FEDERATION TO THE WORLD TRADE ORGANIZATION 3 страница

58. Concerning commercial transactions in agricultural land, the representative of the Russian Federation noted that Federal Law No. 101-FZ of 24 July 2002 "On Commercial Transactions in Agricultural Land" (as last amended on 8 May 2009) permitted leasehold by foreign natural persons, foreign legal entities and legal entities with foreign participation exceeding 50 per cent for a period of up to 49 years. He added that, after the end of the 49-year period of the lease of land for agricultural purpose, the lessee could make a new contract for another term. While the contract for a new term was made on standard basis, the lessee had a right of priority in making a contract for a new term.

PRIVATIZATION AND ENTERPRISES

THAT ARE STATE-OWNED OR CONTROLLED, ENTERPRISES

WITH SPECIAL OR EXCLUSIVE PRIVILEGES

(a) Privatization

59. The representative of the Russian Federation informed Members of the Working Party that, since 1993, privatization had been carried out as provided for in legislation on privatization of State and Municipal Property. He also informed Members of the Working Party that the basics of the regulation of privatization in the Russian Federation were established by the Civil Code of the Russian Federation and Federal Law No. 178-FZ of 21 December 2001 "On Privatization of State and Municipal Property" (as last amended on 22 November 2010). Other legal acts, relative to the regulation of privatization, included, inter alia, the following:

- Article 217 of the Civil Code of the Russian Federation;

- The Budget Code of the Russian Federation - Federal Law No. 145-FZ of 31 July 1998;

- Federal Law No. 160-FZ of 9 July 1999 "On Foreign Investment in the Russian Federation" (as last amended on 29 April 2008); and

- The Conception of Management of State Property and Privatization in the Russian Federation (approved by Government Resolution No. 1024 of 9 September 1999, as last amended on 29 November 2000).

60. The representative of the Russian Federation explained that, in accordance with the Federal Law No. 178-FZ of 21 December 2001, "privatization of state and municipal property" was a form of alienation of property owned by the Russian Federation (hereinafter: referred to as "federal property"), the regions of the Russian Federation, or municipal entities to natural and/or juridical persons that required payment to the owner of the property being privatized.

61. Some Members of the Working Party expressed concerns regarding the transparency of the privatization process in the Russian Federation, as well as concerns regarding restrictions related to privatization and, specifically, restrictions on foreign participation in privatization provided for in the legislation of the Russian Federation. In response to the questions from Members, the representative of the Russian Federation informed Members that privatization of State and Municipal Property was based on the principles of transparency and predictability of privatization procedures. He further added that privatization for each year was carried out on the basis of a plan. The Government of the Russian Federation annually endorsed the forecast of Federal Property Privatization Plan (Programme) for a respective year. The Forecast Plan (Programme) contained a list of Federal State unitary enterprises, federally-owned shares of open joint-stock companies, and other federal property to be privatized in that year. The programmes of privatization as well as decisions on the conditions of privatization (as long as they were approved by the normative acts of the relevant executive authorities) were subject to publication in the sources of official information <*>.

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<*> The source of official information was, inter alia, "Rossiiskaya Gazeta" (Russian Gazette) founded by the Government of the Russian Federation. Its right to publish official documents was determined by the Federal Law No. 5-FZ of 14 June 1994 "On the Order of Publishing and Coming into Effect of Federal Constitutional Laws, Federal Laws and Acts of the Chambers of the Federal Assembly" (as amended on 22 October 1999).

62. Regarding the prohibitions and restrictions on the privatization process, the representative of the Russian Federation stated, that according to the Federal Law No. 178-FZ of 21 December 2011, some property could not be privatized, because it could be owned only by the State or municipal Governments and federal laws stipulated that some property and objects could not be subject to any form of transaction. Property and objects which could not be privatized consisted, among other things, of mineral wealth, forest fund, water resources, air space, resources of the continental shelf, territorial waters and sea economic zones of the Russian Federation, budgetary and non-budgetary funds, currency and other reserves, objects of historic and cultural heritage of federal value, property passed over to State unitary enterprises (SUEs) and state institutions involved in the turnover of narcotics and psychotropic substances, nuclear stations and enterprises producing special nuclear and radio-nuclear materials, nuclear weapons, as well as property of the enterprises performing scientific research and development works in the above-mentioned areas, and property permanently used to provide social services, including orphanages. The alienation of these types of property to any natural and/or juridical persons was prohibited.

63. In response to the specific questions of some Members in regard to joint-stock companies (JSCs) and enterprises of strategic significance, the representative of the Russian Federation clarified, that shares of "strategic" JSCs and "strategic" enterprises could be offered for privatization and be included in the plan (programme) of privatization by decision of the President (i.e., a Presidential Decree based on a proposal initiated by the Government).

64. "Strategic" enterprises and JSCs were defined as follows:

- Federal State unitary enterprises manufacturing products (performing works, providing services) of strategic importance for ensuring the defensive capability and security of the State, protecting the morals, health, rights and lawful interests of citizens of the Russian Federation (strategic enterprises); and

- Public joint-stock companies whose shares were in federal ownership and the participation of the Russian Federation in the management thereof ensured the strategic interests of the State, the defensive capability and security of the State, protection of the morals, health, rights and lawful interests of citizens of the Russian Federation (strategic JSCs).

65. The current list of strategic enterprises was established by Presidential Decree No. 1009 of 4 August 2004 (as last amended on 26 June 2010). The amended list contained 231 strategic enterprises and 212 JSCs. In response to a question from a Member, the representative of the Russian Federation explained that the specific percentage of state-ownership of shares in a public joint-stock company was not stipulated and currently the percentage of state-ownership varied from 100 per cent to 34 per cent. The representative of the Russian Federation further informed Members that, in accordance with Article 5 of the Federal Law No. 178-FZ of 21 December 2001, the participation of some categories of persons (Russian as well as foreign) could be restricted by other Federal laws for the purposes of defending the constitutional order, morals, health, the rights and legal interests of other persons, and ensuring the defence and security of the State. These provisions were in line with Article 55 of the Constitution of the Russian Federation and Article 1 of the Civil Code of the Russian Federation which could also serve as a legal framework for establishing restrictions on ownership by Russian as well as foreign persons. Thus, the Law of the Russian Federation No. 3297-1 of 14 July 1992 "On a Closed Administrative-Territorial Area" (as last amended on 23 December 2003) stipulated that only citizens of the Russian Federation permanently residing in the territory of Closed Administrative-Territorial Area and juridical persons located and registered in that territory, could participate in the privatization of the State or Municipal Property located on that territory and engage in transactions with it. These rules were set with a view to providing a special regime of safe functioning and keeping State secrets in the territory of such areas.

66. In response to further questions of some Members of the Working Party with regard to restrictions on foreign participation in privatization of land, the representative of the Russian Federation added that there were no specific conditions for foreign investors set-out in the legislation on privatization, concerning participation in the privatization programme other than those that applied to domestic investors. Furthermore, Federal Law No. 178-FZ of 21 December 2001 established equality of rights of all customers in the process of privatization. However, certain limitations on foreign ownership were provided for by Russian legislation regulating different areas of economic relations. Such limitations were required to be observed in the process of privatization. The representative of the Russian Federation gave the example of the Land Code of the Russian Federation, providing that foreign citizens, persons without any citizenship, and foreign juridical persons could not own land plots when such land plots were situated in border territories, the list of which was set by the President of the Russian Federation in accordance with the federal legislation on State border of the Russian Federation. Additional information on this issue was discussed in the Section "Investment Regime" of this Report.

67. Some Members of the Working Party requested information on progress achieved in the privatization process and the percentage of trade accounted for by State-owned firms. These Members noted that, in many situations, a shareholding of as low as 25 per cent could amount to effective control, and, accordingly, requested information on the economic activity of companies with 25 per cent or greater Government shareholding. Some Members requested updated information on the current privatization programmes of the Government of the Russian Federation. Responding to this request, the representative of the Russian Federation informed Members that the Privatization Plan (Programme) for the current period was established by the "Forecast Plan (Programme) for Federal Property Privatization and the main directions of the Federal Property Privatization for 2011 and 2013" which had been approved by the Order of the Government of the Russian Federation No. 2102-r of 27 November 2010. This Programme was available on the website of the Government of the Russian Federation (www.gov.ru). The Programme contained a list of 809 JSCs belonging to the Russian Federation for which shares were put up for sale in 2011 - 2013 as well as 114 Federal State unitary enterprises, planned to be privatized in 2011 - 2013. It was planned, in particular, to put up for sale 7.58 per cent minus one share of Sberbank, 100 per cent of the United Grain Company (by 2012) and 50 per cent minus one share of Rosagroleasing (but no sooner than in 2013).

68. The representative of the Russian Federation further informed Members that a total of 1,863 enterprises had been privatized between 2005 and 2009 (see Table 1). He also provided additional information concerning privatization by sectors, reflected in Table 2. Regarding recent years, the representative of the Russian Federation provided information contained in Table 3, Table 4 and Table 5. As a result of the privatization process, the number of Federal State unitary enterprises came to 3,765 on 1 January 2009, and the number of JSCs with the participation of the Russian Federation came to 3,337 by the same date. Among these JSCs, 1,858 had 100 per cent of their shares owned by the Russian Federation; 200 JSCs had from 50 to 100 per cent of their shares owned by the Russian Federation; 510 had from 25 to 50 per cent Russian Federation ownership; and 769 JSCs had less than 25 per cent of their shares owned by the Russian Federation.

69. The possibility of the State to use a special right was provided for in Federal Law No. 178-FZ of 21 December 2001. A decision to use/stop using this special right ("golden share") might be adopted by the Government of the Russian Federation or bodies of the Russian regions when the property complexes of unitary enterprises were privatized or when a decision was made to exclude a JSC from the list of strategic JSCs, irrespective of the number of shares owned by the State. When the decision to use the "golden share" had been taken, the Government of the Russian Federation or the bodies of the Russian regions appointed the respective representatives to the board of directors (supervisory board) of a JSC in question. Such representatives had the right to attend the general meeting of shareholders the same as the representatives of ordinary shareholder, with a right of veto when the general meeting voted on the following decisions:

- Amending the statute of the joint-stock company or endorsing the statute of the public JSC in a new wording;

- Re-organizing the open JSC;

- Liquidating the open JSC, appointing a liquidation commission and endorsing interim and final liquidation balance sheets;

- Altering the amount of authorised capital of the open JSC; or

- Accomplishing large-scale transactions and transactions in the accomplishment of which there was an interest (as specified in the Federal Law "On Joint-Stock Companies").

70. As regards the general mechanism of participation of the Russian Federation in the management of State-owned shares of the JSCs, the representative of the Russian Federation informed Members that it continued to be through representatives of the State participating in the managerial bodies of the JSCs. The rules for managing shares of JSCs owned by the State were stipulated by the Resolution of the Government of the Russian Federation No. 738 of 3 December 2004 "On the Management of Federal Owned Shares of Joint-Stock Companies and the Use of the Special Right for Participation of the Russian Federation in Management of Open Joint-Stock Companies (Golden Share)" (as last amended on 1 December 2009).

71. Members of the Working Party invited the Russian Federation to enter into a commitment to report on developments in its programme of privatization as long as the Privatization Programme was in existence and on other issues related to any ongoing economic reforms relevant to its obligations under the WTO.

72. The representative of the Russian Federation confirmed the readiness of the Russian Federation to ensure the transparency of its ongoing Privatization Programme. He stated that his Government would provide annual reports to WTO Members (along the lines of the information provided to the Working Party) on developments in its programme of privatization as long as the Privatization Programme was in existence. The Working Party took note of this commitment.

(b) Enterprises that are State-Owned or Controlled, Enterprises with Special or Exclusive Privileges

73. In response to the concerns of some Members of the Working Party about the possibility of the Government to control and influence the activity of State-invested JSCs, the representative of the Russian Federation answered that the legislation of the Russian Federation did not provide for the possibility of the Government (State) exercising special control or special management of the activity of those companies, where the Russian Federation or municipal authority-owned shares. As a general rule, when a State or municipal authority held shares of the JSC, it worked as an ordinary shareholder and enjoyed the rights and took the liabilities under the standard rules for shareholders stipulated by the Civil Code of the Russian Federation and Federal Law No. 208-FZ of 26 December 1995 "On Joint-Stock Companies" (as amended on 27 December 2009). Thus, except as explained in paragraph 69 of this Report, State or municipal authorities participated in the management and activity of the JSC along with other shareholders under the same rules irrespective of the share of stock in State ownership.

74. Responding to the questions of some Members, the representative of the Russian Federation also clarified the issue of SUEs and the mechanism of their management by the State. He said that the legal status and activity rules of SUEs were provided by the Civil Code of the Russian Federation and Federal Law No. 161-FZ of 14 November 2002 "On State and Municipal Unitary Enterprises" (as last amended on 1 December 2007). He added that a SUE was a commercial organization, not endowed with the right of ownership to the property, allotted to it by the property owner. These Laws provided that the property of the SUE must be owned by the Russian Federation, a Russian region or a municipality. In its commercial activity, a SUE was acting in the same way as other commercial organizations, except for transactions aimed at the disposition of the property of the SUE (sales, lease, transfer as bond security, giving of credits, etc.), where the approval of the property owner was required by law. This special requirement resulted exclusively from the need to preserve property of the owner (the State, the municipality) and constituted the difference between a SUE and other types of legal persons. In respect to unitary enterprises, the State had the same rights and obligations as an ordinary corporate founder, being subject to common rules of the civil legislation, which did not accord any special rights or possibility of control or rights to manage the activity of unitary enterprises to the state/municipal entity. SUEs existed and acted alongside other forms of legal persons, on the basis of principles and rules common to all commercial organizations, stipulated in civil legislation, and self-organized their activities.

75. Summarizing the information on the possibility of State control over the activities of SUEs and State-invested JSCs, the representative of the Russian Federation stated that governmental influence and guidance of the decisions and activities of SUEs as well as state-invested JSCs was strictly defined by the legislation of the Russian Federation as indicated above. The Constitution of the Russian Federation guaranteed the equality of all forms of property (i.e., private, State, or municipal) thus ensuring that the principle of non-discrimination would be observed regarding the companies and enterprises of different forms of property rights. It also prevented enterprises from activity aimed at monopolization and unfair competition, thus giving a sound guarantee that State enterprises and State-invested JSCs would not act in a manner to distort the competitive environment. He further noted that according to Article 50 of the Civil Code of the Russian Federation, Russian juridical persons were divided into commercial and non-commercial organizations. Commercial organizations were those aimed at deriving profits as the main goal of their activity and that SUEs and state-invested JSCs were one of the forms of commercial organizations alongside with other types of commercial organizations with this goal. The status of the SUEs and state-invested JSCs as commercial organizations pre-defined the freedom of their own market behaviour which was implemented through the respective operational decisions and conclusion of commercial transactions of any kind in accordance with customary business practice and legislation in force.

76. In addition, the representative of the Russian Federation presented statistical data (see Table 6), in his view, demonstrating that the actual participation of State enterprises in the economy, as well as in international trade was relatively small. The proportion attributed to the State enterprises had been declining steadily over the previous years and this trend was expected to continue. In industrial and agricultural production, the share accounted for by State enterprises amounted to approximately 10 per cent, while the share of exports and imports was negligible. Responding to a question of a Member, the representative of the Russian Federation explained that State participation in the gas production sector was higher than in other sectors. In 2009, Gazprom, which was 51 per cent owned by the State, had an 84 per cent share of the total gas production in the Russian Federation. Due to its exclusive right to export gas, Gazprom had a 100 per cent share of gas exports from the Russian Federation.

77. Some Members requested further information on the role of marketing enterprises such as Exportkhleb, Prodintorg, and Roskhleboprodukt in agricultural trade, and a description of the legislation that had specifically ended the special rights and privileges that these organizations had traditionally received as monopoly trade or marketing entities. These Members also asked for further information on the extent to which the agricultural trade of the Russian Federation was still conducted through inter-governmental agreements between the Russian Federation and other countries, especially CIS countries, and on whether any government-to-government barter arrangements were still in place.

78. The representative of the Russian Federation noted that some enterprises (Roschleboproduct and Roscontract) had been granted exclusive and special rights in 1993 and 1994 in the context of bilateral barter trade with some CIS countries performed under the framework of special inter-governmental agreements for those calendar years. Such exclusive rights had expired completely on 31 December 1995 when the agreements expired and had never been resumed. The Government of the Russian Federation had not concluded any bilateral barter trade agreement with Governments of other countries, including CIS countries.

79. Regarding the concerns of some Members in respect of the special export regime for wheat exported to Ukraine, the representative of the Russian Federation stated that a special Inter-governmental Agreement on export supplies of wheat to Ukraine from August to October 2003 had been concluded in August 2003 in view of adverse weather conditions in Ukraine in 2003. This Agreement did not concern barter trade. Under this Agreement, the SUE "Federal Agency on the Foods Market Regulation" (FFMA) had been authorised to supply wheat on terms and in quantities provided for by the Agreement. However, this authority of FFMA had expired upon termination of the supply periods, as defined in the Agreement.

80. A Member was concerned that FFMA appeared to operate the grain intervention system of the Russian Federation and maintained grain reserves, exclusively and at the behest of the Government, using State funds, which would appear to be an exclusive right that had a noticeable impact on prices. In response, the representative of the Russian Federation noted that under Government Resolution No. 1224 of 26 September 1997 "On the Foundation of the State Unitary Enterprise - the Federal Agency for Food Market Regulation by the Ministry of Agriculture and Food of the Russian Federation" (as last amended on 15 June 1998), the FFMA had replaced the Federal Food Corporation with a modified institutional and legal framework. A full list of activities of the FFMA was contained in Government Resolution No. 1224. Pursuant to this Resolution, the Agency was a commercial organization established in order to meet social needs and earn a profit. Its main activities included, in particular:

- Monitoring the current state of the agricultural, raw materials, and foodstuffs market, creating a system providing informational support to market entities, analysing and forecasting the situation on the market;

- Boosting competition in purchase and sale of agricultural products, raw materials, and foodstuffs;

- Organizing and carrying out purchase and sale-related intervention in order to promote stability on the market of agricultural products, raw materials, and foodstuffs;

- Ensuring guarantees in carrying out operations with agricultural products, raw materials and foodstuffs; and

- Performing the functions of the state purchaser on establishing the operative reserve of the Government of the Russian Federation and performing deliveries to polluted territories.

81. Organizing and carrying out purchase and sale-related intervention in order to promote stability on the market of agricultural products, raw materials, and foodstuffs were regulated by Government Resolution No. 580 of 3 August 2001 "On Approving the Rules of Exercising State Purchase and Sale Intervention for the Regulation of the Market of Agricultural Products, Raw Materials, and Foodstuffs" (as amended by Government Resolutions No. 500 of 28 September 2004, No. 431 of 15 July 2005 and No. 157 of 23 March 2006). According to this Resolution, State purchases of agricultural products, raw materials, and foodstuffs (hereafter: referred to as agricultural products) were carried out for building of the Federal Food Intervention Fund. Purchases and sales of agricultural products to/from this fund were aimed at regulation of agricultural products markets. The reserves of the intervention fund had been recognised as Federal property. Purchase and sales interventions were to be carried out by a State agent selected on competitive basis by the agricultural sector regulator of the Russian Federation. The agent acted for a commission fee. The interventions themselves were carried out through a commodity exchange auction. FFMA was approved as an agent for carrying out purchase and sales interventions in 2001, 2002 and 2005, by Government Order No. 1501-r of 13 November 2001, by Government Resolution No. 756 of 11 October 2002, and by the Order of the Ministry of Agriculture No. 80 of 14 May 2005, respectively. According to Order of the Territorial Administration of the Federal Agency for State Property Management in Moscow No. 1345 of 28 December 2006, FFMA <*> was privatized and acted as a Joint-Stock Company Agency for the Food Market Regulation. In 2008, the Ministry of Agriculture of the Russian Federation selected FFMA on a tender basis as an agent for grain interventions, in accordance with Government Resolution No. 580 of 3 August 2001.

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<*> FFMA was established in accordance with Government Resolution No. 1224 of 26 September 1997 "On the Foundation of the State Unitary Enterprise - the Federal Agency for Food Market Regulation by the Ministry of Agriculture and Food of the Russian Federation".

82. The Open Joint-Stock Company Agency for the Food Market Regulation, which was 100 per cent owned by the State, was renamed the "United Grain Company", in accordance with Presidential Decree No. 290 of 20 March 2009. Some federally-owned shares of the companies were transferred as a contribution to the authorised capital of the United Grain Company in order to cover the emission of additional shares. While the State currently owned 100 per cent of shares of the United Grain Company, there was a plan to privatize the United Grain Company by 2012. In 2009, grain interventions were executed by the United Grain Company on a tender basis. In addition to engaging in grain interventions, the mission of the United Grain Company was to increase grain elevator capacity, increase domestic grain trade and exports, and to develop the transport and port infrastructure of the grain market of the Russian Federation. The representative of the Russian Federation explained that United Grain Company continued to act as an agent for state purchase and merchandise interventions for a commission, as stipulated in Government Resolution No. 580 of 3 August 2001 "On Approving the Rules of Exercising State Purchase and Sale Intervention for the Regulation of the Market of Agricultural Products, Raw Materials, and Foodstuffs". He further explained that all the purchase and merchandise interventions were carried out through a commodity exchange. A participant had to confirm its sphere of activity (as "grain producer" to take part in purchase interventions and as "livestock breeder", "producer of forage for livestock", "flour-and-cereals industry company" or "livestock breeder and plant grower (composite agriculture)" to take part in merchandise interventions. A participant also had to go through an accreditation process, involving payment of an accreditation fee, making a guarantee deposit and providing the documents specified in the Bidding Procedure established in accordance with Government Resolution No. 580 of 3 August 2001 "On Approving the Rules of Exercising State Purchase and Sale Intervention for the Regulation of the Market of Agricultural Products, Raw Materials, and Foodstuffs".

83. Several Members requested further information regarding a Government resolution that imposed licensing requirements on procurement, processing, storing, and marketing of grain and grain products for State needs, as well as on production of most grain products (bread, flour, etc.), and clarification of the purpose of these licenses and on whether both foreign and domestic companies were subject to them. Concerning reports that 150 bankrupt grain facilities (mills, storage facilities, etc.) had reverted to State control, some Members requested clarification on how this process was being implemented and what role the Government would play in the operation and management decisions of these facilities.