Since the market collapse in 1998, the volume of Russian imports has been steadily increasing. In early 2007, import growth continued to increase due to greater investment activity, which increased the share of investment products in imports. According to customs statistics, from January to April 2007, imports from non-NIS countries were USD 43.3 billion, an increase of 55.2% over 2006. In April 2007 alone, imports of machine-building products grew 71.6%, food products and raw materials for the production of food products grew by 51%, chemicals grew by 25.5%, and apparel and footwear grew by 93.7%.

For many years, the United States has been one of Russia's main trade partners. In 2006, the volume of U.S.-Russia trade grew 27.5% to USD 24.5 billion (USD 19.2 billion in 2005). Russian exports to the U.S. increased 29.5% to USD 19.8 billion (15.3 billion in 2005); imports from the U.S. grew 19.7% to USD 4.7 billion. The U.S. represents approximately 4% of Russia's overall foreign trade, while Russia's share in the U.S. trade turnover is only 0.8% (26th among America’s trading partners based on the volume of trade turnover). Russia mainly imports machine-building products and vehicles - over USD 2.5 billion in 2006 (53.8% of Russia's overall imports from the United States) and USD 880 million in food products (primarily poultry) in 2006 (18.7% of imports from the U.S.).

Customs environment

The new Russian customs code provides for more complete and detailed regulation of goods and vehicles crossing Russia's customs borders than earlier versions of the code. It brings Russia's customs legislation in line with other Russian legislation (e.g., taxes, foreign trade) and international law. Below are some of the positive changes enacted by the new customs code:

·   The code itself became the law of direct action, and the number of customs by-laws was reduced from almost 4 000 to about one hundred.

·   The documents required for customs clearance were strictly defined, which streamlined customs clearance procedures.

·   The timeframe for customs processing was reduced from 10 to 3 days.

·   The importer can now choose the customs house, at which to perform clearance. It can be either the customs house at the border crossing or at the cargo's destination.

·   The new code allows advanced customs clearance prior to the shipment's arrival at its destination. Electronic versions of declarations and other documents can be submitted to customs immediately after shipment or during transportation under customs supervision in Russia. This simplifies the unloading process and eliminates the need to place the goods in a bonded warehouse.

Aiming to “whiten” imports, Russian customs officials have moved to strengthen customs control while simplifying customs procedures. For example, since cutting import duties on technological equipment, there has been a significant decrease in “gray” imports. Since April 2006, nearly 630 categories of equipment have been brought into Russia with zero duty rates. As a result, imports of machinery and equipment grew faster than imports in any other products category.

Custom clearance procedure

The following are the acting parties in the customs clearance process: exporter, importer (consignee), customs officials, and customs broker. Most shipping agencies have a customs broker license and are contracted to determine transportation cost, provide transportation service, and clear customs as soon as a seller and a buyer sign a contract. The following documents are required primarily from the exporter:

1. A copy of the commercial contract with specifications and appendices (if any), which must contain:

The seller's and buyer's contact information (consignee's address if it is different from the one of the buyer);

·    The price and total value of the contract;

·    The terms and period of delivery;

·    A description of the goods, including quantity.

 

2. The original transport waybill (CÌR), which must contain:

·   The consignor's and consignee's names. The terms of delivery must be the same as in the contract;

·   The address and license number of the customs warehouse in the “Delivery Address” field;

·   The place of discharge if it is different from the delivery address;

·   The Russian customs code.

 

3. The original commercial invoice for each lot of goods, which must contain:

·   The invoice and contract numbers and dates;

·   The names of the seller and buyer. The terms of delivery must be the same as in the contract;

·   A description of the lot, including quantity;

·   The price for each position and the total value of the invoice;

·   The net and gross weight for each position, which must correspond with the specifications;

·   Any information on marking.

4. A packing list which must contain:

·   The net and gross weight for each position, which must correspond with specifications;

·   The names and quantity of pieces and the kind of packaging;

·   Any information on marking.

5. Certificates of quality, safety, and insurance.

6. Pictures, booklets, brochures, and blueprints of goods.

The following documents are required primarily from the consignee:

1. Power of Attorney. This is an authorization letter from the consignee to the specific employee who will be responsible for customs clearance (the person who will sign and stamp the customs declaration);

2. The Russian passport and labor book (or an employment contract with the consignee) of the employee;

3. The consignee's company charter and registration documents;

4. Bank references, including information on existing accounts (less than a month old), a certificate from the tax office with INN number (must be less than 3 months old), and a certificate from the Russian statistics office with OKPO code;

5. The contract between the shipper and the consignee.

6. A certificate of import transaction. This is a statement made by the consignee on import shipments certified by the importer's bank.

7. Transportation documents (CMR or railway waybill);

8. TIR-Carnet;

9. The commercial invoice (description of goods with cost for each item), packing list with weight, pieces and type of packing, and the invoice for transportation to the Russian border, if it is not included in the price mentioned in the commercial invoice;

10. A payment receipt or order for the goods made out to the shipper or seller (if prepaid terms of the contract) and receipt of payment to the Russian customs authorities for duties;

11. A safety certificate or certificate of conformity from Gosstandard of Russia if required for the goods being imported;

12. Any additional documents required for each item (customs code) on the commercial invoice.

IMPORTANT NOTE. There are some seemingly significant peculiarities in the customs clearance process in Russia that can cause delays. For example, if the goods are packaged on palettes, one should avoid indicating “palettes” in the customs documents. Otherwise, the palettes themselves will be subject to customs clearance and will require a quality certificate. Another example is promotional material. Some exporters include such material (pens, hats, etc.) with exported goods. If this is done, the promotional material will also be subject to customs clearance. To avoid this, all promotional material should be sent by express mail.

Some shipping agencies have a “green light” practice. They give the green light (go ahead to ship) to the exporter only after all documents have been prepared and the consignee is ready to pick up the goods, as soon as they arrive in Russia. If these preparations are not made, there may be extra handling and storage charges or the goods may be returned to the exporter.

To expedite the customs clearance process, goods can be declared at customs before their actual arrival. This cuts costs related to temporary storage in customs warehouses. To encourage importers and exporters to clear customs quickly, storage costs at customs warehouses increase sharply starting on the 11th day after the goods arrive.

There are some peculiarities particular to airfreight shipments. Every single piece of cargo in an airfreight shipment must be properly labeled with the following information:

·    Airline name or logo;

·    MAWB and HAWB numbers;

·    Departure airport 3-letter IATA code;

·    Destination airport 3-letter IATA code;

·    Transit airport 3-letter IATA code;

·    Total pieces of cargo;

·    Total weight of the shipment, as mentioned on MAWB (gross).

 

Unlabeled cargo will be considered unclaimed and will be sent back to the shipper within 60 days by the carrier. The carrier will invoice the shipper for the storage costs for the whole period.

The following original documentation should be sent directly with the cargo in an attached envelope. Be sure to mention the following on the MAWB: Attached to AWB 1 (one) envelope with documents.

·    HAWB;

·    Invoice;

·    Packaging list;

·    Price list (may be required);

·    Certificates of origin;

·    Quality certificates.

For all air shipments to Russia, alerts must be sent at least 24 working hours prior to arrival of the shipment. The alert should include the following information:

·    MAWB number and HAWB number;

·   Name of the most recent carrier of the goods;

·    Dispatch flight number, date, and airport (3-letter IATA code);

·    Delivery flight number, date, and airport (3-letter IATA code);

·   Number of pieces and description of HAWB;

·    Weight and dimension of each item in the shipment;

·    Shipper of HAWB;

·    Consignee of HAWB (including the name of the company, the individual signing for the goods, and telephone numbers, including city codes, for that individual);

·    Additional services needed at final destination;

·    Scanned copy of MAWB and HAWB;

·    Scanned copies of all of the original documentation mentioned in the list above.

Abbreviations used in the text:

CMR - Cargo Movement Requirement

TIR-Carnet - A road transit document, which allows container, and in some cases bulk, cargo to move from outside of Russia to a final destination in Russia.

MAWB - Master Air Way Bill

HAWB - House Air Way Bill

IATA - International Air Transportation Association

Customs regimes

Note: this section is designed to provide a good understanding of the most commonly used regimes, such as free circulation, ATA Carnet, customs warehouse, free trade zone (or SEZ), etc.

 

Importers must choose a customs regime, under which to import their goods into Russia. They are free to choose any regime listed below and can change to another regime at any time.

Article 155 of the Russian customs code creates four groups of customs regimes:

1. Basic customs regimes:

·   Free circulation (release for domestic consumption);

·   Export;

·   International customs transit.

2. Economic customs regimes:

·    Internal processing;

·    Processing for domestic consumption;

·    Outward processing;

·    Temporary importation;

·    Bonded (customs) warehouse;

3. Completing customs regimes:

·    Re-import;

·    Re-export;

·    Destruction;

·    Rejection in favor of the state.

4. Special customs regimes:

·    Temporary exportation;

·    Duty-free trade;

·    Movement of stores;

·    Other special customs regimes.

In the context of this article, only the customs regimes and procedures related to importing into Russia are reviewed.

Free Circulation (release of imported goods for domestic consumption). This regime is used for imported goods into Russia that are to remain within the country. To use this regime, importers must observe all import requirements (prohibitions, licensing, certification, etc.) and customs duties and taxes must be paid in full. Following import and payment of duties, the goods are free to circulate within Russia.

International Customs Transit. This regime defines the customs procedures used for foreign goods traversing Russia to a third country. The transit is performed under customs control. Goods transiting across Russia are exempt from customs duties and taxes and import restrictions and prohibitions. The Russian customs authorities handle all issues (permission, timing, etc.) regarding international customs transit.

Internal processing (processing inside the customs territory of Russia). Under this regime, imported goods, except those prohibited from import, are processed (i.e., modified, assembled, adapted to other goods, etc.) in Russia within a time period not exceeding two years for eventual export from Russia. Goods imported for internal processing are exempt from customs duties and taxes, though customs fees still apply. Importers must also apply to the customs authorities beforehand for permissions and licenses to import under this regime. The final exported good is not subject to export custom duties, though it may be subject to Russian export restrictions and may require permission to be exported.

Processing for domestic consumption. This is similar to the previous regime, except that the imported goods must be processed within one year of import and the final products are released for free circulation in Russia. Goods imported under this regime are subject to all restrictions and prohibitions on imports. The initial goods are exempt from customs duties and taxes, but the final products are subject to payment of all applicable duties and taxes.

Outward processing. Under this regime, goods are exported from Russia for processing outside of the country. The goods have two years to be processed, and the final product is then imported into Russia. Goods exported under this regime are not subject to any economic restrictions or prohibitions stipulated by Russian law. They are completely exempt from export duties, but must pay domestic taxes, including VAT. The final imported products are partially or fully (in the case of warranty repairs of exported goods) exempt from customs duties and taxes. Like for the other processing regimes mentioned here, the permission of the customs authorities is required to use this regime.

Temporary import. This regime allows for the use of imported goods in Russia for a certain period of time (usually not exceeding 2 years). Goods imported under this regime receive a full or partial exemption from customs duties and taxes and are not subject to any economic restrictions or prohibitions. This regime is usually applied to the following types of goods: reusable packaging and containers; servicing and assembly tools; samples; business, cultural, and scientific exhibits; and goods imported for tests or expert analysis. The temporarily imported goods should be preserved in their original state, except for changes caused by natural depreciation. The government determines the categories of temporarily imported goods fully exempt from customs duties and taxes. They generally include containers and other multiple-use packaging, items related to international cultural and scientific collaboration, and goods for humanitarian aid. Other categories of goods are subject to partial exemption from customs duties and taxes (VAT). For each month, even incomplete, that the goods are in Russia, they are charged fees equivalent to 3 percent of the payments that would apply if the goods were released for free circulation. The payments can be made periodically or when first placing the goods under the temporary import regime. Customs authorities have the right to require a pledge from the importer that the temporarily imported goods will be re-exported (e.g., a bank guarantee for the customs duties and taxes that would be applied if the goods were instead released for free circulation).

ATA Carnet. ATA Carnet is an international customs document that replaces the customs declaration for the short-term, duty-free exportation of goods with their following re-importation. Using ATA Carnet quickens and simplifies the customs procedures. The ATA Carnet system was developed by the World Customs Organization in the 1960s according to international customs conventions. National chambers of commerce usually act as the issuers and guarantors for ATA Carnets. The ATA Carnet system has functioned in Russia since 2000. ATA Carnet is commonly used for the temporary export of commercial samples, tools, measuring equipment, and certain other categories of goods. It is often associated with international exhibition activities. For goods temporarily imported to Russia from the U.S. using the ATA Carnet procedure, the customs clearance process is reduced to the presentation of this document to the customs office. No customs duties, bails, or banking guarantees need to be paid, because the ATA Carnet itself serves as an international guarantee.

Bonded (Customs) Warehouse. Under the customs warehouse regime, any goods imported into Russia (except those commodities whose import and export are prohibited or restricted) are stored in specially-allocated rooms or territories in the custody of customs authorities. No customs duties and taxes need be paid on such goods, and economic restrictions are not applied. The Russian customs code allows for two types of customs warehouses: open (suitable for the storage of any kinds of goods and accessible by anybody) and closed (intended for the storage of goods belonging to the warehouse owner). Goods previously subjected to other customs procedures can be placed under this regime in order to avoid paying customs duties and taxes. This regime can be beneficial for goods already delivered to Russia that have not yet been purchased. The period of stay for goods under this regime is limited to three years, though this may be extended by request at the customs office.

Re-import. Re-import is a customs procedure, under which goods previously exported from