Annex -5

RUSSIA – Answers on Questions Received during the IAP Peer Review Session

General – ABAC ABAC welcomes the progress achieved by the Russian Federation in moving towards a more open and market -oriented economy and in liberalizing its trade policy regime. While much of this liberalization was undertaken in the context of the latter’s accession to the WTO, ABAC agrees that such liberalization benefits both APEC and non -APEC WTO members alike. Given the size of its economy, it is important that the Russian Fe deration becomes a member of the WTO. Notwithstanding the liberalization already achieved, ABAC notes that the Russian Federation has some way to go in respect of the Bogor Goals. This underscores the importance of determined, if not accelerated, progress if the Bogor timetable is to be met. A.: Russia welcomes these remarks made by ABAC and assures the APEC business society of to do all it s best to achieve the Bogor goals in due time. Russia’s path towards the Bogor Goals looks bright and optimistic. The overall trade policy of Russia has become increasingly liberalized, more transparent, and predictable. Russia’s tariff reductions are certainly on track with further restructuring activities being conducted on an on -going basis. Non -Tariff measures are als o being eliminated in line with WTO commitments while Russia’s investment environment has become more and more attractive to foreign investors. Customs procedures have also advanced with new technologies and training being introduced to increase efficiency of the customs authorities, while intellectual property rights have also been a fast mover with numerous laws being implemented and enforcement measures producing positive results. For these and other various reasons, Russia is confident that it can achie ve the Bogor Goals together with all the APEC economies, but we should also point out that the Forum's extensive capacity building assistance should be used to ensure a successive fulfillment both CAP and IAPs, as well as transition towards liberalization, transparency and facilitation in the APEC region.

Progress towards Bogor 1. In its own assessment, how far along is the Russian Federation in achieving the Bogor Goals? A.: In accordance with our rough estimate , in the midst of the road .

FTA 2. Please comment on the Russian Federation’s FTA policy/strategy. A.: Russia participates in a number of preferential trade agreements . These agreements currently included: bilateral free trade agreements with C.I.S. member states; the "Agreement on the Creation of Free Trade Area" between C.I.S. countries of 15 April, 1994; the "Agreement on Customs Union and Common Economic Area" of 26 February, 2

1999 and subsequent "Agreement on the Establishment of the Eurasian Economic Community" with Belarus, Kazakhstan, Tajiki stan and the Kyrgyz Republic as of 10 October, 2000; the "Agreement on the Creation of a Unified State" with Belarus of 8 December, 1999; and the "Agreement on the Establishment of a Common Economic Area" with Belarus, Kazakhstan and Ukraine as of 19 Septe mber, 2003. Nothing in its agreements on the creation of customs unions limited its ability to accede to the WTO in accordance with its rules and to implement WTO commitments upon accession. The PCA with the EU has been ratified by the Russian Federation on 25 November, 1996, and is one of non -preferential trade agreements the Russian Federation had concluded with its trading partners. The treaty sets out both the general principles and detailed provisions that govern relationships between Russia and the E U in the field of trade in goods and services and related issues. Now the EU and Russia are implementing four roadmap, one of which is directed to create the EU -Russia Common Economic Area in the foreseeable future. It is a notable feature in Russia’s ext ernal economic relations that the economy maintains two regional trad ing agreements (R TAs) – one with the CIS countries and the other with the countries in the Eurasian region (the agreement is called Eurasian Economic Community). The Russian Federation es tablished in 2004 a special inter - ministerial body name d “ Intergovernmental Commission on Economic Integration”, which is responsible for developing strategies for the economy’s economic cooperation and integration with other countries. This Co mmission has designated three integration partners of priority concern, which include the European Union, the CIS countries , and the APEC economies. This indicates the relatively great importance Russian government attaches to cooperation with the APEC economies. The Asian region is gaining importance for Russia as a potential trade and investment partner. This is determined by the export prospects for domestic producers of high -tech products and a potential increase in exports of energy products, as well as import s of various consumer goods and attraction of capital and investments. That is why we are interested to deepen our cooperation not only within the bounds of the Asia -Pacific region but also with ASEAN countries, etc.

3. ABAC thanks the Russian Federation for the responses already made to the queries posed by ABAC. It wishes to raise the following additional comments and/or questions: Recent public statements by Russian government officials indicate that the participation of foreign investors in future mine ral resource development projects will be determined on a case -by -case basis. Greater transparency on conditions of foreign access to such auctions would improve Russia’s ability to attract foreign investment into the mining sector. Does Russia have any pl ans to increase transparency and predictability in this area? A.: Yes, of course. And you c ould be responsible for keeping order of the heated arguments of th e problem of foreign investors participation in future mineral resources development projects amon g our public authorities and the public in large. These 3

differences have not been completely settled and have being discussed now in the context of a new Federal Law draft “On the Land Tenure”.

Chapter 1 - Tariffs Australia 4. Australia notes that the com bined tariffs, VAT and engine displacement -weighted excise duties can increase import prices by 70 percent for large passenger cars and sport utility vehicles. In addition, it is also noted that the Russian government recently passed a new law which increased custom duties to 25 percent of the custom value for used cars between three and seven years, effective December 15, 2003. A.: Russia will take note of this problem . But nevertheless it plan s to heighten the customs defense against the imported used car s in the near future .

Canada 5. Canada objected to the introduction in April 2003 of tariff -rate quotas on meat products. These measures have significantly reduced trade between Canada and Russia. In November 2003, the Russian government announced the mai ntenance and extension of such measures on pork and beef for the 2004 calendar year, as well as the extension of the safeguard action on poultry. These measures have been maintained in 2005. Does Russia have any plans to change these measures? A.: No, by the end of 2009.

ABAC 6. ABAC notes that the Russian Federation uses tariffs as an instrument of trade, economic development and fiscal policies. Given that tariffs will eventually need to be phased out in line with the commitment to achieve the Bogor Goa ls of free and open trade by 2010, is the Russian Federation now seeking alternative ways of achieving its trade, economic development and fiscal policy objectives? A.: Why by the specified year of 2010 solely ? Russia will not only phase out the importatio n tariffs, but has sought for alternative ways of achieving its trade , economic development and fiscal policy objectives during not only its accede to the WTO, but on continuing basis.

7. ABAC also notes that compound tariffs are levied not only agricultu ral products but also on selected manufacturing products such as footwear, leather and fur articles, apparels, home electronics, etc. Are there any plans to eliminate and/or reduce the use of other trade policy instruments such as compound tariffs, export duties and tariff exemptions for products produced in so -called “Bonded Warehouses”? A.: Yes, there are. Please, refer to our previous answer and similar answers during our IAP Peer Review session in Seoul as of 1 March, 2005. 4

Chapter 2 - Non -Tariff ABAC 8. ABAC urges the Russian Federation to eliminate and refrain from introducing new non - tariff measures such as those outlined in the IAP Study Report. Where it is absolutely necessary to do so, the Russian Federation should ensure that such measures are transparent and no more than necessary to achieve legitimate policy objectives. A.: Russia is absolutely sure such measures to be transparent and meet the requirements of the WTO, APEC , ESCAP, OECD, UNCTAD and other regional and multinational economic and tr ade organizations.

Chapter 3 - Accounting Services Australia 9. Australia notes that Russian does not seem to have responded to second part of our Q.53 regarding about negotiations with WTO member countries in respect of access to the Russian market for accounting services. Australia would be grateful for a response to this part of the question in due course. A.: As far as this kind of services is fairly sensitive at the time of our bilateral and multilateral negotiations on the Russia’s accession to the WTO, we offer to discuss it during our bilateral talks on services.

Chapter 3 - Financial Services Australia 10. Australia requests advice on the timetable for the legislation of stated key priorities - secured lending/term deposits/M&A/easier branching ( pg . 138). A.: Please, refer to the previous answer. And we are of opinion that these problems should be discussed complementarily during our financial working and ministerial meetings.

11. Further, Australia seeks clarification whether proposed amendments for 'easier [bank] branching' apply just for domestic institutions or will it extend to foreign banks and an ability for them to branch. A.: At present and according to the Russia’s law currently in force, just for domestic banking institutions. Anyway, t he foreign banks can put up money and create the daughter banking enterprises or operate though it representative offices with the respective limitation. This means that foreign investor could hold up to 100% of shares in commercial banks, but not to set u p branches. In the insurance sector, the sum of foreign capital is limited to a maximum of 25%, and upon reaching this cap the issuance of licenses to those insurance companies that are affiliates of foreign investors or have foreign investors’ stakes over 49% will be terminated.

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Korea 12. Korea is pleased with the close cooperation in finance sector between the two economies. However, there is a trend of the Russian importing companies not to do business through submitting L/Cs, which is cited as one of t he difficulties Korean firms are facing in doing business with Russian trading firms. We would like to ask Russia to encourage Russian firms to use L/Cs to faci litate the importing procedure. A.: Russia will tale note of this problem. But a s far as it is a partial question, Russia offers to discuss it during the bilateral talks on financial services and completing of working out the bilateral Action Plan draft on trade, investment and development.

Chapter 4 - Investments Canada 13. Recent public statement s by Russian government officials indicate that the foreign investors ' participation in future mineral resource development projects will be determined on a case -by -case basis. Greater transparency on conditions of foreign access to such auctions would imp rove Russia’s ability to attract foreign investment into the mining sector. Does Russia have any plans to increase transparency and predictability in this area? A.: Please refer to the answer on Q.3 of the “General – ABAC” Chapter.

ABAC 14. Lack of trans parency, unpredictability and inconsistency in decision -making especially with regard to foreign investment projects is apparent. These accrue to an uncertain business environment, as this is key to foreign direct investment and robust trade. What steps is the Russian Federation taking to improve the investment climate and to remove restrictions on foreign investment? A.: Because fairly often it is complicated enough to make a non -prejudication on ‘lack of transparency, unpredictability and inconsistency” i n decision -making in Russia we recommend once again to study the content of our previous answers to Chapter 4 “Investments” and to take into account that Russia’s fuel and energy complex remains one of the most attractive branches of the national economy f or large foreign capital. And the Far East federal district is one of the most attractive to foreign capital for a long time. Foreign investors’ interest is determined by many causes. Among them are closeness to the APEC economies, abundance of many variou s natural resources (minerals, sea products, timber, etc.) and satisfactory infrastructure. Ratings of the international agencies beginning with 1999 showed a favorable attitude of major foreign investors to Russia. In view of the said before, let us remi nd of that the leading international rating agency Standard & Poor’s improved the Russia’s long -term credit rating in foreign currency from ‘BB+’ to ‘BBB -’ as of 31 January, 2004. Thus, S&P’s agency became the third leading world rating institution (follow ing Moody’s 6

since 8 October, 2003, and Fitch on 18 November, 2004) which raised the Russian sovereign rating up to the investment one with ‘stable’ prognosis. For information, Russia holds 5 th place among the ex -USSR republics by investment attractiveness . There has been notable progress in the 'de -bureaucratization' of the Russian economy, which aims at reducing state intervention in economic activities. The government adopted a number of new laws in 2001 -2002 to provide better protection of legal person s and individual entrepreneurs, to improve the licensing practices, to streamline the registration procedures, and provide new procedures for standardization and certification. It is reported that there has been a considerable reduction in the number of in spections and an improved perception of the overall business climate in the Russian economy.

Chapter 5 - Standards and Conformance ABAC 15. The expert noted that the Russian Federation’s “ overall level of harmonization, albeit increasing over the past few years, is relatively low compared to other economies of similar significance ”. Are there any plans to accelerate work on alignment of national standards with international standards? A.: Yes, there are. According to National Plan of Technical Regulations on 2004 -2006 Russia is working out and implementing 114 new technical regulations to be according to ISO standards instead of Russian ancient GOSTs. Russia is proud of its stay near cradle of ISO technical regulation characterization. Russia is a member o f the ISO, IEC, ITU and various other regional standardizing bodies. In the action area of standards and conformance, harmonization of national system of standards and conformance with the international system is the centerpiece of government policy. The government of Russia enacted Federal Law on December 2002 to provide a legal framework for technical regulations, standards and conformity assessment systems. Furthermore, Russia has been extremely transparent on its standards, particularly with regards t o its technical regulations and compulsory standards elaboration, which for your information, can be easily disclosed free of charge. Information on Russia's standards and conformance can be found at Internet website www. gost.ru .

Chapter 6 - Customs Procedures ABAC 16. ABAC reiterates its call on the Russian Federation to observe the APEC guiding principles of facilitation, accountability, transparency and simplification in its customs procedures . A.: Thank ABAC very muc h for such a dun. Customs procedures have been an area of great 7

concern for both Russia and its trading partners. In response, the Russian customs authorities have been working extremely hard and making extensive progress in an effort to enhance customs pr ocedures in this key sector. More than 98% of the imports consignments were cleaned up by our customs houses in due time (less than 3 days and mainly during 24 hours according to the updated Customs Code of Russia) last year. Russia’s accession to the rev ised Kyoto Convention pathfinder is considered important and is being closely reviewed. We do all our best to complete this work immediately after entering updated Kyoto Convention into force. Personnel training are conducted regularly to improve the inte grity of customs officials in order to enhance transparency and eliminate inefficiencies in customs operations. And last but not least , the Federal Customs Service's Internet website was also being enhanced to increase transparency and user -friendliness.

Chapter 7 – Intellectual Property Rights ABAC 17. ABAC commends efforts made by the Russian Federation in enacting intellectual property- related legislations. It urges the latter to keep its IP legislations under review to ensure that these provide the le vel of protection called for under the TRIPS Agreement and to strengthen their enforcement. A.: The active work of the Government Commission for Counteracting Intellectual Property Infringements has continued chaired by M. Fradkov, Chairman of the Russian Federation Government. A. Fursenko, Minister of Education and Science of the Russian Federation is Deputy Chairman of the Commission. Chief coordinating agency of the Commission activities is Ministry of Education and Science of the Russian Federation. Ope rations of Russian departments and other governmental bodies aimed at enhancing intellectual property rights protection level were based on “The Work Plan of Government Commission for Counteracting Intellectual Property Infringements” and “Plan of Priority Measures to Counter Violations of Intellectual Property Rights in the Russian Federation” . Regular meeting of the Commission with a new composition took place on October 15, 2004. At the meeting, the Commission discussed a complex set of matters titled “O n the Improvement of Legislation of the Russian Federation in the Field of Legal Regulation of IP Turnover”. In October 2004 “Plan of Priority Measures to Counter Violations of Intellectual Property Rights in the Russian Federation”, prepared by the Russia n Ministry of Interior, was approved. The third meeting of the Commission took place on December 15, 2004. The following set of questions was considered at the meeting: 1) on development of the collective control system of property rights of copyright and other right holders in the Russian Federation; 2) on the implementation of the Program of explanatory work with 8 population in the field of the rights protection of IP right holders; 3) on the results of priority measures fulfillment aimed at exercising con trol on the consumer markets, stopping violations in the IP sphere and terminating the activities of clandestine and illegal producers, including those on restricted access factories and others specially protected enterprises; 4) on the list of questions p lanned to be discussed on the meetings of the Government Commission for Counteracting Intellectual Property Infringements in the first half of 2005. The meeting summed up the Commission’s activities in 2004. 2004 Plan of Priority Measures, as well as the 2 004 general plan of Commission’s work, was fulfilled as a whole. Next meeting of the Commission is scheduled for March 2005. (Plan of Priority Measures, paragraph 15). Between the meetings of the Commission interagency meetings are conducted, including tho se in Rospatent Agency, at which interested bodies of state authorities are participated to efficiently discuss most urgent questions. The Federal Service for Intellectual Property, Patents and Trademarks (Rospatent) has continued complex efforts to develo p the IPR protection system. This body, subordinated to the Russian Education and Science Ministry, monitors and supervises the legal protection and use of proprietary articles, patents and trademarks involved in economic and civil law relations. The Minis try of Economic Development and Trade of the Russian Federation within the scope of its responsibilities conducts systematic activities aimed at enhancing IP rights protection level in Russia. The Ministry participates in the development of draft laws, res olutions and orders of the Russian Government and also measures, taken to improve law enforcement practice.

Development of Legislation and Normative Legal Acts Law No. 72 -FZ of July 20, 2004 “On Introducing Amendments in the Russian Federation Law “On Cop yright and Related Rights” entered into force on July 26, 2004. (Plan of Priority Measures, paragraph 1). The abovementioned Federal Law provides the national treatment regime to the protection of copyright and related rights, increases the term of protect ion of copyright up to 70 years, ensures the legal protection of works, performance and phonograms when used in the Internet (being in force since 01.09.2006), embodies a provision allowing right holders to use technical protection means preventing the ill egal use of copyright and related rights, applies, under civil proceedings, confiscation regulations not only to the counterfeit products but also to the equipment and materials used for their production. Federal Law No. 98 -FZ “On Commercial Secrets” of Ju ly 29, 2004 entered into force on August 15, 2004 (Plan of Priority Measures, paragraph 2). With the exception of the cases indicated in the exhaustive list of data, that cannot constitute commercial secrets, the right holder shall himself determine the st atus of the 9 information to be supplied and has the right to insist that the State authorities should observe its confidentiality. For the disclosure of confidential information legislation provides disciplinary, administrative, criminal and civil liability . Federal Law No. 122 -FZ of August 22, 2004 “On Introducing Amendments in General Guidelines for the Organization of Legislative (Representative) and Executive Public Authorities of the Russian Federation Subjects and Local Self -Governments” entered into f orce on January 1, 2005. The abovementioned Federal Law provides in particular the amendments in Federal Law No. 86 -FZ of June 22, 1998 “On Medicines”, introduces a definition of the concept of “falsified medicines” and amends the licensing procedure. In D ecember 2004 draft amendments to the Criminal Code of the Russian Federation (Article 151) have been submitted for consideration to the Russian Government providing for the investigation of offences, committed in the area of copyright and related rights, n ot only by the prosecutor's office but also by the investigators from the Ministry of Interior of the Russian Federation (alternative carrying out of investigation). The above amendments will allow to speed up investigations of such offences and to make th e prevention of the offences in the area of copyright and related rights more effective. (Plan of Priority Measures, paragraph 3). The draft Federal Law “On Making Amendments to the Code on Administrative Offences of the Russian Federation (CoAO)” is being prepared for consideration in the second reading in the RF State Duma of the Russian Federation (Plan of Priority Measures, paragraph 4). In December 2004 a draft Resolution of the Government of the Russian Federation “On Making Amendments and Supplement s in the Sales Rules for Some Types of Goods” has been prepared by the Ministry of Economic Development and Trade of the Russian Federation. The draft Resolution provides for the prohibition of the distribution of the software and databases through the str eet vending and kiosks. Thus it is supposed to reduce illegal sales of counterfeit products. (Plan of Priority Measures, paragraph 5). A draft Resolution of the Government of the Russian Federation “On the Establishment of Licensing of Import of Polycarbon ates for Manufacturing of Optical Media in The Russian Federation”, worked out by the Ministry of Economic Development and Trade of the Russian Federation, was submitted to the Russian Government for consideration in the late September 2004 (Plan of Priori ty Measures, paragraph 6). In December 2004 the Federal Service for Enforcement of the Mass Media Legislation and Protection of Cultural Heritage (Rosokhrankultura) has prepared the draft Resolution of the Government of the Russian Federation aimed at amen ding and supplementing the Regulations “On Licensing Reproduction (Copying) Activities of Audiovisual Works and Phonograms on Any Kind of Media” No. 421 of July 12, 2003. (Plan of Priority Measures, paragraph 7). Presently the draft Resolution is passing through the approval stage with interested federal bodies of executive authorities and further it will be submitted to the 10

Government of the Russian Federation in accordance with the established order. The above mentioned changes and supplements are direct ed to tighten the licensing requirements for the producers of audio -visual products and to strengthen governmental control over their observation, without complicating license obtainment procedure. In particular, it is supposed to extend the powers of lice nsing authority conducting inspections of licensee and to supplement the information indicated on a media with the data on the territorial borders of the product distribution. On the December 16, 2004 the Ministry of Health and Social Development of the Ru ssian Federation issued Order No. 316 “About the Protection of IP Objects”. As a result, Federal Service for Supervision in the Sphere of Public Health and Social Development is assigned the responsibility connected with the determination of the officials, accountable for the operation with the information, which has true or potential commercial value, and in relation to which the owner of such information has introduced a condition of a commercial secret. The given Order is aimed at accomplishing the stan dards of the international agreements in the field of IP objects protection and at preventing from disclosure and unscrupulous commercial usage within 6 years by the third persons of the data obtained in the course of pre -clinical and clinical studies, and pharmaceuticals presented during state registration. The interested federal bodies of the executive authority of the Russian Federation permanently perform the activities aimed at improving national legislation in the sphere of IP. The Ministry of Educati on and Science of the Russian Federation, with Rospatent participating, is developing a number of normative legal acts about the rights on the results of scientific, research, experimental and engineering works, the creation of registration system of scien tific results and control over their usage, as well as the order of exercising rights on the results of above mentioned works, funded from the federal budget. The Ministry of Culture and Mass Media of The Russian Federation performs the activities aimed at enhancing the legislation and the system of collective control over proprietary rights of the copyright and other right holders. The basic purpose of the given work is strengthening the protection of rights of intellectual property right holders. In the reported period the Rospatent Agency also participated in the planned work on developing legislation in the field of copyright and related rights and commercial secrets. In the fall of 2004 pursuant to the assignment of B.Gryzlov, Chairman of State Duma of the Russian Federation and according to the resolution of the Committee of State Duma on Economic Policies, Business and Tourism, Expert Council on Legal Regulation and IP Protection was established in order to coordinate activities on creating the civili zed market of IP objects. 11

The basic task of the Expert Council is to consolidate the efforts of representatives of Federal Assembly of The Russian Federation, other involved State authorities , representatives of entrepreneurs` unions and public association s in order to improve the legislation in the field of copyright and related rights, and to develop effective measures for IP protection. In November, 2004, initiated by the Ministry of Interior of Russia, the Parliamentary hearings on the topic “Civil -law and Criminal -law Mechanisms of Consumer Market Protection from the Counterfeit and Falsified Products” were held in State Duma of the Russian Federation under the guidance of its Committees on Civil, Criminal, Arbitral and Procedural Legislation and on Hea lth Protection. Law Enforcement Activity Administrative Measures In 2004 as a part of the “Counterfeit -2004” operation local offices of the State Trade Inspectorate of the Ministry of Economic Development and Trade of the Russian Federation ∗ continued the control of activities aimed at the protection of intellectual property rights and suppression of manufacturing and distribution of the counterfeit audiovisual products on consumer market. The State Trade Inspectorate of the Ministry of Economic Developmen t and Trade of the Russian Federation conducted 15,000 inspections, including 10 thousand inspections in which directly participated representatives of the bodies of the Ministry of Interior of the Russian Federation. 2,4 millions units of audio -visual pro ducts were inspected (more then 1,7 millions units in 2003) with 1,0 million units to the amount of 200 million rubles were seized (about 0,7 millions units, to the amount of 60 million rubles in 2003) . Upon the facts of revealed violations the fines to th e total amount of 35 million rubles (2,7 million rubles in 2003 ) were ordered to be paid in pursuance to 17,000 court orders issued in accordance with administrative procedure. About 600 materials were presented to the investigation bodies in order to star t criminal proceedings. As a whole in 2004 during special inspections conducted by the State Trade Inspectorate together with the Russian Ministry of Interior were confiscated the falsified and counterfeit products to the amount of 428.6 million rubles, in cluding food articles – to the amount of 92.5 million rubles, and non -food products - to the amount of 336.1 million rubles. About 30 thousand court orders arose from the results of the inspections suspending the distribution of the counterfeit goods. The cooperation between the Russian Ministry of Interior and the State Trade Inspectorate is provided for in joint Order No. 132/261 of April 19, 2003 of the Ministry of Economic Development and Trade of the Russian Federation and the

∗ Starting from July 2004, the State Trade Inspectorate is a subordinate of the Federal Service for Supervision of Protection of Consumers’ Rights and Human Welfare in the Russian Federation (Rospotrebnadzor) under the aegis of the Ministry of Health Care and Social Development of the Russian Federation. 12

Ministry of Interior of T he Russian Federation regarding the mechanisms of cooperation of the territorial directorates and units of the two Ministries in the sphere of terminating production and distribution of falsified and counterfeit products. (Plan of Priority Measures, paragr aph 12). In the course of the implementation of the Resolution of the Government of the Russian Federation No. 421 of July 12, 2003 “On Making Amendments and Supplements to the Rules of the Sale of Some Goods”, the volume of the counterfeit products on the consumer market was reduced, and on the whole the trade of audiovisual products and phonograms was rationalized. (Plan of Priority Measures, paragraph 14). The Federal Service for Supervision of Protection of Consumers’ Rights and Human Welfare (Rospotreb nadzor) together with the Ministry of Interior of Russia continues to develop measures to counter the distribution of counterfeit medicines, alcoholic beverages and other consumer and manufacture goods. Other concerned agencies take part in these activitie s as well. Apart from the control measures a particular attention is paid to the preventive work aimed at the suppression of violations in the field of intellectual property. Through the existing phone hotlines the Rospotrebnadzor bodies provide informatio n and explanations to the customers on the issues connected with the purchase of audiovisual products (Plan of Priority Measures, paragraph 19). The Federal Antimonopoly Service (FAS), within its competence, also conducts activities aimed at the IPR protec tion in Russia by suppressing unfair competition. In 2004 FAS territorial bodies together with the Ministry of Interior of Russia and the State Trade Inspectorate took part in 611 inspections which resulted in filing 186 suits based (80 in 2003) on the fac ts of violation of Article 10 of the RSFSR Law “On Competition and Restriction of Monopolistic Activity on Commodity Markets” No. 948 -1 of March 23, 1991, and issuing 57 orders to stop violations of the antimonopoly legislation (34 in 2003). Under the guid ance of the Federal Press and Mass Media Agency, the traces laboratory of optical information media (CDs and DVDs) was established. In particular, the classification of a set of reference samples from every replicate installation was accomplished, as well as the testing of equipment for authentication of CDs and DVDs and the updating of respective software (Plan of Priority Measures, paragraph 18). The Ministry of Agriculture of Russia and the Ministry of Healthcare and Social Development of Russia, within their competence, were rendering assistance to law - enforcement agencies in the course of activities aimed at suppressing the production of counterfeit food and flavors products, and medicines.

Border Measures In accordance with the Customs Code of the Rus sian Federation, the Federal Customs 13

Service (FCS of Russia) ∗ performs constant activities aimed at the protection of intellectual property rights during the customs checks of goods moved through the customs frontier of the Russian Federation. (Plan of Pri ority Measures, paragraph 11). In 2004 the FCS of Russia continued to compile the customs register of proprietary articles (hereinafter -customs register). As of January 1, 2005, 404 trademarks were included into the customs register, of which 91 belong to USA companies (Procter&Gamble Company, Gillette Company, Nike Company, Kimberly -Clark Worldwide, Inc., Energo Lux Inc.). Basic nomenclature of goods for which above - mentioned trademarks were registered includes alcohol, cosmetics, confectionery and medicin es. More than 50% of trade marks belong to foreign producers. At present, applications from property right holders in respect of about 200 trademarks have been submitted to the FCS of Russia for consideration. In 2004, the customs authorities have revealed more than 169 cases of movement through the customs frontier of the Russian Federation of goods containing proprietary articles and having the counterfeit signs. This led to filing suits against administrative violations, in respect of illegal use of trad e marks and violations of copyright and related rights. The confiscated counterfeit products have been destroyed. The main products seized by the customs authorities with regard to offences of trademarks (under article 14.10 of the Code on Administrative O ffences) were the alcohol and food products, sport clothes and footwear. In most cases the goods involved in cases dealing with violations of copyright and related rights (under article 7.12 of Part 1 of the Code on Administrative Offences) were videocasse ttes, CDs and DVDs. In order to prevent the manufacturing of counterfeit products, in November 2004 FCS of Russia gathered and submitted to the Ministry of Interior of the Russian Federation the information about the import supplies of raw materials (polyc arbonates) and equipment for optical disks production made by entities to the Russian territory. FCS of Russia prepared and submitted to customs bodies the risks profiles for the goods used as cover (goods, in the guise of which audiovisual products can be transported), and the lists of states known as the basic producers of counterfeit products. Also according to body regulations, adopted in 2004 by FCS of Russia, measures are taken to strengthen supervision over optical media export. With the training pur poses of customs officials in the field of legal protection of intellectual property, FCS of Russia conducted the regional seminars with participation of right holders held in August - November 2004 in St. -Petersburg, Anapa, and Vladivostok. (Plan of Prior ity Measures, paragraph 9). The important activities also included informing of right holders, participants of

∗ The Federal Customs Service is the legal successor of the State Customs Committee in respect of performi ng control and oversight functions in the field of application of customs legislation norms. The adoption of normative legal acts in the field of customs regulations is the responsibility of the Ministry of Economic Development and Trade of the Russian Fed eration. 14 foreign trade activity and other concerned parties about the measures taken by customs authorities regarding the protection of intellectual prope rty rights. In mass media, including official publications of FCS of Russia, the data from the customs register, information about the protection of intellectual property rights by customs bodies of The Russian Federation are regularly published. The info rmation column about the protection of intellectual property rights on the Internet - site of FCS of Russia has been created and permanently renewed. The information presented there includes the list of intellectual property objects, included in the custom s register, rules of entering the customs register, information about revealed cases of detention etc.) (Plan of Priority Measures, paragraph 19). On October 8, 2004 the meeting of Council of the principals of customs services of the state -participants of the Eurasian Economic Association was held, on which the decision was taken to create the unified database on the activities of customs services of the above mentioned states related to the protection of intellectual property rights. The given database wil l contain the information about the legal acts regulating the order of inclusion of IP objects in the customs registers, established measures of responsibilities for violation of the IP legislation, analysis of law enforcement practice of customs bodies, a s well as the information about divisions, accountable for the given activities. The mentioned information is placed on the Internet -portal of FCS of Russia .

Criminal Law Measures In the fourth quarter of 2004 have actively been continued the operations i ncluding special inspections and control measures conducted by the Ministry of Interior of the Russian Federation and bodies supervising Russian consumer market, aimed at preventing the sales of falsified medicines, consumer and industrial goods, audiovisu al products by street vendors and through kiosks, as well as special raids on enterprises - producers of audiovisual products, located on the territory of restricted access facilities (Plan of Priority Measures, paragraph 12). According to preliminary data, in 2004 comprehensive actions that were undertaken jointly with the federal executive authorities led to elimination of illegal activities of 325 business enterprises (500 enterprises – in 2003), including seven CD production shops. Criminal proceedings we re instituted in all cases related to mentioned business enterprises, which are put on a special control in the Ministry of Interior of the Russian Federation and in the General Prosecutor’s Office. 6,500 criminal proceedings (3,500 in 2003) were institute d and counterfeit products and material valuables to the amount of 1.9 billion rubles were seized (920 million rubles in 2003) . 30, 000 persons were brought to administrative liability (20,500 persons in 2003). Under Article 146 of the Criminal Code of the Russian Federation (copyright and related rights infringements) 1917 criminal cases were initiated in 2004 (54.7% increase compared to 2003), 1459 cases were sent into court (103,2% increase), 989 15 persons were brought to a criminal liability (93,2% increa se). Since March 2004, 24 -hour unlimited access has been allowed to the territory of restricted access facilities by officers of Russian Ministry of Interior and the State Trade Inspectorate of the Ministry of Economic Development and Trade of the Russian Federation in order to take control measures and conduct special operations at the enterprises producing optical media (Plan of Priority Measures, paragraph 13). Among the abovementioned actions the following special measures undertaken during the fourth q uarter of 2004 could be noted. On the basis of the facts mentioned below proceedings were instituted, which are now under investigation. In the Moscow region (the town of Pushkino), was stopped the performance of a clandestine factory producing counterfeit digital media in the DVD format and releasing up to 2 million units per month. 25 thousand DVDs were confiscated including those with pornographic content, 3 production lines to the amount of 10.5 million US dollars are eliminated. In Moscow the illegal a ctivity of the group of persons was stopped which had organized a clandestine warehouse from which the counterfeit products were distributed in the entities of the Russian Federation. 1,100 thousand CDs containing software and information databases, were r evealed and confiscated In the town of Zelenograd and town of Korolyov of the Moscow region on the territory of restricted access facilities was eliminated the illegal activity of licensed factories engaged in production and distribution of counterfeit go ods. 100 thousand counterfeit disks were revealed. To detect and suppress the distribution of falsified medicines in 2004 the bodies of the Ministry of Interior inspected 3800 enterprises engaged in manufacturing and distribution of pharmaceuticals and med ical preparations. Upon the facts of production and distribution of falsified medicines 127 criminal cases were initiated, 1200 persons were brought to an administrative liability. The analysis of the situation in the sphere of intellectual property objec ts turnover testifies, that as a result of the measures, taken in 2004, according to statistics, provided by the Ministry of the Interior, counterfeit production has shown a decreasing trend, for audio and video products – on 15 -20%, industrial and food ar ticles - on 10 -15 %. The Ministry of Interior prepared methodical recommendations titled “Protection of the Rights of Identification Means (Trade Marks)”, and together with the General Prosecutor's Office of the Russian Federation developed unified “Tactic s and Methodic of Documentation Provision and Investigation of Criminal Proceedings Concerning Violations of the Copyright and Related Rights”, as well as a scientific methodological manual “Methodology of Investigation into Offences Covered by Article 146 of the Criminal Code of the Russian Federation”. In the fourth quarter of 2004 the interdepartmental conferences were held, as were the seminars on offences in the sphere of intellectual property organized for the professional training of employees of the Ministry of Interior. 16

Judicial Procedures In 2004 the court data were further generalized in relation to the cases on IP rights violation. In order to train judges acquiring necessary skills in considering cases about IPR infringement, a number of traini ng seminars was organized. In the first half -year of 2004 the courts of general jurisdiction heard at amount of 7000 thousand cases about violations of IPR (4838 - in 2003), including 6009 cases in administrative offences (3974 - in 2003), and 761 civil ca ses (in 2003 - 618). In 2004 arbitration courts heard 751 cases related to the violations in the IP sphere in the field of civil law (in 2003 there were 466 cases). 397 claims were sustained (in 2003 – 199). Imposed fines totaled 71,605 millions rubles. Re cently within the Russian Academy of Justice the Laboratory of Theoretical and Practical Problems of Judicial Protection of Intellectual Property has been established. Among its tasks - the development of training courses on intellectual property, as well as teaching and methodical manuals for the judges considering administrative offences, criminal and civil cases in the sphere of intellectual property protection and computer - related crimes. The development of the teaching and methodical manuals will allow the judges to receive the qualified information about practical consideration of the given case category. (Plan of Priority Measures, paragraph 10).

Public Awareness, Media Campaigns, and Professional Training The Government of the Russian Federation att aches great importance to the development in Russian society of negative attitude to piracy. A considerable role in this process is assigned to the active use of the mass media potential. A great attention is paid to the explanatory work with population, c rime prevention measures, as well as to the increase of legal consciousness of the citizens. In October -December of 2004 the Russian mass media continued to extensively cover activities relating to the destruction of lots of pirate products seized by custo ms bodies, as well as special operations conducted by the officers of the Ministry of Interior at plants producing optical media, as well as other issues connected with the intellectual property rights protection. (Plan of Priority Measures, paragraph 20). The Program on Educating Population on the Intellectual Property Protection and Combating Piracy was developed by Rospechat Agency in late 2004. It is mainly aimed at provoking a strong public resonance in the society. The Program provides for conducting a massive anti -piracy advertising campaign in electronic media and periodical press, by means of outdoor advertising, as well as PR -campaign. Currently the preliminary phase of the Program has been completed. The start -up of PR - campaign is scheduled for th e beginning of 2005 on TV and in radio broadcasts. (Plan of Priority Measures, paragraph 20). In the fall of 2004 the Advisory Council on Intellectual Property Matters was established with participation of right holders on the basis of the Federal Service for 17

Intellectual Property, Patents and Trademarks of Russia together with the Ministry of Culture of Russia. Within the frames of the Councils on a permanent basis are discussed the key problems related to intellectual property protection. The Advisory Cou ncil is a public organization. The chairman of the Council is B.Simonov, Head of Rospatent Agency. According to its Statute, its basic activities will include the search of efficient ways of IP rights protection, the development of recommendations on impro ving the IP legislation, and the contribution to the creation of innovation -favorable climate. (Plan of Priority Measures, paragraph 8). The first meeting of the Council took place on October 15, 2004. The meeting approved the Statute of Advisory Council e stablished on the basis of Rospatent Agency, as well as the Declaration of the Purposes of Advisory Council on IP Matters. The regular meeting of the Council took place on December 22, 2004 and was devoted to the question regarding the rights of Russian F ederation on trade marks. The meeting of the Council which took place on December 29, 2004 considered the issue “On the Development of Indicators System Reflecting the Efficiency of Functioning of the Mechanism of Counteracting Manufacture and Distribution of Counterfeit Products”. The Rospatent agency Internet -site provides an open free -of- charge access to database of all Russian inventions, trade marks, products` places of origin, well -known trade marks in Russia, useful models, industrial samples with th e information about their legal status. The public authorities cooperate on a constant basis with Russian and foreign right holders associations, including IFPI, RAPO, Disk - Alliance, Rus -Brand etc. In the fourth quarter scientific and practical conferen ces devoted to IP rights protection were held. In particular, in November 11 -12, 2004 in Moscow was held the conference “Sound Around”, organized by Rospatent Agency together with TACIS. On the conference was considered the experience of the European Union states, related to combating counterfeit products and piracy, as well as the problems of legislation harmonization in the sphere of intellectual property. In 2004 Rospatent Agency and Constant Representation of the U.S. Department of Justice at the Embass y of the United States in Moscow organized the series of conferences on the topic “IP Protection. The Legislation and Its Application in Combating Piracy”, for employees of customs services, the Ministry of Interior of Russia, courts and prosecutor's offic es of the Urals, Southern, Far East and Central federal districts. The conferences were held accordingly in April in Ekaterinburg, in May - in Sochi, in September – in Khabarovsk and in November - in Moscow. In 2004 Rospatent also developed and submitted t o the Russian Ministry of Education and Science a specialized training program for judges, employees of the bodies of interior and Prosecutor’s Office. The training program takes into consideration the features of their work. A main attention thereof is pa id to the particularities of law 18

enforcement in IP sphere. The personnel training and professional development of customs and law -enforcement bodies, trade inspection, engaged in the rights protection of intellectual property right holders was further con tinued. The training programs are sponsored by UN Development Program, TACIS, the U.S. Embassy in The Russian Federation, and also American Chamber of Commerce in Russia (Plan of Priority Measures, paragraph 9). Issues of Protection of Intellectual Propert y Rights Discussed in the Course of Bilateral and Multilateral Negotiations . In June 2004 the document (non -paper) on TRIPS regime in Russia, considered on the 24 th meeting of the Working Party (WP) in July, was submitted to the WTO Secretariat. The TRIPS problems were discussed within the framework of the consideration of the draft report of the Working Party conducted in Geneva on December 16 -18, 2004, at the 25th WP meeting on the accession of Russia to WTO. The problems of intellectual property have be en systematically addressed during bilateral negotiations of the Russian party with foreign representatives and international organizations, including WIPO. The issues relating to the cooperation between the parties in different IP fields, as well as to th e cooperation aimed at resolving specific problems in the bilateral relations, are considered during these meetings.

Chapter 9 - Government Procurement ABAC 18 . ABAC urges the Russian Federation to eliminate discriminatory tendering practices that favor d omestic suppliers vis -à-vis foreign suppliers . A.: Russia will take note of it.

Chapter 11 - Rules of Origin Australia 19. Does Russia have rules of origin that apply to most -favored nation trade? If so, are these consistent with the principles outlined in the WTO Agreements? If Russia does have rules of origin of this kind, Australia would be interested in a brief outline of them . A.: The Russian government has adopted a series of new legislations and modified old ones, in order to bring tariff rates do wn and simplify the tariff structure . These legislati ve activities have been motivated, inter alia, to accommodate the interim results of the on -going negotiations for the accession to the WTO, to make the collection of customs duties easier and more effic ient , and to reduce the possibilities of fraud by customs officials . The most recent such move was made in 200 1 and 2004, when the most recent version of Customs Tariff of the Russian Federation was introduced and the new Customs Code came into force, resp ectively. As a result, a four -tier tariff system has been established , under which almost all products were grouped under four broader headings (raw materials, semi -finished products, finished 19

products, foodstuffs), and levied with the respective tariff ra tes of 5%, 10%, 15%, 20%. It is to be noted that this was a major step by Russia to accommodate the requests of WTO member countries within the framework of accession negotiations. Russia has been applying a unique system of differentiated tariff rates vis -à-vis trading partners , according to their level of integration with Russia and their level of economic development . Beginning with the partner countries of free trade agreements – CIS and Eurasian Economic Community – who se products largely enjoy tariff -free access to Russian markets , there are four other groups of countries: MFN recipients, non -MFN partners, recipients of GSP and less -developed countries . With the applied tariff rates being mostly MFN tariff rates, non -MFN partners ’ products are subject to 200% of MFN rates, and GSP recipients 75% of MFN rates , and less -developed countries enjoy the same tariff regime that is applied to CIS countries – namely a tariff -free access to Russian markets .1 Unlike the WTO member countries, the Russian tariff reg ime does not contain the concept of tariff binding , this problem is expected to disappear soon after Russia’s accession to the WTO.

Chapter 13 - Business Mobility Korea 20. According to Russia's IAP, a procedure to amend and complement the “Federal Law o n the procedure of departure from and entry into the Russian Federation" is in progress. Please give us the details of this amendment. A.: Please refer to the Russia’s Ministry of Foreign Affairs Internet -site: www.mid.ru (the Consular Services page). Full information and the necessary abstracts from the up -dated Russia’s legislation language on the business mobility will be provided later on this year in the scope Russia IAP 2005.

1 Currently 1 32 countries (16 APEC economies among them) are classified as MFN countries, and 107 countries (15 APEC economies among them) as GSP recipients. The membership of APEC economies to these two groups is partly overlapping. As granting m ore favorable treatment in case of dual membership of trading partners is a practiced principle of the Russian government, it can be said that 15 APEC economies (except Australia, Canada, Japan, New Zealand, and the United States) are classified as GSP rec ipients, and enjoy 75% of MFN tariff rates when exporting to Russia. No APEC economies were found among the 48 countries classified as less -developed countries. See for the full list of Russia’s trading partners, Russian government (See: 1) Russia’s Govern ment Decree No. 414 as of 25 May, 200 (rev. No. 622 as of 15 July, 2002) “On the Lists of Goods Originated from Developing and Less Developed Countries and of Countries which use GSP for Entry at the Russia’s Customs Territory” and also Russia’s State Cust oms Committee Order No. 1539 as of 26 December, 2003 (amended by RSCC Order No. 656 as of 9 June, 2004) “On GPS Implementation”). 20

ABAC 21. ABAC notes that the Russian Federation has been trying to conclude visa exemption agreements with selected APEC economies. Given the cumbersome nature of negotiating bilateral visa exemption agreements, ABAC encourages the Russian Federation to participate in the APEC Business Travel Card (ABTC) Scheme to facilitate business travel in the region. A.: Russia will take note of it.