Draft law on counter sanctions introduced into Russian parliament

Following the latest round of US sanctions announced on 6 April 2018 (as discussed in our earlier briefing), a draft law “On measures for influencing (countering) unfriendly actions by the USA and (or) other foreign states" was introduced to the Russian Duma for consideration on 13 April 2018.

The draft law foreshadows the following /potential measures:

• Prohibitions/restrictions on the import into Russia of agricultural products, raw materials and food products (as determined by the Russian government) originating from the US and/or other “foreign states”¹
• Prohibitions/restrictions on the import into Russia of alcohol and tobacco products originating from the US and/or other foreign states
• Visa bans for citizens of the US and/or other foreign states to be listed by the Ministry of Foreign Affairs of Russia
• Termination/suspension of international cooperation between Russia and Russian legal entities and US and/or other foreign states (including entities that are more than 25 per cent directly or indirectly owned by entities under the jurisdiction of the US and/or other foreign states, referred to below as relevant foreign owned entities) relating to the nuclear, aviation and rocket propulsion industries
• Prohibitions/restrictions on the provision of technological equipment and software manufactured in the USA and/or other foreign states to meet state and municipal procurement needs and procurement needs of certain categories of legal entities (yet to be defined by the Russian government)
• Prohibitions/restrictions on the provision of consulting, audit and legal services by entities under the jurisdiction of the US and/or other foreign states (including relevant foreign owned entities) for state and municipal needs, as well as with respect to certain types of entities (yet to be defined by the Russian government)
• Prohibitions/restrictions on participation in privatisations for US persons and persons of other foreign states, including relevant foreign owned entities
• Prohibitions/restrictions on the provision of services related to the sale of public property owned by Russia by entities under the jurisdiction of the US and/or other foreign states (including relevant foreign owned entities)
• Loss of protection under Russian law of IP rights to trademarks owned by US and/or other foreign countries (including relevant foreign owned entities). The list of goods covered by this measure is to be defined by the Russian government
• Increase of fees for air navigation services for aircrafts of the US and/or other foreign states for the transportation of goods while using Russian airspace
• Prohibitions/restrictions on the export from the Russian Federation of goods and equipment made from rare earth metals by US persons and /or persons of other foreign states and/or relevant foreign owned entities
• Prohibitions/restrictions on the employment in Russia of citizens of the US and/or other foreign states, including highly qualified specialists
• Prohibitions/restrictions on the import into Russia of pharmaceutical and medical products originating from the US and/or other foreign states, except for pharmaceutical and medical products that do not have analogues manufactured in Russia and/or other countries that are not “foreign states” (as defined in the draft law). The list of products covered by this measure is to be defined by the Russian government
• Prohibitions/restrictions on the import of any other goods originating from the US and/or other foreign countries. The list of products covered by this measure is to be defined by the Russian government.

The measures envisaged by the draft law can only be implemented by the Russian government at the initiative of the Russian President, and may be applied gradually, simultaneously or not at all.

First reading of the bill in the State Duma is scheduled for 15 May 2018. Passing of the bill will require three hearings in the State Duma (however it is possible for these readings to be carried out simultaneously). Once approved by the State Duma, the bill needs to be approved by the Federation Council, signed into law by the President and published before becoming law. Sometimes (although very rarely in practice) the bill may be declined by the President.

Although the potential measures envisaged by the draft law are extensive and far-reaching, it remains to be seen to what extent, if any, its provisions will be implemented. As outlined above, the draft law provides a framework for further actions, but it will be up to the Russian government and the Russian President to decide on the extent of measures to be implemented under the proposed law if it is approved in its current form.

We will continue to monitor and report on developments.