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DECISION OF ECONOMIC COURT OF COMMONWEALTH OF INDEPENDENT STATES

of May 20, 2008 No. 01-1/6-07

Economic Court of the Commonwealth of Independent States in structure:

the chairman - the Chairman of Economic Court of the CIS Abdulloyev F.,

judges of Economic Court of the CIS: Zholdybayeva S. Zh., Kerimbayeva A. Sh., Miroshnik V. P., Molchanovy T.N.,

in case of the court clerk Medvedeva T. E.,

with participation of the representative of Commonwealths of Independent States Executive committee Vezhnovts V. N., the General adviser of Economic Court of the CIS Yukevich V. A., Petrovsky K.G. specialist,

having considered case on request of Commonwealths of Independent States Executive committee on interpretation in proceeding in open court, ESTABLISHED:

The executive committee of the Commonwealth of Independent States appealed to Economic Court of the Commonwealth of Independent States with request about interpretation of item 4 of the Rules of determination of the country of goods' origin approved by the Decision of Council of Heads of Government of the Commonwealth of Independent States on Rules of determination of the country of goods' origin of November 30, 2000 (further - Rules of November 30, 2000), and the List of conditions, production and technological operations in case of which accomplishment the goods are considered the events from that country in which they took place (Appendix 1 to Rules of determination of the country of goods' origin).

In request the Executive committee of the CIS asks to explain whether use of the advanced engineering procedures other than the processes specified in the third column of the List of conditions production and technological transactions in case of which accomplishment the goods are considered the events from that country in which they took place (further - the List) can, to be considered as accomplishment of the necessary conditions, production and technological operations sufficient in order that the goods were considered as the events from that country where these transactions took place, in subitem sense) parts two of item 4 of Rules of November 30, 2000.

Having heard the judge-speaker Molchanova T. N., having discussed the conclusions of the General adviser of Economic Court of the CIS Yukevich V. A., Petrovsky K.G. specialist and having researched the materials which are available in case, the Economic Court of the CIS came to the following conclusions.

The economic Court of the CIS performs interpretation, being guided by Articles 31, 32 Vienna conventions on the right of international treaties of May 23, 1969.

In the Commonwealth of Independent States the legal base in case of determination of the country of goods' origin constitute the Decision of Council of Heads of Government of the Commonwealth of Independent States on Rules of determination of the country of goods' origin of September 24, 1993; The Agreement on creation of the free trade area of April 15, 1994 with the amendments made by the Protocol of April 2, 1999 on modification and amendments to the Agreement on creation of the free trade area of April 15, 1994 (further - the Agreement of April 15, 1994); The Decision of Council of Heads of Government of the Commonwealth of Independent States on Rules of determination of the country of goods' origin of November 30, 2000.

The agreement of April 15, 1994 became effective for the Azerbaijan Republic, the Republic of Armenia, the Republic of Belarus, Georgia, the Republic of Kazakhstan, the Kyrgyz Republic, the Republic of Moldova, the Republic of Tajikistan, the Republic of Uzbekistan, Ukraine. The Russian Federation signed the Agreement of April 15, 1994 and applies temporarily, before completion of interstate procedures. The Agreement of April 15, 1994 is applied by Turkmenistan temporarily, before transfer to depositary of data on completion of interstate procedures, and is effective in edition of April 15, 1994 as it does not sign the Protocol of April 2, 1999 on modification and amendments in the Agreement of April 15, 1994.

Rules of November 30, 2000 became effective for the Azerbaijan Republic, the Republic of Armenia, the Republic of Belarus, Georgia, the Republic of Kazakhstan, the Kyrgyz Republic, the Republic of Moldova, the Russian Federation, the Republic of Tajikistan, Ukraine. The Republic of Uzbekistan and Turkmenistan did not sign the Decision of Council of Heads of Government of the Commonwealth of Independent States on Rules of November 30, 2000. In the relations between these states, and also between the them and the states which signed the Decision of Council of Heads of Government of the Commonwealth of Independent States on Rules of determination of the country of goods' origin of November 30, 2000 the Rules of determination of the country of goods' origin approved by the Decision of Council of Heads of Government of the Commonwealth of Independent States of September 24, 1993 are applied (further - Rules of September 24, 1993).

Rules of November 30, 2000 are applied to goods which come from the State Parties of the Agreement of April 15, 1994 and are in business volume between these states.

The State Party of the Agreement of April 15, 1994 where the goods are completely made or subjected to sufficient processing / conversion is considered the country of goods' origin (Item 1 Governed of November 30, 2000). In case of participation in production of goods of the third countries, in addition to the State Parties of the Agreement of April 15, 1994, determination of the country of goods' origin is performed based on criterion of sufficient processing / conversion. The concept "criterion of sufficient processing / conversion" according to Rules of November 30, 2000 means that the goods are considered the events from the country where it was subjected to the last essential processing / conversion sufficient for giving to goods of its characteristic properties. This provision has general character and is specified by special regulation of item 4 of Rules of November 30, 2000 according to which "the criterion of sufficient processing / conversion can be expressed:

a) the change of goods item according to the Commodity Nomenclature of Foreign Economic Activity at the level of at least one of the first 4 signs which resulted from processing/conversion;

b) accomplishment of the necessary conditions, production and technological operations sufficient in order that the goods were considered as the events from that country where these transactions took place;

c) the rule of ad valorem share when the cost of the used materials or value added reaches the fixed percentage share in the price of end products".

Change of goods item according to the Commodity Nomenclature of Foreign Economic Activity at the level of at least one of the first 4 signs as the main criterion of sufficient processing / conversion is not applied to the goods included in the List. For such goods the criterion of sufficient processing / conversion is determined based on this List.

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