One of the types of legal services provided by our company is full support of a foreign economic contract; in particular, supply agreement.
You may need our services if, for example, you want to purchase some merchandise in Russia, but its manufacturer does not trade with foreign customers and does not export.
In this situation, we act as an intermediary between you and the manufacturer, buying the goods and delivering them to their destination.
The whole delivery process has several stages.
STAGE 1. INVESTIGATING WHETHER THE DELIVERY IS POSSIBLE
Before entering into a foreign economic contract, it is necessary to assess the cost of the goods themselves, the cost and route of transportation, as well as customs requirements for such goods in Russia and in the state of destination.
Everything is quite clear with the cost of the desired product (as a rule, it does not differ from that for Russian customers), but as for the transportation cost, there are some nuances with it.
Depending on the place of destination, merchandise can be delivered by land, air or sea. The fastest and most expensive way is by air, the cheapest and longest one is by sea. Since transportation rates constantly change (even within the same route) due to fluctuations in the dollar exchange rate, sanctions, closure of state borders, natural phenomena, etc., the cost is determined individually by our transport company each time upon request.
Having estimated the transportation cost, we determine the requirements to pass the Russian customs.
Until 2022, these requirements were much more exporter-friendly. However, Decree of the Government of the Russian Federation of March 9, 2022 N 311 On Measures to Implement the Decree of the President of the Russian Federation of March 8, 2022 N 100 introduced a ban on the export of some goods not of Russian origin in Russia until December 31, 2022 inclusive. Moreover, their list is significant.
Thus, only goods of Russian origin can be exported from the country, which in turn must be confirmed by the СТ-1 (ST-1) certificate.
The Chambers of Commerce and Industry of Russian regions are responsible for issuingsuch certificates. At the same time, in order to obtain such a certificate, you must provide documents confirming that the item was made in Russia, as well as information about the manufacturer.
Such documents and information include:
● Documents about the manufacturer (Entity Incorporation Certificate);
● Information letter on the origin of raw materials, indicating the share of the imported materials cost in the price of finished products (the foreign components cost relative to the final cost of a goods unit cannot exceed 50%);
● Documents on the origin of the raw materials that are parts of the finished product (Contracts of Sale, Universal Transfer Document, Invoices, etc.);
● Production Process Description;
● Production Process Equipment Documents;
● Production Location Documents (on ownership, lease of premises);
● Documents on the number of employees.
If you have the above documents, then the merchandise can go through the Russian customs.
Next, we need to define the requirements to have the goods cleared by customs in the state of destination. Different states may require different confirmation certificates, which may be required even before crossing the border. Therefore, this issue is to be studied by both the seller and the buyer on their own.
One also needs to pay attention to the requirements for packaging. For example, if the cargo is going to be transported in wooden boxes (or the cargo itself consists of wood), it must undergo a fumigation procedure.
Fumigation, derived from the Latin word fumigare, “to smoke”, is a treatment with special poisonous vapors that destroy harmful insects and microorganisms. At the end, a certificate is issued, and a special sign confirming the processing is put on the wooden container.
If all the above conditions are met, you can move to the next step.
STAGE 2. ENTERING INTO A GOODS SUPPLY AGREEMENT
After the buyer has decided which product they would like to purchase, and after negotiations with the manufacturer, we (the seller) draw up and send an electronic contract for the supply of the selected product. This agreement defines the terms, conditions, and procedure for the delivery of the goods and fully regulates the relationship between the seller and the buyer. The contract is based on DAP (Delivered at Place) Incoterms and is considered concluded from the time of its signing, even if the parties exchanged its scanned copies. Also, the contract indicates the total cost of the entire delivery, including transportation and any other costs that may arise during its performance.
STAGE 3. PAYING, PASSING CURRENCY CONTROL
After the contract is signed, we send (also electronically) a payment invoice.
The buyer applies with this invoice and contract to the bank where they have an account opened to transfer the fee and pass the currency control procedure in accordance with the law. They will have to do this on their own.
After the fee is received, we proceed to the next stage.
STAGE 4. PURCHASE OF THE CHOSEN GOODS
At this stage, the exporter purchases the required product from the Russian manufacturer and makes settlements with it.
After the purchase, the goods are either kept by the seller until they are exported, or transported to a warehouse.
STAGE 5. OBTAINING THE DOCUMENTS REQUIRED FOR CUSTOMS CLEARANCE
At this stage, the goods are packed and a packing list is prepared; if necessary, they are fumigated resulted in issuing the correspondent certificate.
One also must apply to the Federal Service for Technical and Export Control (FSTEK) of Russia for an Identification Opinion. This opinion allows you to establish a special customs code for the classification of goods (HS code), as well as to determine whether the goods are controlled or prohibited for export.
After that, the exporter issues an invoice indicating the HS code and the full cost of the contract.
Then you can apply for a ST-1 certificate at the Chamber of Commerce and Industry of the region. What documents will need to be provided was described in step 1.
STAGE 6. ENTERING INTO A CONTRACT OF CARRIAGE WITH A TRANSPORT COMPANY AND CARGO SHIPMENT
This is the final part of the FEA agreement performance and includes making a contract of carriage with a transport company, paying the transportation cost, as well as issuing a power of attorney to persons receiving the goods and shipping them by the mode of transport chosen by the buyer.
At this stage, an agreement is also made with a customs broker and a power of attorney is issued to a customs broker to file a customs declaration and pass the Russian border.
The general list of documents that is transferred directly to the carrier or sent to the port / airport to the transport company’s representative is as follows:
☑ Foreign trade contract;
☑ Packing list;
☑ Certificate ST-1 (original required);
☑ Fumigation Certificate (original required);
☑ Power of attorney of the carrier and / or driver’s representative (original required);
☑ Power of attorney of the customs broker (original required).
One can provide copies of all these documents (send electronically), except for those which original is required.
It should be noted that airlines or sea carriers may demand to provide additional papers, for example, letters of guarantee by which the shipper confirms that they are not transporting goods prohibited by foreign states’ sanctions (for example, the United States) and assumes full responsibility in case of violation of their obligation.
After all the documents have been transferred, the cargo is checked at customs and sent to the destination, where, upon receipt, a customs clearance procedure will take place under the guidance of the buyer.
Need an intermediary to purchare something in Russia? Drop us a mail or call us:
Tel: +7 909 961-19-09
Visit us: Moscow, Zubovskiy bulvar, building 4/1, office 308