REFS:  A)  MOSCOW 34712    B)  MOSCOW 34626
       C)  MOSCOW 17045
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SUMMARY
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1.  (U) ON OCTOBER 13 PRESIDENT YELTSIN QUIETLY
SIGNED THE LAW "ON STATE REGULATION OF FOREIGN
TRADE ACTIVITY," THE FIRST POST-SOVIET,
COMPREHENSIVE LEGISLATION THAT DEFINES THE
STATE'S ROLE IN TRADE.  WRITTEN WITH AN EYE TO
BEING WTO CONSISTENT, THE LAW PRIMARILY PROVIDES
THE LEGAL BASIS FOR EXISTING PRACTICES.  IT ALSO
PROVIDES THE LEGAL FRAMEWORK FOR THE RULES AND
PROCEDURES GOVERNING RUSSIA'S NEW MARKET
PROTECTION MEASURES THAT THE GOR IS TO INTRODUCE
SHORTLY.  WE SEE THE LAW AS A POSITIVE
DEVELOPMENT IN THAT IT MAY HELP BIND RUSSIA TO
SOME OF THE MORE LIBERAL ASPECTS OF ITS TRADE
REGIME.  HOWEVER, PROBLEMS MAY ARISE FROM THE
FORESEEN DEFENSIVE MEASURES STEMMING FROM THE LAW
OR FROM THE LAW'S DIVISION OF RESPONSIBILITIES
OVER TRADE REGULATION BETWEEN THE FEDERAL
GOVERNMENT AND SUBNATIONAL AUTHORITIES.  END
SUMMARY.
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THE LAW IN BRIEF
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2.  (U) MUCH OF THE NEW LAW IS DEDICATED TO
PROVIDING A LEGISLATIVE BASIS FOR THE LIBERALIZED
FOREIGN TRADE REGIME THAT HAS EVOLVED DURING THE
REFORM PERIOD FROM DOZENS OF GOVERNMENT AND
PRESIDENTIAL DECREES.  AUTHORITY OVER REGULATORY
MEASURES IS SPLIT BETWEEN AND IN SOME CASES
SHARED BY THE FEDERAL AND SUBNATIONAL LEVELS OF
GOVERNMENT.  FEDERAL AUTHORITY IS FURTHER DIVIDED
BETWEEN THE PRESIDENCY AND THE GOVERMMENT.  OTHER
SECTIONS, MOST IMPORTANTLY, ARTICLE 15
(QUANTITATIVE RESTRICTIONS) AND ARTICLE 18
(PROTECTIVE MEASURES IN RELATION TO IMPORT OF
GOODS), PROVIDE THE GOVERNMENT THE GUIDELINES IT
NEEDS TO DRAFT AND IMPLEMENT DOMESTIC MARKET
PROTECTING MEASURES, SUCH AS RUSSIA'S SOON-TO-
APPEAR "INTERIM" ANTI-DUMPING, SAFEGUARD
MEASURES, AND COUNTERVAILING DUTY REGIME.  REF C
PROVIDES AN EXHAUSTIVE REVIEW OF THE POINTS
COVERED IN THE LAW, THE ONLY SIGNIFICANT CHANGE
TO WHICH CONCERNS THE REMOVAL FROM THE LAW THE
PROVISION THAT WOULD HAVE CURTAILED THE
GOVERNMENT'S EXPORT CONTRACT REGISTRATION SYSTEM.
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YELTSIN COMPELLED TO SIGN THE LAW,
BUT RESERVATIONS SEEM ADDRESSED
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3.  (U) YELTSIN SIGNED THE LAW "ON STATE
REGULATION OF FOREIGN TRADE ACTIVITY" ON OCTOBER
13, HAVING BEEN CONSTITUTIONALLY REQUIRED TO DO
SO ONCE THE PARLIAMENT OVERRODE THE PRESIDENT'S
VETO FOR THE SECOND TIME.  LOCAL PRESS ATTRIBUTED
YELTSIN'S SECOND VETO IN AUGUST TO ADVICE HE GOT
FROM THE PRESIDENTIAL ADMINISTRATION THAT THE LAW
WOULD UNDERCUT PRESIDENTIAL AUTHORITY OVER ARMS
EXPORTS.  THE SECOND VETO SURPRISED MOST
OBSERVERS OF THE PROCESS, INCLUDING OFFICIALS OF
THE MINISTRY OF FOREIGN ECONOMIC RELATIONS
(MINFER).  THEY THOUGHT THE PROBLEMS IN THIS AREA
AND THOSE CONCERNING MINFER'S EXPORT CONTRACT
REGISTRATION SYSTEM THAT PROMPTED THE FIRST VETO
IN JUNE HAD BEEN ADDRESSED DURING THE
RECONCILIATION PROCESS FOLLOWING THE FIRST VETO.

4.  (U) SINCE THE SECOND VETO, HOWEVER, NEITHER
THE PRESIDENT NOR HIS ADMINISTRATION HAS
COMMENTED ON THE POSSIBLE EROSION OF PRESIDENTIAL
AUTHORITY OVER ARMS EXPORTS, AND PERHAPS THEIR
CONCERNS HAVE BEEN ASSUAGED.  MINFER, WHICH UNDER
THE LAW IS GRANTED SOLE AUTHORITY (CONSISTENT
WITH WTO NORMS) TO ISSUE EXPORT LICENSES,
INCLUDING FOR ARMS AND DUAL-USE GOODS AND
SERVICES, WILL BOW TO THE PRESIDENT'S AUTHORITY
TO SET POLICY IN THIS AREA, ACCORDING TO YEVGENIY
YEGOROV, A SENIOR MINFER LEGAL EXPERT.  MOREOVER,
INCLUDED IN THE FINAL VERSION OF
 THE LAW IS A
PROVISION EXPLICITLY STATING THAT THE REGULATION
OF COOPERATION IN THE MILITARY-TECHNICAL FIELD IS
A PRESIDENTIAL PEROGATIVE.

5.  (U) IN CONTRAST TO THE JUNE VERSION OF THE
ACT PASSED BY PARLIAMENT, THE FINAL LAW ALSO
PROVIDES THAT PARTICIPATION IN INTERNATIONAL
ECONOMIC SANCTIONS IS DECIDED BY PRESIDENTIAL
DECREE INSTEAD OF ON THE BASIS OF LEGISLATION.
(COMMENT:  SUCH A CONCESSION BY THE PARLIAMENT,
APPARENTLY WORKED OUT DURING THE RECONCILIATION
PROCESS LAST SUMMER, IS SURPRISING CONSIDERING
THE LEVEL OF PARLIAMENTARY COMPLAINTS ABOUT
RUSSIA'S ECONOMIC LOSSES STEMMING FROM SANCTIONS
AGAINST YUGOSLAVIA AND IRAQ.  END COMMENT.)
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NEW REGULATIONS COMING DOWN THE PIKE
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6.  (U) EVEN BEFORE THE PRESIDENT'S SIGNATURE WAS
SET TO PAPER, THE GOVERNMENT HAD TURNED TO THE
JOB OF DRAFTING THE HOST OF IMPLEMENTING
REGULATIONS THAT STEM FROM THE LAW AND WILL
BETTER DEFINE THE GOR'S NEW REGULATORY FUNCTIONS.
TWO MINFER OFFICIALS TOLD ECONOFFS IN LATE
OCTOBER THAT INTERMINISTERIAL DRAFTERS WERE
PUTTING THE FINAL TOUCHES ON AN "INTERIM" PACKAGE
OF REGULATIONS TO DEFINE RUSSIA'S ANTI-DUMPING,
SAFEGUARD MEASURES, AND COUNTERVAILING DUTY
REGIME.  THE REGULATIONS ARE TO BE FORWARDED TO
PRIME MINISTER CHERNOMYRDIN WHO IS EXPECTED TO
BRING THEM INTO EFFECT SOON BY GOVERNMENT DECREE.
THIS PACKAGE OF REGULATIONS WAS DESCRIBED BY ONE
OF THE MINFER OFFICIALS AS BEING INTERIM IN
NATURE AND IN SOME WAYS NOT CONFORMING TO WTO
NORMS (REF B); HE ADDED THAT A BILL ESTABLISHING
THE WTO-CONSISTENT, FINAL REGIME IN DEFENSIVE
MEASURES WOULD BE SUBMITTED TO THE PARLIAMENT
LATER.

7. (U) YEGOROV ALSO TOLD US THAT MINFER'S TREATY
AND LEGAL DIRECTORATE WAS ITSELF DRAFTING TWO
SETS OF REGULATIONS STEMMING FROM THE NEW LAW.
THE FIRST WOULD REDEFINE THE ROLE OF THE MINISTRY
OF FOREIGN ECONOMIC RELATIONS (REF A) WHILE THE
SECOND WOULD LAY OUT HOW RUSSIA'S TRADE
REPRESENTATIVE ORGANS ABROAD WOULD BE GOVERNED.
YEGOROV SAID THAT OTHER REGULATIONS WILL FOLLOW,
BUT THAT THE GOR HAS YET TO DETERMINE ITS
PRIORITIES AND THUS THE ORDER IN WHICH IT WILL
DRAFT REGULATIONS BEYOND THOSE MENTIONED ABOVE.
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DOES LAW MAKE ROOM FOR SUBJECTS OF
THE FEDERATION TO CREATE MISCHIEF?
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8.   THE PROVISION WAS DELETED THAT WOULD HAVE GRANTED THE
FEDERAL GOVERNMENT VETO AUTHORITY OVER DECISIONS TAKEN
BY THE SUBJECTS OF THE FEDERATION THAT ARE UNDER THE
JOINT CONTROL OF THE FEDERATION AND THE SUBJECTS.
THIS MAY BE A FAIRLY BENIGN CHANGE, HOWEVER,
CONSIDERING THE LIMITED AREAS UWDER JOINT
CONTROL.

9.   A PROVISION WAS INSERTED
INTO ARTICLE 8 (POWERS OF THE SUBJECTS OF THE
FEDERATION) RECOGNIZING THE AUTHORITY OF THE
SUBJECTS OF THE FEDERATION TO "BRING ABOUT THE
COORDINATION AND CONTROL OF RUSSIAN AND
INTERNATIONAL INDIVIDUALS" ON THEIR TERRITORIES
(IMPLYING NATURAL AND JURIDICAL PERSONS). .