Challenges to Expanding a Non-Profit Into Russia


After more than 18 years of negotiations, Russia joined the World Trade Organization (“WTO”) in August 2012. It is the largest economy to join the WTO since China did so in 2001. Although the exact economic impact of its WTO membership is uncertain, its admission is significant. As Russia is now a member of the WTO, U.S. Congress faces pressure to repeal the key legislation known as the Jackson-Vanik Amendment. Inter alia, the amendment requires American exporters to pay higher tariffs for shipping to Russia. Repealing it is estimated to double the annual American exports to Russia to $19 billion in five years. Nationally, trade with Russia is exploding -- U.S. exports with Russia increased 50 percent from 2005 to 2010, and 2011 data shows that U.S. exports are up more than 40 percent over 2010 levels. In Ohio alone, Ohio businesses did $200 million in trade with Russia in 2011. Despite this outstanding business investment, foreign non-profits that seek to expand into Russia, still face marked challenges.

This article provides a fresh look at Non-Profit expansion in to the Russian Federation. This article differs from existing publications that review the challenges foreign businesses in Russia face by arguing the need to revamp the Russian non-profit (NGO) laws. In contrast, the following article analyzes the barriers and provides a basic framework to navigate these laws in light of the recently enacted laws. Non-profits, businesses, and legal practitioners interested in expanding into Russia will find this article informative as it identifies the risks and opportunities of doing so.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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