...for Finland
Wednesday, June 10th 2009:
Vladimir Putin just confirmed not to rise export duties on roundwood for Finland as long as the economic downturn crises lasts.
Both Governments concluded a bilateral timber trade commitment reports Business Support Bureau "Runa"
Monday, 10th of August 2009:
President Dmitry Medvedev called for “intensified talks” with Finland
President Dmitry Medvedev called for “intensified talks” with Finland and China on exports of raw timber, saying that Russia needs to develop its domestic wood-products industry.
“The situation is outrageous and has been for a long time,” Medvedev said during a meeting with political party leaders in Sochi on Monday. “We continue to ship raw timber for export and processing isn’t being developed. To a great extent this is the result of the position of our neighbors.”
Medvedev was due to meet with his Finnish counterpart Tarja Halonen in Sochi on Tuesday.
Reports Business Support Bureau "Runa"
Friday, 4th of September 2009:
Russian authorities has postponed the introduction of export tariffs of round timber to 2011
Russia originally intended to introduce the major tariff increase from 2009, but decided to postpone the move following massive protests from neighboring countries, and first of all Finland.
Now, Russian authorities say the tariffs will be introduced from 2011, newspaper Helsingin Sanomat reports with reference to Russian sources.
Russia wants to increase tariffs in order to stimulate domestic wood processing. Finland however fears the higher tariffs, which will make raw material access of the powerful Finnish wood processing industry far harder.
At the same time, international demands on wood products has over the last year dropped sharply following the financial crisis. That decreases also demands for timber and subsequently also the Finnish need for Russian round timber.
Russia is again postponing the planned increase of its controversial wood export tariffs. This time the delay is to extend until 2011. The first to report on the postponement was the financial newspaper Vedomosti, which quoted sources in the Russian civil service in its story. The Finnish forest industry has been concerned about Russian plans to impose high tariffs on the export of unprocessed timber. The aim of the move has been to promote the expansion of Russia’s own pulp and paper industry by discouraging the export of the raw material.
Wood tariffs were not discussed during a meeting on Tuesday between Prime Minister Matti Vanhanen (Centre) and his Russian colleague Vladimir Putin. The Prime Minister’s staff said on Wednesday that the tariffs were not even on the list of topics for discussion drawn up by the Finnish side. The issue will be discussed in October when the prime ministers meet again at a forest summit in St. Petersburg.
The news of the postponement did not come as a surprise. Already last year Russia decided to delay implementation of the tariffs by one year.
There was talk during the August visit by the Russian economic development minister of an announcement of a postponement of the increase in the wood tariffs, which was expected within a couple of months. The Russian guest said that preparations for the postponement had already been made. The decision to delay the implementation of the hike is linked with the global recession and with relations between Russia and Europe.
In good times the Finnish forest industry has imported nearly a fifth of the wood that it uses from Russia. Most of the imports are grades of wood that are not used very much in Russia. Finland imported the Russian wood because not enough was available in Finland.
Possible decisions by Russia have little bearing on the Finnish forest industry at the moment. Anu Islander of the Finnish Forest Industry Federation, noted that the decision “actually has little significance”.
“Not really. The only right solution would be no tariffs at all”, she says.
The obvious reason for this attitude is that the recession has sharply decreased the Finnish forest industry's demand for Russian wood. “We don’t necessarily need wood right now, but hopefully times will change and capacity of the forest industry will be needed again”, she says.
Islander says that it seems to be difficult for the Russian government to change decisions that it has once made. <Source>
September 16, 2009 - an Anatomy of Russian opportunities by RUNA:
The global downturn has put Russia's forest industry in a difficult situation. All the measures adopted so far have been aimed the increasing of the timber working in the country. However, in the period, when investors can’t afford any expenses, the only thing that can support the timber industry - is an export. The only problem is that foreign wood-consumers, which were convinced that the forest should be processed in Russia, have found over the past few years new suppliers.
Russia is the third country in the world after the United States and Canada in the volumes of timber. In 2008, we had cut down 163 million cubic meters of timber. About half of this amount accounted for the Irkutsk, Vologda, Arkhangelsk regions and Krasnoyarsk area. About 70% of timber harvested in Russia remains on the processing, the rest - going abroad. Two years ago the government declared war against “roundwood logs”. In July 2007, export duties on timber have been raised from four to ten euros per cubic meter; in April 2008, there have been the second growth - up to 15 euros. The main increase was planned for January 1, 2009 - the duty on the export of round wood was supposed to climb to a record 50 EUR per cubic meter.
The RF Government had expected, making the export of timber unprofitable, to stimulate wood processing in Russia. Last year, according to the Federal Customs Service (FCS), there were exported only 22.5% of timber harvested in the country. To make it easier to develop the wood processing in the country, the Government has developed a mechanism for priority investment projects in the forestry sector. To implement the project cost from 300 million rubles, an entrepreneur can get raw material - forest fund on preferential terms: without the auction, and all for half the price. According to the plans of the Ministry of Industry and Trade, by 2020 the export of unprocessed timber should have been reduced to the level of 2007 in ten times, up to 5 million cubic meters.
However, the idea has fulfilled only in a half. Entrepreneurs focused only on the export of roundwood started to leave the branch. However, new refining capacity has not earned due to the crisis. As a result, according to the Union of Timber Industrialists and Exporters of Russia, in 2008, felling of timber decreased by 20%. in Russia
Then the Government took extreme measures: Prime Minister, Vladimir Putin at a meeting with his Finnish counterpart Matti Vanhansen stated that the imposition of protective duties of 50 EUR will be postponed until January 1, 2010. Vanhansen supported: it is impossible for a year to build a sufficient number of pulp and paper mills and timber processing companies in Russia.
But it did not work. Traditional country-importers of Russia's timber (China, Finland, Japan - accounted for more than 80% of all volumes), given Russia's policy aim to reject the export of roundwood, faced to other suppliers. For example, the Canadians, as it is noted in the reports of the Ministry of Economic Development. Finland too, which the sharp decline in Russia's imports were threatened with the loss of 8-20 thousand jobs in the wood processing enterprises, began to build its own logging. As a result, according to the FCS, in the first half of the export of unprocessed timber from Russia declined by more than twofold, to 10.6 million cubic meters, compared to the same period in 2008.
The declines in harvesting continue also. In the first half of the 2009 there has been cut almost 15% less than last year, by the Union of Timber Industrialists and Exporters, and for the year there will be reduction of another 20%, experts predict. The reduction will be significant, according to the large timber companies: Ilim group, Titan and Vologda Lesopromyshlenniki.
The fact is that there is an obvious parallel decrease of the wood demand inside the country. According to the Ministry of Economic Development, the production of pulp and paper industry in Russia during the seven months of this year decreased at 25,3%, the production of boards decreased at 37,7%, and the production of plywood fell at 29,2% in Russia. About 45% of timber production is exported, and it is often not competitive on the world market, reports the Ministry of Economic Development.
The modernization of wood processing enterprises of the complex or building new plants would help to solve the problem. But foresters are too high-risk borrower. The Director of Finance of the Arkhangelsk Pulp and Paper Mill (the second mill in optional rates in Russia) says that his company may borrow loans no less than under 15%, and this is too much. As a result, the company had to halt its program of modernization worth 300 million EUR.
Ilim Group had to cut at 20% its investment program that worth $ 2 billion due to the crisis: the company has decided to postpone the construction of facilities for the production of packaging paper.
In such a situation the government decided to take the extreme measures: to postpone the protective duties on the export of logging for another year, until January 1, 2011. The representatives of timber branch say that raise tariffs now is to kill the industry completely, because the gap between the rising taxes and the development of the processing is normally a year and a half, but in global downturn grows from two to four years. The only problem is that customers may not return to Russia's suppliers, who so often change their priorities.
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Issued by: Runa
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Issue date: September 16, 2009
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MOSCOW: Russia will not lower its export duties on timber next year, Economics Minister Elvira Nabiullina was quoted as saying on Saturday, despite a trade row with Finland over the taxes.
“At the moment our working plan is to keep the same level of duties in 2010 as this year,” Nabiullina said after talks with her Finnish counterpart Paavo Vaeyrynen at an investment forum in the Black Sea resort city of Sochi.
“The government is now discussing this issue and a decision will likely be taken in September-October,” she was quoted by news agencies ITAR-TASS and RIA Novosti as saying.
Finland — for whom Russia was the biggest trading partner last year — fiercely protests Moscow’s refusal to lower duties on raw timber imports, an issue that has long been a thorn in the two countries ties.
“This is one of the most prickly questions in our cooperation because a lot of wood from Russia is supplied to Finland,” Nabiullina admitted.
“Most (Russian) regions have asked for duties to remain the same, but many also ask for them to be lowered now that the crisis has worsened the situation,” she added.
Exports have been hit badly since Russia started gradually ratcheting up export duties in 2006. afp
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Issued by: Daily Times
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Issue date: September 20, 2009
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The 15 euros tariffs per cubic meter of timber will continue, despite Finnish forest industry has reiterated calls for tariffs to be removed completely.
Meeting the forest producers in St. Petersburg Sunday, Prime Minister Vladimir Putin announced that Russia is to continue its moratorium on wood export tariffs, reports YLE News.
However, an earlier announced increase in the export duty on timber will be delayed. - We will extend the moratorium on raising the export duty on raw timber to 2010, Putin said, adding that the freeze also may be extended into 2011, reports the Associated Press.
Russia implemented the increased tariffs as a means to procure additional western investment in the country’s forest sector.
Finland’s Prime Minister Matti Vanhanen urged Russia to cancel the duty altogheter. Vanhanen said he believes that the higher duty will be harmful for the timber processing industry and Russian-Finnish ties.At the same time, representatives from Russia’s forestry industry claims that its business is rotting, writes RusBuisiness News.
Andrey Dobrachev, a Professor at the Urals Forestry University, says to RusBusiness news that the situation of the Russian timber processors is rather difficult: round timber to Finland is shipped from Brazil, since export of round timber from Russia is prohibited. Timber processing has achieved the best possible levels of productivity and quality but this is not enough to pay for the imported machinery. It would only be possible to rectify the economy with further investment into logistics and the establishment a fully fledged cluster but finding money at the time of crisis far from easy. The result is that the timber industry is dreaming of USSR style production volumes while timber rots standing.
A reasonable question arises: why do the authorities, seeing the desperate situation of the sector not stimulate the demand in the domestic market? It is very hard to answer this because, regardless of practically zero profitability Russian plants are continuing to ship timber abroad, writes RusBuisiness News in an analytic article about the problems in Russia’s Forestry Industry.
Visit:
http://www.yle.fi/uutiset/news/2009/10/russia_to_keep_wood_export_tariffs_at_current_level_1108651.html
http://www.google.com/hostednews/ap/article/ALeqM5iBDCaYvCNx19qk-21dMhHQcFxohgD9BI38MG0
http://www.rusbiznews.com/news/n596.html
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Issued by: International Forest Industries
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Issue date: October 30, 2009
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According to the Ministry for Foreign Affairs of Finland, Russia is to come to the terms in the field of export duties on roundwood. Moreover, Russia itself offered the EU to significantly increase export duties on deciduous wood.
Russia is ready to increase export duties by tens %. It will mostly concern birch that is widely used in the Finnish industry, whereas in Russia this kind of wood is not practically processed by the Russian companies.
However, the project doesn’t include coniferous wood – that is of highly importance for Germany. As a result, there is no common decision in the EU re. the Russian offer.
Last week Paavo Vayrynen, Minister for Foreign Trade, said that duties issue would be solved in the nearest future.
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Issued by: Runa
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Issue date: July 26, 2010
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Since the Russian government imposed a 25% (min. €15/m3) softwood log export tax on April 1, 2008, Russian log exports have decreased dramatically. reports International Wood Markets Group.
Russian log exports decreased from a peak of 51 million m3 in 2006 to about 20 million m3 in 2009 and 2010 (-59%).
Major Russian log importers such as Finland, the Baltics, Germany, South Korea and Japan have almost halted Russian log imports during the last four years (from about 30 million m3 in 2005 to only five to six million m3 in both 2009 and 2010).China is the only Russian log export market that has maintained a relatively large log import business with Russia. Chinese imports of Russian logs peaked in 2007 at 25.5 million m3 and have dropped to just over 14 million m3 in 2010 (-45%). Even with this large drop, Russian log exports to China made up 70% of Russia’s log exports in 2010 compared to only 46% of in 2006. With falling log exports, Russian log exporters have become more dependent on the Chinese market.
The Russian government’s surprise move in November 2010 to reduce current log export taxes as part of its requirement to be admitted into the World Trade Organization (WTO) caught many industry players and traders off guard. The tax had been one of the major hurdles faced by Russia to obtain membership agreement from the northern European WTO members. Russia has stated that no changes will be made to the current 25% (min. €15/m3) tax rate until it has joined the WTO.
Although there have been no official announcements by the Russian government about the new log export tax rates after accession to the WTO, Finnish government officials have stated that the new Russian export tax rate on softwood logs will be 50% lower than the current rates (to 12.5%), while the hardwood tax rate on pulpwood will decrease by about 65%.
If the softwood log export tax is reduced to 12.5%, it will have some positive impact for Russian log exporters. However, it should be noted that all of Russia’s former sawlog export customers have made significant supply arrangements to reduce or eliminate the need for Russian logs.
The unanswered question is whether a 12.5% reduction will entice former customers back to Russian logs. Obviously, China is the one country that would benefit from the lower tax given that the country is struggling to replace former Russian log exports with new softwood log and lumber suppliers. Russian log imports will become more affordable, but how well they compete with new softwood log and lumber suppliers (at any point in time) will likely depend on the comparative delivered price of Russian logs versus alternative softwood log and lumber supplies. These are topics the WOOD MARKETS consulting group is currently examining, as the implications for exporters in North America, New Zealand and other countries, and to global trade flows and prices, could be far-reaching.
It should be noted that Prime Minister Putin has made numerous speeches since the WTO announcement extolling the virtues of the log export tax on developing the log-processing industry in Russia. In December, he stated in a speech in the Russian Far East that in “seven to eight years” all of the timber harvested in the region would be processed in the country. These comments provide a degree of uncertainty about the final outcome of this twist in Russia’s plans for the tax after Russia’s admission to the WTO. In addition, we assume that Russia will negotiate a lower log export tax rate with China once it has reduced the tax to Europe - or implement the same reduction.
Source: International Wood Markets Group, www.woodmarkets.com
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Issued by: International Forest Industries
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Issue date: March 17th, 2011
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Reduced log export tariffs in Russia
Reduced log export tariffs in Russia unlikely to boost the country’s log export volumes back up to historic levels, reports the Wood Resource Quarterly
Export tariffs on logs shipped from Russia, the world largest log supplier, are set to be reduced as the country becomes a member of the WTO. The proposed new lower tariffs are not expected to increase export volumes to pre-tariff levels, according to the Wood Resource Quarterly.
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Issued by: Timber Community
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Issue date: February 7th, 2012
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Russia's WTO Membership Opens Fresh Opportunities for the Forest Industry of Finland
Finland, Jun 23, 2012 - Russia's ratification of the World Trade Organisation (WTO) accession agreement on July 21 improves corporate access to the Russian market.
Membership will lead to lower export duties on Russian raw timber and reduced import duties will improve the position of Finnish forest industry products on the Russian market.
Russia's WTO membership will enter into force within 30 days, once the World Trade Organisation processes and approves the accession agreement now ratified by the Russians. Membership will immediately cut timber export duties and thus lower the cost of exporting raw timber from Russia to Finland. The euro amount of the softwood export duty will be halved and hardwood duties will be cut to one quarter of their present amount. Pine and spruce will in future be imported to the EU market and Finland as part of a quota totalling 9.5 million cubic metres.
Some €190 million's worth of raw timber was imported to Finland from Russia last year. If applied to the present makeup of imports, the revised duties would cut the Finnish forest industry's annual wood procurement costs by about €20 million.
Position of Finnish paper and paperboard products to improve in Russia
The import duties Russia levies on paper and paperboard products will reduce by five percent over a four-year transition period. Lower duties will improve the position of Finnish forest industry products in relation to local goods in the growing Russian market.
Last year's Finnish paper and paperboard exports to Russia were valued at €490 million. Applied to the present structure of trade, the revised customs charges would cut import duties by about €30 million after the transition period.
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Issue date: June 23rd, 2012
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