Russia introduced timber export duties to boost its industry
The Russian government decided to increase its timber export duties as of July 1, 2007.
Most of the raw material that Finnish forest industry has imported from it’s eastern neighbour is of a type that is little used in Russia. Timber has to be imported because Finland's own supply of birch pulpwood is insufficient. Expansion of the Finnish owned sawmilling sector in Russia has also boosted imports of chips in recent years.
Russia introduced timber export duties to broaden its industrial base and become less dependent on raw-material exports. Russia tried to force foreign companies to move at least some of their wood-processing capacity on its soil. Confirmation of this came from the highest political echelons at a meeting of the Russian forest sector at Syktyvkar in the Komi Republic in April 2006.
Export duties cannot be considered an acceptable means of promoting investments because, at least in this case, they are a clear trade restriction and, ultimately, will have impacts similar to export bans. For example, no export duties on timber are collected in the EU, USA, Canada or Brazil.
Over the last fifteen years, Finnish companies have invested a total of one billion euros in the Russian forest sector. The projects have helped Finnish forest-industry operators to acquire valuable experience in the purchasing of local raw material for plants they are planning to build in Russia.
Increasing duties since June 2006
Already on June 1, 2006, Russia raised export duties for softwood, from EUR 2.5/m3 to EUR 4/m3.
Under Russian government decree no. 75, issued in February 2007, all timber destined for export (except birch of less than 15 cm diameter) is subject to export duties as of July 1, 2007. The schedule for raising duties was as follows:
As of July 1,2007 EUR 10/m3
As of April 1, 2008 EUR 15/m3
As of January 1, 2009 EUR 50/m3
The raise was postponed by 12 months until January 1, 2011, under the decree no. 1071/2009.
Under the decree 1190/2010 the export duties will be kept on the level of year 2010, until Russia joins the WTO.
In theory, birch pulpwood of less than 15 cm diameter will initially be exempt. However, this exemption is of little practical importance because wood would have to be sorted by diameter, which is very expensive to carry out in practice.
Export duties for aspen are at five euros/m3.