Positive Outcome to Russian Timber Export Duty Issue

Nov. 29, 2010 - According to the Finnish Forest Industries Federation, the timber export duty issue, a matter that has hampered Russian-Finnish forest industry cooperation for quite some time, was resolved as part of WTO negotiations between Russia and the EU.

“Russia's timber duty decision is a positive result from the perspective of the Finnish forest industry. According to the information available at the moment, effects of the duties will not focus on timber grades, which are imported into Finland, as heavily as before. Russian export duties on hardwood will decrease to a quarter of the current level. Duties on softwood will decrease by half," said Timo Jaatinen, Director General of the Finnish Forest Industries Federation.

"The Finnish forest industry has, however, already adjusted its operations to reduced timber imports from Russia and relies on domestic raw materials to a very large extent. A recovery in Russian timber imports is now dependent on developments in forest industry exports and the cost competitiveness of both domestic and Russian timber," Jaatinen said.

Forest Sector Cooperation in the Best Interests of Both Nations

Over the long term, cooperation between the forest sectors of Russia and Finland is in the best interest of both countries. From the perspective of investments, the most critical issues are the removal of all business-negative export duties and trade barriers, a focus on the development of infrastructure as well as the establishment of sufficient guarantees to the continued and reliable supply of wood raw materials for decades to come.

The forest industry of Finland has so far invested over a billion euro into Russia. Its investments have targeted the sawmill and panel industries as well as the paperboard industry in particular.

BACKGROUND

Just 5.3 million cubic metres of timber, without bark as measured in international trade, were exported from Russia into Finland in 2009. Converted into barked roundwood, the measure used in Finnish trade statistics, this amount is equal to 6.1 million cubic metres. In January - August 2010, Russian timber exports to Finland amounted to 4.6

The Finnish forest industry used 52 million cubic metres of wood in total in 2009. The amount of Russian timber imports peaked in 2005, when 14.8 million cubic metres were imported into Finland. This is equal to 17 million cubic meters barked roundwood.

Birch pulpwood formed the majority of these imports. Russia cannot commercially utilise birch pulpwood to any great extent domestically.

After exports into Finland reduced, thousands of Russian harvesting employees lost their jobs; this negative development was accompanied by a rapid deterioration in professional timber-harvesting systems and forestry infrastructure.

Finland is the world's sixth-largest producer of pulp, paper and paperboard in addition to being one of Europe's largest producers of sawn timber.

SOURCE: Finnish Forest Industries Federation