No solution was found on Monday to the dispute over Russia's imposition of export tariffs on raw timber. The tariffs are set to cause considerable problems for Finland's wood processing industry.
Russia is incrementally imposing the tariffs on its exports of unrefined wood. The aim is to promote the development of the country's own wood processing industry.
European Commissioner for Trade Peter Mandelson discussed the matter with Russian Deputy Prime Minister Alexei Kudrin in Brussels on Tuesday.
The discussions are linked with Russia's hopes of joining the World Trade Organisation. The EU feels that Russia cannot join the WTO if it imposes the duties on wood sold to Finland and other EU countries.
A spokesperson for the Commissioner said that the negotiations surged forward on Tuesday. A brief statement after the meeting described the discussions as "open and constructive".
Both sides said that they want to continue talks in order to get a satisfactory solution to the matter "as quickly as possible", Mandelson's representative said.
Russia plans to implement its next increase in the tariffs from the beginning of April.
The Finnish forest industry warns that further increases in the tariffs could make wood imports from Russia unviable, thereby jeopardising thousands of jobs in Finland.
Last week Mandelson said that he was "neither optimistic nor pessimistic" on the possibilities of finding a quick solution to the dispute.
Playing the World Trade Organisation card does not seem to be carry much weight in negotiations with Russia. Only one in four industrial leaders in Russia support Russian membership in the WTO. Another quarter are against it, while half do not have an opinion on the matter.
Finland feels that Russia has enough wood both for export, and to satisfy the needs of its own industry.
Russia would like Finnish and other Western companies to set up wood processing facilities inside Russia.
Western companies are reluctant to do this because of the uncertainties in the Russian business environment. The export tariffs are seen to further increase this uncertainty.
