Putin: Russia to postpone implementation of wood tariffs

Finnish and Russian prime ministers meet in Moscow

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Russian Prime Minister Vladimir Putin says that Russia’s planned new export tariffs on raw timber will not take effect at the beginning of the year, as previously planned.
      The prospect of even higher wood tariffs is a major concern for the Finnish forest industry, which gets much of its raw material from Russia. Russia has said that it wants to discourage mass exports of its raw material as a way of encouraging the development of its own wood processing industry.
      Putin, who held talks in Moscow with Finnish Prime Minister Matti Vanhanen (Centre) on Tuesday, said that the implementation of the tariffs would be postponed by 9 to 12 months. The postponement would apply to all grades of wood.
      The reason that Putin gave for the surprise move was the economic crisis.
      “We know what kind of shape the world economy is in.”
      Putin said that he understands that Russia’s raw material deliveries do not only affect the Finnish economy, but that they also affect social questions such as unemployment.
     
In his response, Prime Minister Vanhanen said that he appreciates the fact that Putin is taking the problems of Finland’s forest industry into consideration.
      “This gives time for the forest industry to seek solutions.”
      However, Putin pointed out that a postponement does not mean that Russia would be giving up on its plans to build its own wood processing industry.
     
At the beginning of the meeting Vanhanen emphasised the importance of a positive atmosphere in a situation in which the world economy is in a state of uncertainty.
      “Then it is important, what neighbouring countries can do together”.
      Putin began the meeting by saying that Finland is one of Russia’s most important partners, and not only because it is a neighbouring country.
      “It is also because of our bilateral trade. Russia is now Finland’s most important trading partner”, Putin said.
     
Accompanying Vanhanen in Moscow was Finland’s Minister of Foreign Trade Paavo Väyrynen (Centre).
      Väyrynen welcomed Russia’s decision to postpone the wood tariffs.
      “Now there is time to negotiate on a permanent solution”, Väyrynen said to Helsingin Sanomat.
      Väyrynen notes that Finland proposed a postponement of the tariffs last May. Another Finnish proposal was lifting the tariff on birch fibre. “Fortunately this postponement decision has been made”, Väyrynen said.
     
Russia’s decision was praised by the European Commissioner for Trade, Catherine Ashton, who said that the positive move was the result of months of negotiations, and it gives plenty of needed space for further negotiations.
      A resolution to the dispute over wood tariffs is a precondition for Russia’s membership in the World Trade Organisation.
     
The moves have been broadly welcomed by the Finnish forest industry, but a warning has been given that a postponement is just that: a stay of execution.
      It is not likely that the latest decision will affect the plans of local pulp and paper manufacturers, who are already taking steps to adjust their production such that they are less dependent on imported timber - in particular birch.


Previously in HS International Edition:
  Putin defends wood tariffs during last press conference of presidency (15.2.2008)
  UPM: Russian wood tariffs could reduce paper production already this year (6.2.2008)
  Commissioner Mandelson: EU cannot pressure Russia into removing wood tariffs (18.2.2008)
  Väyrynen remains hopeful on partial solution to timber tariffs dispute (27.5.2008)
  Väyrynen demands discussion of wood tariff dispute at EU-Russia Summit (18.5.2007)
  Russian export tariff could end timber imports into Finland (12.2.2007)

See also:
  EU links Russian WTO membership with wood tariff issue (11.6.2007)

Helsingin Sanomat