Russia threatens to close half of crossing points on Finnish border to wood exports
The wood trade dispute between Russia and the European Union is set to intensify after Russia threatened to close up to half of its 70 customs clearing stations at its land crossings on the Finnish border to wood exports.
Finns did not have a clear picture on Monday of what such a move would really mean.
"Nobody knows how different customs stations will actually operate. But this is certainly a difficult situation. We won't be getting even the small amount of raw material that we have been getting now", said Anne Brunila, President of the Finnish Forest Industries Federation on Monday.
If Russia stops exports of wood completely at certain border crossings, the Finnish forest industry will find itself in difficulties. The roads on the Russian side are in such poor condition that it is not a viable option to drive truckloads of logs hundreds of kilometres to an open border station.
Minister of Foreign Trade and Development, Paavo Väyrynen (Centre) said in Brussels on Monday that Finland has appealed to Russia not to implement the measure.
Russia says that the move is aimed at saving costs and preventing crime. In Finland and the EU the situation is seen as a new twist in the long-standing dispute over Russia's export tariffs on felled timber.
Russia plans to raise export tariffs to EUR 15 per cubic metre as of the beginning of April. The tariff is currently EUR 10 per cubic metre.
Väyrynen does not feel that the move will have a dramatic impact on the Finnish forest industry. "However, it has a psychological impact, when the industry makes plans for next year."
The European Commission is trying to persuade Russia to keep the tariffs at the present level. Väyrynen said on Monday that he is "cautiously optimistic" that this might succeed before April.
The European Commissioner for Trade, Peter Mandelson, was not as sure.
"I am neither optimistic nor pessimistic", Mandelson said to Helsingin Sanomat after a meeting of EU trade ministers. The Commissioner for Trade will discuss the wood tariff issue next week with Russia's deputy prime minister.
"The Commission will do all it can to reach a solution", he said.
Russia is imposing export tariffs on raw timber because it wants to develop its own forest industry. However, Western companies are not especially eager to invest in Russia, where the business environment is unpredictable.
Väyrynen notes that Russian leaders, from President Vladimir Putin on down insist that Russia's intention is not to hurt Finnish industry. However, this is what happens in practice.
If the tariffs rise to EUR 50 per cubic metre next year, imports from Russia to Finland will collapse.
The EU does not want Russia to be allowed to join the World Trade Organisation unless the wood tariff dispute is resolved.
The WTO card is not much of a deterrent, because most Russian industrialists take either an indifferent, or negative view of joining the organisation.
Previously in HS International Edition:
EU Commission: No speedy solution in sight in dispute over Russia´s timber export tariffs (25.10.2007)
Russian export tariff could end timber imports into Finland (12.2.2007)
President Halonen says all possible steps taken over timber tariff issue (4.6.2007)
Commissioner Mandelson: EU cannot pressure Russia into removing wood tariffs (18.2.2008)
Putin defends wood tariffs during last press conference of presidency (15.2.2008)
Russian wood tariffs could threaten economic viability of Saimaa Canal (29.5.2007)
Väyrynen demands discussion of wood tariff dispute at EU-Russia Summit (18.5.2007)