Russian government restricts imports of foreign-made tractors and forestry machines with high entry tariffs

25% tariff on Ponsse forestry vehicles

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The Russian government has raised ill-will among its foreign trading partners by imposing high import tariffs on earthmovers and forestry machines. Russia’s trade policy measures are being felt in Finland as well.
      Furthermore, Russia is practically putting an end to the importation of foreign-made tractors.
     
Since the turn of the year the Vieremä-based Ponsse Group has had to pay a 25 per cent import tariff on all its forestry machines sold to Russia.
      “The tariff is substantial, but the situation in Russia is also in other respects such that our trading there has become appreciably more difficult”, says Ponsse Sales and Marketing Director Jarmo Vidgrén.
      The American Agco Corporation’s Finnish subsidiary, the Suolahti-based tractor manufacturer Valtra, has in turn come up against a 15% import tariff plus a trading impediment, which has to do with the potential Russian buyers’ ability to get cheap bank loans for such purchases.
      The Russian central bank has “recommended” that the country's banks would not finance the importation of foreign tractors.
      The country’s largest credit lender Sberbank and an important agricultural bank Rosselkhozbank therefore now dish out 20% cheaper loans to the buyers of Russian-made tractors compared with those who opt for an imported model.
      Last year Valtra managed to supply the Russian market, which is generally considered to be extremely large, with only a couple of hundred tractors. Valtra’s Suolahti factory’s annual output is nearly 11,000 units.
     
The tariffs have also delivered a blow to the American large-scale operators.
      According to news agency Bloomberg, the giant earthmover manufacturer Caterpillar, which on Tuesday published its negative Q1 results, has expressed fears that its exports of mining industry vehicles into Russia may come to a total halt because of the 25% tariff levied.
      The steep downhill slide of the Russian economy has dramatically weakened all export prospects, as has the rouble’s 40 per cent devaluation against the US dollar since last summer.
      All exporting from the West into Russia is now experiencing enormous difficulties.
     
The battered and embittered trading partners have pointed out that within the G20 group Russia has promised to avoid protectionist measures in the already critical world trade situation.
      Furthermore, Russia is already on the home straight in its negotiations over World Trade Organisation (WTO) membership, and should avoid moves that could put its membership in jeopardy.
      Another issue is that Russia has a partnership and cooperation agreement with the EU, which calls for preliminary discussions before imposing higher tariffs. Russia has not engaged in any such discussions on this occasion.


Previously in HS International Edition:
  Putin: Russia to postpone implementation of wood tariffs (13.11.2008)

Links:
  Ponsse
  Valtra

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