Translated material
Chips are flying
Relations with Finland fell under the ax of Russian forest duties
Finnish woodcutters do not want to understand the Russian Lefty. They are categorically not satisfied with the protective duties imposed by Russia on the export of round timber . But the Russians insist. Therefore, the current visit of Russian Prime Minister Mikhail Fradkov to Helsinki was extremely relevant both for them and for us.The Finns stated at the official level that Russian export duties “do not fall within any framework - there are no WTO agreements, no agreements with the European Union.” The Russians thought about the incident. Last Monday, Russian President Vladimir Putin bade farewell to Prime Minister Mikhail Fradkov, who had gathered in Finland, and ordered the “contradictions” to be resolved. “These are the issues that are being discussed as part of Russia’s accession to the WTO . I will try to discuss them with my Finnish colleagues,” Mr. Fradkov cautiously promised.
Already in Helsinki, but, however, even before the expanded negotiations at the intergovernmental Russian-Finnish commission, Deputy Minister of Economic Development Andrei Sharonov said that maximum concessions had been made for the Finns (with regard to export duties on timber exports). Export duties on so-called “birch and aspen pulpwood” have been postponed until 2011. However, the negotiating position of the Russians was declared, despite the postponement, unambiguously.
A compromise is possible - this is the good will of the Finns in organizing at least partial wood processing on Russian territory. According to Mr. Sharonov, the Russian government is ready to provide benefits to Finnish companies in exchange for investment. For example, if Finnish companies invest a certain pre-agreed amount in the construction of timber processing enterprises in the Russian Federation, they will immediately be provided with land for the construction of these enterprises, including areas for the necessary deforestation. At the same time, Mr. Sharonov did not name an acceptable amount of investment. I just noticed that we are talking about hundreds of millions of dollars.
The position voiced by Deputy Minister of Economic Development and Trade Andrei Sharonov, to put it mildly, does not suit the Finnish partners. Therefore, summing up the results of the visit of the Russian delegation, Prime Minister of Finland Matti Vanhanen, without diplomatic roundaboutness, said: “The introduction by Russia of an export duty on the export of wood will have an extremely harmful impact on the development of the Finnish national economy. In addition, with this decision, Russia violated the terms of its accession to the WTO, which were agreed upon by the European Union.”
The head of the Finnish government made it clear that if this continues, Russia will have to re-negotiate with the EU the standards for joining the World Trade Organization. Mr Vanhanen called on the Russian government to reconsider its decisions.
Mikhail Fradkov, which was very noticeable, did not want to exaggerate the sensitive topic. He said that export duties on timber could be returned to next fall, when the next meeting of the Russian-Finnish intergovernmental commission will be held in Moscow. “We haven’t come to a consensus yet. The topic of export duties is only one of the elements of our negotiations on the forestry complex,” noted Mr. Fradkov. However, the Finnish journalist’s question forced the Russian Prime Minister to make an equally harsh statement, which was not much different from the Finnish position announced by Mr. Vanhanen.
“Export duties will be introduced sooner or later. This is a fact! But the grace period for their introduction can be maintained if Finnish companies take an adequate position,” said Mr. Fradkov. If our negotiating partners do not take this adequate position, the Russian Prime Minister promised to focus on domestic producers: “We are doomed and will achieve deep processing of timber on our territory.”
It cannot be said that public toughness actually led to a conflict between Russia and Finland over the issue of timber exports. Members of the Russian delegation say that they understand their partners very well, they are not going to leave them without raw materials, and therefore will not put a spoke in their wheels. And Finnish Prime Minister Vanhanen was so harsh in his statements not because he wanted to protect exclusively the interests of his producers, but mostly because he was not able to influence them. In other words, he made it clear to the Russians: “I cannot build a business, as is customary with you.”
The Finnish prime minister nevertheless promised that a group of Finnish companies would help the Russian timber processing industry with investments. Now we are talking about investments of 1 billion euros. And the Finns are also scaring the Russians with the fact that if the parties fail to reach an agreement, then Russian timber exporters may lose the market. Because Latin American countries today are ready to supply timber cheaply and process it for pennies. New production facilities are allegedly about to open in Brazil and Chile - with the help of American and Canadian technologies.