In order to solve the problem of forest restoration and against the background of recent forest fires in Siberia and the Far East, the Minister of Natural Resources and Environment Dmitry Kobylkin said in an interview with Vedomosti that he does not rule out the possibility of introducing a ban on the export of round timber to China. However, international rules, in fact, will not allow a ban on timber exports to be introduced for only one specific state: the ban, if introduced, must apply to all. Such a practice cannot be called radical for timber exporters today: in the USA, for example, it is generally prohibited to sell federal timber in unprocessed form. Of course, the ban is intended to stimulate the high-quality development of the timber industry within the country. But in Russian realities, such restrictions without clarifying customs and tariff regulations will not be able to change anything radically.

The fact is that at Russian customs, "roughly" processed and "deeply" processed timber are classified under the same code, and accordingly, they formally mean the same thing, but qualitatively they are diametrically opposed. An exporter of roughly processed timber does not need any special technical equipment, he does not need to invest in the development of his own woodworking industries - he does not develop the industry in any way. Of course, this loophole with a common code is used by those who, on the one hand, want to avoid an increased duty on the export of unprocessed timber - round timber (currently for a number of companies - up to 40%, from 2021 - up to 80%, and this is already a virtually prohibitive rate), and on the other hand, do not intend to invest. Many have switched to selling cant - this is the same round timber, but planed on both sides.

If the ban is introduced, unprocessed timber from Russia will no longer be exported to China and other countries. But how will this affect the development of the Russian woodworking industry? It can be safely assumed that companies will continue to save on processing and sell to the Chinese, in essence, the same raw materials instead of finished products, and the Russian economy will lose new jobs, taxes and investments. At the same time, the most important thing for the development of the timber processing complex within the country already exists: raw materials and labor resources, with the availability of which the volumes of wood processing should increase. There is great potential in the production of wood products, the same furniture components and the furniture itself, as well as in more capital-intensive projects - the production of cellulose and cardboard, which are in great demand, including on the Chinese market.

In order to achieve the effect of the prohibitive measure on the export of raw materials of the forest industry, it is necessary to clearly separate the products passing through customs by the depth of processing. If possible, it is necessary to introduce preferences for companies that export goods with high added value - dry sawn timber, planed products - furniture and its components should be separated from raw sawn timber, which makes up about half of the export.

In Russia, it should be profitable to deepen and improve the processing of raw materials. Therefore, in my opinion, forest rental rates for entrepreneurs without the appropriate production capacities should be higher, since they do not invest in the development of industry inside Russia, but, on the contrary, export raw materials abroad. At the same time, it is raw materials that constitute the main cost item of woodworking industries (for example, in the pulp and paper industry - up to 56%). Another important factor in favor of developing our own production: after processing round timber into dry sawn timber, the cost of transportation per cubic meter decreases, since the loading of containers and wagons increases, and transportation is a significant cost item for exporters.

Considering the real goal of banning roundwood exports to China – to give impetus to the development of the domestic timber industry, and not “to punish the Chinese who are engaged in illegal logging of Russian timber” – it is necessary to engage in comprehensive changes in the industry now. Following the Chinese example, it is necessary to create several wood processing centers where there are raw materials, experience and personnel, for example in Krasnoyarsk Krai or Irkutsk Oblast. And in my opinion, it is desirable to involve the same Chinese companies in this work. True, the Chinese are surprised by the manner of doing business in the Russian way, when several managers can change in a short time. This entails not the most pleasant consequences for business: for example, Chinese investors recently reduced the scale of their timber processing project in Novosibirsk Oblast several times and instead of the declared 1,500 jobs at the new enterprise, they created only 150 – only because of a misunderstanding of who makes the decisions. It is simply unacceptable for the Russian timber industry to lose a Chinese investor for such absurd and stupid reasons, especially since direct Chinese investment in the Russian economy is stable and in the first quarter of this year alone amounted to $150 million.

Overall, the strategy of restrictions with amendments to customs regulations proposed by the Ministry of Natural Resources would be effective given the overall market situation: the global price index for sawlogs, i.e. straight raw logs suitable for sawing, has been declining for five quarters in a row, and by the end of the second quarter of 2019, the indicator had fallen to a two-year low. At the same time, the volume of procurement in Russia is constantly growing - in 2018, it amounted to 236 million cubic meters, and this is a product of the highest quality.

Russia's main trump card is that China has a shortage of round timber, and solid wood furniture is considered a status product, the demand for which is growing. Russia, with a convenient land border and forest resources that make up 20% of the world's reserves, has every chance of remaining a priority partner for the Chinese. This will give it the opportunity to dictate its own terms of export policy and build it taking into account the strategic plans of the Russian government, according to which the contribution of the forestry industry to the country's GDP should be doubled by 2030, the number of people employed in the industry should increase from 500,000 to 820,000 people, and tax revenues from forestry enterprises to budgets at all levels - from 90 billion to 190 billion rubles. All this, in my opinion, is quite achievable.

The author is the CEO of RFI Consortium, the management company of the Novoyeniseisky forest chemical complex, Lesosibirsk

Furniture instead of forest