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Top subjects at issue in Pulp & Paper Industry

6/4/2012

Russia's WTO accession is on everyone's lips! The key moment is possible intervention of international business into Russian internal market.

Main and the most expected innovation is reduction of export duties for round timber, which are to be reviewed annually. The reduction will not be applied to all kind of wood for example, crude birch quotes will not be applied but the duties will be set up from the zero point as they used to be. Large Finish exporters lobby the cancellation of this limitation, as many mills are technologically dependable on birch wood.

Reduction and even cancellation of export duties should provoke growth of forest harvesting, which should be positive for Russian forest industry, but on the other side there is strong constraining factor - new European legislation coming into effect in March 2013 which prohibits import of wood which legality is not approved by documentation to the EU.

Head of Forest Stewardship Council in Russia, Andrey Ptichnikov comments it:

"Each exporter to European markets, should have a system of due conscientiousness to track the origin of imported timber. The first requirement is legality; the second is information about the wood composition for all imported forest products. And the last one - the exporter must know what region the timber was delivered from. For example last year FCS investigated the interesting case. We examined Wal-Mart's, biggest US retailer, notepads. It turned out that their notepads where made of Siberian woods, which was shipped to China. Russian wood is processed to cellulose in China and then goes to the USA through a complex chain of countries-facilitators; it can be Vietnam, South America or Europe. Then all these streams flow into one and at the end the customer have Wal-Marts notepads" All these new rules can lead to the establishment of new supervisory structures and inspections formed in Europe with representatives in Russia to support and consult local loggers.

Looking at finished wood products - some kinds of products import duties will be cut in three times by 2015. It opens imports gates to furniture and pulp & paper markets. Thus duties for newspaper in rolls will be reduced from 15% to 5%, for coated paper and cardboard from 15% to 10-5%. Container board which is used for corrugated packaging will be out of competition: before that local producers won their pricing war due to high import duty rates. In case of duties reduction the low-price and good quality European container board will be welcomed on Russian market and will play a favorite among consumers choice.

Import duties reduction also works for machinery segment. It simplifies the procedure of bringing in specialized equipment to Russian forestry and pulp and paper industry which is starving for modernization! It of course makes Russian market even more attractive for international investments!

WTO accession is controversial, but it's obvious that it opens new perspectives for the industry. Now Russia is seen as main importer of raw materials, but with wise approach to WTO benefits, it is possible to strengthen the whole cycle of pulp & paper production and bring raw and end-product to the competitive standard!

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