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SAINT PETERSBURG: Russia will not raise its export duties on timber in 2010, Prime Minister Vladimir Putin said on Sunday at talks with his Finnish counterpart amid a trade row with Finland over the taxes.
"The Russian government already took the decision to delay the next round of tax increases on round wood. Today, I can say that this moratorium will be extended to next year," Putin told Finnish Premier Matti Vanhanen at a forestry summit in Saint Petersburg.
He added that Moscow's decision came as a result of a "sharp fall" in export demand for timber amid the global financial crisis.
Exports have been hit badly since Russia started gradually ratcheting up export duties in 2006. But Moscow views the duties on round wood exports as a means of encouraging investment in developing its own timber processing sector.
Vanhanen sharply criticised the tariffs as protectionist, saying Moscow should speed accession talks to join the World Trade Organization.
"We think that the cancelling of protective export duties on timber could be an answer to the problem of developing the timber processing industry. We have differing views on this question," he said.
"As far as the WTO is concerned, Finland sees Russia's place as part of the WTO."
Meanwhile, Russian officials at the weekend summit loudly complained that Finnish companies were not investing enough in Russia's timber sector, pushing for more projects in the Russia's Far East.
"Finnish capital is largely invested in Russia's northwest and the Moscow Region. But Finnish investors are also present in China. It may interest them to also be present in the Far East," Industry and Trade Minister Viktor Khristenko said.
His deputy minister, Andrei Dementyev added: "Unfortunately, we see that our Finnish colleagues are not investing enough in Russia."
According to Finnish officials, over one billion euros (1.5 billion dollars) was invested by Finnish business in the Russian timber industry over the last 15 years.
Finland's Minister of Economic Affairs Mauri Pekkarinen admitted there was "still a lot of untapped potential" for investment in Russia, but added: "Russian duties have a negative influence both in Finland and in Russia."
Finnish paper companies, which rely heavily on cheap Russian wood, have threatened to close mills and cut jobs if the timber row is not resolved, but negotiations between the European Union and Russia have so far failed to strike a deal.
Russia, the only major economic power still outside the WTO, began negotiations to join in 1993, but talks have been marked by growing expressions of Russian frustration over the process.
Moscow surprised the trade body this year with an unorthodox request to join the WTO as part of a joint customs union with ex-Soviet neighbours Belarus and Kazakhstan.
- AFP/so
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