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WhatWood Forest legislation Should the Russian government introduce export duties on sawn timber?

Should the Russian government introduce export duties on sawn timber?

22 June 2020 ` 13:48  

The main problem of accounting for the export of unprocessed roundwood and primary processed timber is, according to the authorities, the difference in customs duties on different commodity items of timber. For example, unprocessed or roughly processed wood, which practically does not differ from the timber, is not subject to customs duty, which entails the malicious “flow” of timber from one position to another.

Accordingly, the use of a longitudinal timber sawing as one of the tools for avoiding customs duties reduces the timber export of 4403 HS Code and increases the volume of timber 4407 of HS Code. In the structure of 4407 HS Code, the forest products processed by grinding, planing (goods with a higher degree of processing) account for about 8%, and 92% – for other sawn wood.

One of the possible solutions to this problem, according to the Federal Customs Service, may be a temporary quantitative restriction (quotas) on the export of timber classified in heading 4407 HS EEU, and the equalization of customs duties on goods classified 4403 and 4407 TN FEA. In this regard, the Deputy Prime Minister instructed the relevant departments to further study the issue of introducing export customs duties on timber of position 4407 HS Code with low added value (not processed by planing, grinding).

According to WhatWood, the introduction of duties on products throughout customs code 4407 will negatively affect the export-oriented sawmill industry in Russia and reduce its competitiveness in the world market. Currently, the share of lumber in the structure of the industry’s export revenue is 34% or $ 4.5 billion. Codes included in 4407 HS Code divide lumber by species, but not grades, quality or degree of processing (there is only division into planed and rough). But almost all Russian sawmills (more than 95%) sell rough lumber. The wording “primary processed timber” itself requires a clearer definition and description.

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