Wood exports to China - bureaucratic dispute over ban

2024 Author: Seth Attwood | [email protected]. Last modified: 2023-12-16 15:55

The Ministry of Industry and Trade of the Russian Federation considers it inexpedient to prohibit the export of Russian timber to China. The head of the department Denis Manturov told the journalists about it.

the minister believes.

Manturov's statement was a response to the statement of another member of the government - the head of the Ministry of Natural Resources Dmitry Kobylkin. He actually delivered an ultimatum to the Chinese authorities last week, stating that Moscow could impose an embargo on timber exports if the PRC does not stop buying Russian illegally mined timber.

“They come, buy timber, and we have to clear the rubble. China must clearly understand that if they do not join in solving this problem, then we will have no other option but to ban timber exports completely,”

said the head of the Ministry of Natural Resources.

When the thunder struck

The dispute between the two statesmen over who is to blame and what to do provoked, as usual, another catastrophe, namely, gigantic wildfires that raged this summer in the Krasnoyarsk Territory, Irkutsk Region and a number of other regions of Siberia and the Far East.

The seasonal disaster was aggravated by the inaction of local authorities, who refused to extinguish the forest, arguing that fighting the fire was allegedly economically unprofitable.

said the Governor of the Krasnoyarsk Territory Alexander Uss in this regard.

The inaction of Uss and his subordinates led to the fact that, in general, a standard problem for the region has grown to the level of an international cataclysm. On July 30, the chairman of the 73rd session of the UN General Assembly, Maria Fernanda Espinosa-Garces, called on the world community to help Russia fight forest fires, and a day later, Donald Trump called the Kremlin and mockingly offered to help extinguish the Siberian taiga.

Thank you for not volunteering to store the nuclear warheads. However, what was said was enough for the Kremlin: an operatively created group of army aviation consisting of 10 Il-76 aircraft and 10 Mi-8 helicopters extinguished 90 thousand hectares of blazing taiga in a couple of days. Already on August 2, the military reported on the elimination of60 fires. Say what you like, but we know how to bomb.

In general, it turned out that it is very possible to fight forest fires, it would be a desire. And not so much technology is needed for this.

Ministerial level

However, let's return to Manturov and the department headed by him. To demonstrate the competence of the head of the Ministry of Industry and Trade and the team he selected, let us recall just one case that took place not so long ago.

In the fall of 2018, thinking about how to support the Russian aluminum industry, which has suffered from the American sanctions, the Ministry of Industry and Trade gave birth to an enchanting idea: to exclude beer from alcoholic beverages and, accordingly, to lift the ban on its sale in stalls and at night.

At the same time, the abolition of the restrictions was supposed to affect only those sorts of beer that are sold packed in aluminum cans. That is, beer in plastic is the most alcoholic beverage, but in "aluminum" it is already a harmless non-carbonated drink. Such is the non-trivial logic.

Critics then did not appreciate the simplicity and elegance of the design. But in vain. After all, Manturov and his comrades could begin to be clever. For example, give a briefing and say: one of the main consumers of aluminum is the aviation industry, so let's develop aircraft construction. In second place in terms of the rate of aluminum consumption - 25.3% - is the production of building structures, so we propose to temporarily zero taxes on this segment of the industry. In third place are manufacturers of electrical equipment, so let's give them additional incentives for development.

But no, the minister did not become clever. Instead of such cheap populism, the Ministry of Industry and Trade proposed a very simple, and therefore, undoubtedly, easily implementable scheme: aluminum for cans, beer for men, empty cans for the trash. Brilliant.

We can only be glad that the Afghan drug mafia did not think of packaging heroin in Krasnoyarsk aluminum foil. Otherwise, we would not have heard such proposals.

Although it is possible, the matter is not at all in the department's ardent desire to save metallurgists suffering from sanctions, but in a special relationship with brewers. At least, this is hinted at by the fact that in July 2019, the Ministry of Industry and Trade again proposed to withdraw beer from the concept of alcoholic beverages. At the same time, the authors of the initiative no longer began to hide behind the problems of aluminum producers, realizing that the relevance of this topic in the media space made it live for a long time.

Analyze it

If we analyze Denis Valentinovich's statement on the forestry issue, then the claims arise not so much to the essence of the proposal as to the argumentation with which the official justifies his position.

said Manturov.

Everything is fine, except for one little thing: the WTO is dead. It is a fact. The organization's rules prohibit member states from introducing unilateral duties and restrictions on goods from other countries, subsidizing their own production and in any other way engaging in protectionist policies. Meanwhile, since 2016, about 30 protective duties have been in force in the world against Russian steel and rolled metal products. China, at its discretion, allows the import of agricultural products from some Russian regions - and prohibits from others. The United States has been waging a tariff war against China and the EU for the third year in a row, forcing European companies to join the economic blockade of Iran.

WTO is not just a deceased, it is a corpse, from the eye sockets of which flowers have already grown. In July of this year, the INSTEX trading platform began operating in Paris, the purpose of which is to hide the transactions of European companies with Iranian counterparties. A structure completely unthinkable even with a living and functioning World Trade Organization.

The question arises: does our Ministry of Industry and Trade generally know what year it is? Atleast approximately.

Manturov's arguments about economic cooperation with China refer to the same opera. Beijing, despite its declared friendship with the Russian Federation, was in no hurry to open its food market for us. And, perhaps, he would not have opened it, if not for the trade war with the United States, which forced the Chinese to retaliate against American business.

One of the few areas in which the PRC can just pinch the Americans is the purchase of soybeans and legumes. Accordingly, before the Celestial Empire itself, the question arises: who will replace the supplies of American farmers, whose products were imposed with protective duties? This is where Russia came in handy. The Chinese authorities began issuing import permits one by one. Not earlier and not later.

Deny cannot be exported

In general, the question of a possible ban on timber exports is extremely complex and controversial. Supporters of this measure note that it is the possibility of selling timber to China that creates the preconditions for deliberate arson, predatory felling, corruption in the ranks of local authorities and law enforcement agencies.

Opponents, on the other hand, argue that the problem is not in the Chinese, but in the rotten system of Russian government, the completely inadequate Forest Code and the complete destruction of structures that should protect forests from illegal logging and fires. Along the way, it is noted that the forestry industry brings profit to the state and is one of the main sources of income for the local population.

What can I say? Both sides are right in their own way. Russia really exports timber and receives income from this. Is it profitable for the state? Is not a fact. On the one hand, lumberjacks pay taxes, on the other hand, for the sake of supporting the industry, the state has been reimbursing VAT for many years. According to some reports, only in the Irkutsk region the amount of refunds amounted to 4 billion rubles.

That is, take the figures of tax deductions and, on their basis, declare head-on: look how the lumberjacks are feeding Mother Russia! - does not work. You need to know what exactly the state has done with this money, and whether it has fed the lumberjacks with it.

The idea of the head of the Ministry of Natural Resources is also faulty. The essence of his proposal boils down to a simple idea: we will prohibit the export of timber to China, and the outrage will stop. The question is, why would? Really, someone thinks that only for the Chinese the forest is cut with wild violations, but for the Russian customers everything is done according to the letter of the law?.. But even if we admit such a thought, there is one problem.

According to experts, Russia sends to the PRC about 1/4 - 1/5 of all the timber harvested. That is, even according to the very oak logic of the embargo on exports to the PRC, 20-25% of the outrages will be stopped. And the remaining 75% do not interfere with our life?

What to do?

Asking Beijing to deal with our corrupt customs officials is even worse than asking Trump to put out our taiga. This is a very extreme form of national self-abasement.

Problems begin with the fact that no one, neither in the regions nor in Moscow, knows exactly what is happening in the industry.

For example: according to the data of the Accounts Chamber, the share of shady felling accounts for 30% of the timber harvested. And according to the secretary of the Security Council Nikolai Patrushev, about 70% of this market is in the shadow.

As for China and the fact that it might be offended by our ban, this is a myth. The PRC consumes 170 million cubic meters of wood per year, of which about 100 million are from the Chinese, and another 30 million from the USA, Canada, Finland, New Zealand. Russia supplies 22 million.

That is, even if we assume that the Russian embargo will be introduced, this will practically not affect the Chinese market in any way. Our niche will be occupied by other suppliers, and everything will be decided on this.

In general, a very complex and ambiguous rebus turns out. And it can be solved, first of all, by changing the Forest Code and restoring the Federal Forestry Service, but will the people who offer to save the aluminum industry by selling beer at night cope with this task? It is highly doubtful.

Despite the complexity of the problem as a whole, the ban on timber exports to China itself is a secondary issue and depends entirely on how we intend to restore order in our country. It can be prohibited - but then you need to clearly understand what to do with the released volumes of wood; or it may not be prohibited, but in this case it is finally necessary to create a really working system of control over the legal purity of the exported timber.

In any case, this should be exclusively our decision, made on the basis of Russian national interests, and not flirting with the WTO, Beijing or Washington. But with this just everything is very sad with us.