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. Last Updated: 07/27/2016

Fradkov Talks Tough on Timber With Finns

lehtikuvaPrime Ministers Mikhail Fradkov and Matti Vanhanen of Finland holding a news conference in Helsinki on Tuesday.
Russia intends to press ahead with plans to more than double export duties on raw timber, Prime Minister Mikhail Fradkov said during a one-day visit to Finland on Tuesday.

The increase in duties from from 4 euros ($5.40) to 10 euros per cubic meter is aimed at changing Russia from a raw material exporter into a value-added products exporter, Fradkov said.

But Finnish Prime Minister Matti Vanhanen hit out at the proposal at a news conference after his talks with Fradkov, saying they contradicted commitments undertaken during bilateral talks on Russia's World Trade Organization accession.

Vanhanen also said his government hoped the issue would be settled at the Russia-EU level.

"I urged Russia to talk to the European Union to avoid negative consequences for Finnish industry and to keep the same volumes of timber trade," Vanhanen said, Interfax reported.

"The ultimate aim of Russia's strong-arm tactics is to use rising costs to persuade forestry companies to relocate their processing and production facilities to Russia," he said, Thomson Financial news agency reported, citing Finnish broadcaster YLE.

One-fifth of unprocessed timber used in Finnish industry is imported from Russia, meaning the duties could have a big impact.

The higher export duties ordered by President Vladimir Putin last year to promote domestic processing will take effect July 1 and will be further hiked over the next two years.

"We will introduce these duties sooner or later and that's a fact," Fradkov said, Interfax reported. "We want to encourage Russian businesses to focus on domestic timber processing."