News

July 01, 2008

Russian Timber Is Becoming An Incendiary Item

By Sally White

The Russo-Finnish timber dispute looks about to ignite! Tempers on the Finnish side are getting very hot indeed. Major Finnish companies are getting into real trouble – paper groups Stora Enso and UPM-Kymmene have seen their share prices decimated following seven profit warnings – and their government is sounding threatening. Finland is saying it will block or tax Russia goods that transit to international markets on its roads. Russia’s admission to the World Trade Organisation is being challenged yet again. (Russia has been negotiating to join the WTO since 1985, but its trading style is a mite aggressive for some!) The EU has been asked to step in to calm things down.

Source of contention is Russia’s attempts to build processed wood businesses rather than see the added value on its exported raw timber scooped up elsewhere. To rub salt in it, the Scandinavian paper and furniture companies and Chinese furniture companies do not even make their profits from processing Russian timber from their home markets. They are made out there in world export markets, China is taking over half the international furniture trade. The Kremlin wants those profits and jobs back...