world news - 05.06.2003
The Chinese government has abolished a special tax rate on Russian market pulp and newsprint imports which are transported via land.
The preferential tax policy led to Russian market pulp,
newsprint and kraftliner becoming increasingly popular in China over the past
few years. The tax break was only applicable to Russian imports transported via
land. Shipments to main Chinese ports from Russia were and remain subject to the
same taxes as imports from other countries. This meant that most deliveries from
Russia were sent by rail to the border city of Manchuria in the Mongolian
autonomous region of China. Since joining the World Trade Organization in
December 2001, China has been under pressure to revoke the policy, which was
seen as unfair to other countries.
The tax policy imposed an 8.5% levy on Russian land-based
imports of market pulp, newsprint and kraftliner. These grades were not subject
to import duties or the 17% VAT rate that was levied on imports from other
countries. With China's cancellation of the special tax, Russian market pulp and
newsprint imports are now charged the full amount of VAT and are also subject to
import duties, where applicable. China does not impose import tariffs on market
pulp, but newsprint imports are subject to an 8.5% duty. The Chinese government
did not offer an explanation as to why Russian kraftliner imports still enjoy a
special status.
The revocation of the special tax rate has wreaked havoc for
Russian pulp producers, but has had little impact on Russian newsprint exports
to China as such volumes are minimal. Russian suppliers lowered their prices for
both bleached softwood and hardwood kraft pulp by $70/tonne, while unbleached
softwood kraft pulp fell by $25-30/tonne at the end of May in China. The
Russians reduced prices in a bid to attract buyers and maintain their market
share. The sharp price cuts have put heavy pressure on pulp suppliers from other
countries at a time when pulp demand in China is sluggish.
According to data from China Customs, China imported 422,719
tonnes of bleached softwood kraft pulp from Russia in 2002, second only to
imports from Canada of 608,079 tonnes. Last year, China also imported 198,212
tonnes of Russian bleached hardwood kraft pulp. Russian suppliers shipped the
most unbleached softwood kraft pulp to China in 2002, with imports totaling
276,050 tonnes.
The tax was rescinded on
June 1 and replaced with value added tax (VAT), which is already applied to
imports from all other countries. However, Russian kraftliner was not included
in the list and still enjoys a tax rebate.
See also:
- — Danish Furniture Trade: The Danish trade balance in furniture in 2002 was positive with exports exceeding imports
- — West African Log Market in May
- — UPM-Kymmene has established a company for wood procurement in the Baltic countries
- — Russia is increasing its exports of wood and paper products. Currency earnings from exports of wood and paper products in January-February came to $763.1 million, which is 11% more than the same period of last year.
- — Production of corrugated board in Russia will reach 3.3 million m2 by 2007, according to Pyrabelisk. Multi-national investors in the Russian corrugated industry account for only 15% of capacity, the rest being Russian owned.
