Russia sent mixed signals to the World Trade Organisation (WTO), saying it may double agriculture subsidies from 2011 but will keep raw timber duties at the same level.

The Agriculture Ministry said in a statement Russia may increase agriculture subsidies to $9 billion per year and gradually reduce them back to the current level of about $4.4 billion between 2013 and 2017.

Minister Yelena Skrynnik this week attended negotiations over the country’s accession into the WTO in Geneva where the size of state subsidies as well as export duties for unprocessed timber are seen as major hurdles.

“This size of subsidies will allow us to carry out all current and planned programmes of modernisation and development (of the sector),” the ministry said.

Economy Minister Elvira Nabiullina said Russia was not likely to raise the existing export duty on unprocessed timber but hinted that such an option remained on the table since the timber industry was still recovering from crisis.

Russia has been using measures including subsidies, trade barriers and sanitary regulation in recent years to support its agriculture sector and is facing growing complaints from WTO members. Russia said it would ensure support measures did not distort trade or affect prices, in line with WTO rules in the period between 2013 and 2017.

The ministry said the 19-member Cairns Group of leading agricultural exporting countries has welcomed the proposal. The ministry’s spokesman called the recent talks on agriculture subsidies “a breakthrough”.

Value Added Products
Russia had originally planned to hike export duties for timber threefold, but the move had been delayed after pressure from both Brussels and Helsinki which feared damage to the European processing sector.

“There is a clash of interests. Those who want to process timber (in Russia) are interested in higher duties. We need to look at their investment projects. If they are faring well, it makes sense for the timber to remain in Russia,” she said.

“My view is that we need to extend the existing duties for at least one year,” Nabiullina added. Exporters now have to pay 15 euros ($20) per cubic metre of timber.

Prime Minister Vladimir Putin, who is keen to diversify Russia’s economy away from oil and gas, said exports of unprocessed timber had fallen by 4 percent so far this year as a result of protectionist measures.

“We are convinced that our niche in the global (timber) market is high value-added products—construction materials, paper and other,” Putin told a timber industry conference.

“In Russia and not elsewhere should new jobs be created and taxes paid,” he said. (Reuters)