Plastics stretched along the border – Newspaper Kommersant No. 67 (7512) of 04/18/2023

Russian polymer processors, who have lost part of the export market due to sanctions, are asking the government to introduce protective duties on finished imported products, mainly from China, and to zero import rates on materials and components. The government in response asks to prove the fact of dumping of foreign suppliers.

As it became known to Kommersant, the largest Russian manufacturer of equipment for ventilation and revision systems ERA (brands ERA, Diciti, Evecs, Auramax and ERA Pro) is asking the government to set an import duty on plastic products and imported fans at a level of more than 20%. The company explains that it has to buy fan motors in China, which are not produced in Russia, with an import duty of 11%, while finished foreign products enter the country without duties.

The ERA emphasizes that the eighth package of sanctions actually banned the export of the company’s products to the EU, and there are duties of 20-35% on the markets of friendly countries. The export revenue of the company in 2022 amounted to about 800 million rubles. and may be reduced by 15-20% in 2023: “The WTO rules do not worry governments that protect their own market from competition from importers. We proposed to compensate exporters for import customs duties (20-35%) when delivering Russian goods to foreign countries.”

As Uliana Tararyshkina, director of economics, finance, legal affairs and personnel of the ERA, explained to Kommersant, in order to establish the maximum possible duty rate for fans in the amount of 3%, the company must confirm that the previous three years, products from China and other countries were cheaper, that is there was dumping. But this is impossible due to differences in the range of goods that fall into the same customs group. In addition, even if it is possible to confirm the fact of dumping, the process of establishing the duty will take up to a year.

The Ministry of Industry and Trade suggested that the ERA provide specifications, data on prices and the number of engines to search for Russian suppliers, and also consider building their own plant with state support in the amount of up to 2 billion rubles. at a rate of 1-3%. As Ms. Tararyshkina explained, the company intends to build a plant, but still needs to reduce import duties on engines for the duration of the project. The Ministry of Industry and Trade did not comment on the situation.

As Peter Bazunov, head of the Union of Plastic Processors, explained to Kommersant, the reduction in duties is also relevant for other manufacturers. For example, the issue of importing films is acute: “Raw materials for the production of plastic products are subject to import duties of up to 6.5%, and for a number of finished products the rate is either the same or equal to zero, while it should be vice versa.” The same position is shared by Anzor Uzdenov, the head of Grand Master, a large film manufacturer, noting that the company has to compete with foreign products imported without duties. Mr. Bazunov is sure that the WTO has “lost its former significance” against the backdrop of sanctions: “But it does not make sense to completely demolish the WTO rules yet, it is necessary to zero import duties on basic polymers.”

Maxim Medvedkov, adviser to the Center for Expertise on WTO issues, explains that the maximum level of “ordinary” import duties could be increased, but this would require complex negotiations. According to him, the level of duties in the case of dumping or subsidies in the exporting country is practically unlimited, since they must compensate Russian companies for the damage caused. It is either impossible or too expensive to create modern production without protectionism, he notes.

Mr. Medvedkov clarifies that China, for example, has introduced 248 protectionist measures against primary plastic, 73 against plastic packaging, and Russia – 16 and 8, respectively. At the same time, the expert believes, unlimited protectionism is much more dangerous than free trade. Maxim Medvedkov has no doubts about the need for Russia to retain its place in the WTO, noting that this allows the country to participate in the formation of future trade rules.

Olga Mordyushenko