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7 arguments against export of Ukrainian roundwood

Author : Igor Huzhva

21:07, 8 December 2016
7 arguments against export of Ukrainian roundwood

Author : Igor Huzhva

Failure to confirm the moratorium will prove inconsistent and unsystematic actions of Ukrainian authorities in the protection of national economic interests

21:07, 8 December 2016

 Read the original text at zn.ua

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"Visa-free regime or forest-free regime", "600 million euros vs national interests;" last week was accompanied by discourse over a ten-year moratorium on the export of unprocessed roundwood. Disputes not subside, and today there is a real confrontation between the government and domestic business. A few words about its followers and opponents. The reason for the moratorium was the catastrophic situation with the mass and uncontrolled deforestation in the West of Ukraine, as well as the crisis in the domestic wood processing industry as a result of mass export of unprocessed timber. The idea of a moratorium provoked strong resistance of individual representatives of local government circles, and the European Community. Here are seven main argument for its preservation.

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The first results of the moratorium demonstrate the positive impact of timber export restrictions on the development of the national economy. While the volume of industrial production in Ukraine in January-September 2016 decreased by 4%, wood industry has shown a 16% increase (to $ 983 million), furniture - by 15% (to $ 506 million,) and paper - 5% (to $ 1.14 billion) compared to the same period of the previous year. The amount of taxes paid by these industries in US dollars increased by 17% over the period - up to 89 million dollars Exports of roundwood decreased by 30% and the delivery abroad of processed timber increased by 11%.

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The positive influence of the moratorium on the economy and suggests forecasts of experts on the results of economic and mathematical modeling. For example, it is estimated that the price of wood for the wood industry will fall by an average of 8%. In terms of domestic wood processing industry growth in access to advanced technologies and foreign investment also will increase the moratorium in Ukraine production (by 9.6%) and exports (22.4%) of the product timber.

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The introduction of a moratorium on timber exports will help reduce the volume of its cutting in Ukraine by 38.2%. This is an extremely important argument, because, according to statistics, uncontrolled deforestation in the west of Ukraine led to a decrease in the indicator of forest cover from 16% in 1996 to 11% in 2015. In order to achieve an optimum level of 20% of the forest cover in Ukraine it is necessary to plant new trees in an area of about 2.5 million hectares. Moreover, the rapidly deteriorating and the quality of forest resources. Today, the greatest area of forest plantations occupy saplings (45.4%) and middle-aged stands (37.7%), and maturing and mature stands account for only 10.1 and 6.8%, respectively. With the current pace of deforestation in the near future, we run the risk of leaving the forest potential of Ukraine except for historians.

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Moratorium on the whole complies with international trade law and the commitments made by Ukraine in the framework of the WTO accession. In particular, Article XX (g) of GATT provides for the possibility of countries - members of the WTO to take measures for the conservation of exhaustible natural resources. One of the main conditions is if they are used along with restrictions on domestic production or consumption. The legislative developments to establish restrictions on the consumption of wood products ensure compliance with these provisions in full.

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Most countries - EU members argue on the abolition of the moratorium. The logic is simple - their wood-working power is based on the Ukrainian forest-round wood. Meanwhile, their legislation forbids them to destroy their own forests. Finally, the lifting of the moratorium was the basic requirement of the EU to grant Ukraine the next tranche of 600 million euros for macro-stabilization assistance. The adoption of such conditions will confirm the absolute inability of our government to think strategically and for the long term. Foreign loan is a pill that temporarily relieve the economic situation, but does not affect the overall economic organism. In addition, in the future we have to repay the loan with interest. Or even worse - take the national interests again. But over time, the wood processing industry development policy will create a strong foundation for the growth of GDP, employment and economic welfare of the population as a whole.

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One of the main purposes of the moratorium was the development of the wood industry, the company which, in fact, did not have access to high-quality domestic wood cutting. The reasons are known: more than 70% of first grade wood were exported. But thanks to a moratorium Ukrainian companies have received access to the Ukrainian forest-logs, import volumes to Ukraine of machines for wood processing in January-September 2016 increased by almost three times -24.1 to $ 69.1 million. This trend reflects the growth of investment demand sectors 45 mln, which clearly stands out from the background of the general stagnation of the economy. Thus, the lifting of the moratorium will undermine investor confidence, will worsen the already not very favorable investment climate in the country.

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Failure to confirm the moratorium will prove inconsistent and unsystematic actions of Ukrainian authorities in the protection of national economic interests. The absence of an agreed position of all branches of the Ukrainian authorities on the issue of a moratorium has led to the spread among the international partners of conflicting information about the future prospects of the ban on timber exports. Lifting of the moratorium on the requirement of the EU only to get another loan confirms the weakness of the position of Ukraine in the international arena, in which time it will not as a subject but as an object of international processes. And in some subjects of international law is the cause of ridicule, and will be an occasion to manipulation. Moreover, the newly elected president of the United States, as you know, respects the strong and confident partner.

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