THE SUB-COMMISSION ON TARIFF AND NON-TARIFF CUSTOMS REGULATION SUPPORTED THE COMBINED EXPORT DUTIES ON FERROUS AND NONFERROUS METALS

On June 24 the sub-commission on tariff and non-tariff customs regulation supported the imposition of combined export duties on ferrous and nonferrous metals. The income from duties will be used to compensate for the rise in the prices of metal products in the domestic market.

Earlier, the corresponding decision was agreed at a meeting of the Government of the Russian Federation. Andrei Belousov, the First Deputy Prime Minister, said that the issue of supporting non-primary non-energy exports remains an absolute priority set by the President of the country. He also noted that the Russian economy is not ready for the kind of avalanche-like shock transfer of global prices to the domestic market.

The First Deputy Prime Minister emphasized that the introduction of the duty is not a punishment for the metals industry, but part of a package of protective measures for the domestic market.

"We must protect our domestic consumers from what’s actually happening in the global markets," he said.

"Based on the results of this work, starting from 2022, we will need to make corresponding system-wide – this time taxation-related – and more or less permanent decisions to protect the domestic market." – he also noted.

Temporary export duties on major commodities in ferrous and non-ferrous metallurgy to be introduced from 1 August to 31 December 2021 inclusive. During this period, a permanent mechanism aimed at centralizing excess profits in the budget will be developed.

It is assumed that the duty will be extended to a broad range of commodities: rolled stock, rebar, billet, wire, ingots, as well as low-grade copper, nickel and aluminium.

At the same time, a combined duty is provided, which will consist of a base rate (15%) and a specific one to be calculated in USD per tonne.

Depending on the degree of “redistribution” (processing) of ferrous metals, each product category will have its own minimum duty:

- the duty for iron ore pellets and other ferrous products shall be at least USD 54 per tonne

- flat hot-rolled steel and rebar – at least USD 115 per tonne

- cold-rolled mill products and wire – at least USD 133 per tonne

- stainless steel and ferroalloys –at least USD 150 per tonne

For nonferrous metals, the specific duty was calculated depending on the type of metal:

- copper – at least USD 1,226 per tonne

- nickel – USD 2,321 per tonne

- aluminium – USD 254 pertonne

The calculations were made based on the current price environment for the first five months of 2021.

The draft of the relevant Government decree is planned to be prepared and introduced in the near future.

The measures are planned to be extended only to exports outside the Eurasian Economic Union. Russia will hold negotiations with partners from the EAEU to prevent re-export of metal products.

"The income from the duties will be used to compensate for the increased cost of production, so the companies can continue to fulfill their obligations in the implementation of projects. First of all, this is important for the timely commissioning of social facilities," - said Maksim Reshetnikov, Minister of Economic Development of Russia.

"This is a necessary measure. We hope that it will not have to be extended. Additional receipts will go to support metal-intensive industries," - said Victor Evtukhov, The deputy head of the Ministry of Industry and Trade.

Maksim Chmora, the head of the General Department of Federal Customs Revenues and Tariff Regulation of the FCS, noted, that the customs service is ready to administer the collection of these duties.

According to the FAS, in the determination of prices for metal products, not only global market quotations should be taken into account, but also the price environment of the domestic commodity markets: supply and demand in the Russian market. The price level should not lead to a reduction in the number of consumers of metal products.

"Export duties on ferrous and non-ferrous metals will not harm the state of competition in the domestic market of the Russian Federation, but rather will contribute to ensuring domestic demand and adjusting prices," - said Maksim Shaskolsky, the head of the FAS Russia.