The increase in duties may be a response, among other things, to restrictions on steel imports to the European Union, the source said. Since July 2018, supplies to the EU in excess of the established quota are subject to a 25% duty. In June, the European Commission extended these measures until June 30, 2024.
According to one of the interlocutors of the publication, the Ministry of Industry and Trade is also preparing its proposals. A spokesman for the department confirmed that a retaliatory measure can be implemented. Due to the extension of restrictions on steel imports in the EU, Russia has the right to suspend trade concessions for European countries in an amount equivalent to the damage to Russian exporters, he said. “Such measures are not sanctions, their application is in accordance with the WTO rules, and they remain in force only for the period during which a special protective measure will be in force in relation to Russian metal products,” – said the representative of the Ministry of Industry and Trade. He added that the introduction of these measures and their content are being discussed with the Ministry of Economic Development.
According to a source familiar with the discussion of the increase in duties, the list of goods may change. It may also include agricultural equipment, refrigerators, footwear and other goods, noted another source familiar with the initiative of the departments.
For many of the goods proposed for restriction, Russia depends on imports, for example, about half of still wines consumed this year and about 40% of sparkling wines are imported, noted the head of the Center for the Study of Federal and Regional Alcohol Markets (CIFRRA) Vadim Drobiz.
The total volume of imported still and sparkling wines in 2020 amounted to 36 , 3 mln dal. Most of all imported from Italy – 5 million decaliters of still and 4.3 decaliters of sparkling wines, Spain exported 5.1 million decaliters of still and 570.8 thousand decaliters of sparkling wines, France supplied 3 million decaliters and 667 thousand decaliters, respectively.
However, restrictions, as follows from the proposals of the Ministry of Economic Development, are not being prepared for all products. Duty rates may be increased for wines with protected appellation of origin, protected geographical indication and others. In total, 7.4 million dal of such products were imported from the EU in 2020 for $ 265.4 million, the publication calculated based on data from the Federal Customs Service. If some of the European products leave the market, they can be replaced with supplies from the countries of the New World (South Africa, Chile, USA, Australia, etc.), Drobiz noted. Some fans of products from the European Union may switch to other types of alcohol – beer or spirits, he said.
But the authorities are unlikely to agree to a significant increase in rates: Russia is still heavily dependent on the supply of bottled wine from Europe, therefore, there may be a shortage of products, the expert continued. It is not yet possible to produce more – domestic wine materials are not enough, and products from imported raw materials, due to the new law on winemaking, fall into the category of “not wine”. Therefore, companies do not release it, Drobiz said. According to him, due to these restrictions, the import of wine in 2021 already began to grow: in January-July, the import of still wines amounted to 15.9 million decaliters (plus 21% compared to the same period in 2020), sparkling wines – 3 million decaliters (plus 53%).
AB InBev Efes, the largest brewing company in Russia, is aware of the discussion of the increase in duties, including for beer. Despite the insignificant volume of imported drink in consumption (about 4%), over the past five years, sales in this segment have more than tripled, said Oraz Durdyev, Director of Legal Affairs and Corporate Relations of the company.
According to CIFRRA, in 2020 beer import grew by almost 20%, to 42.6 million decaliters. The first place in terms of supplies is occupied by Germany, which accounts for more than 40% of total imports. It is followed by the Czech Republic with 10%, followed by Lithuania with a comparable indicator.
If duties are significantly increased, up to a prohibitive level, such products will become unavailable to the general consumer, Durdyev fears. This could lead to the termination of its supplies to Russia and negatively affect the business of importers, distributors, logistics companies and retailers, he added.
For perfumery and cosmetic products, the increase in duties may also be critical: more than 70% Perfumes and decorative cosmetics are imported to Russia, said Pyotr Bobrovsky, executive director of the Association of Manufacturers of Perfumery, Cosmetics, Household Chemicals and Hygiene Products. At the same time, Europe accounts for about half of imports.
The increase in duties may lead to a reduction in supplies, the expert continued. In his opinion, the industry community will not support such a proposal: imports now do not interfere with increasing production of domestic products, and many foreign companies localize their capacities.
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