Tariffs go to WTO
New tariff rates for railway transportation to Russian ports will rise by almost 11% in 2007. The idea was initiated for discussion at the session of the Federal Tariff Service (FTS) to be held on December 9. It is estimated that tariffs will grow by almost 9% within another year and by the moment Russia joins WTO, tariffs for cargo transportation to the ports will be equal to those for transportation via land border crossings.
At the threshold of WTO
The Ministry of Economic Development and Trade (MEDT) has held successful negotiations on Russia’s WTO membership – bilateral negotiations finished in November 2006. According to German Gref, head of MEDT, Russia may become a WTO member in 2007.
Actually, it is a disappointing fact for Russian stevedoring companies since they are going to loose one of their major advantages against foreign stevedores. Currently, average tariffs for transportation via RF land border crossings are 1.5-2 times as high as those for cargo transportation to ports. WTO membership implies uniform tariffs providing equal competition conditions. German Gref is going to comply with all international requirements: “We will gradually lead the tariffs for transportation via ports to the level of transportation via land border crossings. Thus, our ports will enter uniform competition environment”. In respond to numerous notices of Russian port representatives predicting cargo turnover decrease, Gref encourages them to raise the quality of stevedoring services and improve cargo logistics. “Our national ports may preserve cargo flows through speeding up loading process and improving services as well as through securing long-term contracts,” Gref believes.
Igor Levitin, Minister of Transport, also supports WTO requirement of uniform tariffs. A year ago, at the meeting with EC representatives in Brussels, Levitin told that sometimes it is more profitable for railways to transport cargo not to the ports but by land. The state deliberately puts the ports into more favorable conditions as it tries to support them in their difficult situation, which the ports faced after USSR collapse. In a number of years the ports will be able to compete on a common basis.
In favor of RZD
While MEDT’s purpose is to fulfill liabilities on Russia’s joining WTO, the railways aim at deriving of profit, which is quite natural for any business unit. So RZD OJSC cannot but welcomes the process of tariff unification.
The meeting of FTS Board to be held on December 9 will consider 10.7% - 10.9% increase of tariff rates for railway transportation to Russian ports with preservation of current tariffs for transportation via land border crossings. This information has been provided to the reporters by Evgeny Mikhailov, director of MEDT tax department. According to Mikhailov's forecast, in 2008 the rates may grow by 8.5% more. By 2009, the difference between tariffs for cargo transportation to ports and those for transportation via land border crossings may decrease to 12%.
From both sides
Such a process will enable the ports of Baltic states to recover the flow of Russian cargo lost over last five years. “We are very interested in Russia’s and Byelorussia’s WTO membership,” Nickolai Bashtavoi, chairman of the board of Ventspils terminal Kalia Parks, told in an interview to Byelorussian newspaper. Aigars Stokenbergs, Latvian Minister of Economy, raised the issue of railway tariffs on its visit to Moscow: “Any economic cooperation or any trade should be based on equal rules. Discrimination is not admissible here.”
Representatives of Russia’s northern ports are worried most of all, though not all of them risk to express publicly their opinion. A representative of one of stevedoring companies operating in the northern port of Russia has placed its comment at the customs site – ibk.ru. According to him, the uniform tariff will shoot down the activities of the ports located within the Arctic circle. “Being a northern port we'll become noncompetitive against the ports of the Gulf of Finland or those of the Black Sea,” he says. “One should pay a lot in order to reach us.”
Besides increased railway tariffs the stevedoring companies will also have to face increased port charges having not been changes from 1995 and being based on dollar rate today. However, today port charges already exceed those of some ports in the Baltic states. According to Yury Parfeonov, head of Rosmorport FSUE, new port charges will annually secure RUR 10 billion for Russia while in 2005, total amount of port charges was RUR 7.8 billion.
Draft decree on introduction of new rates for port charges in Russian ports is currently under consideration at FTS. The date of discussion has not been determined yet. Representatives of FTS have informed the correspondent of PortNews IAA that Parfeonov's forecast on introduction of the new rates from January 1, 2007 is unlikely to come true, while the source in the Ministry of Transport told that the document may not be put into effect before new procedure of charges collection is introduced in the ports. The issue is currently under discussion between Transport Ministry and FTS.