Mechanisms for pursuing the economic and environmental interests of Ukraine in Forest and Woodworking industry

Abstract

Introduction. Interim results of a full log export ban have evidenced the benefits of such a solution for the national economy and the environment. However, despite obvious achievements, the situation in the wood industry on the whole remains disadvantageous, in particular due to the massive smuggling of the unprocessed wood disguised as fuel wood.

Aim and tasks. This article is intended to identify and substantiate legal and regulatory measures of the governmental policy aimed at the intensification of log export ban effects in Ukraine, as well as to give a forecast of macroeconomic effects of the realization of such measures in the mid-term run.

Research results. The inadequate institutional environment and the high level of corruption in the public sector form a favorable environment for massive smuggling of wood raw materials subject to a moratorium. Nevertheless, author strongly disagrees with conclusions that a log export ban, as a fragmented tool, totally failed in performing its mission, namely to stop the uncontrolled logging and forest export from Ukraine. One should remember the trade being a two-way process, the responsibility for smuggling should be also assumed by the destination countries which import unaccounted wood originated from Ukraine. It is necessary to urgently strengthen the effect of a log export ban through closing loopholes which are used to export unprocessed wood under the guise of the another associated commodity groups.

Conclusions. Vision on regulatory measures system, which is called to strengthen the effect of the log export ban, embraces: a) criminal responsibility for avoiding or deceiving customs control when bringing banned unprocessed wood across the border of Ukraine; b) fuelwood export ban for an eight-year period; c) limitation of unprocessed wood volumes for domestic consumption at the level of 25 million cubic meter a year. In the long-term perspective, to establish an effective and self-sufficient forest industry in Ukraine, it is necessary to strengthen ban on the export of unprocessed and fuelwood through a number of systematic measures: a) creation of the Ukrainian Export and Credit Agency; b) introduction of the “reasonable import substitution” policy; c) free connection to utilities for the companies; d) introduction of industrial parks with investment incentives for new manufacturing.

Keywords:

log export ban, timber export ban, unprocessed wood, fuel wood, plywood, furniture, mirror statistics, economic modeling, GTAP.