Experts of the Association of Heating Radiator Producers conducted an analysis of changes in the volume and structure of the heating radiators import into Russia in Quarter 1 of 2016.
- a decrease of aluminum and bimetal heating radiators import into Russia by more than 50%;
- the Russian Federal Customs Service gets tighter control over customs value of heating radiators imported into Russia;
- bimetal heating radiators in whose composition steel content exceeds aluminum content entered the Russian market.
Lately the Russian market of heating radiators import and consumption has been considerably changing.
In the first place, the volume and structure of heating radiators import into Russia have changed.
The largest change falls onto Quarter 1 of 2016 – a trend towards decreasing the volume of the aluminum and bimetal heating radiators import into Russia.
Compared to February 2015, as by the code 7615 20 0000 («aluminum sanitary-technical equipment») of the
Foreign Economic Activity Commodity Nomenclature of the Eurasian Economic Union (the FEACN of the EAEU), February 2016 saw a 50% decrease in heating radiators import.
- February 2015 – 3 387 tons;
- February 2016 – 1 547 tons.
In January 2016 the decision of the Eurasian Economic Commission Council № 164 as of 8 December, 2015, entered into force. This decision makes provision for obligatory classification of bimetal heating radiators by the code 7616 FEACN of the EAEU in case if the aluminum content exceeds the steel content in their composition.
Thus, if in 2015 bimetal heating radiators imported into Russia were classified by the code 7615 20 0000 of the FEACN of the EAEU, as soon as from the beginning of 2016 such radiators must be classified by the code 7616 99 1009 of the FEACN of the EAEU.
This taken into account, in February 2016 the volume of bimetal heating radiators imported by this code amounted to over 388 tons.
However, even comparing the total volumes of aluminum and bimetal heating radiators import by the codes 7615 and 7616 of the FEACN of the EAEU in February 2016 to the same period in the past year, we can see that the import volume has shrunk by 43%.
March 2015 and 2016 show even more considerable dynamics in radiators import – a decrease by 60 %.
The dramatic fall in aluminum and bimetal heating radiators import into Russia is connected to the following.
Firstly, devaluation of the Russian ruble to the US dollar and euro made importing heating radiators into Russia much less profitable for businessmen.
The positive effect of this situation for Russian manufacturers of heating radiators is obvious.
Secondly, the Russian Federal Customs Service started to exercise tighter customs control over heating radiators import. The Russian Federal Customs Service applies severe measures of control to importing goods whose customs value was declared as less than the “value risk profile”.
Worth mentioning are also the initiatives of the Association of Heating Radiator Producers, the APHR, aimed at intensifying control over the customs value of heating radiators imported into Russia.
These initiatives were discussed at the meeting of the Russian State Duma Expert Council on Import Substitution and afterwards were forwarded to the Russian Customs Service.
Customs agencies of Russia are already engaging representatives of the Association of Heating Radiator Producers to assist in considering legal cases on correcting the customs value of heating radiators imported into Russia.
As concerns analyzing the customs statistics and the structure of heating radiators import, a few negative trends are to be mentioned.
It is observed that in a number of cases bimetal heating radiators are declared by the codes of the FEACN of the EAEU not intended for their classification.
For example, as compared to February 2016, March 2016 saw a considerable decrease in bimetal heating radiators imported by the code 7616 99 1009 of the FEACN of the EAEU. While the amount of radiators imported by the code 7615 20 0000 of the FEACN of the EAEU, on the contrary, increased.
The “migration” of bimetal heating radiators from one code to another can be related to the difference in the import duty rate. The point is that the import duty rate for the code 7615 20 0000 of the FEACN of the EAEU is 9%. While the import duty rate for the code 7616 99 1009 of the FEACN of the EAEU is 10%.
The obligations of the Russian Federation within the WTO provide for reducing the import duty rate by the code 7616 99 1009 of the FEACN of the EAEU by 9% as starting from 1 September, 2016. Thus, this trend of changing the structure of the heating radiators import will not last long.
Another negative trend observed is the increase in importing bimetal heating radiators into Russia by the code 7322 19 0000 of the FEACN of the EAEU, which is intended for heating radiators made from ferrous metals – steel and cast iron. The amount of bimetal heating radiators imported by this code in March 2016 reached 365 tons against 327 tons imported in February 2016.
Importing bimetal heating radiators by the above code is lawful if the steel content exceeds the outer aluminum element in the total mass.
Besides, in March 2016 the average customs value of 1kg of a bimetal heating radiator by the code 7322 of the FEACN of the EAEU fell to 1.94 US dollars.
Such a price is not intended by any manufacturer of the Russian Federation or of the People’s Republic of China.
The low customs value can be related to intentional reducing the mass of the outer aluminum element by the manufacturer of bimetal heating radiators. This tells badly on the heat output of a bimetal heating radiator.
Such approach undermines the good reputation of the bimetal heating radiator on the market. Presently, the bimetal radiator is characterized on the market as a highly reliable and durable device.
The APHR will continue to closely monitor the dynamics of volume and structure of heating radiators import into Russia revealing alarming trends.
In order to ensure legal clarity as concerns the classification of imported heating radiators the Association of Heating Radiator Producers proposed to make changes to the FEACN of the EAEU. It is proposed to allot special codes in the FEACN of the EAEU to aluminum and bimetal heating radiators with the specification of up to 10 digits.
This initiative is presently being actively considered by authorized state agencies of the Russian Federation supported by the broad expertise of the Association of Heating Radiator Producers.