The Russian Forest Code, which entered into force in January, 2007, introduced a number of changes in forest administration, which included structural reforms such as transfers of responsibility for forest management and protection to regional governments; reduction of the lease period from 99 to 49 years; introduction of auctions in timber sales; and the promotion of investment projects and infrastructure development. For the most part, these changes have not yet come into effect, since administration of the forest sector was still undergoing major reorganization in mid-2008, following abolition of the previously centralized forest management system. Early experiences necessitated some changes to the Code. In July, 2007 the Russian Federation Council approved an amendment to streamline the procedure for the lease of forest areas by removing administrative barriers that arose in bringing contracts signed before January 2007 into compliance with the new Code. Further amendments to the Forest Code were being drafted by the Natural Resources Ministry to substantially reduce the time it takes to approve rezoning of reserve forestland for geological exploration. Russian export taxes on roundwood increased from 6.5% to 20% in July 2007, and to 25% in April 2008 . The tax will increase to 90% in January 2009 (minimum €50/m3). The intent of the export taxes on logs is to encourage more domestic valueadded production in the forest-products industry. In addition, the Russian Federation has reduced import duties on wood-processing equipment with the same objective. There were indications that this strategy was working when several joint ventures with multinational forest products manufacturers were announced in 2008. As reported last year, the changes in the Forest Code, and especially the export duties, have caused significant concern among nations that have long been importers of Russian roundwood. For instance, eastern Finland on the Russian border is facing considerable structural changes, in terms of income and employment effects, with loss of production value in the range of several hundred million euros (Pirhonen et al., 2008). According to the Finnish Forest Industry Association, 25,000 jobs in Finland could be jeopardized (Fitzsimmons, C., 2008). The high export taxes on logs have been brought to the attention of the World Trade Organization by the EC, on request by Finland and Sweden, as not being in the “WTO spirit”. This could affect Russia’s negotiations for accession to the WTO on the grounds that the taxes negatively impact European trade flows, leading to plant closures and job losses.