Canada and Ukraine: Creating jobs and opportunities together

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United in Building a Prosperous and Secure Future

The Canada-Ukraine Free Trade Agreement (CUFTA) signed on July 11, 2016, and entered into force August 1, 2017, represents an important milestone in the Canada–Ukraine bilateral relationship. In addition to generating commercial benefits for Canadian businesses, CUFTA will support the economic reform and development efforts of the Government of Ukraine, strengthen the Canada-Ukraine partnership for peace and prosperity, and help pave the way for long-term security, stability, and broad-based economic development in Ukraine.

Canada and Ukraine have enjoyed close bilateral relations since Canada became the first Western nation to recognize Ukraine’s independence on December 2, 1991. The bilateral relationship is further reinforced by strong people-to-people ties between the two countries, with almost 1.3 million Canadians of Ukrainian heritage.

Although there was an upsurge in trade and investment in the early 1990s following Ukraine’s independence, there remains potential for further growth in bilateral trade and investment between Canada and Ukraine. From 2014 to 2016, bilateral merchandise trade between Canada and Ukraine averaged $298.2 million annually, with Canada's merchandise exports to Ukraine comprising $206.8 million, and Canada’s merchandise imports from Ukraine representing $91.4 million. CUFTA will create new opportunities for Canadian and Ukrainian companies, thereby strengthening the bilateral commercial relationship.

The Government of Ukraine has begun to undertake the necessary reforms to stimulate economic growth, including by taking steps to address corruption and introducing measures to create a more positive business environment. While this campaign is gaining momentum, it is only the beginning of a long and challenging process. Canada continues to reaffirm its strong support for Ukraine as it implements the reforms needed to restore stability and prosperity.

Canada and Ukraine launched free trade agreement (FTA) negotiations in 2010. Six rounds of negotiations were held between 2010 and 2015. Negotiations concluded in Kyiv in July 2015.

Ukraine is a promising emerging market for Canadian exporters, with opportunities in agriculture and agri-food (including fish and seafood products), manufactured goods, such as articles of iron and steel, agricultural machinery, aerospace components, plastics and cosmetics. CUFTA will enable Canadian exporters to take greater advantage of these opportunities by ensuring improved market access conditions, including the elimination of tariffs.

Two-way merchandise trade between Canada and Ukraine (value in millions of Canadian dollars)

  • Text version
    • 2012 - 313.5
    • 2013 - 322.5
    • 2014 - 243.9
    • 2015 - 278.0
    • 2016 - 372.6

CUFTA

The Government of Canada is committed to providing Canadian businesses with the tools and support they need to compete and succeed in international markets. In today’s modern, knowledge-based economy, FTAs need to both eliminate tariffs on goods, and address “beyond the border” issues – such as product certification and technical standards – that can distort or restrict trade, or otherwise add costs or uncertainty for businesses looking to increase sales. The Government of Canada is also committed to being a leader in promoting free and progressive trade through provisions in its FTAs that help ensure for example the protection of the environment and the respect of workers’ rights.

CUFTA includes chapters in the areas of market access for goods; rules of origin and origin procedures; trade facilitation; emergency action and trade remedies; sanitary and phytosanitary measures; technical barriers to trade; government procurement; competition policy, monopolies and state enterprises; intellectual property; electronic commerce; labour; environment; trade-related cooperation; institutional provisions; and dispute settlement. The Agreement will support Canadian businesses, deepen trade linkages, and further strengthen Canada’s bilateral relationship with Ukraine. CUFTA will also enhance cooperation, provide for increased transparency in regulatory matters, and stands to reduce transaction costs for businesses.

Key highlights:

“This is the first FTA Canada has signed in Europe. It represents another historical milestone in the strong relationship between our two countries and it will provide enhanced market access for Canadian businesses in a country that is ripe with significant trade and investment opportunities.”

Paul Grod, President, Ukrainian Canadian Congress

“This agreement will create additional jobs for citizens in both countries and lay new foundations for trade, growth, and investment. It also sends a very powerful message to the rest of the world that Ukraine is open for business, and Canada again lends a supportive hand to Ukraine.”

Zenon Potoczny, President, Canada-Ukraine Chamber of Commerce

Creating New Market Access Opportunities for Manufactured, Agricultural, and Fish and Seafood Products

Manufactured Goods

Canada is a country endowed with a wealth of natural resources and people with the creativity and skills to turn them into a wide range of manufactured goods. Canada’s manufactured goods capacity comprises an array of sectors, including aerospace, automobiles, medical devices, industrial machinery, and chemicals and plastics. If something can be manufactured, chances are a Canadian is producing it or working on ways to improve it. Examples of products that Canada has exported to Ukraine over the 2014-2016 period include bituminous coal, pharmaceutical products, airplanes and turbojets, reservoir tanks and other similar equipment, agricultural machinery and mining equipment.

CUFTA will improve market access for Canada’s manufactured goods by eliminating all tariffs on such exports to Ukraine. Canada’s exports of manufactured goods averaged $161.7 million annually from 2014 to 2016. Upon entry into force of the Agreement, Ukraine will eliminate tariffs on roughly three-fourths of manufactured goods, with the balance to become duty-free over seven years.

Key Canadian manufactured goods benefiting from this elimination of tariffs include iron and steel, industrial machinery, articles of plastics and cosmetics.

Agricultural and Agri-food Products

Canada’s agricultural and agri-food sector is one of the most dynamic in the world, renowned as a reliable supplier of high-quality products. In many countries, a label that reads “Made in Canada” immediately signifies a premium product. We have an abundance of consistently high-quality products for export such as cranberries and cherries from British Columbia, processed foods from Ontario and Quebec, potatoes from Prince Edward Island, grains and pulses from the Prairies, apples from the Annapolis Valley, and beef and pork from various regions of the country.

On average, between 2014-2016, Canada was the world’s seventh-largest exporter of agricultural and agri-food products. Nearly 50 percent of Canadians employed in the sector work in the processing segment of the industry, transforming raw ingredients into processed foods, ready-to eat meals, beverages, nutritional supplements, and a wide range of other products.

Canada’s agricultural and agri-food exports to Ukraine averaged $11.6 million annually from 2014 to 2016. During this period, top exports included soy beans, pet food, frozen pork, animal products, processed foods, live cattle, seeds for sowing, pulses, and maple syrup.

Under CUFTA, Ukraine will eliminate the vast majority of its agricultural tariffs. Key agricultural products benefiting from this duty-free access include beef, fresh and chilled pork, pulses, grains, canola oil, processed foods, and animal feed. Frozen pork and certain pork offal and fat will benefit from a large annual duty-free tariff rate quota that exceeds, by a wide margin, Canada’s current exports to Ukraine.

“We are very pleased with the potential that this new agreement with Ukraine provides to further diversify our exports.”

Rick Bergmann, Chair, Canadian Pork Council.

“A survey of Canada’s meat processors has confirmed the existence of significant long-term interest in trade with Ukraine.”

Joe Reda, President, Canadian Meat Council

Fish and Seafood Products

Canada is also known for its world-class fish and seafood exports. Surrounded by the Arctic, Atlantic and Pacific oceans and home to the Great Lakes, Canada has one of the world’s most valuable commercial fishing industries. It is the economic mainstay of approximately 1,500 communities in rural and coastal Canada. On average over the last three years, Canada was the world’s seventh-largest exporter of fish and seafood products, exporting nearly 75%, by value, of its fish and seafood production. Canada is among the top suppliers of fish and seafood to Ukraine, with exports from 2014 to 2016 averaging $26.6 million annually. During this period, key exports included frozen hake, frozen shrimp and prawns, frozen capelin, salmon roe and frozen mackerel.

Under CUFTA, Ukraine will immediately eliminate all tariffs on fish and seafood products, including high tariffs on prepared or preserved fish and seafood products, such as caviar and caviar substitutes, as well as all fresh, chilled and frozen fish.

Trade snapshot by region

Western Canada's exports to Ukraine averaged $139.0 million annually between 2014 and 2016. Top exports from Western Canada  during this period included bituminous coal, frozen hake and other fish and crustaceans, agricultural equipment, pet food, electrical equipment and geophysical instruments.

Central Canada’s exports to Ukraine averaged $60.7 million annually between 2014 and 2016. Top exports from Central Canada during this period included aircraft and parts, pharmaceuticals, soybeans, pet food and other animal products.

Atlantic Canada’s annual exports to Ukraine averaged $7.1 million annually from 2014 to 2016. Top exports from Atlantic Canada during this period included shrimp and prawns, frozen capelin, salmon and mackerel.

Tariff Elimination

The tariff preferences obtained under CUFTA will benefit Canadian producers, processors and exporters across Canada. CUFTA will result in notable improvements in market access for Canada’s high-quality agricultural, manufactured, and fish and seafood products, and will address specific Canadian export interests in the Ukraine market. Under CUFTA:

CUFTA means that for many products where market access has so far been constrained by tariffs, Canadian exporters will have a competitive advantage over those countries that do not have an FTA with Ukraine, and will be able to compete on a level-playing field in the Ukrainian market vis-à-vis other competitors where an FTA is already in place.

Benefits from coast to coast

For export interests specific to Western Canada, tariff preferences for the following products will result in enhanced market access opportunities:

“The free trade agreement with Ukraine will help Canadians involved in our globally competitive agri-food sector that exports half of our beef production, 65% of our malt barley, two-thirds of our pork, almost 75% of our wheat, and 90% of our canola.”

Brian Innes, President, Canadian Agri-food Trade Alliance

For Central Canada, tariff preferences for the following products will result in enhanced market access opportunities:

“The opportunity here is limitless. This unique and historic trade agreement will create economic development in both countries. As a proud Canadian of Ukrainian heritage, I'm grateful to the leadership of both governments for their work concluding this agreement. God Bless Canada and Ukraine."

Eugene Melnyk, Owner, Governor and Chairman, the Ottawa Senators Hockey Club

For Atlantic Canada, tariff preferences for the following products will result in enhanced market access opportunities:

“We applaud the Government of Canada’s initiative to strengthen economic ties with Ukraine and welcome the news that free trade negotiations have concluded. This initiative will have an important impact on the economic well-being of Ukraine and its citizens.”

Ihor Walter Bardyn, President, Ukrainian National Federation of Canada

“This signals a positive step forward for both Canada and Ukraine, and will serve as a stabilizing factor in Ukraine’s economy.”

Orest Steciw, President, League of Ukrainian Canadians

Beyond Tariffs

CUFTA includes provisions to address non-tariff barriers, including those related to labelling, and to help ensure that sanitary and phytosanitary measures relating to food safety, and animal and plant health are not used as unjustified barriers to trade.

Building on the strength of the existing Canada-Ukraine commercial relationship, CUFTA establishes mechanisms under which Canada and Ukraine can discuss, prevent and resolve unjustified non-tariff barriers that may arise in the context of exporting agricultural, and fish and seafood products. Such mechanisms include the creation of a Committee on Trade in Goods and Rules of Origin, as well as dedicated Subcommittees on Agriculture and on Origin Procedures.

CUFTA will also ensure opportunities and tools for Canadian and Ukrainian regulators to exchange information in order to better understand each other’s regulatory requirements, which stands to benefit both importers and exporters.

Rules of Origin

Under CUFTA, only goods that “originate” in Canada and/or Ukraine may benefit from preferential tariff treatment. CUFTA, like all of Canada’s FTAs, includes rules of origin that specify how much production must occur in Canada and/or Ukraine for a product to be considered originating and therefore eligible for preferential CUFTA tariff rates. The rules of origin under CUFTA reflect Canadian production patterns and sourcing realities, thereby enabling Canadian exporters from across the country to take advantage of CUFTA tariff preferences.

Origin Procedures and Trade Facilitation

Canada and Ukraine share a desire to keep border procedures simple, effective, clear, and predictable in order to facilitate trade. CUFTA provides for transparent and effective origin procedures to administer and promote compliance with rules of origin, without creating unnecessary obstacles to trade. Other provisions in CUFTA include access to advance rulings on the origin or tariff classification of products; the promotion of automated border procedures through the use of information technology in order to expedite procedures for the release of goods; and the establishment of an impartial and transparent system for addressing any complaints about customs rulings and decisions. Together, these provisions will make it easier, faster and potentially less costly for Canadians to do business in the Ukrainian market.

Emergency Action

In order to safeguard against serious injury to a domestic industry resulting from a surge in imports following a reduction in tariffs under CUFTA, the Agreement contains an Emergency Action chapter that includes transitional provisions (valid only for the first seven years following entry into force) allowing for temporary tariff increases in exceptional circumstances.

Sanitary and Phytosanitary Measures (SPS)

The CUFTA chapter on sanitary and phytosanitary (SPS) measures reaffirms Canada and Ukraine’s commitments pursuant to the World Trade Organization (WTO) Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement). The SPS Agreement recognizes the rights of members to take measures necessary for the protection of human, animal, or plant life or health, while requiring that these measures be based on scientific findings, and do not create unjustified restrictions on trade. Under CUFTA, Canadian and Ukrainian officials will facilitate communication on SPS-trade related matters, and will work expeditiously to resolve any issues that may arise. Early and effective cooperation in addressing SPS issues will benefit Canadian exporters by helping to ensure that market access gains under CUFTA are not undermined by unjustified SPS trade barriers.

Technical Barriers to Trade

As tariffs are eliminated, the prevention and removal of technical barriers to trade (TBT) and other types of non-tariff measures takes on greater importance. The TBT chapter will help ensure that technical regulations, conformity assessment procedures, and other standards-related measures are not used as barriers to trade. It will also help Canadian exporters by creating mechanisms to minimize and, where possible, eliminate the negative impacts of discriminatory or overly burdensome regulatory requirements.

This chapter also includes a provision requiring Canada and Ukraine to label wine as icewine only if the wine is made exclusively from grapes naturally frozen on the vine. This provision complements Canada’s global effort to protect Canadian icewine from imitation products, including those made from industrially frozen grapes, and will help to ensure that icewine continues to be recognized world-wide as a high-quality product. These provisions will benefit Canada’s wine producers in Central and Western Canada.

Competition Policy, Monopolies and State Enterprises

The Competition Policy, Monopolies and State Enterprises chapter aims to ensure that the benefits of trade liberalization are not offset by anti-competitive business conduct. While both Canada and Ukraine have existing domestic competition laws, CUFTA sets out a framework for effective enforcement action against anti-competitive business conduct, thereby making the trading environment fairer and more predictable for Canadian business, and ultimately benefiting consumers. The chapter also obliges Canadian and Ukrainian designated monopolies and state enterprises to operate in a manner consistent with the Agreement when exercising delegated governmental authority, and to accord non-discriminatory treatment to each other’s entities in relation to monopoly goods or services.

Government Procurement

CUFTA will provide companies with preferential access to procurement opportunities at the central government level in both countries. Canadian suppliers will have the right to fair, non-discriminatory and predictable treatment when bidding on procurement opportunities tendered by the Ukrainian central government entities, including government departments and agencies as well as several public enterprises such as airports, the postal system and public transportation (rail and subway systems).

Intellectual Property (IP)

An effective IP regime is important for Canada’s growing knowledge-based economy as it will help to foster competitiveness, innovation, and creativity; and stimulate jobs and growth. The IP provisions in CUFTA contribute to a sound and balanced framework for the protection and enforcement of IP rights. The IP chapter includes commitments which will facilitate cooperation between Canada and Ukraine to enhance the protection of IP rights and to combat IP rights infringements. The provisions of this chapter also establish a consultation mechanism which would provide an avenue to aid in the bilateral resolution of related issues between Canada and Ukraine.

Electronic Commerce

Twenty years ago, electronic commerce was in its infancy. Today, electronic commerce is a part of daily life and Canadians can buy and sell almost everything online. Canadians shop and plan holidays online, and buy and download software and entertainment content, including movies, television and music.

CUFTA includes a commitment between Canada and Ukraine to not apply customs duties and other charges to digital products transmitted electronically, which will provide greater certainty to Canadian businesses and consumers in all provinces and territories that are engaged in electronic commerce with Ukraine.

Labour

Labour provisions in trade agreements seek to defend Canada’s competitive position and support the promotion and realization of workers’ rights in partner countries. In line with recent labour provisions of free trade agreements, CUFTA includes a comprehensive and enforceable labour chapter. For Ukraine, at the time of entry into force, it is the most comprehensive labour chapter ever negotiated.

This chapter commits Canada and Ukraine to effectively enforce their laws, which must respect the International Labour Organization 1998 Declaration on Fundamental Principles and Rights at Work and provide acceptable protections for occupational health and safety, hours of work, wages, and migrant workers. The labour chapter emphasizes cooperation on labour matters and also includes a dispute settlement mechanism that can result in monetary penalties in cases of non-compliance, and institutional mechanisms designed to monitor compliance with labour commitments.

Environment

CUFTA includes a substantive chapter on the environment. For Ukraine, at the time of entry into force, it is the most comprehensive environment chapter ever negotiated. CUFTA’s environment obligations will ensure a level playing field for Canadian and Ukrainian companies as both countries commit to not lowering their levels of protection to attract trade or investment. The Agreement also reinforces Canada’s and Ukraine’s mutual commitment to maintain high levels of environment protection while we continue to develop our trade partnership. Canada and Ukraine agree to: effective enforcement of their environmental laws; promote greater accountability, public participation and transparency; and ensure that citizens have access to domestic remedies in the face of a violation of an environmental law. Moreover, Canada and Ukraine agree to cooperate in areas of mutual interest.

Trade-Related Cooperation (TRC)

CUFTA includes a TRC chapter, illustrating the important role of TRC in allowing both countries to maximize the benefits of the Agreement. The chapter notes Canada’s and Ukraine’s intention to promote TRC; provides for an ongoing dialogue on using TRC to enhance the benefits of the Agreement; and includes a listing of indicative areas for TRC.

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