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Canada-Ukraine Free Trade Agreement modernization

On January 27, 2022, Canada and Ukraine announced the launch of negotiations for the modernization of the Canada-Ukraine Free Trade Agreement (CUFTA). The original CUFTA entered into force on August 1, 2017, eliminating tariffs on most bilateral merchandise trade. It has a range of commitments related to non-tariff measures aimed at ensuring gains in market access are not constrained by unjustified trade barriers. It also includes commitments related to trade facilitation that are designed to reduce red tape at the border.

In 2021, Canada’s bilateral trade reached its highest total ever. The value of Canada’s merchandise exports to Ukraine totalled $220 million and the value of merchandise imports from Ukraine amounted to $227 million. However, the Russian invasion in February 2022 and the resulting war in Ukraine has negatively affected overall bilateral trade and investment, leading to a 31% fall in Canada’s exports to Ukraine. In 2022, the value of Canada’s merchandise exports to Ukraine totalled $150 million and the value of merchandise imports from Ukraine totalled $271 million.

CUFTA has a review clause (Article 19.2) committing the 2 countries to review the agreement within 2 years of its entry into force, with a view to expanding it to include new areas not part of the original agreement, such as investment and trade in services. The parties will also be exploring areas not identified in the review clause, such as inclusive trade. In July 2019, Prime Minister Justin Trudeau and Ukraine’s President Volodymyr Zelenskyy agreed to modernize CUFTA to create new opportunities and good, middle-class jobs for Canadians and Ukrainians alike.

Canada conducted public consultations in early 2020 to seek the views of Canadians on the potential modernization of CUFTA. A report on the consultations was published on the Global Affairs Canada website in May 2020. During the consultations, Canadians expressed broad support for modernizing the agreement as a means to further strengthen Canada and Ukraine’s bilateral commercial relationship and to build on Canada’s current engagement with Ukraine.

Modernizing CUFTA will create new opportunities to maximize the agreement’s benefits for Canadian workers, entrepreneurs and small and medium-sized enterprises. It will also help reinforce the rules-based international system by advancing fair, inclusive and transparent trade with Ukraine. Additionally, as part of Canada’s continued support to Ukraine following the Russian invasion and war, the modernized CUFTA will support prospects for long-term security, stability and economic recovery in Ukraine.

Canadian and Ukrainian officials conducted negotiations from May 2022 to April 2023. On April 11, 2023, Prime Minister Justin Trudeau and Ukraine’s Prime Minister Denys Shmyhal signed a joint declaration announcing the substantive conclusion of CUFTA-modernization negotiations.

Consulting Canadians

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