Summary of Initial GBA Plus for Negotiations to Modernize the Canada-Ukraine FTA
Table of Contents
- 1. Background
- 2. Process
- 3. Stakeholder consultations: what we heard
- 4. Data sources for the Initial GBA Plus
- 5. Summary of Initial GBA Plus
- 6.Canada’s gender equality laws, policies and programs
- 7. Conclusion
- Next steps
- Annex A - Background on GBA Plus
- Annex B - Background on Canada’s inclusive approach to trade
- Annex C - List of other government departments, agencies or Crown corporations that lead, co-lead or provide support to Global Affairs Canada on the modernization of CUFTA
- Annex D - Questions to guide GBA Plus analysis of trade negotiations
- Annex E - Background on FTA partner market for Canadian goods, services, and investment
- Annex F - Background on objectives of FTA chapters
- Annex G - Background on the trade and gender nexus
- Annex H - Women’s economic empowerment programming in Canada
The initial GBA Plus for the Canada-Ukraine FTA modernization was conducted prior to the Russian invasion of Ukraine in February 2022. Since the invasion, Canada has announced a suite of policy measures aimed at bolstering Ukraine’s economic resilience and holding Russian leadership to account. These measures include recent re-engagement on the Canada-Ukraine Free Trade Agreement (CUFTA) modernization.
The Initial GBA Plus is expected to identify and analyze the differentiated effects of the CUFTA modernization on women and other under-represented groups in Canada and to the extent possible in Ukraine. In the case of women and under-represented groups in Ukraine, however, their current situation and anticipated impacts of the invasion on their economic participation and involvement in international trade are difficult to assess as the conflict is ongoing and a multitude of factors will need to be considered.
Canada is nevertheless committed to take into account the current situation of these groups in Ukraine and will endeavor to mitigate effects of the invasion during negotiations of the CUFTA modernization. The final GBA Plus conducted at the end of negotiations will also endeavor to assess and identify ways to mitigate the impacts of the Russian invasion on women, visible minorities, LGBTQI, people with disabilities and Indigenous peoples in Ukraine. Canada sees the CUFTA modernization as one of many ways of supporting Ukraine’s independence, resilience and economic recovery, with a focus on economic participation of these groups so that no one is left behind, in the spirit of inclusive trade and achieving the Sustainable Development Goals.
The Government of Canada is committed to the advancement of an inclusive approach to trade, which seeks to ensure that the benefits and opportunities resulting from FTAs are more widely shared, including among under-represented groups in Canada’s economy and trade, such as women, small and medium-sized enterprises (SMEs), and Indigenous peoples. In this regard, the government has committed to conduct a comprehensive quantitative and qualitative chapter-by-chapter gender-based analysis Plus (GBA Plus) process to inform negotiations to modernize the Canada-Ukraine Free Trade Agreement (CUFTA). GBA Plus is an analytical tool used by the Government of Canada to support the development of responsive and inclusive initiatives, including policies, programs, and other initiatives. GBA Plus is a process for understanding who is impacted by the issue being addressed by the initiative; identifying how the initiative could be tailored to meet diverse needs of the people most impacted; and anticipating and mitigating any barriers to accessing or benefitting from the initiative.
This summary of the initial GBA Plus conducted on negotiations to modernize the CUFTA is being published in order to seek stakeholder feedback on the differentiated effects of anticipated provisions on men, women and gender-diverse people in Canada and Ukraine, and on any other intersecting identity where possible, with SMEs and Indigenous peoples as priority considerations.
In the meantime, the GBA Plus is contributing to a better understanding of the potential effects and opportunities of a potential modernized CUFTA on all people in Canada—workers, producers, business owners, entrepreneurs, and, where possible, consumers. In this regard, the GBA Plus will inform Canadian officials in negotiations with Ukraine and help identify opportunities for Canada to pursue new gender-responsive and inclusive trade provisions across CUFTA as well as relevant potential domestic policy responses if an effect or opportunity cannot be addressed through potential provisions or an agreement.
This initial GBA Plus is complementary to and advances Canada’s Feminist Foreign Policy. It also helps further progress on Goal 6 of the government of Canada’s Gender Results Framework—gender equality around the world—in order to achieve a more peaceful, inclusive, rules-based and prosperous world by pursuing a feminist international approach to all policies and programs, including trade.
The comprehensive chapter-by-chapter GBA Plus process developed to inform the ongoing negotiations to modernize CUFTA builds on and expands the mandatory GBA Plus process that is required to seek Cabinet authority to engage in FTA negotiations, which Global Affairs Canada (GAC) has implemented consistently since 2016.
The Canada-Ukraine Free Trade Agreement (CUFTA), which entered into force on August 1, 2017, represents an important milestone in the Canada–Ukraine bilateral relationship. In addition to generating commercial benefits for Canadian businesses, CUFTA supports the economic reform efforts of the Government of Ukraine, and aims to contribute to long-term security, stability, and broad-based economic development in Ukraine.
In July 2019, Canadian Prime Minister Justin Trudeau and Ukrainian President Volodymyr Zelensky announced a mutual commitment to expand and modernize CUFTA. A modernization of CUFTA provides an opportunity to increase the Agreement’s benefits for Canadians by further diversifying and expanding Canada’s preferential access to Ukraine, and advancing an inclusive approach to trade such that the benefits of trade are more widely shared in Canada and Ukraine. A modernization of CUFTA would also help reinforce the rules-based international system and promote the development of global value chains, strengthening Canada’s connectivity to the region. Additionally, it will play a positive role in ensuring growth and job creation in both Canada and Ukraine during the post-pandemic economic recovery.
Public consultations to seek the views of Canadians on modernization of the Canada-Ukraine FTA were held in February/March 2020. Global Affairs Canada heard from five provincial and territorial governments, fourteen businesses and industry associations, six civil society organizations, and two individuals, for a total of 27 submissions. Global Affairs Canada also heard from Indigenous peoples’ representatives. The majority of submissions were either positive or neutral. A report summarizing the findings of the public consultations was subsequently published online.
CUFTA contains a clause (Article 19.2) that commits the Parties to review the Agreement within two years of its entry into force “with a view to examining the further development and deepening of its provisions, and to extending it to subject matters not covered by the Agreement.” The review clause identifies the areas of cross-border trade in services (CBTS), financial services, investment, telecommunications, and temporary entry, but does not restrict the Parties from exploring other potential areas to include in the Agreement.
In addition to the areas of trade in services and investment referenced by Article 19.2 of the CUFTA, as part of modernization of the CUFTA, Canada is also seeking to:
- Add new provisions on good regulatory practices, trade and gender, trade and Indigenous peoples, and trade and SMEs;
- Update existing chapters on e-commerce, transparency, government procurement, labour, and environment; and
- Create separate chapters for provisions on state-owned enterprises and competition policy, as they are currently contained within a single chapter of the CUFTA.
Accordingly, the scope of this Initial Gender-Based Analysis Plus (GBA Plus) is limited to these areas which have specifically been identified by Article 19.2 or have been identified by Canada and Ukraine as areas of interest for modernization negotiations. This GBA Plus will not touch upon any other provisions in the 2017 text of the CUFTA.
1.1 Status of women and other marginalized groups in Ukraine
According to the United Nations Development Program (UNDP)’s 2020 Human Development Report, Ukraine has a high standard of human development.Footnote 1 Ukraine ranked 52nd out of 162 countries evaluated against the UNDP Gender Equality Index, but gaps remain: only 21% of Ukraine’s seats in Parliament are held by women.Footnote 2 According to the Association of Women Lawyers of Ukraine (JurFem), on average, women earn 23% less than their male counterparts. According to this same study, 46% of business owners are women. In 2019, 52.4% of women in Ukraine were unemployed.Footnote 3
Ukraine’s economic and political institutions remain male-dominated. Although women have access to employment and education, they are overrepresented in traditionally female roles such as administrative assistants, teachers and social workers, and insufficiently represented in senior decision-making positions.Footnote 4 The non-implementation of domestic legislation on gender equality and the absence of political will to advance gender equality at all levels remain problematic.Footnote 5 Since the outbreak of the pandemic, reports of sexual and gender-based violence have increased by 35% throughout Ukraine. The protracted conflict with Russia in the East of Ukraine has affected women living in that region, leading to increased rates of gender-based violence and single mother-headed households. In addition, in Ukraine, similar to other countries, the impact of COVID-19 has been devastating on women, who have suffered greater loss of employment either due to employment ceasing or being saddled with child-care and family care responsibilities during lockdowns.
Some recent progress has been seen in respect of LGBTQ+ rights in Ukraine. Homosexuality was decriminalized in 1991, and employment protections were introduced in 2015Footnote 6. That being said, same-sex relationships do not have legal status, and LGBTQ+ activists continue to push for equality and protections against discrimination and hate crimesFootnote 7.
Indigenous status is claimed by three groups of people in Ukraine: Crimean Tatars, Karaites, and Krymchaks. These groups make up 0.5%; >0.1%; and >0.1% of the Ukrainian population, respectively, and all three are traditionally concentrated in the Crimean Peninsula, an area of Ukraine which is currently illegally occupied by Russia. Ukraine recently adopted a law to recognize and protect the cultural, educational, linguistic and information rights of these three Indigenous peoplesFootnote 8. Modernization of the CUFTA is not expected to have many direct effects, negative or positive, for any of these groups.
In January 2018, the Trade Policy and Negotiations Branch at Global Affairs Canada appointed a gender focal point and established a GBA + action plan, the implementation of which positioned the department to deliver on Canada’s inclusive approach to trade and other government priorities.
Following the July 2019 announcement by PM Trudeau and President Zelensky that Canada and Ukraine would seek to modernize CUFTA, drafting of the initial GBA Plus was initiated as officials prepared for the proposed CUFTA modernization negotiations. The GBA Plus analysis was developed through the use of a custom-designed guidance questionnaireFootnote 9 and other supporting materials for use by lead negotiators for each area under consideration. Public consultations on the potential modernization were launched in February 2020, followed by a Notice of Intent to conduct impact assessments, including this GBA Plus, in March 2021. The analysis was updated and revised based on feedback received from gender equality experts and the Government of Canada’s gender focal point network across relevant departments. This summary is based on the initial GBA Plus, which is used by officials to guide and adapt their approach to the modernization negotiations.
3. Stakeholder consultations: what we heard
Global Affairs Canada (GAC) conducted two public consultations on the potential modernization of CUFTA. The first consultation from February 15 to March 16, 2020 focused on how Canada should best prioritize and proceed with possible CUFTA modernization negotiations, including in areas such as services, investment, and inclusive trade. The second consultation from March 20 to May 4 2021 sought input specifically on the government’s intent to conduct an initial environmental assessment and GBA Plus of the potential modernization of CUFTA. In addition, GAC’s Gender and Trade Advisory Group (GTAG) GBA Plus committee was consulted on the draft GBA Plus analysis in June and July 2021.
Overall, those consulted noted that CUFTA modernization would provide the opportunity to include new provisions to reflect Canada’s inclusive trade objectives, including commitments for gender, small and medium-sized enterprises (SMEs), and Indigenous peoples. In this context, interests raised by stakeholders included the incorporation of provisions for individuals with disabilities, the inclusion of a general exception for the rights of Indigenous peoples, and more robust labour and environment provisions.
Further, stakeholders recommended that Canada take an intersectional approach to gender analysis, including consideration of marginalized groups and intersecting identities. Stakeholders also recommended providing specific examples of how new obligations once implemented would positively impact women and other groups, or conversely to acknowledge and recognize the limitations of trade agreements to enact change in support of inclusive outcomes.
A full report of submissions received during the first public consultations can be found here. No submissions were received during the second public consultations.
4. Data sources for the Initial GBA Plus
A variety of data and research sources was used in conducting the GBA Plus for each chapter. Data publications from Statistics Canada include:
- Women in Canada: A Gender-based Statistical Report (2017)
- Labour Force Survey, December 2019
- Census 2016
- National Household Survey (2017)
- Survey on Financing and Growth of Small and Medium Enterprises, 2017
- Research Blog: Women-owned businesses in Canada (2019)
- Business Register (December 2019)
- Trade in goods by exporter characteristics, by enterprise employment size and industry
Other sources include:
- Global Affairs Canada Women-Owned SMEs and Trade Barriers (2020)
- Global Affairs Canada Indigenous-Owned Exporting Small and Medium Enterprises in Canada (2019)
- Standards Council of Canada Gender and Standardization Strategy 2019-25
- The World Bank Women, Business and the Law (2021)
- The World Bank Gender Data Portal
It should be noted that data on gender and particular sectors in Ukraine was often not readily available. One of the most important sources of data on Ukraine’s economy and inclusivity was the GBA Plus conducted by the Canada-Ukraine Trade and Investment Support (CUTIS) Project on Export Challenges for Ukrainian MSMEs.
5. Summary of Initial GBA Plus
5.1 Economic impact assessment
The provisions Canada will seek to add or update as part of the modernization of CUFTA will improve the business environment for stakeholders in Ukraine and in Canada by strengthening trade rules and increasing transparency and certainty in the areas of services, investment, government procurement, state-owned enterprises, digital trade, and inclusive trade, including environment and labour. While the economic effects of tariff reductions and eliminations are relatively straightforward, quantifying the impact of strengthening rules and improving transparency and certainty is much more difficult. Given that barriers to trade in services and investment typically are part of broader regulatory frameworks governing the delivery of services and investment in a given jurisdiction, the extent to which services and investment provisions can reduce the trade-inhibiting aspects of these regulations is very hard to measure directly.
Further, the Office of the Chief Economist at Global Affairs Canada usually relies on the Organization for Economic Cooperation and Development (OECD), the World Bank, and other international organizations to provide credible data to measure the existing regulatory regimes and potential changes in an FTA partner country. Such information is available for most industrialized countries, but is not available for Ukraine. As a result, a detailed economic analysis about the potential effects of changes in trade rules under the proposed modernization is not possible in the short term until more data is available for Ukraine.
5.2 CUFTA and current bilateral trade
With CUFTA’s entry-into-force on August 1, 2017, Canada eliminated duties on 99.9 percent of imports from Ukraine. Similarly, Ukraine immediately eliminated tariffs on approximately 86 percent of Canada’s exports, with the balance of tariff concessions to be implemented over seven years. Once fully in force, CUFTA will eliminate tariffs on the majority of goods currently traded between Canada and Ukraine.
In 2022, Canada’s merchandise exports to Ukraine totaled $150.2 million, and merchandise imports from Ukraine were $271.2 million, for a total bilateral merchandise trade of $421.3 million, a decrease of 5.8% compared to 2021.. In 2022, Canada’s top exports to Ukraine were vehicles and parts ($58.3M), fish and seafood ($18.4M), and pharmaceutical products ($17.1M). Canada’s top imports from Ukraine were fats and oils ($58.9M), iron and steel ($58.9M), and electrical and electronic machinery and equipment ($31.7M). In 2021, the stock of Canadian investment in Ukraine was valued at $114 million. Data on Ukrainian investment in Canada is unavailable.
In 2020, Canada’s merchandise exports to Ukraine directly or indirectly supported 927 jobs, of which 336 were occupied by women.Footnote 10 Of this, 77 were in retail trade, 50 in food manufacturing, 29 in crop and animal products, 29 in wholesale trade, 10 in chemical manufacturing and 132 in other. Similar import data is unavailable.
Gender of ownership share: Exports and exporters with Ukraine
In 2018, women-owned Canadian businessesFootnote 11 made up 25.8% of export value and accounted for 12.9% of Canadian exporters doing business in Ukraine for which ownership information is available. When looking at imports, women-owned Canadian businesses contributed to 3.6% of import value and accounted for a larger share of importers, at 19.3%. Comparatively, in the same year, equally-owned Canadian businesses made up 6.4% of export value and 20.3% of import value while accounting for 7.2% of exporters and 10.1% of importers.
Gender of ownership share: Imports and importers with Ukraine
When looking at imports, women-owned Canadian businesses contributed to 3.6% of import value and accounted for a larger share of importers, at 19.3%. Comparatively, in the same year, equally-owned Canadian businesses made up 20.3% of import value while accounting for 10.1% of importers.
5.3 Chapter-by-Chapter GBA Plus
The initial GBA Plus also includes a chapter-by-chapter analysis for all 16 areas (chapters or provisions) under consideration to be added or updated during the CUFTA modernization negotiations. For the purposes of this report, the assessment has been broken down into two main groups of related chapters: 1) services, investment and government procurement, further broken down by new chapters to be added and those to update; and 2) chapters and provisions, both new and updated, which seek to make the agreement more inclusive.
5.3.1 Services, investment and government procurement
While CUFTA is considered a comprehensive FTA, it does not include provisions on services and investment. Modernization seeks to add new chapters on services and investment, while updating existing chapters on e-commerce and government procurement, among others. The first group of chapters in this summary includes potential new chapters on Cross Border Trade in Services (CBTS), Temporary Entry (TE), Telecommunications, Financial Services, Investment; potential updates to existing chapters on Electronic Commerce and Government Procurement (GP); and creation of new chapters to update existing provisions on State-Owned Enterprises (SOEs) and Competition Policy, which are currently contained within a single chapter entitled “Competition policy, Monopolies and State Enterprises”. Broadly, the purpose of these chapters is to help Canadian suppliers, services providers and investors gain market access and to ensure that the regulatory system in Ukraine is predictable and transparent to Canadian business. For more information on the purpose of each of these chapters, please see Annex F.
The findings of the initial GBA Plus revealed opportunities to pursue gender-responsive and inclusive provisions across a number of these chapters, pending Ukraine’s willingness to agree to such negotiated outcomes. For example:
Proposed new chapters
Cross Border Trade in Services (CBTS) chapter: In CUFTA, Parties negotiated but did not conclude a CBTS chapter. As the chapter that was on the table is dated, Canada would propose an updated version with robust disciplines in a stand-alone Development and Administration of Measures (DAM) Chapter to facilitate services trade, including provisions seeking gender equality. The GBA Plus found that in Canada in 2019, 42 percent of employees in services sectors that require a license were women. Therefore, gender equality provisions in a DAM Chapter could be sought to improve predictability and transparency, and reduce trade costs by facilitating the authorization to provide a service, including the acquisition of licenses, without being discriminated against based on gender.
Temporary Entry for Business Persons chapter: Canada seeks to ensure that couples and families can benefit from the market access gains achieved in an FTA, including with respect to accessing high-quality professional jobs on a temporary basis in FTA partner countries. While still subject to negotiation with Ukraine, Canada’s Temporary Entry for Business Persons chapter typically seeks to provide reciprocal coverage for the accompanying spouses of certain business persons, including investors, highly-skilled professionals, and intra-company transferees, thus allowing the spouse of the principal applicant to work as well. This is a key way in which temporary entry can contribute to making the FTA more inclusive. The term ‘’spouse’’ is not consistently defined in free trade agreements and, in the absence of a definition, defers to each Party’s domestic regime. For Canada, this would include same-sex partners. Canada recognizes that many households rely on dual incomes, and that providing work authorizations for spouses can promote family unification and economic independence for both spouses.
Investment chapter: Canada and Ukraine currently have reciprocal investment protection obligations through a 1995 Foreign Investment Promotion and Protection Agreement (FIPA). The FTA negotiations will seek to include a modern investment chapter based on Canada’s 2020 FIPA model to help ensure that the benefits of trade and investment are more widely shared. In this context, the GBA Plus found that there is an opportunity to advance gender-responsive and inclusive outcomes. For example, provisions could be sought with respect to investors or investments to reaffirm the government’s right to regulate to protect or promote the rights of Indigenous peoples, gender equality or cultural diversity; and to more explicitly prevent discrimination based on gender, race or religious beliefs. A new and modern investment chapter would also better define and circumscribe the obligations, thereby properly protecting the intended policy flexibilities. Other provisions could allow Parties to require enterprises to nominate women to senior management positions or to boards of directors; and address responsible business conduct (RBC) themes related to Indigenous rights, human rights, anti-corruption, supply chain transparency, labour practices, environmental protection, and gender equality. Such provisions can benefit traditionally marginalized groups by establishing government expectations for RBC and encouraging corporate due diligence uptake.
Financial Services chapter: In past trade agreements, Canada’s Financial Services chapters have not included explicit language on under-represented groups, such as women and Indigenous peoples, but the commitments included in these chapters may still have an indirect impact on these groups. In 2019, 55 percent of persons employed in finance and insurance identified as female. In the banking sector, the representation of visible minorities exceeds that of other federally regulated industries and in the public sector. Industry statistics indicate that women hold roughly 49 percent of middle management positions and 38 percent of senior management positions at Canada’s six largest banks. In recognition of the gender gap that still exists in senior management positions, Canada will use the opportunity of modernizing the Canada-Ukraine FTA to seek a commitment in the Financial Services chapter that contemplates measures requiring the representation of women in senior management positions and on the boards of financial institutions.
Telecommunications Chapter: The GBA Plus recognizes that there is a gender gap within the telecommunications industry in Canada, whereby approximately 35 percent of the employees within the sector are women, and women typically earn 25 percent to 30 percent less than men. Similarly underrepresented in the sector, Indigenous peoples occupy around 2 percent of jobs within the Canadian telecommunications service sector while representing almost 4 percent of Canada’s workforce in 2021Footnote 12. As Canada’s bilateral Telecommunications chapters in its FTAs are intended to promote consistent regulatory rules for the sector, they do not contain specific provisions dedicated to advancing gender or inclusivity outcomes, nor does the chapter seek to promote consumer access to telecommunications services. With respect to telecommunications services in Ukraine, there are no restrictions in place in Ukraine that would prevent equal access to telecommunications services between men and women.
Proposed updates to existing chapters
E-Commerce chapter: The GBA Plus found that while the “electronic shopping” sector in Canada employs nearly the equivalent number of men and women, there continues to be a considerable gap in salaries, whereby the average women’s salary is more than 50 percent below the average salary for men. Additionally, Indigenous peoples occupied only 2 percent of jobs in the sector. The modernization of the existing e-commerce chapter in CUFTA could seek provisions on protection of personal information, which is of particular importance to the LGBTQ+ community, and measures to address deceptive commercial practices and spam. Updated provisions on digital trade have the potential to act as a tool to advance gender equality and narrow the gender digital divide by facilitating access to international markets for women- and Indigenous-owned SMEs.
Government Procurement (GP) chapter: In all of its FTA negotiations, Canada seeks to secure preferential access to its trading partners’ GP markets, while retaining the necessary domestic policy space to achieve environmental and socio-economic objectives. The existing CUFTA GP Chapter supports the primary objective of providing Canadian businesses, including small and medium-sized enterprises (SMEs), with increased opportunities to access GP opportunities in foreign markets. While GP Chapters generally do not include specific gender and diversity-related provisions, the existing CUFTA has an exception in its market access schedule permitting the development of domestic procurement policies that benefit traditionally under-represented groups. In the context of modernization negotiations, Canada could further clarify and protect its ability to undertake domestic policies and programs that advance gender and inclusivity outcomes, such as the use of social procurement criteria. Social procurement refers to integrating socio-economic considerations into the procurement process to promote socio-economic development opportunities for socially or economically disadvantaged people, such as persons with disabilities or from under-represented groups.
Other proposed updates
A GBA Plus was also conducted on potential updates to the existing rules on competition and SOEs within CUFTA. While updates to these provisions could promote collaboration and sharing of best practices (competition chapter), and reserve domestic policy space to address gender and inclusivity (SOEs), modernization of these chapters is unlikely to have a significant effect in terms of gender equality and inclusivity. The potential addition of provisions related to good regulatory practices (GRP) would seek to promote good governance with greater transparency, accountability and predictability and would ensure that regulations are developed using best practices and that many perspectives are heard by regulators, including those pertaining to gender. Lastly, potential updates to the existing CUFTA transparency chapter would seek to bring its provisions in line with Canada’s most recent FTAs. Any updates are expected to have a positive effect on the broader objectives of inclusivity in the Agreement, as they would seek to include the addition of new obligations that aim to increase accessibility, promote fairness, and contribute to a more level playing field.
5.3.2 Promoting a more inclusive approach to trade
Chapters or provisions included in the second group of potential areas for negotiation, which seek to improve the inclusivity of the CUFTA, are Environment; Labour; Trade and Gender; Small and Medium-sized Enterprises (SMEs); and Trade and Indigenous Peoples. For more information on the purpose of each of these chapters or provisions, please see Annex F.
The modernization of CUFTA seeks to update existing chapters on labour and the environment, and add new chapters or provisions on trade and gender, SMEs, and trade and Indigenous peoples.
Indigenous Peoples and CUFTA modernization
The initial GBA Plus found that the modernization of CUFTA may benefit Indigenous peoples in Canada if updates to existing chapters and the addition of new provisions on trade and Indigenous peoples were included in the modernized agreement. As per Canada’s preferred approach, these provisions would seek to protect the rights of Indigenous peoples in Canada and to support their economic development and participation in trade.
Some chapters in CUFTA have existing provisions that support Indigenous peoples in Canada. For example, in the Government Procurement Chapter, Canada excludes any measures adopted or maintained with respect to Indigenous peoples. This provides Canada with the flexibility to carry out programs, such as the Procurement Strategy for Aboriginal BusinessFootnote 13, and to fulfil its legal obligations under Comprehensive Land Claims Agreements.
Canada will also seek to modernize several existing Chapters of the CUFTA:
- Environment: Canada would seek provisions to encourage Parties to recognize the importance of traditional knowledge of Indigenous peoples, which contributes to the conservation and sustainable use of biological diversity. The Chapter would acknowledge Parties’ roles as major consumers, producers, and traders of natural resources and the impact these roles can have on Indigenous peoples in fishing and forestry communities. It would also stress the importance of conservation and sustainable management of forests in contributing to economic, environmental and social objectives, and in providing livelihoods and job opportunities for Indigenous peoples.
- Transparency: Canada would seek to add provisions to encourage companies to implement responsible business conduct into their business activities. Enhanced transparency can help ensure greater corporate accountability with respect to human rights and the rights of Indigenous peoples.
- Canada will also seek to add new chapters/provisions aimed at protecting the rights of Indigenous peoples and facilitating their participation in trade:
- Investment: Canada would seek to ensure that domestic measures conferring rights or preferences to Indigenous peoples are exempted from certain obligations. Canada would also seek an obligation on the Parties to make laws and regulations regarding rights of Indigenous peoples publicly accessible. This would help ensure that investors are aware of the rights of Indigenous peoples that must be respected. Canada would also seek a non-derogation clause that would affirm that Parties will not relax domestic measures relating to, among other things, the rights of Indigenous peoples in order to attract investment.
- Trade and Gender: Canada would seek a provision for co-operation activities to support economic opportunities for under-represented women in trade, including Indigenous women.
- SMEs: Canada would seek to include provisions recognizing that Indigenous peoples may benefit from strengthened collaboration on SME promotion activities designed to increase participation in international trade.
- Trade and Indigenous Peoples: Canada would seek to recognize the unique barriers and challenges that Indigenous peoples face when seeking to participate in or benefit from international trade. Potential provisions on Trade and Indigenous Peoples in a modernized CUFTA would not create new rights or reduce rights but it would propose to establish a co-operation committee that would seek to identify and remove barriers to Indigenous economic development and participation in trade through the implementation of activities.
Canada’s Environment and Labour chapters aim to ensure that high levels of environmental protection are maintained and that international labour standards and rights are implemented effectively as trade is liberalized. In this regard, these provisions help to level the playing field between parties with regard to environmental and labour standards in order to prevent one party from gaining a competitive advantage over another. Canada has pursued opportunities to make these chapters more gender-responsive and inclusive in previous international trade negotiations.
Environment chapter: The existing CUFTA includes a substantive Environment chapter that reflected Canada’s approach at the time the agreement was negotiated (the Environment chapter was concluded in 2011). In the context of a modernized CUFTA, Canada would seek to ensure that the environment chapter reflects Canada’s recent agreements, and includes additional gender responsive and inclusive provisions to recognize that positive environmental outcomes for underrepresented groups, including women and Indigenous peoples are key to ensuring sustainability, equality, and high levels of environmental protection. The GBA Plus found that there is an opportunity to advance gender-responsive and inclusive outcomes in the environment chapter as evidence suggests that Indigenous Peoples as well as other marginalized populations such as women, the elderly, people with disabilities and lower income communities are more negatively impacted by climate change. Further, evidence suggests that women are likely to benefit most directly from high levels of environmental protection. The modernization offers an opportunity to include GBA Plus provisions in areas such as cooperation, biodiversity, fisheries, forestry, climate change and environmental goods and services, pending a willing partner in Ukraine to secure these negotiated outcomes.
Labour chapter: The existing CUFTA includes comprehensive labour obligations that are subject to a labour-specific dispute settlement mechanism that can result in penalties in cases of non-compliance. The GBA Plus analysis findings reveal that women and other marginalized groups in the workplace—including migrant workers and LGBTQ+ individuals—encountered challenges related to the gender wage gap; discrimination on the basis of gender identity and expression; sexual orientation; and gender-based harassment, bullying and violence. One of the main differences between the CUFTA labour chapter, originally negotiated in 2010-11, and Canada’s more recent FTA labour chapters is that the latter generally include more comprehensive commitments, including in relation to violence against workers and the elimination of gender-based discrimination (e.g., CUSMA), more explicit provisions against forced or compulsory labour (e.g., CPTPP, CUSMA), and a commitment to ratify and implement ILO fundamental conventions. Therefore, there is an opportunity to seek to include more inclusive labour obligations in an updated labour chapter to further protect workers against violence and discrimination.
Gender, SMEs and Indigenous Peoples: In Canada’s most recent FTA initiatives, Canada seeks to include cooperation-based chapters and provisions on Trade and Gender, SMEs, and Trade and Indigenous Peoples. These all have the objective of advancing gender equality, women’s economic empowerment and inclusivity. They are consistent with and advance Canada’s inclusive approach to trade, which seeks to ensure that the benefits and opportunities from trade are more widely shared, including among traditionally under-represented groups in the economy and trade, such as women, SMEs and Indigenous peoples, and others such as persons with disabilities, youth, LGBTQ+ persons, and newcomers to Canada.
The Trade and Gender chapter seeks to have a positive impact on women’s economic empowerment and increase their participation in international trade and investment activities. The Trade and Gender chapter:
- acknowledges the importance of incorporating a gender perspective into economic and trade issues to ensure that economic growth is inclusive;
- reaffirms relevant international instruments against gender discrimination, such as the Convention on the Elimination of All forms of Discrimination Against Women (CEDAW);
- provides a framework to undertake cooperation activities on issues related to trade and gender and remove barriers to participation; and
- establishes a committee to oversee these cooperation activities and review the operation of the Chapter and monitor other Chapters.
Canada’s model SME chapter has four main components. The SME chapter:
- acknowledges the importance of SMEs in the economy, the importance of cooperation on issues related to SMEs, and the role of the private sector in that cooperation;
- requires that parties establish a website targeting SMEs in order to make SME-relevant trade information more readily accessible, including applicable laws and regulations related to doing business with the FTA partner;
- provides a non-exhaustive and illustrative list of potential cooperation activities that could occur between the parties to remove barriers and advance SME participation in international trade and investment; and
- establishes a committee to oversee these cooperation activities, review the Chapter’s implementation and provide expertise to other committees under the FTA on SME-related issues as necessary.
Canada has yet to bring into force a Trade and Indigenous Peoples chapter with an FTA partner, despite seeking such provisions in several recent and ongoing negotiations. Canada intends to seek provisions on Trade and Indigenous Peoples in a modernized CUFTA with Ukraine. As detailed in the above “Indigenous Peoples and CUFTA Modernization” textbox, provisions on Trade and Indigenous Peoples would not seek to create any new rights for Indigenous peoples, but rather acknowledge and recognize the unique barriers and challenges that Indigenous peoples face when seeking to participate in or benefit from international trade. Canada will seek provisions which commit the Parties to:
- acknowledge the importance of enhancing the ability of Indigenous peoples and businesses to benefit from the opportunities created by a modernized CUFTA;
- reaffirm a number of existing international obligations with respect to rights of Indigenous peoples, such as the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP);
- recognize the importance of respecting, preserving and maintaining the knowledge and practices of Indigenous peoples that contribute to the conservation of the environment;
- facilitate cooperation activities between the Parties, including the sharing of information and establishment of a dedicated website containing information on the agreement that is useful to Indigenous entrepreneurs and businesses, and remove barriers to participation;
- establish a mechanism to determine and facilitate cooperation activities between the Parties to support the trade related interests and objectives of Indigenous peoples.
The GBA Plus conducted in these areas identified many barriers that women and other under-represented groups encounter when seeking to share in the benefits and opportunities of trade, including: less access to financing (including trade financing and venture capital); unequal responsibility for unpaid care work; limited access to networks, mentors and global-value chains; lack of digital and other skills and supportive infrastructure; and explicit, as well as implicit, discrimination. Therefore, new provisions in each of these chapters will be sought to address these barriers to the extent possible, including in a proposed co-operation activities article that will provide a non-exhaustive and illustrative list of activities for governments to implement, in partnership with partners and stakeholders, including business.
In summary, the chapters or provisions in Group 2 can lead to improved participation in the economy and access to the benefits of trade for women, Indigenous peoples, SMEs, and other under-represented groups in the Canadian economy.
5.3.3 Development dividends of commitments to make FTAs more inclusive
Canada’s suite of co-operation based inclusive trade chapters (Trade and Gender, SME, and Trade and Indigenous) have development dividends for our trade agreement partners. They encourage the implementation of activities where best practices are shared and exchange of information on policies and programs to advance the economic development of under-represented groups in the economy; that help to advance the capacity of officials and others in the partner country; facilitate partnership, including with private sector and civil society organizations; and reduce systemic barriers to trade for under-represented groups, resulting in sustainable and inclusive economic development and trade. These chapters also serve to help advance the trade partner’s understanding and adoption of global standards on labour, environment, gender equality and other issues. Inclusive provisions also help level the playing field, advance economic development in Canada and have side benefits for FTA partners if they embrace the opportunity. They help maximize potential gains of trade for both Canada and the FTA partner, help build a strong relationship with the FTA partner, and advance Canadian values abroad.
6. Canada’s gender equality laws, policies and programs
Canada has many domestic laws, policies and programs already in place to support gender equality and economic empowerment for traditionally under-represented groups. These federal, provincial and territorial laws, policies and programs will serve to mitigate any potential negative effects of free trade agreements.
For more information visit Federal gender equality laws.
The Government of Canada has made the achievement of gender equality and supporting the empowerment of women and girls a priority for domestic and international policies, and conducting a GBA Plus of all policies and programs is an important tool to help deliver on that goal. It is important to recognize, however, that all FTAs are a negotiated outcome and Canada may not achieve all of its goals in the negotiation of a modernized FTA with Ukraine.
The initial GBA Plus demonstrates that while the addition of chapters and updates to CUFTA may not have direct impacts on improving inclusive outcomes, there are clear opportunities in other areas of the Agreement to increase gender-related benefits. For example, the modernization of environment and labour chapters and the addition of chapters and obligations on trade and gender, SMEs and trade and Indigenous peoples could improve the level of participation in trade and employment conditions for women, Indigenous peoples and other traditionally under-represented groups. In order to achieve these results, it will be important for the cooperation activities geared to advancing gender equality, women’s economic empowerment and inclusivity be implemented effectively with demonstrated value-added and positive results over time.
There are limitations of applying GBA Plus to FTA negotiations that are important to recognize as well. For example, trade policy may be unable to address all GBA Plus findings. In many cases, gaps and barriers identified by the GBA Plus are related to domestic policies and regulations, both within Canada and in Ukraine, that would need to be addressed through other government mechanisms.
Applying the GBA Plus process to the modernization of an existing FTA offers the opportunity to reflect on past practices and identify where a more inclusive lens can be applied to specific measures and provisions in the Agreement. In the context of negotiating with Ukraine, the GBA Plus exercise offers another tool to strengthen the gender-responsive and inclusive nature of the agreement and also support Ukraine’s reform efforts towards greater transparency and stability in order to support economic growth and prosperity.
Following publication of the Summary of the Initial GBA Plus for negotiations to modernize the CUFTA, Global Affairs Canada will undertake these next steps:
- Invite stakeholder feedback on this summary of the initial GBA Plus until April 3, 2023. Stakeholders can provide comments on questions below or any other issue. Stakeholders may submit their comments online via email to firstname.lastname@example.org.
- Global Affairs Canada will integrate comments into the GBA Plus to inform ongoing negotiations.
- Officials will continue to update and renew the GBA Plus for each area as negotiations proceed and as new data and evidence come to light.
- Once the FTA negotiations are concluded and a modernized CUFTA is signed, Global Affairs Canada will conduct the final GBA Plus on the agreement and publish a summary online to inform how any risks or opportunities could be addressed in domestic policy responses or activities implemented by committees established under the trade agreement.
Questions for stakeholders
- Based on the summary of the initial GBA Plus, what gaps do you see in the analysis and what risks does this pose?
- What other provisions could be included in a modernized CUFTA in order to advance gender-related issues?
- From your point of view, what are the effects and opportunities for under-represented groups in Canada of the proposed modernization of CUFTA?
- Are there unintended negative effects of trade due to modernization of CUFTA on women or other groups that you would like to highlight? In your view, what can be done to promote further positive effects and what could be done to help mitigate negative effects?
Annex A - Background on GBA Plus
The Government of Canada has made advancing gender equality a top priority. To this end, the government has mandated that Gender-based Analysis Plus (GBA Plus) be integrated in all policies and proposals. In Budget 2018, the government committed that all free trade agreements (FTAs) would be subject to GBA Plus.
What is GBA Plus?
GBA Plus is an analytical tool used by the Government of Canada support the development of responsive and inclusive initiatives, including policies, programs, and other initiatives. GBA Plus is a process for understanding who is impacted by the issue being addressed by the initiative; identifying how the initiative could be tailored to meet diverse needs of the people most impacted; and anticipating and mitigating any barriers to accessing or benefitting from the initiative. Moreover, GBA Plus is an intersectional analysis that goes beyond biological (sex) and socio-cultural (gender) differences to consider other factors, such as:
- geography (urban, rural, remote, Northern, coastal)
- socio-economic status
- family status
- sexual orientation
- gender identity and expression
- mental or physical disability
GBA Plus challenges assumptions and puts the lived experiences of diverse peoples at the forefront of a particular issue. GBA Plus prompts officials to consider the full impact of government initiatives and to identify potential challenges at an early stage so that they can be addressed in policy design and implementation. GBA Plus puts people at the heart of decision making, and aims to ensure that inequalities are not exacerbated or perpetuated.
To learn more about GBA Plus, Women and Gender Equality Canada provides a free online course and several short videos.
GBA Plus in trade agreements
When GBA Plus is applied to trade agreements, its findings can help inform negotiators and policymakers of the best ways to address gender and inclusivity considerations. This can help in the identification of potential risks and opportunities created through the application of an FTA. The end goal is to mitigate potentially negative impacts, enhance positive opportunities, and to ensure that all Canadians benefit from trade. Essentially, GBA Plus helps develop more gender- and inclusivity-responsive trade policies and related measures. GBA Plus is changing the way we do trade policy in Canada.
A critical factor in conducting a quality GBA Plus is collecting and assessing gender disaggregated data. This data provides the evidence base for understanding the effects of policies, including trade policies, on population groups. For Canada, data comes from Statistics Canada’s Census, Labour Force Survey and other surveys such as Women in Canada, as well as through stakeholder consultations. Global Affairs Canada’s Office of the Chief Economist uses this data for economic models that help highlight the effects of FTAs on gender and other sub-groups in the population.
GBA Plus recognizes the diversity and multiplicity of overlapping identity factors and how diverse groups of Canadians may be impacted by government initiatives, including trade agreements. GBA Plus puts people at the heart of policy development and helps deliver on innovation as it encourages officials to think outside of the box. GBA Plus will help ensure that Canada’s FTAs are more gender responsive and inclusive so all members of Canadian society can benefit more from free trade and continued economic growth.
GBA Plus will also help Canada deliver on the United Nations 2030 Agenda for Sustainable Development Goals, including Goal 5 on gender equality.
Annex B - Background on Canada’s inclusive approach to trade
As part of the Government of Canada’s trade diversification strategy, we are pursuing an inclusive approach to trade that seeks to ensure that more Canadians have access to the benefits and opportunities that flow from international trade and investment. This includes those Canadians who have traditionally been under-represented in international trade and investment, including women, small and medium-sized enterprises (SMEs), and Indigenous peoples. This means seeking trade policies that are sustainable, transparent and inclusive.
Why is an inclusive approach to trade important?
Trade liberalization has been a significant stimulus to economic growth and prosperity around the world, including in Canada. However, the Government of Canada is aware that criticism of international trade and globalization has led to protectionist movements and a retreat from the international rules-based order, a system that has provided unparalleled prosperity to Canada and others for decades.
In response, we are committed to creating opportunities for more Canadians to engage in and benefit from trade, while at the same time advancing broader economic, social, and environmental priorities.
We have also talked to a diverse range of Canadians to hear their views on trade.
Although, overall, Canadians support trade, many have also expressed concerns. Some of these include:
- a perceived lack of transparency in trade agreement negotiations
- the perception that large corporations are accorded special rights and privileges
- a perception of negative or divergent effects of trade agreements on certain populations, particularly members of the middle class and workers in traditional industries
- perceived threats to the environment, health, safety and consumer standards, as well as governments’ right to regulate
Responding to global concerns, as well as to input received from Canadians through our consultations, we continue to work on making trade accessible and beneficial to more Canadians. Our approach reflects and promotes domestic and international policy priorities that support economic growth that benefits everyone and maintains confidence in an open, rules-based trading system.
How the Government of Canada works to ensure our trade and investment agreements can benefit everyone.
The government’s efforts to date can be divided into three areas:
1) Putting more Canadians at the heart of our trade policy-making agenda
To better align Canadian trade policy priorities with the interests of all Canadians, we are:
- ensuring that our trade policy positions are informed before and during negotiations by thorough consultations and ongoing dialogue, including with traditionally underrepresented groups, such as women, SMEs and Indigenous peoples
- improving transparency throughout negotiation processes and related activities
- communicating the benefits of trade and investment, including through public events in Canada
- enhancing links, where appropriate, between trade and domestic socio-economic policy objectives that support middle-class job creation and growth that benefits everyone
2) Expanding access to the benefits of trade for more Canadians through inclusive trade content in trade agreements
To date, we have:
- built on Canada’s past achievements, such as improving labour and environmental protections with innovative provisions. For example:
- the Canada-EU Comprehensive Economic and Trade Agreement protects the ability of Canada to regulate and legislate to achieve legitimate public policy objectives in public health, social services, public education, the environment, safety and privacy
- The newly implemented Canada-United States-Mexico Agreement (CUSMA) and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) include Labour and Environment chapters that are subject to dispute settlement.
- advanced new elements in “traditional” chapters of trade agreements, such as those on government procurement, investment and services trade, that would make the benefits of these chapters more accessible to a broader range of Canadians
- developed new chapters, focused on cooperation and information sharing, designed to improve the capacity of and conditions allowing underrepresented groups, in particular women, SMEs and Indigenous peoples, to access and benefit from the opportunities created by trade agreements
- the Trade and Gender chapters in the modernized Canada-Chile and Canada-Israel free trade agreements establish trade and gender committees to facilitate cooperation activities to help remove barriers to women’s participation in trade, and share experiences in designing programs that encourage women’s participation in national and international economies
- While Canada’s previous FTAs have acknowledged the importance of SMEs to the Canadian economy, the CPTPP (entered into force December 30, 2018) was Canada’s first FTA to include a stand-alone chapter on SMEs. Canada has since concluded 2 additional FTAs that include dedicated SME chapters: the modernized Canada-Israel FTA (entered into force September 1, 2019) and the CUSMA (entered into force July 1, 2020).
- At its first Joint Committee meeting in September 2018, Canada and the European Union (EU) agreed to three Recommendations under the Canada-EU Comprehensive Economic and Trade Agreement (CETA) on Trade and Gender, SMEs, and Trade and Climate Change.
- Canada is advancing its inclusive approach to trade in its ongoing negotiations with the Mercosur, including by advocating for dedicated chapters and provisions on gender, SMEs and Indigenous peoples.
- Canada, New Zealand and Chile launched the Inclusive Trade Action Group (ITAG) at APEC in 2018, which reflects a shared commitment to achieving economic growth while advancing broader social and environmental objectives and ensuring that the benefits of trade are widely shared. ITAG has developed an evergreen work programme that includes Canadian priorities, such as the signing of the Global Trade and Gender Arrangement in August 2020 which is now being implemented. Mexico joined ITAG and GTAGA in October 2021. Peru and Colombia joined GTAGA in June 2022.
3) Engaging with international partners to promote and advance trade initiatives
We are working with our international partners:
- in international economic fora, such as the World Trade Organization (WTO), the G20, the Organization for Economic Co-operation and Development and Asia-Pacific Economic Cooperation, on enhanced bilateral and multilateral engagement and participation:
- For instance, over 120 WTO members and observers at the organization’s December 2017 Buenos Aires ministerial conference endorsed the Joint Declaration on Trade and Women’s Economic Empowerment (PDF), which Canada championed; in March 2018 in Geneva, Switzerland, Canada hosted the first seminar organized under the declaration, focusing on gender-disaggregated data and gender-based analysis. Six seminars on key themes identified in the declaration took place to date, and 20 trade policy reviews at the WTO have directly raised issues around trade and gender.
- Building on the Declaration, signatories of the Declaration agreed to establish an “Informal Working Group on Trade and Women’s Economic Empowerment” in order to work together at the WTO to remove barriers for women’s participation in trade. The work plan takes into account the increased relevance of advancing work at the WTO on gender responsive and inclusive trade policies in light of the COVID-19 pandemic.
Annex C - List of other government departments, agencies or Crown corporations that lead, co-lead or provide support to Global Affairs Canada on the modernization of CUFTA
- Global Affairs Canada
- Competition Bureau
- Crown-Indigenous Relations and Northern Affairs Canada
- Department of Finance Canada
- Employment and Social Development Canada (Labour Program)
- Environment and Climate Change Canada
- Immigration, Refugees and Citizenship Canada
- Indigenous Services Canada
- Innovation, Science and Economic Development Canada
- Public Services and Procurement Canada
- Transport Canada
- Treasury Board Secretariat
- Women and Gender Equality Canada
Annex D - Questions to guide GBA Plus analysis of trade negotiations
Below is a list of questions designed to aid Trade Policy and Negotiations Branch officials at GAC in conducting GBA Plus analysis of the effects and opportunities on people in Canada of the CUFTA trade negotiations throughout the negotiating process.
A key first step in analysis is considering what assumptions might influence analysis. For example, assumptions around a trade chapter being gender blind or gender neutral; that all are affected in the same way by the chapter’s provisions; that women, men and gender-diverse people have equal access to its benefits. A key first step in GBA Plus is being open-minded and recognizing your assumptions as it is generally viewed that no policy or program is absolutely gender neutral in its effects.
- What is the purpose of your Chapter? What are its intended effects?
- What are the potential unintended effects of your Chapter?
- Does your Chapter include any provisions that you think could impact on gender or inclusivity in a positive/intended or negative/unintended way?
- What are the top industries/sectors/goods/services that are potentially affected by your Chapter?
- What is the level of gender or diversity participation in those sectors across Canada in terms of jobs, business ownership, consumption? (Provide any data or evidence to support your analysis)
- What are the potential risks in terms of gender or inclusivity effects? How could you mitigate them in a trade policy provision in your chapter?
- What are the potential opportunities or positive effects of your Chapter in terms of gender or inclusivity effects? How could you realize this opportunity through enhanced provisions in your chapter?
- How are you factoring considerations around gender and inclusivity into provisions in your chapter? Consider both direct impacts (e.g., primary industry or regions affected) and indirect impacts (e.g. secondary industries or regions affected).
- Does your Chapter include/are you planning to include any specific gender or inclusivity provisions? If so, what are they? If not, could you consider developing a new innovative inclusive or gender responsive provision to address an issue or a risk that you foresee?
- What are the policy options/recommendations that you can develop to advance gender equality and inclusivity outcomes in your Chapter and the FTA? For example, would you recommend domestic actions such as the development or redesign of a policy or program potentially lead by another government department?
Annex E - Background on FTA partner market for Canadian goods, services, and investment
The Government of Canada’s Export Diversification Strategy seeks to increase Canada’s prosperity by creating more opportunities for more Canadians to pursue new markets, compete and win. The strategy also provides Canadians with a greater choice of affordable products, raises living standards in the process and creates well-paying jobs for the middle class.
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 1.4 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.
Market Opportunities in CUFTA
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. The existing CUFTA enables Canadian exporters to take greater advantage of these opportunities by ensuring improved market access conditions, including the elimination of tariffs.
With CUFTA in force, for many products where market access has so far been constrained by tariffs, Canadian exporters now have a competitive advantage over those countries that do not have an FTA with Ukraine, and are able to compete on a level-playing field in the Ukrainian market vis-à-vis other competitors where an FTA is already in place.
Negotiations to modernize CUFTA will not cover goods market access chapters given that most products will be tariff free by 2024 through provisions and obligations in the existing agreementFootnote 14.
Despite already existing commitments from Ukraine in its Foreign Investment Promotion and Protection Agreement (FIPA) with Canada, as well as under the WTO General Agreement on Trade in Services (GATS), trade between Canada and Ukraine under a modernized CUFTA may bring new opportunities in the following sectors of interest:
- Ukrainian businesses are investing in Canada. For example, half of Ukraine’s top 10 IT companies now have offices in Canada. Ukrainian companies have also invested or are considering investing in other important sectors, such as defence technology, heavy cargo hoisting and food manufacturing.
Trade in services
Annex F - Background on objectives of FTA chapters
Free trade agreements (FTAs) are binding treaties between countries that open markets to businesses by addressing trade barriers, such as tariffs and non-tariff barriers. These agreements:
- provide Canadians with preferential access to a wider range of export and international investment opportunities
- provide Canadian businesses with lower cost inputs and improved access to diverse suppliers of important inputs into products produced in Canada
- create more predictable and transparent conditions for businesses operating in foreign countries
- provide Canadians with a more diverse range of consumer products at lower prices
The term “FTA” may seem to imply complete free trade between countries involved in the agreement; however, FTAs do not automatically eliminate all tariffs (customs duties imposed on imported goods) and other barriers to trade. For example, some products may be free of tariffs, but others may not be. Tariffs may also be eliminated over a period of time. Beyond tariffs, FTAs seek to prevent and address non-tariff barriers, such as those arising from health, safety, and environment regulations, while preserving the right to regulate in the public interest.
Many of Canada’s FTAs also go beyond trade in goods to cover services. Over 18% of Canada’s total trade is in services, including:
- information technology
- financial services
- environmental protection and monitoring
- mining and energy development
Objectives of FTA Chapters
This section is divided into three thematic sub-sections, in order to reflect provisions Canada will seek to add or update in the CUFTA, as well as provisions in the CUFTA which will not be part of the modernization discussions.
Objectives of possible new chapters and provisions in CUFTA
Good Regulatory Practices – The focus of the Good Regulatory Practices provisions are to promote enhanced transparency and good regulatory practices, with a view to improving governance and predictability while taking into account the legitimate policy objectives of each country. These provisions include commitments on mechanisms to facilitate inter-agency coordination; obligations involving the implementation of good regulatory practices; and obligations concerning cooperation with other parties and interested persons of other parties.
Cross-border Trade in Services – The Cross-Border Trade in Services provisions set out comprehensive rules regarding the treatment of service suppliers in partner countries.
Temporary Entry for Business Persons – Sets out the labour mobility provisions that support the facilitated movement of highly skilled business persons between partner countries.
Telecommunications – The Telecommunications provisions enhance regulatory certainty for telecommunications service suppliers.
Financial Services – The Financial Services (FS) chapter provides protections for investments in financial institutions, establishes a framework for regulatory transparency and includes a dispute settlement framework tailored to the unique regulatory characteristics of the financial sector.
Investment – The Investment provisions protect investors from discriminatory or arbitrary treatment in their host country.
Trade and Gender – The main objective of the Trade and Gender chapter is to advance women’s economic empowerment and gender equality by removing barriers to participation in trade. It also facilitates cooperation activities and information sharing.
Trade and Indigenous Peoples – The Trade and Indigenous Peoples provisions seek to remove barriers to participation in trade and enhance the ability of Indigenous peoples and businesses to benefit from the opportunities created by an FTA, including by facilitating cooperation activities and information sharing.
Micro, Small and Medium-sized Enterprises – The Micro, Small and Medium-sized Enterprises provisions support the growth and development of micro, small and medium-sized enterprises by enhancing their ability to participate in and benefit from the opportunities created by an FTA, through identifying and removing barriers to participation, and facilitating cooperation activities and information sharing.
Objectives of existing chapters of CUFTA – Possible modernization
Electronic Commerce – The Electronic Commerce provisions help facilitate the use of e-commerce by consumers and businesses, in recognition of the growing digitalization of trade and its impact on the economy.
State-owned Enterprises and Designated Monopolies – The State-Owned Enterprises and Designated Monopolies provisions seek to ensure a level playing field between state-owned enterprises, designated monopolies and private firms, while at the same time preserving the ability of state-owned enterprises to provide public services.
Competition – The purpose of the Competition Policy chapter is to promote open and competitive markets, and help ensure that the benefits of trade liberalization are not offset by anti-competitive business conduct. The proposed competition policy provisions require that the parties adopt or maintain measures to proscribe anti-competitive business conduct, and include specific commitments for transparency and procedural fairness.
Government Procurement – The Government Procurement provisions help to ensure that suppliers of goods, services and construction services are treated in an open, transparent and non-discriminatory manner when competing for government procurement opportunities in partner markets.
Environment – In addition to the obligations that ensure that parties effectively enforce their environmental laws and do not lower environmental standards to promote trade or attract investment, environment provisions could also include commitments that support efforts to address a range of global environmental challenges, such as climate change, conservation of biological diversity, illegal wildlife trade and invasive alien species.
Labour – The Labour provisions commit parties to effectively enforce their domestic labour laws which should in turn embody and provide protection for internationally recognized labour rights and principles, including those set out in the International Labour Organization’s Fundamental Conventions.
- Preamble – The preamble is not a chapter, but an introduction on the purpose of the Free Trade Agreement (FTA). The preamble reflects the intentions of the parties and the scope of the FTA and has interpretive value should a dispute arise.
- Initial Provisions and General Definitions – The first part of the Initial Provisions and General Definitions chapter explains how the FTA respects WTO commitments and how it links with existing agreements. The second part includes definitions of terms used in more than one chapter.
- Administrative Provisions--The Administrative Provisions chapter establishes the structure of the bodies that will be charged with the governance and the implementation of the FTA.
- Exceptions and General Provisions – The Exceptions and General Provisions chapter includes exceptions, such as for essential security, cultural industries and taxation, that would apply across the entire agreement.
- Transparency, Anti-Corruption and Responsible Business Conduct – The purpose of this chapter is to facilitate trade by reducing corruption, enhancing transparency, and encouraging companies’ uptake of responsible business practices. Canada’s model chapter is divided into three sections: transparency, anti-corruption and Responsible Business Conduct.
- Final Provisions – This chapter includes provisions related to entry into force or accession to the agreement (i.e. elements linked to the Vienna Convention). However, the Final Provisions Chapter as a whole is not gender-neutral, as, for example, delaying the entry into force of an FTA foreseen as having a positive impact on women would also postpone the benefits they could avail from the FTA.
Objectives of existing chapters in CUFTA – Not part of modernization discussions
Market Access for Goods – A National Treatment and Market Access (NTMA) chapter establishes clear and predictable rules on a range of issues affecting trade in goods, such as elimination of customs duties and import and export restrictions, among others. The chapter also enshrines the foundational World Trade Organization principle of “national treatment,” which ensures that a country treats imported goods no less favourably than it treats domestically produced goods. Tariff schedules, which are often appendices to the NTMA chapter, set out each country’s obligations to eliminate custom duties (i.e. tariffs) within specified time frames. Canada’s FTAs typically involve elimination of all customs duties, except on a limited number of highly sensitive products.
Rules of Origin and Procedures related to Origin
- Rules of Origin – The Rules of Origin provisions set out the general requirements under which a good may be considered originating in the territory of the Parties to the Agreement and therefore eligible for preferential tariff treatment. These provisions are intended to benefit Canadian importers, exporters, producers and consumers by establishing a predictable rules-based environment for trade in goods. The economic impact of these provisions is dependent on the extent to which market access increases as a result of tariff reduction.
- Origin Procedures – The Origin Procedures provisions establish the procedures used to administer the rules of origin and set out obligations for importers, exporters, and the customs authorities. The procedures clarify the processes and obligations required for importers and exporters to take advantage of the reduced or free rates of duty and provide the customs authorities with an applicable methodology to ensure that only qualifying goods receive preferential tariff treatment under the FTA. Furthermore, one of Canada’s main objectives is to ensure that the rules of origin are administered in a fair and transparent manner by the customs administrations and provide the trade community a facilitative means in which to take advantage of the preferential tariff treatment afforded under the free trade agreement.
Trade Facilitation – The Customs and Trade Facilitation Chapter promotes a transparent, predictable and consistent border environment that facilitates legitimate trade in goods, while safeguarding Canada’s ability to protect its borders and to provide certainty around Canada’s ability to administer or introduce new measures that ensure or enhance trader compliance with Canada’s laws, regulations or procedural requirements relating to the importation, exportation or transit of goods. Such measures include those that seek to ensure the safety and security of Canada and its citizens through the proper reporting and accounting declaration of goods and payment of duties, taxes, fees and charges by traders.
Emergency Action and Trade Remedies – The purpose of the Emergency Action and Trade Remedies chapter is to reaffirm WTO rights and obligations for anti-dumping, countervailing and global safeguard measures under the relevant WTO Agreements.
Sanitary and Phytosanitary Measures – The Sanitary and Phytosanitary Measures provisions maintain each party’s right to take measures necessary to protect against risks to food safety, animal or plant life or health, while ensuring that such measures are science-based, transparent and do not create unnecessary and unjustifiable sanitary and phytosanitary trade restrictions.
Technical Barriers to Trade – The Technical Barriers to Trade (TBT) chapter builds on the existing WTO World Trade Organization Technical Barriers to Trade Agreement’s provisions in the areas of transparency, conformity assessment, and joint cooperation. A TBT is a non-tariff barrier to trade - such as a technical regulation, standard or conformity assessment procedure - that sets out specific technical or other requirements for products to be exported or imported to a certain country.
Intellectual Property – The Intellectual Property (IP) provisions include standards for the protection and enforcement of IP rights to which each Party’s national laws must conform.
Dispute Resolution – The Dispute Resolution provisions describe transparent, effective and efficient dispute settlement mechanisms, including for state-to-state and investor-state disputes. State-to-state mechanisms help to resolve disputes between the FTA partners over the interpretation of the agreement or whether a measure of a Party is inconsistent with the agreement. Investor-state mechanisms provide recourse for companies that consider they were not treated as favourably as the host country’s companies.
Trade-Related Cooperation – Through this chapter, Parties undertake to promote trade-related cooperation to strengthen capacity to benefit from the Agreement, foster new trade and investment opportunities and promote sustainable economic development through activities including information exchange, joint studies and institutional assistance and capacity building.
Annex G - Background on the trade and gender nexus
Trade liberalization has been a significant stimulus to economic growth and prosperity around the world, including here in Canada. However, trade affects people differently, based on a wide range of factors, including gender. In this context, the link between trade and gender is an important issue for trade policy-makers to consider as they negotiate free trade agreements (FTAs).
Incorporating gender perspectives into macroeconomic policy, including trade policy, is key to pursuing inclusive and sustainable economic development and to achieving outcomes that are fairer and more beneficial for all. Studies have shown that women-owned businesses contribute $150 billion to the Canadian economy and employ over 1.5 million people. Advancing women’s equality in Canada could add $150 billion to the GDP by 2026. To ensure that the benefits of free trade can be maximized and widely shared, it is important, therefore, for Canada to consider gender-related issues when developing trade policy and negotiating FTAs.
Canada’s approach to trade and gender is also consistent with the Government of Canada’s broader commitment to advancing gender equality and women’s economic empowerment and complements its efforts to advance gender equality both at home and abroad.
Trade and gender and the impact on workers
Trade can impact women and men differently, whether as workers or entrepreneurs or, more generally, as members of society.
For example, in Canada, women are overrepresented in lower-growth and lower-wage industries, such as retail trade, and in non-tradeable services, such as accommodation and food services. In comparison, men dominate highly-traded sectors, such as manufacturing and resource extraction.
Women, in contrast, account for a larger share of the workforce in service and knowledge-based sectors, such as financial services, e-commerce and telecommunications, which are expanding and in which Canada has a comparative advantage.
Therefore, trade policies can have different effects on women and men as workers, depending on the sector in which they are employed and whether that sector is likely to expand or contract as a result of an FTA. Because of this, trade policies need to take gender-related factors into account during FTA assessments and negotiations to understand the risks and opportunities on particular demographics in the economy.
Trade and gender and the impact on business owners
Even though women start businesses at a greater rate than men, women-owned businesses account for less than 16% of small and medium-sized enterprises (SMEs) in Canada and only 11% of all exporters. Education and managerial experience are key determinants of whether SMEs export. While women who own SMEs are generally more educated than their male counterparts, they also tend to have less managerial experience. This suggests that there are barriers to exporting other than education for women-owned SMEs.
Research has identified the following likely primary factors explaining female under-participation in exporting:
- Firm size: Smaller firms are less likely to participate in trade, and SMEs owned by women tend to be much smaller, on average, and to report lower revenue growth than those that are male majority owned. Women-owned SMEs tend to be survival-oriented businesses rather than wealth-accumulation-oriented firms that lean toward investment as a long-term objective.
- Sectoral concentration: SMEs run by women are more likely to be in service activities that have lower start-up costs and are less likely to export. As well, women-owned businesses tend to be in sectors and industries that are not high growth and are therefore eligible for fewer government supports. Additionally, women entrepreneurs are underrepresented in high-technology manufacturing and knowledge-intensive sectors and disproportionately concentrated in low-value-added services.
- Access: Women may lack access to networks and mentors; information and market intelligence; domestic and global value chains; government and corporate procurement markets; training and skills development, including in financial literacy; e-commerce and digital payments; and financing, including trade financing. In addition, SMEs owned by Canadian women are less likely, compared to those owned by Canadian men, to seek loans and outside investment and more likely to have loan applications rejected on the grounds of insufficient collateral.
- Lower-value-added firms: Canadian women entrepreneurs are less likely than their male counterparts to run high-value-added and growth-oriented enterprises. Far fewer self-employed women (31.3%) than men (50%) incorporate their businesses.
- Time constraints: Many women must balance their businesses with family responsibilities, which limits the time they spend on their businesses and their ability to grow them.
- Discrimination: Women-owned SMEs may encounter implicit and explicit discrimination that limits their growth potential.
- Violence and harassment: Women may encounter violence and harassment when travelling outside of the country, in particular at border crossings. This can affect their ability and willingness to participate in international trade and investment.
Increasing the number of women-owned business exporters is important for a variety of reasons. Evidence shows that SMEs that export, compared to those that don’t, have the following important characteristics:
- They are larger and more productive and innovative.
- They have higher growth and revenues.
- They are more resilient to market shocks.
- They hire more workers, including women and other diverse population groups, and pay higher wages.
- They invest more in research and development, information and communications technologies, and machinery and equipment.
- They invest more in employee training.
Therefore, increasing the number of women-owned SMEs that export has important socio-economic benefits for both society in general and the businesses themselves.
Trade and gender and the impact beyond workers and businesses
In addition to having effects on women as workers and as business owners, free trade can impact women in other ways, as members of society.
For instance, trade can impact women and men differently as consumers, particularly with regard to changes in the prices of imported goods. As women typically earn less than men, the reduction in the prices of goods could have, in relative terms, a more positive impact on their lives than on the lives of men in equivalent circumstances, by freeing up a higher percentage of their disposable incomes.
Given that FTAs reduce tariffs on imported products, government revenues may be negatively impacted, which could lead to reductions in government-funded services and programs. This is particularly the case in emerging markets, where the share of government revenue that comes from tariffs can be larger than in more open economies and could affect women more than men because, evidence suggests, women benefit more from these services.
At the same time, however, FTAs also increase economic prosperity and GDP through business development and expansion, job creation and increased exports. Therefore, what governments lose in revenue as the result of FTA tariff reductions may be counterbalanced by increases in tax revenue.
Annex H - Women’s economic empowerment programming in Canada
The Government of Canada’s Women Entrepreneurship Strategy (WES) is a nearly $5 billion investment aimed at increasing women-owned businesses’ access to the financing, talent, networks and expertise they need to start up, scale up, and reach new markets. Under the WES, and through its over 20-year-old Business Women in International Trade (BWIT) initiative, Canada’s Trade Commissioner Service (TCS), part of Global Affairs Canada, received an additional $2 million per year to enhance export support services to women entrepreneurs. The TCS network of offices in over 160 locations around the world, and six Regional Offices across Canada, helps Canadian companies including underrepresented groups (women, Indigenous peoples, visible minorities, youth and members of the LGBTQ2+ community) navigate the complexities of international markets, and make better business decisions for their international expansion. The TCS organizes and executes women-focused business delegations and trade missions to new markets and prominent global trade shows and events, including those focused on providing opportunities for women-owned businesses through supplier diversity programs.
The TCS’ CanExport program provides over $33 million a year to Canadian SMEs, innovators, associations and communities to help them diversify exports and expand their international footprint. In line with Canada’s Export Diversification Strategy, the CanExport program seeks not only to diversify where Canada exports, but also to achieve trade that is more inclusive for all Canadians. To this end, CanExport’s new dedicated Concierge Service for women and Indigenous entrepreneurs encourages applicants from those under-represented groups in international trade to access its funding. The TCS Regional Offices deliver the Concierge Service by providing application guidance in an effort to make the CanExport program more accessible. CanExport also provides special considerations during the assessment of proposals to applicants from underrepresented groups in international trade (women, Indigenous peoples, visible minorities, LGBTQ2+ and youth).
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