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Picture it, if you will: A gigantic Ukrainian Antonov aircraft, powered by a Canadian engine and taking cargo across continents. Or how about major Canadian companies outsourcing software production to Ukraine? Or maybe Canadian AAA beef or seafood on grocery shelves in Lviv or Odessa? All of this would have seemed a fantasy just a couple of years ago, but, in fact, it is already a reality of business co-operation between Canada and Ukraine. And it is just a tiny appetizer to the promising dishes that are now in sight, thanks to the recently signed Canada-Ukraine Free Trade Agreement (CUFTA).
Unfortunately, the trade rates between both countries are far below their potential.
According to the State Statistic Service of Ukraine, the total value of exports from Ukraine to Canada in 2016 was only $38.6 million. It’s peanuts when you consider that Canada is a G7 country and Ukraine has a market of 45 million consumers.
The most common Ukrainian exports to Canada are soya beans, parts of rail vehicles, sports equipment, ferrous metals and wood. Ukrainian imports from Canada, according to our figures, grew by five per cent last year and were worth approximately $290.7 million. Oil (oil distillation products), fish, pharmaceutical products, nuclear reactors and vehicles formed the list of the most popular Canadian exports to Ukraine.
Canada is one of the most under-traded partners for Ukraine. This was one of the reasons behind the launch of negotiations for CUFTA, which was finalized by the Harper government and signed by then-trade minister Chrystia Freeland during Prime Minister Justin Trudeau’s visit to Ukraine last year.
I accompanied Trudeau on his visit, and can confirm there was great enthusiasm in Ukraine for CUFTA. More than a trade deal, it is a sign of solidarity. Now, as we are completing the ratifying procedures, it is time to explore the new opportunities.
First, CUFTA should boost trade. The agreement eliminates 98 per cent of tariffs on semi-finished goods, footwear, pumping machinery, confectionery goods and IT services.
I would like to encourage Canadian aviation companies to work with Ukraine’s Antonov. Our specialists have knowledge about how to build unique planes such as the one already mentioned. An-124, or An-70, can perform a typical transport mission from an unpaved airfield of just 600 to 800 metres in length. Or the An-74, a plane that was designed for support of research, ice floe reconnaissance and transport operations in the Arctic and the Antarctic, as well as for commercial cargo carriage over medium-haul routes in all climatic conditions, can operate in temperatures from -60°C up to 45°C.
Second, CUFTA opens government procurement to companies from both countries. In the case of Ukraine, this opens access for Canadian companies to tenders by state-run enterprises such as airports, railways, mail networks and public transportation systems, to name just a few.
Every day, approximately 4,000 government tenders are announced in Ukraine. Moreover, the procurement budget for the year is about $15 billion.
Third, CUFTA provides for electronic commerce. Both sides will refrain from using any tariffs on products delivered in electronic form. This will contribute to the free movement of products delivered through e-commerce (books, show and game tickets, clothing and household goods). Furthermore, we are looking forward to expanding our co-operation in CUFTA, by, for instance, providing access to the services market. I hope that in the near future both countries will add a services chapter to the agreement.
It’s also worth mentioning that Canada is finishing the ratification procedures with the EU on the Comprehensive Economic and Trade Agreement (CETA). As Ukraine already enjoys a trade agreement with the EU, it creates even more opportunities.
Just as Canada can help Ukrainian companies access North American and Pacific markets, so, too, can Ukrainian companies help Canadians reach the EU.
Moreover, I hope that CUFTA will help Canadians rediscover Ukraine as a country with the highest literacy rate on the continent and smart, skilled workers who are willing to put in the time to build a modern society on their land.
Yes, the Russian aggression in the east of our country and the economic hardships and challenges that brings require thoughtful management. However, this is also a time of opportunity.
So, CUFTA is not just an agreement. It is a symbol of strong friendship between our countries, between Canada — the symbol of the Free World — and Ukraine — a new frontier of the Free World.
Andriy Shevchenko is Ukraine’s ambassador. Reach him by email at emb_ca@mfa.gov.ua or by phone at (613) 230-2961.
