OTTAWA – The Canada-Ukraine Free Trade Agreement (CUFTA) represents an “endorsement” of the Ukrainian economy and efforts by the Ukrainian government and people to strengthen it and build prosperity, according to the Ukrainian Canadian Cabinet minister who signed the pact on Canada’s behalf.
“This agreement is about Canada strengthening and deepening its historically close friendship with Ukraine, and of supporting Ukraine at a crucial moment” in its history, said Canadian International Trade Minister Chrystia Freeland in a telephone interview from Lviv last week.
“We really understand, as do the Ukrainians, that a very important front on which Ukraine is fighting today is the economic front,” she noted.
On July 11, Ms. Freeland and Ukrainian First Vice Prime Minister and Economic Development and Trade Minister Stepan Kubiv signed CUFTA in Kyiv in the presence of President Petro Poroshenko and Prime Minister Volodymyr Groysman of Ukraine, and Canada’s Justin Trudeau, who was on his first official visit to Ukraine as prime minister.
Mr. Trudeau’s predecessor, Stephen Harper, announced in July 2015, during then-Ukrainian Prime Minister Arseniy Yatsenyuk’s visit to Canada that a bilateral trade deal had been reached following five years of negotiations.
A year later in Kyiv, Prime Minister Trudeau told reporters that “this milestone agreement will improve market access and create more predictable conditions for trade.”
He said that by removing tariffs on almost all goods traded between the two countries, “and by addressing other trade barriers, the Canada-Ukraine Free Trade Agreement will benefit Canadians and Ukrainians alike.”
According to Mr. Trudeau, CUFTA will “bolster” the Canadian and Ukrainian economies, “spur innovation” and “contribute to a stable, secure, prosperous economic future for the people of Ukraine.”
Both countries’ parliaments must first ratify the agreement, but Minister Freeland believes that will happen “quickly,” without giving any precise timeline. However, she said CUFTA has support from opposition members of the House of Commons, and that Prime Minister Groysman and Ukrainian Parliament Chair Andriy Parubiy were committed to ensuring that it passed the Verkhovna Rada too.
Once CUFTA is in force, Ukraine will drop tariffs on 86 percent of Canadian imports, with the rest to be phased out or subject to tariff reductions over the next seven years. Ukrainian tariffs will be eliminated on all Canadian industrial products – from automobiles and medical-testing equipment, to industrial machinery, chemicals and plastics.
Other Canadian exports that will be duty-free include fish and seafood, and a range of agricultural products, such as cranberries and cherries from British Columbia, processed foods from Ontario and Quebec, potatoes from Prince Edward Island, Prairie grains and pulses, apples from Nova Scotia’s Annapolis Valley, beef and pork, pet food and animal feed, soybeans and canola oil, and maple syrup.
Meanwhile, Canada will eliminate tariffs on almost all (99.9 percent) Ukrainian imports.
Ukrainian products to have duty-free access to Canada include all industrial products, fish and seafood, sunflower oil, sugar and sweets, baked goods, vodka, clothing, ceramics, iron and steel, and minerals.
Strengthened economic partnership
Ms. Freeland noted that the Canada-Ukraine Business Forum, co-presented last month in Toronto by Global Affairs Canada (the federal government department of which she is a part) along with Mr. Kubiv’s ministry, highlighted the need to collaborate on bilateral trade and investment.
“We believe, and Ukrainians agree with us, that it’s important to start working together now, and that the trade agreement is one piece of a strengthened economic relationship,” she said. “It opens the door, but you have to have businesses ready and excited about walking through it.”
Several already are, as evidenced by three smaller agreements finalized in Kyiv on the same day Minister Freeland put her signature on the bilateral trade deal.
The Berlin-based transportation arm of Canadian planes-and-trains maker Bombardier Inc. signed a memorandum of understanding (MOU) with state-run Ukrainian Railways – Europe’s largest rail-cargo operator – to collaborate on a joint venture to make locomotives that can not only be procured in Ukraine, but potentially elsewhere in Eastern Europe and Central Asia as well, according to a Global Affairs Canada backgrounder. It said the strategic partnership has the support of Ukraine’s Infrastructure Ministry and involves producing locomotives in Ukraine’s Lviv region to help “revive the transportation and manufacturing industries” there.
Meanwhile, Borsch Ventures, a Canadian initiative based in Kyiv that invests in Ukrainian start-ups in the agriculture sector, is helping to expand the scope of one of those companies, eFarmer, which has designed a mobile app that uses GPS technology to help farmers track the location of their tractors and optimize the passes they make on a field.
Borsch and Washington, D.C.-based International Finance Corp. have invested $500,000 (about $388,000 U.S.) to help create eFarmer 360°, a software application that will address “business management needs of farmers and credit risk assessment requirements of banks,” according to the same Global Affairs backgrounder.
Finally, Canadore College in the northeastern Ontario city of North Bay signed an MOU with Ukraine’s National Aviation University that will facilitate student and faculty exchanges, along with the sharing of curricula and exploring common areas of research.
Ms. Freeland said there is increasing interest in collaboration between Ukraine and Canada in information technology – a space in which Google and Snapchat acquired Ukrainian tech companies last year.
Ukraine’s services sector holds some promise too, added the minister, who noted that Toronto-based Fairfax Financial Holdings Ltd. purchased Dublin-based QBE Management Ltd.’s insurance operations in Ukraine in 2015.
Concern about corruption
Ms. Freeland acknowledged that corruption is a concern for some Canadians. “What I heard at the Canada-Ukraine Business Forum [in Toronto] and from Canadian businesses in Ukraine at events surrounding the signing of the free trade agreement is that there is a real belief that Ukraine presents some terrific opportunities and that reforms the Ukrainian government is working on – which very much include a serious anti-corruption drive – are significant and meaningful,” she explained. “This is a great place for people and businesses looking for a highly educated workforce.”
She said that President Poroshenko and Prime Minister Groysman raised the issue of corruption and the government’s efforts to crack down on it in meetings they had with her and Prime Minister Trudeau. The subject was also raised when the official Canadian delegation met with representatives from Ukrainian civil society organizations.
“Civil society in Ukraine is very strong and is playing an important and essential role, and is one of the real drivers, of that anti-corruption effort,” Minister Freeland said. There is definitely a lot of work in that sphere, she said, adding, “The good news is that both the government and people of Ukraine really recognize that this is an issue that needs to be addressed.”
She also underscored that Ukraine’s reform initiative is being conducted against the backdrop of a war in the eastern part of the country.
“When we look at what Ukraine is managing to do, it’s important to appreciate the cost in human lives, economic production and the hryvnia while maintaining a very significant military build-up,” Ms. Freeland said. “To be facing that existential military challenge and working on an economic transformation at the same time is a really tall order and it’s important to recognize that.”
Optimism about Ukraine
Still, the 47-year-old, Alberta-born daughter of two lawyers remains optimistic about her ancestral homeland.
Signing CUFTA on Canada’s behalf had a deep connection for Ms. Freeland, who was appointed international trade minister in November 2015, when Mr. Trudeau’s Liberal Party won the federal election and formed a majority government.
She explained that, “as a very proud Ukrainian Canadian,” affixing her signature to the trade pact had “particular emotional resonance” and was a “great moment” for her – and her family.
Ms. Freeland’s late mother, Halyna Chomiak Freeland, was born in a displaced persons camp in Germany when her Ukrainian Catholic parents – Mykhailo Chomiak and Alexandra (Loban) Chomiak – fled their home in western Ukraine before World War II when “they knew the Soviets would invade,” Ms. Freeland told the Toronto Star last year.
She said her maternal grandparents’ experience had a “very big effect” on her, and that “they were also committed to the idea, like most in the [Ukrainian] diaspora, that Ukraine would one day be independent and that the community had a responsibility to the country they had been forced to flee… to keep that flame alive.”
As Canada’s top trade official – and one who speaks Ukrainian, along with Russian, Italian, French and English fluently – Ms. Freeland carried a torch to Ukraine last week that she hopes will bring greater economic independence and stability to a nation ravaged by war and under constant threat from its Russian neighbor.
During her visit, she also noticed a change in the country where she once lived and studied, at the University of Kyiv as a Harvard exchange student, and where she began her journalistic career as a stringer for the Financial Times, The Washington Post and The Economist in the late 1980s.
“Ukraine is more united and more determined than at any time I’ve seen it,” said Ms. Freeland, who first traveled to the country in 1980. “There has been a big transformation over the past three years – a uniting of Ukrainian society. The Ukrainian people are taking responsibility for themselves and their country.”
She said the 2014 popular uprising on Kyiv’s Maidan “was called the Revolution of Dignity for a reason, because it was about people taking charge of their own lives. And you can really see that and people are aware of that.”