On July 14, 2015, Canada and Ukraine signed the Canada-Ukraine Free Trade Agreement (the “CUFTA”). As at January 1, 2016, Canada has not released the test of the CUFTA. Also, on January 1, 2016, the Ukraine-EU Free Trade Agreement came into effect. This means that Canada is behind the larger EU. This means that Canada needs to move quickly before certain opportunities are filled by exporters in the EU.
The CUFTA is a trade in goods agreement. It does not cover services or investment. The CUFTA includes chapters in the areas of market access for goods; rules of origin and origin procedures; trade facilitation; emergency action and trade remedies; sanitary and phytosanitary measures; technical barriers to trade; government procurement; competition policy, monopolies and state enterprises; intellectual property; electronic commerce; labour; environment; trade-related cooperation; institutional provisions; and dispute settlement.
Upon entry into force of the CUFTA, Ukraine will immediately eliminate tariffs on 86% of Canada’s current exports, with the balance to be phased out or subject to tariff reductions over periods of up to seven years. Ukrainian tariffs will be eliminated on all Canadian exports of industrial products (including aerospace, automobiles, medical-testing equipment, industrial machinery, and chemicals and plastics), fish and seafood, and agricultural products (including cranberries and cherries from British Columbia, processed foods from Ontario and Quebec, Prince Edward Island potatoes, Prairie grains and pulses, Annapolis Valley apples, beef, pork, pet food, soybeans, canola oil, animal feed, and maple syrup). Key Canadian industrial products benefiting from the elimination of tariffs include certain articles of iron and steel, articles of plastics, cosmetics, reservoir tanks and similar containers, and air compressors. Manufactured goods sold to Ukraine include medications, coking coal, pharmaceutical cultures, boring or sinking machinery, trailers and semi-trailers, and certain tractors.
Upon entry into force of the Agreement, Canada will immediately eliminate tariffs on 99.9% of current imports from Ukraine. This includes elimination by Canada of tariffs on all industrial products, fish and seafood, and 99.9 percent of agricultural imports from Ukraine. Key products from Ukraine that will benefit from this duty-free access include sunflower oil, sugar and chocolate confectionery, baked goods, vodka, apparel, ceramics, iron and steel, and minerals.
It is important for Canada for move quickly because the EU sells some of the same products as Canada. The next step in the ratification process in Canada is for the text of the CUFTA to be released. The next step after that would be for the CUFTA to be tabled in the House of Commons for review. Canada also needs to table the Canada-Ukraine Free Trade Agreement Implementation Act in the House of Commons and it must pass the House and the Senate. The Canada-Ukraine Free Trade Agreement Implementation Act will contain the changes necessary to ensure that the agreement can take effect under Canadian law. For example, the tariff elimination and reduction schedules must be implemented via changes to the Customs Tariff.