Canada Announces Free Trade Agreement with the Ukraine

July 16, 2015

On July 14, at a ceremony near Ottawa, Prime Minister Stephen Harper and Ukrainian Prime Minister Arseniy Yatsenyuk announced the conclusion of negotiations on a Canada-Ukraine Free Trade Agreement (CUFTA).

The text of the agreement has not yet been released, but  details on the Department of Foreign Affairs, Trade and Development website, suggest that the achievements of the agreement are principally in the area of tariff elimination (with phase-outs of up to seven years) and possibly government procurement. The biggest beneficiaries among Canadian exporters, at least in the shorter term, are likely to be in the agriculture and agri-food sectors.

The agreement does not cover services or investment trade and most of the disciplines on internal regulation seem to duplicate those which already apply to Canada and Ukraine as WTO Members. Similarly, while the agreement addresses intellectual property it appears to be light on new commitments to protect Canadian technology and intellectual property from unauthorized use or appropriation in Ukraine. Nor will it affect the ability of Canadian producers to bring anti-dumping and subsidy complaints against imports from Ukraine.

As trade with Ukraine currently represents approximately 0.03% of Canada's total two-way merchandise trade, the CUFTA was hardly an economic priority for Canada. However, it was a political priority, particularly in a federal election year. The agreement is consistent with the Canadian Government's policy of supporting western-oriented economic development in Ukraine as it continues to struggle with Russia and pro-Russian separatist forces in the armed conflict that began in the Crimean region and eastern Ukraine in early 2014. The CUFTA announcement comes two weeks after Canada announced significant new economic sanctions against the Crimea, including a full import/export ban on the region. (See more details about the new sanctions in our article Canada Expands Sanctions on Russia and the Crimea Region of the Ukraine.)

The July 14 announcement is only the first step in the process to bring the CUFTA into force. The agreement will need to undergo a legal review before it can be signed by the Parties. The Canadian Government also has a policy of giving Parliament 21 sitting days to consider treaties after they are signed but before they are ratified. As well, prior to ratification, Parliament will need to adopt implementing legislation to give effect to parts of the agreement. With a federal election scheduled for October, it is likely to be several months at least before the CUFTA takes effect.

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