Hon. Peter Harder: Honourable senators, before I begin I would like to do a land acknowledgement and acknowledge that we are on the lands of the unceded territory of the Algonquin Anishinaabe people. I do so because I think it is appropriate that on major speeches — of which sponsoring a bill is one — we should begin with that acknowledgement.
I rise today to speak to Bill C-57, the legislation to implement the Canada-Ukraine Free Trade Agreement. I’ll refer to it as CUFTA so that I don’t have to repeat the language throughout the bill.
While this bill is primarily aimed at implementing a free trade agreement with Ukraine, the modernization of CUFTA has come to represent far more than just a mechanism to encourage and foster bilateral trade. In fact, it can be argued that the true value of this agreement, particularly at this time, reaches far beyond trade and investment.
The fact that Canada and Ukraine worked in tandem to conclude this agreement during Russia’s illegal invasion and ongoing war shows that our bilateral relationship is as strong as ever. This represents a strong statement to the world of Canada’s recognition of Ukraine as a sovereign, independent nation at a moment in time that that very sovereignty is being challenged by the aggression of its neighbour.
To that effect, beyond goods, services, market access and other trade elements, current circumstances have made this agreement yet another demonstration of Canada’s continued and unwavering support to our Ukrainian allies in their time of need as they defend their independence, sovereignty, democracy and freedom in the face of this protracted Russian aggression since at least February 2022 and, I would argue, since the 2014 invasion of Donbas and the Crimea.
Since the beginning of this conflict, Canada has committed over $9.7 billion in multifaceted support covering military, financial, humanitarian, development, security and cultural assistance to Ukraine. As Canadians, we ought to be proud that this support has remained a priority and galvanized Canadians towards this common goal.
The modernization of CUFTA, which we are discussing here today, is the latest demonstration of this steadfast support, this time through means of facilitating trade and investment with Ukraine.
Indeed, a modernized CUFTA will not only offer assistance in the short-term but will extend well beyond Russia’s war of aggression by strengthening the foundation on which Canadian and Ukrainian businesses can work together during Ukraine’s recovery and economic reconstruction for years ahead.
It will also bolster an already strong relationship between Canada and Ukraine, which dates back as far as 1991 when Canada became the first Western country to recognize Ukrainian independence — an issue that Ukraine is unfortunately still fighting for to this day. Furthermore, these bilateral relationships are strengthened by warm people-to-people ties rooted in the Ukrainian-Canadian community of roughly 1.3 million people and our shared values, many of which are reflected in the modernized CUFTA that I will be discussing today.
I would now like to say a few words about this historic agreement and highlight some of the benefits and opportunities it represents for Canadians and Ukrainians alike.
As you may already know, the original CUFTA entered into force in August 2017 after much work spanning two governments. Upon entry into force, the CUFTA immediately eliminated tariffs on 99% of imports from Ukraine. Similarly, the 2017 CUFTA immediately eliminated tariffs on 86% of Canadian exports to Ukraine with the balance of tariff concessions to be implemented over a seven-year period by January 1, 2024.
While reductions in coal supplies from Canada caused a slight drop in total trade following the 2017 CUFTA’s entry into force, non-coal exports grew at a rapid pace, and, in 2021, total bilateral trade reached its highest level ever at $447 million before dipping to $421 million in 2022, primarily due to the Russian invasion.
In 2022, top Canadian exports to Ukraine included armoured vehicles, fish, medicine, motor vehicles and parts and pet food. Top imports from Ukraine included fats and oils, iron and steel, electrical machinery and processed foods. Canadian investment in Ukraine in 2022 amounted to $112 million.
While comprehensive in perspective of trade in goods, the 2017 CUFTA did not include chapters on trade in services or investments. These areas were left out of the agreement due to divergent views and approaches at that time. Rather, the CUFTA contained a clause committing Canada and Ukraine to review the agreement within two years of its entry into force, with a view to expanding it. The review clause specifically identified services and investment as potential additions without restricting the parties from exploring other areas. As such, this was an opportunity to make this agreement a fully comprehensive one on par with Canada’s most comprehensive free trade agreements or, as we know them, FTAs.
Pursuant to this review, in a visit to Ottawa in July 2019, the Prime Minister and Ukrainian President Zelenskyy announced their intention to modernize the CUFTA.
The government held formal public consultations on the modernization of CUFTA in the winter of 2020. Submissions supported the initiative as a means of strengthening the bilateral relationship, building on Canada’s commercial engagements with Ukraine, and further promoting an open, inclusive and rules-based trading environment for our businesses and investors.
The Government of Canada also received positive feedback from the provinces and territories, several of which were particularly supportive of the potential inclusion of new or modernized chapters on cross-border trade in services, financial services, investment, digital trade, and additional commitments to support small- and medium-sized enterprises — SMEs. All of these areas have been successfully included in the modernized CUFTA, as well as new chapters or provisions on trade and gender, trade and Indigenous peoples, transparency, labour and environment, among other areas.
Following these internal consultations and delays due to the COVID-19 pandemic, CUFTA modernization negotiations were officially launched in January 2022. Unfortunately and horrifically, only weeks later, on February 24, 2022, Russia began its illegal invasion of Ukraine. As part of our support to Ukraine, Canadian trade officials relayed to their Ukrainian counterparts that they stood ready to proceed with CUFTA modernization discussions in accordance with Ukraine’s capacity and willingness to do that negotiation.
Negotiations happily were initiated at the officials level in June of 2022, and despite compressed timelines and difficult circumstances for our negotiating partner, they were highly constructive. Both sides demonstrated an eagerness to reach an ambitious and high-standard agreement, on par with Canada’s most comprehensive trade agreements, with the aim of facilitating increased trade between our two nations, not just to meet the immediate needs of reconstruction but for a long time thereafter.
In this agreement with Canada, Ukraine has undertaken ambitious commitments not found in its existing trade agreements with other nations. The openness to negotiating new commitments is reflected in how comprehensive the final CUFTA is, with due respect not only to trade in goods from the original agreement but also to the new chapters and provisions on investment, services, labour, environment, inclusive trade and others.
I suspect Ukraine’s neighbours in the EU are looking to this ambition on Ukraine’s part as confirmation of their capacity to negotiate further ties with the EU.
During a visit on April 11, 2023, Ukrainian Prime Minister Shmyhal and Prime Minister Trudeau announced the conclusion of negotiations for the modernized CUFTA, and each committed to completing their respective domestic processes to facilitate its signature and entry into force as soon as possible.
As you may remember, Ukraine further demonstrated the importance it places on this agreement by designating President Zelenskyy himself to sign the final modernized CUFTA when he was here in Ottawa on September 22. This was a historic milestone in the Canada-Ukraine bilateral relationship, and, as mentioned, served as another clear demonstration of Canada’s support for Ukraine’s sovereignty, independence and territorial integrity.
Allow me now to go into more detail with respect to the content of the agreement and explain why it is a positive outcome for Canadian firms and a model agreement for Ukraine to demonstrate its ability to adhere to a modern, ambitious and high-standard agreement with other partners around the globe.
Substantive negotiations have resulted in a modernized CUFTA that will include nine dedicated new chapters and upgrades to eight existing chapters from the 2017 CUFTA.
I will begin with an overview of the new chapters that have been added.
First, the agreement includes a dedicated new chapter on cross‑border trade in services, which includes substantive obligations consistent with Canada’s existing trade agreements, putting both Canadian and Ukrainian service suppliers on a comparable footing vis-à-vis our main services trading partners. This chapter provides market access, non-discriminatory treatment, transparency and predictability for both Ukraine and Canadian service suppliers. Additionally, this chapter includes provisions on the recognition of professional qualifications seeking to facilitate trade in professional services, which is strategically important for both parties in a knowledge-based and digital economy.
As part of the CUFTA modernization, parties also negotiated a comprehensive and progressive stand-alone financial services chapter with core obligations related to market access, national treatment and most-favoured-nation treatment that will provide a level playing field through a framework of rules tailored to the unique nature of the financial sector. This includes ambitious commitments for Canadian financial services through legally binding rights and obligations that will support a predictable, stable and transparent investment environment for investors while maintaining flexibility for regulators to preserve the integrity and stability of the financial system. The financial services chapter allows Ukraine a 10-year period to transition from its existing World Trade Organization commitments to those included in this agreement.
The new chapter on temporary entry for businesspeople supports economic opportunity for Canadians, including permanent residents, by making it easier for businesspeople to move between the two countries, as well as encouraging highly skilled workers to benefit from jobs in both markets. The temporary entry provisions remove barriers, such as economic needs tests or numerical quotas, and provide new and reciprocal market access commitments for eligible Canadians and Ukrainian businesspeople.
This includes new access for Canadian investors to enter and stay in Ukraine to establish, develop or administer an investment with a duration of stay of up to one year, thereby facilitating business opportunities and the growth of partnerships.
The chapter also includes commitments that ensure that accompanying spouses of Canadian investors, intra-corporate transferees or highly skilled professionals will also be able to enter Ukraine and work.
For Canada, this chapter offers a range of options and benefits to Canadian employers who will have easier access to highly skilled Ukrainian talent on a temporary basis across a broad range of occupations, including engineers, architects, software developers and programmers.
Parties have also added a new chapter on investment, which was omitted, as I indicated earlier, from the 2017 CUFTA, and that will replace the Canada-Ukraine Foreign Investment Promotion and Protection Agreement — or FIPA — which was signed in 1994. The CUFTA investment chapter modernizes the framework of protections for investors and their investments, with a comprehensive set of obligations in line with Canada’s most ambitious trade agreements. This investment chapter is also the first negotiated using Canada’s most recent model that seeks to better ensure that investment obligations act as intended and provide the necessary policy flexibility for governments to act in the public interest.
As such, this new drafting for the investment chapter will allow Canada and Ukraine to maintain their right to regulate in key areas such as environment, health, safety, Indigenous rights, gender equality and cultural diversity.
Additionally, this chapter also includes a modern dispute settlement mechanism that offers strengthened alternatives to avoid arbitration, as well as enhanced transparency of proceedings commitments. In all, these outcomes represent a significant improvement over the 1994 FIPA, which this chapter will replace and will strengthen the environment within which Canadian investors can invest with more confidence in Ukraine’s reconstruction.
A new chapter on telecommunications promotes competition and provides enhanced certainty for telecommunications service suppliers when operating in Canadian and Ukrainian markets. This chapter has the benefit of helping to facilitate trade more broadly, including online, by ensuring that non‑telecommunication companies can also access and use telecommunications networks and services. It also includes commitments to ensure that regulators of the telecommunications sector are independent, impartial and transparent.
Another new chapter to the modernized CUFTA covers good regulatory practices, which demonstrates to current and future trading partners that Ukraine can take on commitments that support a regulatory environment conducive to trade.
Lastly, the modernized CUFTA reaches high standards regarding inclusive trade with specific chapters on trade and gender; trade and small and medium-sized enterprises, or SMEs; and trade and Indigenous peoples.
The “Trade and Gender” chapter aims to promote gender equality, remove barriers to trade for women and facilitate improved access to benefits and opportunities of the CUFTA. For Canada, advancing women’s equality could add an estimated $150 billion to the gross domestic product, or GDP, by 2026.
To ensure that the benefits of free trade can be maximized and widely shared, it is important for Canada to consider gender-related issues when developing trade policy and negotiating free trade agreements. As such, this chapter aims to empower more women to participate in trade and benefit from the modernized CUFTA when it comes into force.
To achieve these goals, the “Trade and Gender” chapter includes an article committing parties to enforce — and not weaken — their domestic laws and protections afforded to women in order to attract trade and investment. It further includes a commitment to undertake cooperation activities and establish a committee to facilitate the chapter’s implementation.
Additionally, responding to stakeholders’ interest to see the enforcement of the “Trade and Gender” chapter, Canada and Ukraine delivered on this by subjecting the chapter to a dispute settlement arrangement. This sends an important signal to Canadian stakeholders that Canada is committed to advancing gender equality and women’s economic empowerment.
Another new inclusive chapter concluded under the CUFTA modernization is the chapter on “Trade and Small and Medium‑Sized Enterprises.” It seeks to enhance their ability to participate in and benefit from the opportunities created by this agreement.
Over the 2015-19 period, the SME contribution to Canada’s GDP was, on average, just over 53% in the goods-producing sector and 51.8% in the services-producing sector. Additionally, in 2021, small and medium-sized businesses composed 97.9% and 1.9%, respectively, of the 1.21 million businesses in Canada. Based on this recognition of the importance of SMEs to the economy, both Canada and Ukraine are committed to working together to remove barriers so that SMEs may be better placed to participate in and benefit from international trade and investment.
As such, both Canada and Ukraine made important commitments to developing a dedicated digital medium for SMEs to easily find relevant information of interest to them under this modernized agreement. Canada and Ukraine also agreed to establish a committee and to carry out cooperation activities. These commitments will not only contribute to removing barriers to trade for SMEs but also support inclusive and sustainable growth for all.
Lastly, the modernized CUFTA includes a “Trade and Indigenous Peoples” chapter, which will seek to ensure that Indigenous peoples in Canada have access to the benefits and opportunities that flow from international trade and investment. More than this, it is also a significant milestone for Canada, as our first stand-alone trade and Indigenous peoples chapter is concluded in this FTA.
This economic-focused and cooperation-based chapter establishes a bilateral committee to facilitate cooperation activities to remove barriers and challenges that Indigenous peoples face when participating in international trade. The chapter also includes a binding commitment to enforce and strengthen domestic laws and protections on Indigenous peoples’ rights in order to attract trade and investment in the spirit of these commitments. Canada and Ukraine both reaffirm the United Nations Declaration on the Rights of Indigenous Peoples in this agreement.
Additionally, and consistent with the UN principles, this chapter also advances our reconciliation efforts with Indigenous peoples by ensuring that Indigenous peoples are included in discussions about their interests. In that regard, the bilateral committee under this chapter may directly include the participation of Indigenous peoples.
Beyond the new chapters that I’ve outlined, Canada and Ukraine have also agreed to update the existing eight chapters of the agreement.
The first is the “Rules of Origin and Origin Procedures” chapter, where Canada and Ukraine have agreed to activate an article from the 2017 CUFTA on cumulation of origin. This will allow materials of any non-party with which both Canada and Ukraine have existing FTAs — such as the European Union — to be taken into consideration by the exporter when determining whether a product qualifies as originating under the CUFTA. This will make it easier for Canadian and Ukrainian businesses to participate in regional value chains, and it reflects a shared desire to support trade among like-minded partners.
The “Digital Trade” chapter includes updated language previously contained within the CUFTA “Electronic commerce” chapter, ensuring that customs duties will not be applied to digital products transmitted electronically. This modernized chapter also contains ambitious commitments to facilitate digital trade. This includes protections against unnecessary requirements to store data locally or provide access to proprietary software source code as well as commitments to facilitate public access and use of open government information to support economic development, competitiveness and innovation.
Moreover, commitments regarding the protection of individuals online have been included, ensuring frameworks are in place to protect personal information and address online fraudulent and deceptive commercial practices in order to build trust and confidence in engaging in digital trade.
For the first time in any of Canada’s free trade agreements, this chapter contains a provision prohibiting government authorities from using the personal information collected from private organizations to conduct targeted discrimination against a person on wrongful grounds. With increasing concerns about how governments use personal data, this commitment is intended to provide user confidence in the digital economy.
This modernized CUFTA also includes a stand-alone chapter on competition policy with updated and new obligations to promote a comprehensive and competitive marketplace. The chapter furthers Canada’s and Ukraine’s objectives towards a fair, transparent, predictable and competitive business environment. This is notably done through enhanced obligations for competition authorities on procedural fairness and transparency, as well as new obligations for the identification and protection of confidential information. These new obligations provide assurance that fundamental principles, including the rights of defendants, are guaranteed during competition law investigations and enforcement proceedings.
The “Designated Monopolies and State-Owned Enterprises” chapter has been upgraded to include important definitions for state-owned enterprises and designated monopolies and updated commitments on transparency and technical cooperation.
In the modernized “Government Procurement” chapter, Canada and Ukraine have carried over the ambitious market access commitments from the 2017 agreement. In modernizing the chapter, Canada and Ukraine have clarified that they are allowed to take into account environmental, socio-economic or labour-related considerations in their procurement processes. This means it is now clear that the agreement does not prevent parties from adopting domestic policies and programs to support initiatives such as green and social procurement.
The updated chapter also includes a new article to ensure integrity in procurement processes by committing parties to have criminal or investigative measures in place to address corruption in government procurement. Finally, the updated chapter also facilitates greater participation by Canadian and Ukrainian SMEs in government procurement.
The upgraded chapter on labour shows that Canada and Ukraine are committed to the highest labour rights standards. This chapter is robust, comprehensive and fully subject to the dispute settlement arrangements of the agreement. It also commits Canada and Ukraine to implementing in their own labour laws the content of the core International Labour Organization conventions.
Two particularly notable articles were added: an import prohibition on goods made in whole or in part with forced labour and a stand-alone article on violence against workers. This chapter confirms that Canada and Ukraine are fully committed to the highest labour rights standards and agree to cooperate further in the field.
The updated “Transparency, Anti-Corruption, and Responsible Business Conduct” chapter significantly builds on and improves the 2017 version. This chapter provides a framework for promoting transparency and integrity among public officials and the private sector while advancing the enforceability of anti‑corruption laws. Therefore, the new chapter furthers Canada and Ukraine’s objective of an open and transparent international rules-based trading system that also promotes measures to prevent and respond to corruption. The chapter also includes a new section to encourage responsible business conduct per internationally recognized standards, guidelines and principles, further supporting Ukraine’s domestic reform agenda in this area.
Lastly, the modernized Canada-Ukraine Free Trade Agreement also includes perhaps the most comprehensive and ambitious environment chapter ever achieved in a Canadian free trade agreement. Canada recognizes the importance of fostering strong environmental governance while expanding trade and investment partnerships. Promoting robust environmental governance as trade relationships deepen is crucial to ensuring long-term, sustainable economic growth and well-being that can be publicly supported. To achieve this sustainability, trade and environment policies need to be mutually supportive, and the modernized Canada-Ukraine Free Trade Agreement provides the framework to make this happen.
Ukraine is a partner who also recognizes the importance of the linkages between trade and the environment — which is why, in 2017, Canada and Ukraine negotiated a comprehensive environment chapter with strong, legally binding commitments to protect our environment. At the time, the 2017 Canada-Ukraine Free Trade Agreement broke new ground by including the most comprehensive environmental commitments ever negotiated by Ukraine up to that point. Now, in 2023, Canada and Ukraine have built upon this foundation even further.
The updated chapter promotes robust, ambitious and transparent environmental governance, and a dedicated article reaffirming the parties’ commitment to addressing climate change and providing for cooperation in this area.
Senators, let me be clear that the environment chapter in this agreement does not implement a carbon pricing regime in Ukraine. This has been made clear through trade experts, journalists and, yes, even the Ukrainian embassy. “There aren’t binding provisions on carbon taxes or climate change.” These are not my words, but the words of Canada’s chief negotiator Bruce Christie, who testified at the Standing Committee on International Trade in the other place. In fact, Ukraine has had its own version of carbon pricing since 2011 — long before the backstop system was created and enforced in Canada.
At the Standing Committee on International Trade in the House, one amendment was adopted to the bill and put forward by Bloc Québécois MP Simon-Pierre Savard-Tremblay. The effect of this amendment is to ensure that the Canadian companies operating in Ukraine comply with the principles and guidelines referred to in Article 15.14 of the agreement. Article 15.14 deals with the responsible business conduct provisions of the “Transparency, Anti-Corruption, and Responsible Business Conduct” chapter of the agreement. The amendment calls for the minister to establish processes for receiving complaints and reporting to Parliament each year. This will add transparency and teeth to the business conduct provisions of Canadian businesses in Ukraine.
Honourable senators, I hope this overview of the modernized Canada-Ukraine Free Trade Agreement helps you understand why this agreement is important for both Canada and Ukraine. Ukraine has already expressed to Canada the value of modernizing the Canada-Ukraine Free Trade Agreement as a model agreement to demonstrate its ability to reach a comprehensive, modern and high-standard agreement with prospective trading partners around the globe.
To that effect, this agreement positions Ukraine as a country that stands with like-minded allies who believe in the rule of law, inclusivity and the need to act for the protection of the environment and labour rights. This is why, despite the circumstances, Ukraine dedicated scarce trade policy resources toward achieving that goal, and pushed forward this modernization with Canada.
Beyond the short-term and medium-term benefits related to the reconstruction efforts that will be needed, Ukraine also recognizes and acknowledges the long-term importance of further developing relationships with like-minded partners, as well as building and safeguarding an open and inclusive rules‑based global trading system — a system that contributes to creating strong and resilient economies, and enables long-term growth.
As you are undoubtedly aware, the past few months have seen some debate on this modernized Canada-Ukraine Free Trade Agreement, with suggestions that it may not be what Ukraine needs at this point.
It’s no secret that, in this day and age, trade policy has become broader than what it used to be. In an increasingly complex world that requires multi-pronged approaches due to the global interconnectivity of our activities and their consequences, unilateral approaches are not adequate. As the world becomes increasingly complex, so should our policies in order to remain relevant and meet challenges head-on.
It was Ukraine who initiated our re-engagement and determined the pace of our negotiations, recognizing that a modernized Canada-Ukraine Free Trade Agreement would be but one mechanism to support Ukraine’s rebuilding and future economic prosperity.
To that end, this is why the modernized Canada-Ukraine Free Trade Agreement tackles difficult issues of inclusive trade, environmental concerns and labour rights, in addition to its ambitious market access provisions.
This agreement, as mentioned, is not only meant to support Ukraine in the present time as it struggles with an illegal invasion of its territory. It is also meant to underpin our bilateral relationships far into the future, beyond the war and, hopefully, for generations to come.
In closing, this agreement and its accompanying bill are significant to me personally. This year marks 100 years since my parents immigrated to Canada from Ukraine, as refugees fleeing the Soviet revolution, which makes this bill personal.
In my previous life, I occupied — at a time — the role of Deputy Minister of Foreign Affairs at the department that is now Global Affairs Canada. In my time as the deputy minister, I witnessed first-hand the complexities of maintaining and developing bilateral relationships. I am personally quite pleased that Canada has been able to contribute to strengthening the bilateral trade relationship with Ukraine in such a productive and forward-looking manner, with the negotiation of a comprehensive and ambitious Canada-Ukraine Free Trade Agreement. I’m certain my ancestors would be pleased.
Let me conclude by saying that while some differences appeared in the House of Commons regarding this bill, the ethos of what it represents — which is Canada’s support to Ukraine in these difficult times, and our commitment to expanding our long‑term bilateral commercial relationship — has, thankfully, enjoyed broad support. To that effect, our Senate consideration of this bill is urgent so that we may convey to our Ukrainian allies ongoing support for their economic future. We now need to meet the moment to move things forward, as time is of the essence.
Colleagues, Ukraine has started their own implementation process. Considering their Verkhovna Rada is unicameral, it shouldn’t take them long. They are relying on us to get this job done. Ukraine wants this. Canada wants this. I, therefore, urge this chamber to advance this bill as quickly as possible. Thank you.
Hon. Amina Gerba: Would Senator Harder take a question?
Senator Harder: Absolutely.
Senator Gerba: Senator Harder, I want to congratulate you on this bill and on your speech. This is a bill I can get behind, since I personally help facilitate our trade relations with other countries and I like to see them developed.
I’m sure you’re well aware of what is happening in France. I’m referring to the fact that French farmers are being flooded with chicken products from Ukraine. Are there any safeguards in this bill to protect our farmers, particularly in this sector?
Senator Harder: Thank you, senator, for your question. You’ll know that Canada has been aggressive in protecting its agricultural sector in the supply-managed area.