Canada-Ukraine trade deal announced by Arseniy Yatsenyuk, Stephen Harper - Action News
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Canada-Ukraine trade deal announced by Arseniy Yatsenyuk, Stephen Harper

Prime Minister Stephen Harper and his Ukrainian counterpart say the two countries have finished a free trade agreement worth an estimated $41 million to Canada.

Annual bilateral trade worth less than loans Canada has provided to Ukraine since 2013

Prime Minister Stephen Harper announces Ukraine Free Trade Deal

9 years ago
Duration 1:16
Negotiations concluded on deal to help Ukraine economy

The embattled government ofUkraine has completed a free trade agreement with Canada.

Ukrainian Prime Minister Arseniy Yatsenyukand Prime Minister Stephen Harper announced the deal Tuesday during Yatsenyuk's visit totheQuebec hamlet of Chelsea. Yatsenyukmet withHarper, whose summer residence is at nearby Harrington Lake. Yatsenyuk is on a visit to the U.S. and will head to Britain after his stop in Canada.

The deal will see Canada eliminate duties on 99.9 per cent ofimports from Ukraine, while Ukraine will end duties on 86 per cent ofimports from Canada, according to a news release. The Ukraine tariffs will come offCanadian industrial goods, forestry and wood products, andfish and seafood products, as well as the vast majority of agricultural products.

Canadian agriculture exporters will getduty-free access for beef, pulses, grains, canola oil, processed foods and animal feed, the release said.Canadian pork producers will be able to export more frozen porkto Ukraine without the country applyingtariffs.

The government expects Canada's exports to Ukraine to increase by $41.2 million and Ukraine exports to Canada to increase by $23.7 million, mostly in textile, apparel and metal products.

Modest trade relationship

Although Canada's trade with Ukraine is modest it was worth$244million last year, down from$322million the year beforeobservers say the deal will be an important political gesture, sending a message of confidence in the reforms being undertaken by the government of Ukraine's president, Petro Poroshenko.

Trade between the two countries is worthless than the$400 million in low-interest bilateral loans Canada has provided to Ukraine since its political crisis began in November 2013.

It also comes nearly two years after Harper announced atentativeCanada-European Union trade agreement, and nearly a year after holding asigning ceremony to celebrateit,although the details of that agreement arestill being finalized. The government says that trade deal isworth $12 billion a year to the Canadian economy.

Statistics for 2013 compiled by the World Trade Organization suggestUkraine doesn't crack Canada's top 40 trading partners.

High foreign debt

A spokesman for Trade Minister Ed Fast directed questions about Yatsenyuk's visit to the Prime Minister's Office, but did say "Prime Minister Harper and Ukrainian leadership have been clear about their commitment to concluding negotiations on a free trade agreement."

"A free trade agreement between Canada and Ukraine would further strengthen our partnership and create jobs and prosperity for Canadians and Ukrainians alike," Rick Roth wrote in an email to CBC News.

The PMO did not immediately reply to a request for comment.

Harper and Poroshenkomet June 6in Kyiv, where Harper pledged to send negotiators to conclude an agreement "as soon as possible."

The deal has been under negotiation since 2009 but stalled during the past year of turmoil, as Russian-backed rebels seized control of Crimea and much of Ukraine's industrial heartland in the east of the country.

Dominique Arel, a professor of Ukrainian studies at the University of Ottawa, said the agreement will be no economic bonanza in the short term and that Ukraine's foreign debts presented a situation "parallel to Greece" except, he said, that Ukraine was moreready and willing to reform its economic and political system to eliminate corruption.

Symbolic deal

Arel saidthe free trade agreement would be of symbolic value, showing the world that Canada had confidence in Ukraine's efforts to clean up its politics and its business environment.

Currently, almost all of Ukraine's economic output goes to pay its debts.

Members of the Ukrainian armed forces prepare a weapon at their position near the town of Horlivka, north of Donetsk, Ukraine, June 6. Canada has been a vocal supporter of Ukraine's government as it struggles with pro-Russian fighters. (Oleksandr Klymenko/Reuters )

Taras Zalusky, executivedirector of theUkrainian Canadian Congress, agreed that the deal will have more political than economic impact in the short term. However, he said Ukrainewill be an important market in the future.

"You've got a country of 45 millionpeople, one of the largest countries within Europe with a very high literacy rate, and a high level of economic potential," said Zalusky.

"It used to be the economic engine of the former Soviet Union. So you've got great opportunity and you've got a country who used to rely on Russia as one of its primary trading partners. So now you have opportunity for Canadian companies to partner with Ukrainians in the aerospace sector, agriculture, financial services and oil and gas."

The free trade agreement, Zaluskyadded, will serve as a "sign of confidence by Canada" in Ukraine's ability to "move on with the reforms that it's doing, all the while being at war with Russia."

The agreement would still require legal vetting and ratification by parliaments in both countries.