Trudeau in Ukraine: CUFTA instead of military cooperation

Author : Mykola Siruk

Source : 112 Ukraine

Canadian Prime Minister praised Ukraine's reforms and promised to continue the instructors' assistance
22:48, 12 July 2016

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Ukrainian President

First Vice Prime Minister - Minister of Economic Development and Trade Stepan Kubiv and Honourable Chrystia Freeland, Minister of International Trade, have signed an agreement on free trade zone between Ukraine and Canada, which was initialed last year.

In a joint statement with the Canadian Prime Minister Justin Trudeau, President Poroshenko said that the agreement on free trade zone between Ukraine and Canada will take effect immediately, but implementation would last for 7 years.

Trudeau said that signing of the agreement "will facilitate the market access, create a more predictable trade regime." According to him, all barriers to trade matters and implementation of the agreement to be eliminated, and both countries would benefit from it. "It will create new opportunities, new jobs, and new markets for products; it will improve the living standards of our citizens. This is a new surge in the development of our economy," summed Trudeau.

Both leaders also raised the issue of military cooperation between the countries. In particular, Poroshenko told journalists that the parties agreed to extend the length of stay of 22 Canadian military instructors that train the Ukrainian military. Trudeau underlined that his country will help to train Ukrainian soldiers, to make them more efficient and able to fight against the enemy who infringes on Ukrainian territory."

"We will also monitor the situation and find the best ways of supporting Ukraine. We will do this by maintaining the spirit of cooperation and friendship that long existed between our countries," said the Canadian PM.

The issue of expanded cooperation in the field of defense was raised at the meeting of Ukraine’s and Canada’s PMs. Ukraine’s PM Groisman said: "Today, the main task is to create the necessary level of defense in order to prevent the aggressor from attacking Ukraine; Ukraine must be strong."

And it seemed that Trudeau did not hear the conversation. Canadian Prime Minister instead emphasized on the achievements of Ukrainian reforms. "Obviously, Ukraine goes through a difficult period because of the conflict with Russia, but at the same time you have implemented a significant amount of difficult reforms," said Trudeau. He also stressed that Canada intends to continue to support Ukraine and its citizens. This is true, but equally important is to force Russia to stop aggression in Donbas, which is a bloody wound on the body of the country. It would fasten the implementation of the reforms.

CMD-Ukraine expert, Ihor Huzhva, has comment on the importance of CUFTA:

"Canadian market is reliably protected by the high tariff duties. In addition, under NAFTA, Canada gives a global quota for 200 tariff lines - they are distributed to all countries. After CUFTA comes into force, Canada to open 98% of the market of industrial goods to Ukraine. The import duties for agricultural products to be lifted in some 3, 5, 7, and 10 years. But there is some clarification, there are some 108 tariff lines, which provide global quotas regime. In this case, they reach 150-200%! Agricultural production with high added value is in this list of "exceptions." We have good supply conditions in a number of headings. But this usually applies to the unprocessed products. Market access for industrial goods is more optimistic. During the transition period, Canada to abolish import duties to 0. However, the technical barriers would be significant - Ukraine safety requirements and quality of the products are different. Accordingly, the agreement to facilitate Ukraine’s exports of the raw materials and the products with low levels of processing.

CUFTA could lead to a reduction of the state budget of Ukraine. According to the results of expert calculations, CUFTA might have a negative impact on budget revenues in the medium-term budget period. But in the future it will increase; in its first year the reduction of budget revenues would reach 8 million USD, and 8.8 million USD in the next year. These effects are caused by the political will of Ukrainian leadership that is in a hurry to sign the agreement. We went to the formula: yes, we cannot trade, but we receive financial and technical assistance, i.e. obtain resources for development. It seems that the new Ukrainian team of negotiators was wrongly informed about these conditions. Therefore, all previous agreements with the Canadians were not announced."

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