The embattled government of Ukraine has completed a free trade agreement with Canada.
Ukrainian Prime Minister Arseniy Yatsenyuk and Prime Minister Stephen Harper announced the deal Tuesday during Yatsenyuk's visit to the Quebec hamlet of Chelsea. Yatsenyuk met with Harper, 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.
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The deal will see Canada eliminate duties on 99.9 per cent of imports from Ukraine, while Ukraine will end duties on 86 per cent of imports from Canada, according to a news release. The Ukraine tariffs will come off Canadian industrial goods, forestry and wood products, and fish and seafood products, as well as the vast majority of agricultural products.
Canadian agriculture exporters will get duty-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 pork to Ukraine without the country applying tariffs.
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 $244 million last year, down from $322 million the year before — observers 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 worth less 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 a tentative Canada-European Union trade agreement, and nearly a year after holding a signing ceremony to celebrate it, although the details of that agreement are still being finalized. The government says that trade deal is worth $12 billion a year to the Canadian economy.
Statistics for 2013 compiled by the World Trade Organization suggest Ukraine 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 Poroshenko met June 6 in 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 more ready and willing to reform its economic and political system to eliminate corruption.
Arel said the 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.
Taras Zalusky, executive director of the Ukrainian Canadian Congress, agreed that the deal will have more political than economic impact in the short term. However, he said Ukraine will be an important market in the future.
"You've got a country of 45 million people, 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, Zalusky added, 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.