Ukraine to finish ratifying free trade zone agreement with Canada

The Ukraine-Canada treaty will enter into power 30 days after ratification in Ottawa

The Ukrainian president Petro Poroshenko filed a draft bill on ratifying the agreement on Ukraine-Canada free trade zone, the UNIAN agency reports.

The bill war referred as urgent for approving at the Verkhovna Rada.

The mentioned treaty provides Ukrainian businesses a customs-free access to the Canadian market, the president’s press service notes.

“The document will reveal new opportunities for the Ukrainian entrepreneurs, which includes both expanding the market outlets and developing and modernisation of the production aimed to increase competitiveness in the new markets and also to create new jobs.” the service says.

With the act signed, Ukraine has ended the process of ratification of the deal with Canada. It will enter into force 30 days after the Canadian part finishes the process the same way.

The Ukraine-Canada free trade zone agreement was signed in Kyiv on July 11. According to the deal, Canada and Ukraine liberalise their custom policies upon each other in a mutually comfortable way, simultaneously protecting their sensible industries.

Just after the agreement enters into force, Ottawa will open 98% of its market for Ukraine, and Ukraine will steadily cancel 80% of the customs tariffs for the Canadian exports. Other fees would be abolished in the next 3, 5 and 7 years.


President submitted draft Law on ratification of FTA between Ukraine and Canada for consideration by Verkhovna Rada

Under article 93 of the Constitution of Ukraine and article 9 of the Law of Ukraine on the International Treaties of Ukraine, President Petro Poroshenko submitted the draft Law on the Ratification of the Free Trade Area Agreement between Ukraine and Canada for consideration by the Parliament as an immediate one.

The Law ratifies the Agreement concluded between the two states in July 2016.

The implementation of the provisions of the document will promote the development of bilateral trade and economic cooperation, allow producers of goods to use benefits from duty-free access to the market of Canada, open opportunities for the Ukrainian business to expand their markets and modernize production in order to increase competitiveness on the new market. The Agreement will also facilitate the creation of new jobs in Ukraine.

Bilak plans to bolster Ukraine business

Changing perceptions about Ukraine with local and foreign investors will be among the key goals for Daniel Bilak, the newly appointed chief investment advisor to Prime Minister Volodymyr Groysman and director of the Ukraine Investment Promotion Office.

It’s a year-long assignment for Bilak, a prominent lawyer from Canada who stepped into his role on Nov. 1.

His aim is to rebrand the country and improve conditions for doing business through a number of initiatives, including expediting the passage of more than a dozen laws to improve the business climate. Currently, they are stuck in the Verkhovna Rada. He backed a proposal to merge them together into one package, which he wants to put forward to the business community.

“Maybe we can improve something…that would make it more difficult for the deputies to say ‘we don’t want this law’ because there will be more pressure put on them,” he said.

Ukraine ranks nowhere near the top of nations in foreign direct investment, ease of doing business or per-capita income, and investors cite three primary reasons: global instability (to which Russia’s war has contributed), lack of rule of law and pervasive corruption.

Bilak fielded questions from around a dozen investors during a roundtable meeting in Kyiv on Nov. 15 sponsored by the U.S.-Ukraine Business Council and hosted at the offices of KPMG.

Bilak said he knew the job would be tough, but changes in the global political climate over the past week- including the U.S., Moldova and Bulgarian elections — will make it even harder.

Following the Kremlin-friendly Donald Trump’s victory in the U.S. presidential election on Nov. 8, Moldova and Bulgaria also elected pro-Russian politicians in November.

Bilak said the U.S. was a critical partner and Ukraine would need to secure anchor investments from the states in key four sectors — infrastructure, energy, agribusiness and high tech.

Meanwhile, he said, Japanese companies have shown interest in investing in Ukraine, with automobile parts maker Fujikura among those announcing plans to launch in Western Ukraine this year.

“They actually have no problems, they’re very happy people right now and I think we want to understand what have those regions done that make them so happy,” he said. “That’s another area of focus for us, to create cities, or, regions of excellence that are going to create the environment that will attract investment.”

Taxes, inspections remain biggest problems of Ukrainian business

The number of complaints filed to the Business Ombudsman Council in Ukraine has increased. Among those complaining, most are dissatisfied with the work of State Fiscal Service, law enforcement authorities and local municipalities.

Most of the complaints come from small or medium-sized manufacturers, wholesalers, distributors, agribusiness, real estate and telecommunications market players, as well as individual entrepreneurs. They are based in Kyiv and Kyiv Oblast, Odesa, Dnipropetrovsk and Kharkiv regions.

In the last three months of 2016, the council received 242 complaints, the most since it started functioning 16 months ago. More than a half of them involve the State Fiscal Service, including Tax Inspection and Customs Service. Tax issues remain the most troubling with tax inspections being a pivotal roadblock.

“This tendency indicates the necessity to improve fiscal legislation and its execution,” said Business Ombudsman Algirdas Šemeta. “The majority of tax-related complaints that we receive are caused by the violation of law and failure to follow in-house instructions. It’s not that the existing laws are poor; they’re merely not executed.”

On Nov. 3, the Ukrainian parliament passed amendments to improve some laws on state regulation, including State Fiscal Service’s activities too.

Šemeta also expressed concern with growing pressure on business from law enforcement agencies such as Prosecutor’s Office, National Police, and State Security Service, as the number of complaints of them rose by a third.

There have been reports of criminal proceedings started before the results of fiscal inspection. Use of criminal law against businesses remains a serious challenge from the standpoint of business climate in Ukraine and the country’s reputation in the eyes of international investors.

“The problems won’t disappear fast. The system will need a lot of time to clean itself,” concluded Šemeta.
According to the State Fiscal Service of Ukraine, in 10 months of 2016 the five largest taxpayers were three public companies — UkrGazVydobuvannya, Naftogaz, and Ukrainian Railways — and two tobacco producers, Phillip Morris and British American Tobacco.

Improving tax and customs administration is one of the key points in the lending program of International Monetary Fund, Ukraine’s major creditor. In addition, fiscal decentralization has been a part of reform package supported by the European Union.

Source: Kyiv Post, By Bermet Talant, Published Nov. 5.

International Trade Minister Introduces Legislation in Parliament to Implement CUFTA

November 3, 2016 – OTTAWA, ON – Global Affairs Canada

The Honourable Chrystia Freeland, Minister of International Trade, today introduced legislation in the House of Commons to implement CUFTA. The legislation will be subject to all required stages of the legislative process. Canada is committed to the timely ratification of CUFTA so Canadians and Ukrainians alike can take advantage of its benefits as soon as possible. When implemented, the Canada-Ukraine Free Trade Agreement will generate opportunities for Canadians and Ukrainians, create new job opportunities, and help to grow the middle class and those working hard to join it.

When CUFTA enters into force, Canada will immediately eliminate duties on 99.9 percent of imports from Ukraine. Similarly, Ukraine will eliminate tariffs on approximately 86 percent of Canadian exports, with the balance of tariff concessions to be implemented over a period of up to seven years. CUFTA will thus eliminate essentially all tariffs on goods currently traded between Canada and Ukraine.

Canada is deeply committed to working with the people of Ukraine to help implement important economic and democratic reforms and to strengthen business ties between the two countries.