Thank you.
Thanks for the invitation to speak before this committee today.
My name is Michèle Govier. I am the director general of the international trade policy division at the Department of Finance. I'm joined by Yannick Mondy, the director of trade and tariff policy.
Our division is responsible for Canada's import policy, including measures related to the customs tariff and the Special Import Measures Act.
I am here to speak about the Ukraine goods remission order and will provide some context as to the rationale, process and key features of the order, as well as the results of our close and regular import monitoring, including on the imports of supply-managed goods.
The Ukraine goods remission order was introduced in the context of Russia's invasion of Ukraine, which has caused widespread human suffering and destruction.
Russia’s invasion of Ukraine, with support from Belarus, has had untold impacts on Ukraine and its people, including a significant effect on its economy and its ability to export its goods to other countries.
In response, Canada has worked in close coordination with our allies to impose severe sanctions and continue to provide humanitarian and financial support to Ukraine. Canada has committed more than $5 billion in financial, military, and other aid to Ukraine.
That includes $2 billion in direct financial support for the Ukrainian government. This is money that has already been disbursed and is helping the government continue to operate.
As part of its response, the Government has also temporarily waived tariffs and trade remedy duties on imports originating from Ukraine. This was done by way of a temporary remission order, which came into force on June 9, 2022, and will expire after one year.
This measure was part of a concerted effort with Canada's allies who have taken similar measures. Notably, the European Union implemented comprehensive tariff relief for goods not already covered by its free trade agreement with Ukraine. The United Kingdom reduced all tariffs on goods imported from Ukraine to zero, and removed all quotas. The U.S. has also taken the step of removing Ukraine from its 25% section 232 tariffs applied to steel.
Canada's remission order temporarily lifts remaining customs duties on Ukrainian imports—for example, supply-managed agricultural goods, passenger vehicles and sugar—and makes it easier for importers to meet the rules of origin and shipping requirements when importing into Canada.
Canada and Ukraine enjoy a positive and growing trade relationship. The Canada-Ukraine Free Trade Agreement, or CUFTA, came into force in 2017, and is the ongoing subject of modernization negotiations. Canada's two-way trade with Ukraine expanded by 17%, from 2017 to 2021, to $446 million annually.
While the remission complements these important steps, the remission is temporary. There are no plans to consider any permanent changes under the FTA.
We are also mindful of the importance of tariffs as a key pillar in Canada's supply management system, and that providing such temporary duty-free access to supply-managed goods is unprecedented.
In considering this measure, we assessed the potential for exports from Ukraine. ln general, it was assessed that the scope for Ukrainian businesses to start exporting meaningful quantities of supply-managed goods to Canada could be hindered by the current conflict situation, the short time frame for the remission of one year, and the lack of recent exports to Canada and associated business ties.
Over the period from June 9, when the order came into force, to November 23, imports of supply-managed goods have been limited to one importation of supply-managed products—ice cream—with a value for duty of $6,000.
We are aware of concerns over the prospect that imports could increase, particularly related to chicken. The department is working closely with other departments to track the level of imports, including in the over-access supply-managed goods, and to promptly identify imports that could have an impact on domestic producers. If imports in meaningful quantities are detected, we will ensure that any risks and impacts to domestic producers are assessed and considered in a timely way, while being mindful of the intended purpose of the measure. Further, we would reinforce that in light of the exceptional nature of the current conflict and situation in Ukraine, the precedential risk of this order is very low.
In sum, the remission order was part of a broader Canadian response to the invasion of Ukraine, intended to support its economy, and was undertaken as part of a concerted effort with allies. We are closely monitoring its impacts.
I'd be happy to answer your questions.
Thank you.