Thank you, Chair.
Good afternoon, committee members, and thank you for the opportunity to provide an update on the status of the modernization of the Canada-Ukraine Free Trade Agreement, or as you'll hear me refer to it, CUFTA.
To begin, I will provide an update of our trade relations with Ukraine before delving into the modernization of CUFTA.
In 2020, total bilateral merchandise trade between Canada and Ukraine was $305 million, with Canadian exports valued at $161 million, led by fish and seafood, vehicles and machinery. Canada's imports from Ukraine stood at $144 million, led by electrical machinery, fats and oils, and machinery. Canadian investment in Ukraine stood at $81 million in 2020.
Preliminary data for 2021 shows that overall bilateral trade between Canada and Ukraine saw significant growth, with an increase of over 25% from 2020, surpassing $400 million in total bilateral trade for the first time.
CUFTA was negotiated between 2010 and 2015 and entered into force on August 1, 2017. Upon its entering into force, Ukraine immediately eliminated tariffs on approximately 86% of Ukraine's imports from Canada, and Canada immediately eliminated tariffs on 99.9% of imports from Ukraine. The balance of tariff concessions is to be implemented by January 1, 2024.
While CUFTA is a comprehensive free trade agreement from a trade-in-goods standpoint, it does not cover services or investment due to significant differences in positions at the time. CUFTA includes a review clause that committed the parties to review the agreement within two years of its entry into force with a view to expanding it. The review clause specifically identifies cross-border trade in services, financial services, investment, telecommunications and temporary entry, but does not restrict parties from exploring other areas.
We're going to work with Ukraine not only to include the provisions covered in the review clause, but also to expand the agreement into new areas. We will seek to update some of the existing chapters, too.
Provisions covering cross-border trade in services, financial services, investment and temporary entry of business persons would increase transparency and predictability, reducing uncertainty to service providers. Updated disciplines on domestic regulation and mutual recognition agreement guidelines for professionals would also facilitate services trade.
The Canada-Ukraine foreign investment protection and promotion agreement, or FIPA, which entered into force in 1995, provides a baseline of protection to Canadian investors in Ukraine, but it is an older FIPA based on an earlier model agreement, and there is scope to modernize it.
The CUFTA review clause also offers an opportunity to pursue a more comprehensive and inclusive agreement. Canada will seek to add new provisions on good regulatory practices, trade and gender, trade and indigenous peoples, and trade and SMEs, among other updates. The modernization of CUFTA offers an opportunity to increase the agreement's benefits for Canadian workers, entrepreneurs and small businesses while advancing fair, inclusive and transparent trade with Ukraine.
This review process formally started in July 2019, when Prime Minister Trudeau and Ukrainian President Zelenskyy announced that they had agreed to expand the agreement. Following our respective internal preparations and a pause due to COVID-19, Ukrainian officials confirmed in September 2021 that they were ready to proceed. On January 27, 2022, Minister Ng and Ukraine's minister of economy, Yulia Svyrydenko, announced the launch of negotiations.
The modernization of CUFTA is a clear demonstration of Canada's steadfast commitment to Ukraine. Modernization of the agreement will help build commercial ties and contribute to long-term security, stability and broad-based economic development in Ukraine. Indeed, our Ukrainian partners welcomed the launch of our negotiations last month through the same lens.
Thank you.