International Trade Committee on Feb. 14th, 2022

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Correct me if your figures show otherwise, but, as far as I can tell, Ukraine's exports to Canada have gone up 6.5%. Meanwhile, Canada's exports to the Ukraine haven't really increased.

From 2016 to 2020, merchandise trade between the two countries was pegged at an average of $340 million per year. That is very little.

[Jay Allen]

Ukraine is about our 71st trade market in terms of bilateral trade. It's definitely not our largest market, but there is lots and lots of room to grow. It's a market that sits at a really critical place in Europe. It has agreements with the European Union. Its economy is growing, and we have to have confidence that it will continue to grow.

With respect to Canadian trade, as I said, Canada's non-coal exports to Ukraine grew by 28.5% between 2016 and 2019. That's significant growth. While our overall exports are roughly the same, the composition of those exports is changing. We're moving away from export purely of coal to exporting other things, including machinery, equipment and some of these other manufactured products, which make it a more valuable type of export for us.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you.

According to the Ukrainian government, it has made some necessary reforms to stimulate growth and address corruption, in order to foster a more favourable business environment.

Can you give us an update on the progress Ukraine has made through such policies?

[Jay Allen]

You're absolutely right. One of the things we've been very impressed with is their efforts to continue to fight corruption. I know we've been specifically involved with training judges and we've done a number of other programs. I will turn to my colleague Andrew Turner to give a few more details, but overall, the perception of Ukraine as a business environment certainly appears to be one that is improving.

Adding the types of predictability and the types of certainty that this modernization will produce will encourage more people to do business there and it will encourage them to continue making changes in their system. The more you attract investment, and the more you attract trade, the more interest there is domestically in terms of making those changes. It's a self-reinforcing thing to a certain extent.

If we have a moment, I'll maybe ask Andrew Turner to tell us a bit about the anti-corruption programs that we're working with them on.

[Andrew Turner]

Ukraine has undertaken a number of anticorruption reforms in its decentralization efforts, which support local services. That said, I think it would be more important to reform the legal system.

Two very significant laws were passed in July. We continue to support them, including through the participation of Canadian judges. The initiative is aimed at encouraging the selection of qualified judges and continuing to fight corruption.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

In other words, you have seen real progress since these discussions began.

Do I have any time left, Madam Chair?

[The Chair, Liberal, Judy Sgro]

You have 50 seconds.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

I will leave it there. I do have another topic I'd like to discuss, but I'll wait until my next turn.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you.

We'll go on to Mr. Masse, please, for six minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Madam Chair, and thank you to our witnesses.

Mr. Allen, the first question I have is with regard to businesses surrounding telecommunications and cybersecurity. I think that's one of the underestimated places where Canada can actually help Ukraine in a significant way.

I wonder whether there has been growth in those industries, especially given the fact that Russia and other states even outside of Russia have taken such an aggressive stance on this. This is where I would hope we could actually provide some inroads as a country.

[Jay Allen]

You're absolutely right, Mr. Masse. Telecommunications is certainly a very big area for potential growth. It's one of the chapters that we're looking to add to the agreement. The agreement doesn't cover telecommunications at this point.

We would be looking to put in provisions that would facilitate trade in telecommunications equipment and facilitate trade in services relating to telecommunications, including with respect to security services.

I'll turn to my colleague Darren Smith, who is the acting director general responsible for services and is a long-time services negotiator. Maybe Darren will have something that he might want to add.

[Darren Smith, Acting Director General, Trade in Services, Intellectual Property and Investment, Department of Foreign Affairs, Trade and Development]

Thank you.

Good afternoon, everyone.

Effectively, I'll just echo what Jay has just remarked on. In terms of the Ukrainian market, there certainly is strong potential for the expertise and excellence of Canadian services in relation to cybersecurity and, broadly speaking, telecommunications services to expand into the Ukrainian marketplace. At this point in time, I would say that is more on the potential side.

We are looking at the FTA, of course, as an opportunity to provide, as has been noted, further transparency and opportunities for greater certainty and predictability to help facilitate greater Canadian commercial interests into this marketplace, but I think we can confirm that it is definitely one of the areas where we see some commercial opportunity, at the same time as having downstream effects and positive benefits for broader security and other interests in this particular jurisdiction.

[Brian Masse, NDP, Windsor West, ON]

That's really interesting. It would seem that it should actually be a priority, at least in my opinion, on the surface of where we would find.... At least, the Ukrainian population that I represent has been very concerned about this, and this has also been targeted at the industry committee. We studied, for the first time ever, fraud prevention. Part of that was the international component, because I'd been pushing for international agreements, not just about fraud in India but in other countries. I would suspect.... Wouldn't that be the same thing? If we were able to augment those types of initiatives, it would also stop some of the harassment and challenges that some of our own Ukrainian citizens face when they're engaged on social media, and also stop the fraud attacks.

[Jay Allen]

Certainly. One of the interesting things about being in a trade negotiating session is that you get to cover a lot of new areas and new ideas. As things like this come to the fore, we can certainly talk about them at the table.

You're absolutely right. Telecommunications and services associated with it are a big interest for Canada. We will certainly make use of these opportunities to talk about how we can protect our citizens and what we might be able to do in that context.

[Brian Masse, NDP, Windsor West, ON]

Mr. Smith, did you have an answer on that too?

[Darren Smith]

Yes, thank you.

I would just add that in addition to a robust cross-border trade-in-services chapter, as well as telecommunications, we're also looking at expanding the e-commerce chapter, although it would really be broader in terms of digital trade. There, I would say that we have three baskets of activity. We're facilitating trade and we're looking at dealing with market access impediments, but we're also trying to build greater trust and confidence on the part of users on online platforms and such.

Indeed, I'll point to the fact that although the FTA won't be the panacea for the myriad of challenges that exist within the cybersecurity realm, it does provide another platform for us to engage with a trading partner on these important issues and to reinforce efforts that were undertaken in other forums, including the WTO.

In that respect, in that forum, we do have a proposal from Canada dealing with the protection of personal information that relates to people who could be subject to persecution from authorities for nefarious reasons—people of ethnic minorities, people who belong to LGBTQ+ communities, etc. We're trying to introduce these types of protections into our trade agreements so that governments are not using or demanding access to the personal information of users within the online realm to undertake activities that would be detrimental to them and certainly contrary to Canadian values.

[Brian Masse, NDP, Windsor West, ON]

That's really good to hear. I've had Ukrainian interns for probably about 14 of my 20 years in Parliament; just the last couple of years have been interrupted, and other than that it's been due to elections. I find that some of the younger people who come from the universities have very good skill sets in the digital economy. They also have some international experience, beyond just Canada and Ukraine. I just see that as a natural fit to bolster entrepreneurship and confidence in investment if the digital aspect is rectified.

Even in Canada people are concerned. We've had our own challenges with Russian interference on that. For investing in Ukraine, it would make a lot of sense to bolster the relationship by enhancing safety and security through the digital lens.

I think that's my time, Madam Chair.

[The Chair, Liberal, Judy Sgro]

It is. Thank you, Mr. Masse.

Mr. Hoback, you have five minutes, please.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

Thank you, witnesses, for being here this afternoon.

I'm just curious: With what's going on in the environment in Ukraine, how do you conduct negotiations in this type of environment? It must be rather tenuous.

[Jay Allen]

Indeed. We are going to be very pragmatic about this. We are making it clear that we are interested in working with them on a schedule that will suit them.

As Mr. Turner said earlier, they've asked us to continue to move ahead with these negotiations. At this point, we will work with them on the pace that they are able to meet.

Right now, thankfully, they seem ready to move ahead.

[Randy Hoback, Conservative, Prince Albert, SK]

Okay.

[Jay Allen]

We will very likely do our negotiations virtually, but if there's an opportunity for a face-to-face negotiation either in Ukraine or in Canada or in a third country location, we can take advantage of that as well. Obviously, we are sensitive and we're not going to push them very aggressively in terms of timing. We will be cognizant of the situation—

[Randy Hoback, Conservative, Prince Albert, SK]

I don't mean to interrupt, but I have lots of questions, so we'll have to have quicker answers, if that's okay.

[Jay Allen]

Sorry.

[Randy Hoback, Conservative, Prince Albert, SK]

In the situation that we have in our agreement right now.... Have you found situations where we've seen products going into Ukraine duty-free and all of a sudden ending up in Russia and places like that? Has there been any evidence of that in our existing agreements?