Thank you very much.
In these very difficult days for Ukraine with the massive Russian army on the Ukrainian borders, we stand together with Ukraine and must say no to Putin.
I'm sorry, Mr. Roche, I don't quite agree with some of the things you mentioned, but we're not going to get into the politics today.
Over the past 30 years the Government of Canada has been continually providing extensive guidance and support for the Government of Ukraine and its efforts to establish a stable economic environment. One of the most mutually beneficial examples of this is the Canada-Ukraine Free Trade Agreement, CUFTA.
Since it came into force on August 1, 2017, CUFTA has laid new foundations for trade, growth and investment in both countries.
That being said, CUFTA is still a work in progress with opportunities for improvement. The Canada-Ukraine Chamber of Commerce conducted some of the consultations with our partners, members and stakeholders, and here are some of the points of our discussions and interest.
The first is cross-border trade, and consulting, financial and ICT services. Ukraine is a great destination for outsourcing of consulting, financial and IT services. The experienced and educated labour force of Ukraine has encouraged global corporations to locate their shared service centres in Kyiv, Lviv and other cities. Ukraine is now the fourth-largest supplier of tech talent to the world.
Ukraine is becoming increasingly popular among those looking for IT outsourcing partners. Since 2017, the IT sector in Ukraine has grown approximately 27% to 30% year over year, with over 285,000 IT specialists currently working in the industry with about $6.8 billion worth of services in export.
We currently see a rise in interest from Canadian ICT firms in outsourcing to Ukraine as well as looking into opening their offices in the country due to the newly adopted law on digital economy facilitation, with highly attractive tax and regulatory conditions. The GDPR law is under way to its adoption. All this will make Ukraine highly competitive on a global market, and Canadian companies will benefit from it.
On the other hand, big Ukrainian service companies are also opening their offices in Canada to benefit from being located in the same time zone as most of their customers and better provide services. Hence, there are additional jobs in the Canadian economy.
On investment, Canadian corporations and investment funds are sophisticated investors. During the last few years we witnessed quite substantial investments in the Ukrainian markets made by such companies—Mr. Waschuk mentioned Fairfax, Brookfield and others. An important role in decision-making on the implementation of international projects by Canadian investors is played by the federal corporation, Export Development Canada, EDC, which provides credit and government guarantees for the implementation of the project.
In 2014, Ukraine's EDC rating significantly deteriorated, which led to reduced interest of Canadian businesses to invest in Ukraine. In 2017, Ukraine's rating was slightly improved, but it remains undesirable and does not correspond to the realities of the business and investment climate in Ukraine.
We would ask the committee to consider the need to re-evaluate the current EDC rating on Ukraine.
On non-trade barriers, we constantly hear of Canadian exporters facing challenges while dealing with Ukrainian customs, and it is probably time to consider implementing some improvements. Beyond tariffs, there are many other chapters and provisions on such elements as non-tariff barriers that will help to ensure that the market access that we gain through lowering or eliminating tariffs is not taken away by some other means or circumstances.
CUFTA should focus on eliminating the red tape that companies face at the border by establishing customs procedures that are as standardized, as simple, as predictable and as modern as they can be. We suggest that digital transformation with a paperless environment and an ability to advance ruling for a given product, even before it reaches the border, would be very helpful.
A perfect example of such an issue is the certificate of origin, which in many cases gets questioned once the product travels from Canada through another country to Ukraine. Another example of such a non-tariff barrier is the treatment of Ukrainian alcoholic beverage exports to Canada by Canadian companies.
The export tariffs on these beverages were removed but in the case of one of our members the Ontario Ministry of Finance, through the LCBO, has levied an unfairly high cost of service differential, COSD.