Теги: Канада
Footwear manufacturer KaDar: We have successfully fulfilled our first order for the Canadian market

The history of KaDar, the largest footwear manufacturer in Western Ukraine, began back in 1999. At the moment, the production capacity enables the company to produce about 500 pairs of shoes per day. KaDar is actively entering new markets including the Canadian market. Halyna Panas, KaDar Export Development Manager, tells about the company’s preparation for the international exhibition – Toronto Shoe Show and its first results.    

KaDar has been successfully operating in the Ukrainian market for over 20 years and exporting its products to EU countries for more than 5 years.

The Free Trade Agreement between Canada and Ukraine gave us an excellent opportunity to supply footwear to Canadian consumers at zero import duty rate.

Due to our cooperation with the CUTIS project, we were able to participate in the Toronto Shoe Show, as it is a good opportunity to showcase our products to key players in the Canadian market. The first exhibition was held in late August 2018, the next one – on 20-22 February this year.

When preparing for the first exhibition, we did not understand exactly what shoes should be shown to Canadian clients. After all, Ukraine and Canada have their own specific tastes, preferences, and trends. Not always trendy models of footwear in Ukraine will be in demand in Canada, and vice versa. Therefore, it was not easy for us to prepare for the August exhibition and decide on the product mix.

We are now much better aware of what Canadian consumers need. The first exhibition and meeting with potential customers, talks with importers helped us understand the needs and requirements of the Canadian market.

That is why, when preparing for the second exhibition (February 2019), we were quite savvy in terms of mix, requirements and product quality. We brought exactly the products that might be of interest to potential consumers in Canada.

We see good prospects of exporting KaDar shoes to Canada as we got positive feedback on our products. Expectations are positive, we want to find a good business partner for long-term and mutually beneficial cooperation.

We already have our first order that we successfully completed. We work on further orders, prepare a collection in accordance with the requirements of the Canadian market.

We hope for successful exports to Canada. We want Canadian consumers to appreciate the high quality of shoes by the Ukrainian manufacturer and believe in the potential successful cooperation with our company. The most important reward for us will be the customer’s appreciation and recognition of the company as a reliable business partner.

Find out more about the success of Ukrainian producers at Toronto Shoe Show by following the link

UKRAINIAN CONFECTIONERY MANUFACTURERS WIN OVER CANADIAN CONSUMER AT SIAL 2018 MONTREAL

Emma Turos, Executive Director of the Canada-Ukraine Chamber of Commerce told in the publication for the Magazine “All for the Food and Processing Industry” about the SIAL 2018 Confectionery Exhibition in Montreal, which was attended by 7 Ukrainian companies. What confectionery manufacturers should focus on trying to win the Canadian market and what mistakes should be avoided.

On August 1, 2017, the Free Trade Agreement between Canada and Ukraine entered into force, which opened new opportunities for domestic companies to export to the promising Canadian market. The Agreement, in particular, provides for the abolition of import duties for 98% of Ukrainian goods.

The Canadian-Ukrainian Trade and Investment Support Project (CUTIS) is a powerful additional tool for export development into Canada. CUTIS is a five-year (2016 – 2021) international technical assistance project funded by the Canadian Government through the Canadian Ministry of International Affairs and implemented by the Conference Board of Canada in partnership with the Canadian-Ukrainian Chamber of Commerce.

Currently, CUTIS is implementing the first phase of the export support program for Canada – U CAN EXPORT, in five priority sectors: clothing, footwear, furniture, confectionery and IT sector.

Confectionery as a priority

Why did small and medium-sized confectionery producers fall into the focus of the Project? There were several reasons. First, the export experience – many Ukrainian sweets are already present on the Canadian market and have their customers. Secondly, the readiness of the industry in terms of compliance with the technical regulations, availability of certificates, as well as the lack of restrictions on the part of Canada.

How were Ukrainian companies selected? Maximum transparency. Advertisements were posted on the web resources of the Project, almost all chambers of commerce and industry associations. Information was also disseminated at meetings of the Project participants with business.

After receiving applications from interested companies, there were two stages of selection. By the way, the backup selection continues. Any company from the 5 priority sectors can submit its application through the Project website by filling out a simple questionnaire.

As a result, 10 companies were selected and recommended to take part in one of the largest exhibitions in Canada – SIAL 2018 Montreal. For the selected companies, one-day training was conducted with the participation of a leading Canadian expert.

Exhibition participants

They were mostly medium-sized businesses, because they have resources to work in foreign markets. However, there were also small family businesses that offer a unique product.

We tried to present a very wide range of products: cookies, bagels, gingerbreads, etc. for national shelves; sweets; snack group, chocolate bars; nuts and dried fruit bars, etc. Most companies already have experience working with Canada, have collaborated with distributors, without which operation on this market is impossible. The companies met the certification requirements, had a quality control system. Almost half of the companies at the exhibition were represented at the level of senior management and owners, all fluent in English.

The SIAL 2018 Montreal exhibited 7 Ukrainian companies among more than 1,000 participants from 50 countries, namely:

  • Beverages Plus (EAT ME sweets)
  • CHOCOBOOM
  • Zolote Zerno
  • Favorito
  • Khlibodar
  • Biskvit-Shokolad
  • LOL&POP

Participation in exhibitions is extremely important at the initial stage of entering a new market, as it is a great venue for meeting all the stakeholders including business representatives from all over Canada.

We had an intensive program that included training from a major retailer, meetings with retailer chain representatives, a tour of large retail stores (major chains, ethnic stores, discount stores, warehouses, distributors, etc.). We also had access to closed events organized not for general public by individual networks such as Metro. Also, bilateral meetings were held, which is the most important in any business mission.

Prospects for Ukrainian products

Ukrainian products have good prospects on the Canadian market because there is already a loyal clientele for our products. After the exhibition, Ukrainian producers received new supporters. Negotiations are under way that indicate that there is potential for increased sales.

What are the main advantages of Ukrainian products in Canada? I would point out the “European origin” of the product and the fact that almost everyone knows about Ukraine in Canada, unlike many other countries.

We should not forget about almost 1.3 million Canadians with Ukrainian roots. In addition, Ukrainian companies produce an interesting modern product. We have experts who are ready to work with Canada by informing manufacturers about the requirements and conditions of operation, packaging, marking and logistics.

Among the disadvantages, I would mention inconsistency and unreliability of Ukrainian companies, poor language skills and breach of ethics in doing business, which is often the case among Ukrainian companies. As a rule, we try to not work with such companies.

Sometimes one telephone call may be determining for the success or failure of a large delivery, so there are no trivialities in this process. All in all, we are talking about the development disease and the change of mentality from the “Russia-centered” policy of companies to conduct international business.

Advice for Ukrainian business

Participation in an exhibition is a proof of the product and company readiness to enter external markets. This is an important step that needs to be prepared. It takes about a year to prepare if the company has already identified the target market. You need to know your products, markets, competitors and prices perfectly.

Listen to your consumers and partners. Today, the consumer determines what to consume, what should be the product, its manufacturer and price. Consumers are the greatest experts because they vote with his own purses. A pragmatic approach and professionalism will help to adapt to the modern world transformations.

Also, in no case one can ignore the preparatory work for the trade show – research, product selection and adaptation to the relevant market (do not try to present everything), determining the number of samples, marketing materials. Local expert advice may be helpful, but such services are expensive. It is important to make sure that such specialists can help invite potential buyers to the stands and organize meetings during the exhibition. This work in Canada starts about three months before the trade show.

Another important point is that nobody will come to the meeting unless you agree in advance – about a month before. In Canada, people plan their time. A meeting can take 5-10 minutes. Be prepared to provide all the necessary information and demonstrate materials during this time. Your staff should know the answers to questions about prices, logistics, certificates, etc. Canada is a market for companies with experience and resources for development.

As part of the CUTIS project, we have trained consultants to help businesses in the regions get to know the benefits of the Canadian market. Most of them are representatives of chambers of commerce and industry. Pilot training in regions will begin shortly. Interested business people will be able to take part in such training sessions for free. The schedule of training will be available very soon on the Project’s web resources.

BUSINESS TRAVELER TIPS: HOW TO START EXPORTING TO CANADA

The free trade regime between Ukraine and Canada has been in operation for over a year and has already attracted Canadian buyers to Ukrainian goods. In turn, this heightens the interest of Ukrainian suppliers in the Canadian markets.

The Canada-Ukraine Trade and Investment Support Project (CUTIS) conducted a two-week training program “How to Export to Canada” for representatives of the regional chambers of commerce and trainers from the leading business schools. The program included a more theoretical Ukrainian part in Kyiv and a Canadian one in Toronto and Ottawa. During the latter, program participants had an opportunity to communicate with Canadian government officials and representatives of non-governmental organizations responsible for various aspects of Canadian export of goods.

Dmytro Shvets, Director of Start Global, a lecturer at Kyiv-Mohyla Business School, shared with Mind the interesting insights he had received during the course.

Country Profile. Canada is a North American country with the area of 9.9 million square kilometres (16 times larger than Ukraine) and the population of just over 36 million. It is a federation of 10 provinces and three territories, each having unique “tastes” in the issues of import, customs, taxes, legislative regulation, etc. For example, to register a company in Canada, you need a local director, but not in British Columbia.

61% of Canada’s total population lives in two provinces: Ontario and Quebec. Canadians prefer to live in cities, of which the largest is Toronto.

In a multicultural and multilingual country (there are two official languages – English and French – at the federal level), a large number of different nations retain their culture and traditions. In recent years, the flow of immigrants from Asia to Canada has increased. This makes it necessary to take into account when positioning a product and negotiating it that your client may have the habits and traditions not inherent in North America.

Indigenous people (First nations) account for almost 5% of the total population – about 1.7 million people. Interestingly, the average age of the indigenous part is 32 years old (ten years younger than the rest of the population). But in general, Canadians are an aging nation: it is expected that a quarter of the country’s population will be over 65 years old in 2031. This should also be taken into account when determining the target clientele for your products when preparing for their export.

Who do Canadians trade with? Canada imports goods and services from most countries of the globe. It is one of top ten trade leaders and accounts for 2.2% of world imports. Mostly, it imports from the USA, China, Mexico and Germany, and exports to the above countries, as well as the UK and Japan.

Canada is one of the world’s leading importers, and this is a good reason for the most responsible attitude and high requirements for everything coming from outside. Canadian importers are responsible to the State for the quality of products and will require the same from the supplying exporters.

What are the requirements for foreign goods? It is prohibited to import products to Canada that could harm human health or life. Such goods are either destroyed or sent back at the expense of the supplier. Canadian Food Inspection Agency has been created, among other things, for checking imported food products; more than 7,000 of its employees are concerned to reject the products that do not meet the standards.

Almost everything you need to know about standards and requirements for food and medicine can be found on the Ask CFIA web resource.

Another useful tool is AIRS CFIA: Here you can easily find out about the requirements for different products.

Standardization of goods and Canadian customs is a complex but well-balanced mechanism with the components working in concert and complementing each other. Almost all authorities and agencies have comprehensive information on their websites and patiently answer telephone requests.

Canadian import/export information is freely available. In particular, the CBSA website has a Step By Step Guide, which describes the process of import to the country in detail. At the same site, you can get a list of products and requirements (including goods that are not allowed to be imported).

Keep in mind that the goods to be imported can be delayed indefinitely until clarification (at the expense of the importer), so this should be taken into account in planning your time and budget. In addition, when determining the origin of goods, the cost and origin of the materials from which it is made are taken into account.

The logistics component of export to Canada should not be a problem provided careful preparation – the customs clearance of goods in the country of maple leaf is simplified and can be carried out remotely. You will be able to calculate the shipping rates at the website searates.com.

How to sell? With regard to Canadian sales channels, it is worth considering a few issues. One of the most interesting channels can be Public Services and Procurement Canada, which annually makes purchases for $18 billion Canadian dollars including a large number of imported items. At the web-portal buyassell.gc.ca, you can get registered for participation in the public tenter, and if you have questions, you may call +18008111148 and, as we are assured, get a detailed answer to the relevant questions. Civil servants feel morally obliged to respond the questions of interested exporters. It would be wise to use this.

In Canada, industry associations that advise trade missions are also very professional and help their members in international affairs. Contacts of those associations can be found on the Canadian Chamber of Commerce website.

Another interesting organization that deals with the development of trade relations with countries such as Ukraine is TFO Canada. You can find many tips on exports to Canada and register your company in the directory at its web page in order to promote your product among buyers.

Canada has one of the largest Ukrainian diasporas in the world – 1.3 million people. Although it is unlikely that it can be used as a sales channel, a significant number of Ukrainian-born specialists can be found in almost every sector of the country. These acquaintances would be good to use to get alternative contacts for industry and market information.

An additional channel for promotion in Canada can be annual festivals of Ukrainian culture.

Legal features of export to Canada. Special attention should be paid to legal aspects. For example, there is a case-law applied in many cases that takes into account the large number of cases for the century. At the same time, lawyers are highly specialized – both in the branches of law and geographically (in specific provinces).

Another very important issue is the protection of intellectual property. Canada has a large number of lawyers specializing in lawsuits against brands that violate someone’s intellectual property rights. Therefore, it is worth thoroughly checking the names of your brands before going to the country’s markets.

In general, Canadians are quite conservative. All serious statements should be made with reference to a reliable source. However, this also has a significant positive effect: they are all inclined to comply strictly with established rules and arrangements. There is a culture of follow-ups and taking notes of the meeting.

How can Canada perceive all Ukrainian? Unlike southern neighbours, almost everyone in Canada knows about Ukraine. The image of the country is improving, although not very fast. Ukrainian goods are sold mainly in supermarket chains specializing in Eastern European products.

The Free Trade Agreement between Ukraine and Canada (CUFTA), which is in force since August 1, 2017, has opened up 98% of its goods market to Ukrainian exporters. In general, CUFTA is expected to support Ukrainian companies in entering new markets and strengthen trade relations between the two countries.

Thus, despite all the regulations, rules and standards, with proper preparation Canadian market may be of interest to Ukrainian companies that build a long-term strategy of international expansion. After all, as you have set your product or service in Canada and adapted the brand to local ethnic groups, markets in many countries, including the neighbouring US, will become easier for further advancement.

Information contained in this publication will partly be included into Global Market Access Strategy course, which will be held at kmbs on November 26, 2018.

Canadian Ambassador: IT-services is the future of Ukraine’s export to Canada

Free-trade area (FTA) regime between Ukraine and Canada was established August 1, 2017. This is the 16th free trade regime coming into effect within the period of Ukrainian independence. But the situation with Canada is a specific one. This is because the North American partner opened 98% of its market for the Ukrainian commodities, having set to zero import duties for the majority of commodity groups. The influence of FTA introduction on commodity circulation between the states, the level of increase of the Ukrainian companies’ presence on the Canada’s market, the most promising sectors of the national economy from the perspective of Canada – all these and many more issues in the interview with Roman Waschuk, Ambassador of Canada to Ukraine.

Mr. Ambassador, how has the dynamics of Ukraine-Canada commodity circulation changed within the period after FTA introduction between our countries?

The two-month statistics we have does not give grounds for commodity turnover analysis. Though, it is positive from both sides. I will explain. The thing is that statistics of our countries are a bit different. The Canadian party demonstrates boost of commodity turnover within the first nine months of 2017 up to USD 65 million, i.e. 13,5% more comparing to the same period of 2016. The Ukrainian statistics for the period of three quarters of 2017 estimates USD 33,9 million which is 65% more comparing to the same period of 2016. As you see, the difference is twice bigger. This is due to peculiarities of declaration practice of exporters or statistical systems the adjustment of which will be ensured by the group we are currently establishing.

In fact, the states better maintain import than export statistics. That is why, let’s say, Canada works with the USA in the following way: their import statistics is used as our export ones and vice versa.  If we speak about trade between Ukraine and Canada, we talk about export to Ukraine at a rate of USD 179 million. The Ukrainian data shows that import from Canada equals to USD 196 million. According to our statistics trade balance deficit in Ukraine is less than the one estimated in the Ukrainian statistics.

Could you tell us what kind of commodities make our countries attractive for each other?

I would like to point out that the agreement between Canada and Ukraine has fueled the mutual trade. In 2016 the top-6 commodities of Ukraine’s export to Canada included:  1 — ferrosilicon manganese, 2 — colorants of titanium oxide, 3 — soybeans, 4 — cars, 5 — television and radio equipment, 6 — coffee makers. In our turn, we supply to Ukraine:  1 — coal, 2 — fish (in particular, hake), 3 — shrimps, 4 — pet feed, 5 — medicine, 6 — human or animal blood.

What other sectors benefit from Ukraine-Canada trade liberalization? 

The most promising sectors include, first of all, IT-area, clothes, footwear, furniture, chocolate and confectionary. In particular, there was established a support program for exporters «U CAN Export» aimed at fostering promotion of these goods on the Canadian market. It is important that the project is aimed not at Ukrainian “giants”, but at support of small and medium businesses. We are sure that the companies experienced in export can do a good job on the Canada’s market themselves.

In what way did FTA regime benefit your companies? To what extent does the Ukrainian business exploit opportunities to reach the market of Canada?

The agreement is an asymmetric one. Canada has immediately opened 98% of its market for Ukrainian producers, having reduced customs duties to 0% for almost all commodity groups, except for cars the duty on which will be cancelled within seven years. Also, there are specific restrictions on some agricultural products, which are exported on a duty-free basis only within established quotas. In particular, this is about milk, poultry, eggs, etc.

In case with Canada’s export, Ukraine has opened almost 80% of its market. Duties on some commodities from Canada will be cancelled systematically based on three, five and seven-year long transition periods. And there have been imposed restrictions on importing pork and lard. By the way, talking about lard, the Ukrainian producers persuaded me that it has not only economic but also a symbolic meaning.

Talking about agricultural products, significant dynamics was demonstrated by honey export of which has doubled. This means that there emerge new companies which take up the slacks.  

Analysis of export statistics of Ukraine shows significant leaps of some commodities. Let’s say that export growth of coffee makers within nine months of 2017 estimates 1 500 %, glass containers for transportation and packing of goods – 2 450 %, equipment for seed cleaning, sorting or calibration — more than 3 000 %. Talking about agricultural products, significant dynamics was demonstrated by honey export of which has doubled. This means that there emerge new companies which take up the slacks. Canada’s experience in free-trade areas proves that export grows broad first, and then – deep. To put it in other words, first of all, the range of commodities is increased, and then its volumes of supply are ramped up. Commodity producers which reach a new market explore tastes and demands of consumers and then concentrate upon promotion of commodities. It does not mean that traditional sectors do not face any increase. We, in particular, observe a significant growth related to agricultural equipment. Here, our companies have “overslept” the first phase of large-scale investments into agricultural equipment and are trying to сatch up.

Each market has its own specific features. What kind of difficulties do Ukrainian exporters happen to overcome?

We took into consideration specific features of each market and along with the agreement we have launched Canada-Ukraine Trade and Investment Support Project. Trade means exporting from Ukraine to Canada, and investments mean Canada’s investing to Ukraine. Expert advice is provided to your exporters who are eager to open Canada’s market for themselves. A detailed explanation is provided in relation to market specificities, requirements, ways of adjustment, types of certification required and geographical, palatability and other traits of a consumer.

Are there differences between Ukraine-Canada and Ukraine-EU FTAs?

The most important difference is that Canada’s market is more open for the Ukrainian goods than the EU market. And here there are much less restrictions, and if there are any, they are not really tough. In other words, ship as much as you wish. On the other side, our agreement deals, first of all, with commodities, but talking about trade in services, it is not that much diversified comparing to the agreement between Ukraine and the EU. In that respect, everything is still ahead for us.

Establishment of Canada-EU free-trade area is planned soon. What will this triangle change?

First of all, it is important to harmonize certification of commodities for export with due consideration of all the rules, requirements, qualifications, titles and other aspects. Soon we hope to form a positive free-trade area triangle “Ukraine – Canada – EU”. Then, producers from each side will have a better opportunity to see where inside this triangle there are advantages for their production and choose the most beneficial options for cooperation.

More intensive cooperation is planned in the IT-sphere. As of today, export of IT-services is two-three times the commodity export.

Is Canada involved into investment projects in Ukraine? What projects are the most attractive for investing?

On the part of Canadian investors there is some interest towards Ukraine. During the last two years, most funds were invested into agro-industrial sector. Therefore, one large Canadian fund has already purchased one third of shares belonging to the Ukrainian agro-industrial holding. In future, significant investments are planned to be made into the IT area and everything related to it, for example, infrastructure for information technologies. These are the spheres where I can see potential in the short-term outlook.

Mr. Ambassador, could you please share your predictions as to development of trading relations between our states?

In addition to the commodity market, service market will also grow, in particular, more intensive cooperation is planned in the IT sphere. Export of IT-services is difficult to encompass, but as of today it is two-three times broader than the commodity one. Only one big contract of a Canadian retailer with Ukrainian IT-professionals costs about USD 50 million. Besides, nearly 2 thousand programmers in Ukraine work for Canada. IT-services market belongs to invisible export, but at the same time it is economically sound for your country. And, considering geographical distance between our countries, it can play a huge role.

Ihor Sanzharovskyi: Ukrainian producers should find their place on the Canadian market

Market analysis, certification, finding a partner in Canada and fluency in English are just a few of the key “must-haves” for the Ukrainian exporters to Canada. CUTIS project director Ihor Sanzharovskyi talked to UA TV about the crucial aspects of exporting to Canada.

The interview covers the structure of the Ukrainian exports to Canada, the main obstacles exporters face, free trade with Canada, and the prospects of bringing Canadian investments to Ukraine.

“The Canadian market is not empty, it does not simply wait for Ukrainian goods. Ukrainian producers need to find their place on the Canadian market and, let’s be honest, fight for the Canadian shelves,” said Mr Sanzharovsky.

Watch the full interview below:

Zoia Pavlenko: Clean or Rich? How Free Trade with Canada will Impact Environment in Ukraine

Developments of the recent years have dramatically changed the foreign trade of Ukraine: due to the loss of the Russian market Ukrainian manufacturers had to reorient their export trade from the East to the West. Due to the efforts of the Ukrainian government, in particular trade diplomacy of the Ukrainian Ministry of Economic Development and Trade, the free trade zone with the EU was introduced, implementation of Free Trade Agreement with Canada is nearing completion, and active negotiations with Turkey and Israel are currently under way. Every day we witness new success stories of Ukrainian goods on foreign markets.

Graph: The Economist

The aspect rarely mentioned in the discussions of the ‘new way’ of Ukrainian export trade is its environmental impact. In this article we will briefly analyze potential impacts of trade liberalization on the environment in Ukraine. Let’s take as an example the Free Trade Agreement between Ukraine and Canada recently ratified by the Ukrainian Parliament.

From Poor and Clean to Rich and Dirty?

The liberalization of foreign trade, in fact, means facilitating international movement of goods and services. It stimulates production in exporting countries. In theory, such growth leads to a greater consumption of natural resources and growing amounts of industrial waste. This may have both local impact (e.g. discharging of untreated sewage into small rivers) and global impact (increase in greenhouse gas emissions).

In 1955, Simon Kuznets (scientist) suggested the curve of correlation between environmental load level and economic activity (Picture 1). According to the scientist’s theory, growing of the GDP per capita, at first, leads to increase of environmental load, and then – to its reduction. The logic is clear – revitalization of economic activities and new financial resources are used to meet critical needs (filling the gaps), so to say – ‘patching the holes’. In a situation like that, no one worries about environment.

However, later on, when a country is already quite rich and environmental problems continue to accumulate, the environmental protection becomes a pressing matter. The country can invest in the upgrading of outdated production technologies and address negative environmental impacts.

Today, the twenty-fold difference in GDP per capita between Ukraine ($2155) and Canada ($43248) puts them at the different ends of the Kuznets curve. It is possible to assume that increase in the trade relations between the two countries threatens our particular state with environmental degradation. But is it really true?

Is a Leap to Cleanness Really Possible?

The particularity of our country’s participation in free trade agreements is the focus on the export of raw materials that requires considerable use of natural resources. However, even with the gradual shift of focus to the export of manufactured goods with higher added value, we should not forget about environmental impacts of the manufacturing processes themselves (energy and water consumption, emissions of air pollutants, wastewater discharges).

The desire to rapidly increase the economic growth rate and attract foreign investments leads to the loosening of environmental control in Ukraine. This includes a moratorium on environmental inspections of enterprises, formalization of environmental assessment process and delaying of the legislative system reboot with regard to environmental matters. Ukraine became an active participant of the ‘race to the bottom’, because the competition to cut a slice of an ‘international economic cake’ leads to a drop in environmental standards.

It would seem that the prospects are not particularly bright for the Ukrainian environment.  However, in the case of a deeper analysis of international agreements, one can see specific ‘win-win’ opportunities for all parties.

Environmental ‘Letter of the Agreement’

The emphasis on environmental aspects is common for the free trade agreements of the new generation. The Free Trade Agreement between Canada and Ukraine is no exception. The document contains direct links to the environmental conventions and protocols to be followed by the parties. These are, for example, the Convention on International Trade in Endangered Species of Wild Fauna and Flora (СITES Convention), the Montreal Protocol on Substances that Deplete the Ozone Layer, the Stockholm Convention on Persistent Organic Pollutants, etc.

In addition, often before signing a free trade agreement, countries conduct its environmental assessment. This helps each party to provide for possible negative impacts and, therefore, make an informed decision and properly plan appropriate countermeasures. In Canada this is stipulated by the legislation – Environmental Assessment Report of the Free Trade Agreement between Canada and Ukraine is available online.

In the terms of environmental regulation, Ukraine is in a better position than the developed countries at the beginning of their economic upturn

While analyzing the articles of the agreement, one can assume that in the terms of environmental regulation Ukraine is in a better position than the developed countries at the beginning of their economic upturn. Since even Canada, learning from its own mistakes, ended up with the need for introduction of more stringent environmental regulations and development of innovative and cost-effective production technologies. And Ukraine can simply adopt these ready-made tools that, in addition, will bring Ukrainian production closer to the European and international standards.

Let Consumers Choose by the Means of a Dollar

Ralph Fücks, the popular German author, in his book ‘The Green Revolution’ claims that, in the modern world, economic growth and environmental protection are not opposed, but become a single whole. So, the obvious solution of the environmental-economic dilemma would be a capital investment in the upgrading of Ukrainian production. Of course, in reality, such quick changes are not so easy to introduce. However, there is an obvious and environmentally-friendly winning approach for small and medium export businesses – let foreign customers support the investments in sustainable production of Ukrainian goods.

In Canada, more than 50 percent of the population identify themselves as responsible consumers.

Greater attention on the part of Ukrainian producers to the environmental protection issues may be rewarded in the markets of the developed countries, such as Canada. Here it has been long-established and growing trend of responsible consumption, when the consumer deliberately buys those goods that reduce the use of energy or water, contain recycled materials or can be recycled themselves, are non-toxic and biodegradable. For example, in Canada, about 58% of the population identify themselves as responsible consumers. Not to mention the global crush on organic products.

The ‘eco-friendly’ image is certainly not just the writing on the label. This is a strategic work, investment and brand development. In some cases, the claimed environmental benefits of the product must be approved by an independent third party in the form of an appropriate certificate. For example, in Canada, consumers very well know product certification according to the ISO 14001 “Environmental Management System” standard, organic certification of agricultural products according to the Canada Organic Regime, timber certification by Forest Stewardship Council (FSC), certification of energy efficiency of electrical appliances by Energy Star, etc.

It is also important to remember that unfounded marketing claims of environmental benefits of your products are the examples of so-called ‘greenwashing’ and involve administrative liability both in Canada and in Ukraine.

The real environmental benefits of goods have direct financial benefits: for example, the cost of the certified organic agricultural products in Canada, on the average, is 40% higher than of their conventional equivalents. So, there is a possibility to not only compensate the costs associated with certification and investments in the production, but also get the higher returns.

Special focus of the Free Trade Agreement between Canada and Ukraine and other international agreements on environmental aspects may create conditions for a quantum leap of domestic producers. Why do the same mistakes, which the developed countries has already made, and go through decades of the depletion of raw material resources, when it is possible to look forward, follow the global trends and get additional price advantages? It is environmental friendliness of Ukrainian goods that can be a part of the brand of Ukraine in international markets and, at the same time, the key to sustainable development of Ukrainian economy.

Information and support on environmental aspects of export to Canada are available at the government Export Promotion Office and Canada-Ukraine Trade & Investment Support project.

Author: Zoia Pavlenko, Ukrainian Environment Expert at CUTIS project

Roman Waschuk: CUFTA isn’t grants or cash loans – it is opportunities to earn money on Canadian market

Every tenth glass of apple juice, drunk by Canadians, is made of Ukrainian concentrate. Delo.ua has asked the Ambassador of Canada in Ukraine, Roman Waschuk, what else Ukrainian businesses could need in order to find the path to Canadians’ hearts.

– How soon, after the Free Trade zone (FTZ) between our countries is in effect, can we talk about wide mutual investments and access of Ukrainian goods to Canadian market?

Ukrainian party has already done the part of its job – it has ratified the Agreement for FTZ by the Parliament. Two formal steps remain to be done by ourselves: the third ballot in the Senate and signature by the Governor General of Canada, David Lloyd Johnston. Then comes the exchange of notes on ratification and in a month the FTZ between our countries becomes effective. Thus, it should all happen during the summer. Since that moment, 99% of all quotas and duties will be eliminated and 0% rate will be applied to the exports of Ukrainian goods to Canada.

However, the question is, to what extent and how prepared the Ukrainian businesses are to use these opportunities. I would like to stress, though, that our attempts to propagate this agreement and Canada-Ukraine business forum, that was held last June, have already increased the interest in Canadian market in Ukraine and Ukrainian market in Canada. That is why we experience certain revival of our commercial relations – before the FTZ Agreement takes effect.

– Are you sure, that the FTZ between our countries will work in summer already? What if life brings nasty surprise, such as the Senate’s countervote or the Governor’s General non-signing the document?

I can assure you that no surprise is envisaged, because, when both upper and lower house make the unanimous decision, there can be no doubts.

– I agree. When can we see the first practical results of the FTZ though?

This is impossible to forecast, because it all depends on the entrepreneurs and companies from both sides, that should enjoy the privileges of the FTZ Agreement. However, I am certain, that both Canadian and Ukrainian businesses are prepared to use new trade opportunities. And, as an evidence of my words, a visit of 14 Ukrainian companies, representatives of food industry, to Canada has already been scheduled for early April. This trip is arranged within the Ukrainian Export Support Program.

Ukrainian delegation will meet Canadian importers, supermarkets’ owners, etc. And this can be considered as a preparatory step, which aims at increasing our trading volume.

– You emphasized a key point while talking about the FTZ launch: “if Ukrainian businesses are ready”. What do you think Ukrainian businesses have to do in order to increase demand for our goods? How to reach out to Canadians? Will Ukrainian goods be popular with Canadian customers?

Ukrainian businesses have to study Canadian market in the first place. For that very purpose we have launched the Canada-Ukraine Trade and Investment Support project. It has got an office in Kyiv. It also cooperates with Canada-Ukraine Chamber of Trade and Canada-Ukraine Trade and Investment Support (analytical entity of Canadian businesses). They are the ones who provide consultations to the interested companies. I.e., there is a whole structure that can orient Ukrainian businesses whether their goods have a perspective on Canadian market, what should be changed in order to attract Canadians.

By now, 9 priority groups of goods have been identified (clothing, textiles and confectionaries, machine building – milling equipment, that are in demand in Canada, dish-washers) and one service sector – the IT, which has been successfully operating between ourselves.

– This is what Canada is interested in obtaining from Ukraine. What is it Canadians have to offer to us?

By the results of the year 2016, the basis of Canadian exports to Ukraine is formed of coal and metallurgy. And the beginning of this year also shows revival of this sectors. Supplies of fish and shrimp are top second (we’re close to the ocean, after all). Then come aircrafts and aircraft components (to replace Russian parts). And this segment is very perspective, because our jointly manufactured high tech goods can be sold on the third markets. A big portion of our exports accounts for pharmaceuticals and soya (mostly seed). I have recently visited Kharkiv oblast and I was told that local specialists prefer Canadian seeds for they are cold resistant and fit good to continental climate.

A big portion of Canadian exports (almost $3.5 million) accounts for pets’ food (cats and dogs) and materials for cattle artificial insemination. By the way, a big part of Ukrainian dairy herd are Canadian descendants.

Thus, the range of exports to Ukraine is large, but we work on its extension.

– This is great that our countries plan to extend our commercial horizons. However, plans do not always coincide with reality. Who can guarantee that Canadians need Ukrainian goods? What goods from Ukraine are currently being sold in Canadian stores? Are they popular?

A Ukrainian company, before entering Canadian market, does promotional launch with engagement of certain PR-companies. I know that a Ukrainian birch sap producer is being entering Canadian market right now. They will sell their goods through one of the biggest chains of our supermarkets. And, if Canadians are going to like it, the supplies will grow.

For instance, in 2016 our country bought concentrated apple juice from a Ukrainian producer for the amount of CAD 9.5 million and your country became top second external supplier of this product. On top of that, every tenth glass of apple juice, drunk by Canadians – is made of Ukrainian concentrate.

I would like to mention honey. Ukraine can occupy this niche, because Ukrainian honey supplies to the EU are subject to quotas, while being unlimited to Canada.

– We have to be honest, though. I presume that Canadian customers got used to, for instance, American quality of goods, while our products are hardly competitive…

You are excessively humble, because there is a fair amount of Ukrainian companies, especially those who have bought modern production facilities, that can produce goods of the world’s top level. A lot of Ukrainian manufacturers also develop partnerships with Canadian distribution networks and our embassy helps with this.

– FTZ is often perceived by Ukrainian businesses as another opportunity to sell their goods. However, some experts with more strategic vision say that the Agreement should be treated as a partnership and we also have to think, how our countries can help each other. How do you think the commercial partnership between Ukraine and Canada should look like?

Canada-Ukraine Trade and Investment Support’s findings indicate that after FTZ agreements with other countries are signed, investments in both directions have doubled. The wider commercial opportunities are, the more the countries learn about the investment potential of each other.

As far as Ukraine is concerned, on the verge of 2016-2017 an investment in food industry was made – a Canadian investment fund bought 30% of shares of one of the biggest local agricultural holdings “Astarta”.

We can also see that Canadian capital comes to Ukraine through acquisition of large international entities that operate here. When I have recently visited Kharkiv, I learned that 50% of a big local outsourcing company had been purchased by the National Pension Fund of Canada. Thus, Canadian capital flows to Ukraine through many channels including indirect ones.

Currently we see the increase of project and investment interests. Talking about projects, there is a rocket project being prepared on the East Coast of Canada, with the plans to build a small space launch complex, from which Ukrainian rockets “Cyclon-4” are to be launched. The rockets are manufactured by “Pivdenmash” holding. The plan is to launch medium sized satellites to the orbit.

– But, honestly, what is Canada’s interest to the FTZ with Ukraine? What, in your opinion, the agreement gives to highly developed Canadian economy and Canadian businesses?

Indeed, we are interested in selling our goods in Ukraine. Even though Ukrainians love to cry poor, they buy a lot of luxury goods. Of course, Canadians don’t want to miss this profitable opportunity.

Apart from that, the FTZ between our countries is a gesture of economic support for Ukraine. And these are neither any grants, nor financial loans, but a real opportunity for Ukrainians to earn their living by trade with Canadian market. It is profitable for both, Canada and Ukraine.

For example, Ukrainian canned apricots could be of enormous demand in Canada, if they are cheaper than Austrian ones, because only 1% of Canadian territory harvests apricots (due to special climate conditions).
In general, the part of Ukrainian production facilities, that used to work for Russian Federation, can find their markets in Canada.

On the market of services, this exchange between our countries is being going on for a while, because it is less regulated, specifically in IT. It is hard to make precise calculations but I believe it is over $40 million on the annual basis. Canadian employers highly value knowledge and talents of Ukrainian programmers, because they don’t only support the existing systems, but also create new ones.

– In numerical terms, what is the current place of Ukraine in Canadian trade volume?

70% of Canadian commodity turnover accounts for USA, with the rest of the countries comprising 30%. As far as Ukraine is concerned, the current number is very modest – less than 1%. However, thanks to FTZ, we can reach much higher indicators, considering that every additional million wouldn’t go amiss for your country. So, we will make money step by step.

– Is such a readiness by Canada to launch FTZ with the EU and Ukraine connected with the complicated situation around Trans-pacific partnership and USA’s statements of the need to reconsider North American Free Trade Agreement?

Not at all. As far as Ukraine and the EU are concerned, the FTZ negotiations are under way for almost 6 years, while Trans-pacific partnership problems had started long before. Apart from that, both Canada and other countries understand that diversification of trade flows is a positive thing for national economy.

Of course, various processes are going on in the world, including political issues that need to be adjusted to, i.e. the Ukrainian situation with coal and metallurgical complex. Back in January 2016 Ukraine didn’t buy Canadian coal at all, whereas in a year Canada sold coal for the amount of $48 205 062. Therefore, when forecasting the future we cannot rely on the last year’s statistics.

The Canadian party doesn’t want to promise to Ukraine any sky-high results. However, if any Ukrainian company finds its market niche in Canada, it can make very quick progress, because Canadian market grows continuously and our population has substantial buying power. Canadians are especially attracted by high quality and cheap goods. So, when there is a will, there is a way.

– You mentioned a rocket project that is being done by Canada jointly with “Pivdenmash” holding. Are the investments coming from both parties?

Ukraine is a supplier of rockets and investments come from the North America. They are provided by the group of American space program engineers. This is purely commercial project to launch the satellites by the means of Ukrainian rockets, which is assisted by Canadian government and the Ministry of Transport of Canada, as this is from the shore of Canada that safe launches are possible.

– What is the term of the contract with Pivdenmash and when is the launch of the project?

You should get this information from Pivdenmash, but I think this is going to be a long term project. As for the project start is concerned, the beginning of construction of a space site is scheduled for early next year. New launches start in late 2018 – early 2019.

– And how’s our cooperation in defense and military technical sector going on?

As far as the contracts in space and aircraft industry are concerned, the first flight on AN-132 was on March, 31. The aircraft was engineered by Antonov plant for Saudi Arabia and it has got Canadian engines.

The Minister of Defense of Ukraine, Mr. Poltorak, comes to Canada in mid-April. He will sign a military cooperation agreement, which facilitates our dialog in this sector. I won’t go into details so as not to rush ahead of things.

 

Stepan Kubiv: Why FTA with Canada is part of our European integration

On the 14th of March Parliament ratified the Free Trade Agreement between Ukraine and Canada.

I would like to remind that the Agreement is the part of the government’s policy to extend trade opportunities for Ukrainian exporters. And Ukraine’s direction towards the EU plays vital role.

We, basically, talk about the triangle of opportunities and interaction in production among Ukraine – Canada – the EU, with the leading idea of Ukrainian and European cooperation in agricultural, manufacturing and other areas with the emphasis on innovations and high technologies.

Can we call this triangle of opportunities equilateral though?

What is it Ukraine has to offer to technologically developed Europe and Canada in order to become an equal counterpart of a new level of economic and commercial relations?

After manufacturing ties with Russia had been ruined, Ukrainian manufacturers started to direct their efforts to create production chains with the EU and other countries. Thus, according to The World Integrated Trade Solution (WITS), Ukraine imported to Russia in 2015 $1.9 billion intermediary goods (inputs for manufacturing), and exported $2.1 billion. To compare, imports of similar intermediary goods to Canada comprised the price equivalent of $9.4 million with exports of $17.6 million.

It is obvious that Ukrainian companies cannot instantly overcome the dependency on the intermediary manufactured goods. Therefore, the extension of alternative cooperation and search for manufacturing and commercial partners in the EU and Canada is very timely and important. I should remind here of a recently initiated Ukraine-EU Industrial Dialogue, which started a few weeks ago in Brussels. Within this dialog, the EU and Ukraine initiated horizontal interaction between some companies, NGOs and professional associations, agricultural in particular. These are, in fact, the stakeholders of the relationships that organize joint business processes.

How Canada is involved here?

First of all, access to big Canadian market place creates wide opportunities for exports of jointly manufactured Ukrainian and European products in North America. I talk about aircraft engineering, IT products, textiles, agriculture including organic produce.

Very few people know that joint efforts of Ukraine and Canada in agricultural segment can make ourselves the biggest world wholesale trader in the area of grain growing and processing. By the way,

Since the Free Trade Agreement with Canada was signed three Ukrainian companies (two in agricultural business) received over $300 million of direct investments from Canada.

Along with that, Ukraine is committed to switch from the raw material orientation of its economy to an advanced technological model of manufacturing with high added value. Such production is supposed to contain large portion of small and medium businesses, that often create production ties with big companies and employs a lot of workers.

For example, in the fall of 2016 a German company “Bader” opened a new factory of a premium class vehicle leather production in Lviv oblast, which employs around 3 thousand workers. And this is just one of the cases of successful cooperation of Ukraine and the EU.

That is why the interaction of Ukraine and Canada is important in that very triangle with the EU. Because that very triangle creates new opportunities for cooperation in production and manufacturing, where Ukraine offers very beneficial conditions for salaries and convenient locations of industrial facilities of the joint ventures.

For Ukraine it will mean new modern production, which includes, apart from agribusinesses, car manufacturing, aircraft engineering, pharmaceuticals, textiles and innovative technology solutions.

Foreign direct investment in manufacturing will bring to Ukraine capital equipment, state of the art technology, managerial and marketing solutions and experience. This means greater multiplication effect from investment, because investors “imbed” new production facilities in already existing manufacturing chains.

Therefore, our employees are the decisive competitive advantage of Ukraine in our relationship with highly technological manufacturing of the EU countries and Canada.

They have extremely high, even under European standards, education and qualification levels. They major in natural sciences, technologies, engineering, and mathematics. They are able to create new knowledge, produce, adapt and use state of the art technology.

These qualities, multiplied by hard work and competitive labor cost, create enormous opportunities for manufacturing competitive products and create attractive opportunities for every joint Ukrainian and European manufacturing or investment project, which brings its manufacturing facilities to Ukraine.

Under the conditions of tougher world competition, it will be beneficial for the EU to place their manufacturing facilities in Ukraine where we have space and conditions for starting new facilities and labor resources for arranging qualified technological processes.

This scenario, by the way, will keep qualified Ukrainian personnel from moving to Europe, because, unlike with service industries, manufacturing requires an employee’s participation in the production process.

This is extremely important for development of regions, because qualified engineers and high technology production specialists will have more employment opportunities in Ukraine, particularly in the regions with sufficient manufacturing space.

The AuthorStepan KubivThe First Vice Prime Minister of Ukraine, The Minister of Economic Development and Trade

Source: European Pravda

Olga Vergeles: What prevents Ukrainian business from entering the Canadian market?

In July 2016, the team of the Ministry of Economics managed to complete the negotiation process and sign the Free Trade Agreement with Canada that opens 98% of the Canadian market and creates a wide range of opportunities for Ukrainian exporters. Currently, the document undergoes ratification at the Ukrainian and Canadian parliaments and may come into effect very soon.

As noted by Natalia Mykolska, Deputy Minister of Economic Development and Ukraine’s TradeRepresentative, Canada annually imports goods for about 420 billion Dollars. If this sum is divided by the actual number of Canada’s population annual import per one Canadian will amount to about USD 12,000. So Canada’s potential as a market for Ukraine is extremely high.

I wish I could simply tell the business about the requirements and standards and then give future exporters a “blessing” to conquer overseas markets.

However, no consulting or technical assistance works unless you try to look at the root of the problem. What do Ukrainian companies really lack to start working in Canada?

Below are my observations based on the results of dozens of meetings with Ukrainian exporters aimed at the markets across the Atlantic. As it will be clear below, there is a topic that combines most of the problems faced by Ukrainian exporters.

Thus, the top five barriers that prevent Ukrainian companies from taking on the market of Canada (and others) are as follows:

No. 1 Lack of information.

“We don’t know Canada’s market”, “What do Canadian buyers want?”, “How to find information on Canadians’ preferences with regard to our products?” – these are only some of the questions that start the discussion of the topic of trade with Canada. In fact, the answers are obvious but Ukrainian companies often lack time to search for information and analyse the market carefully.

My advice is to start with applying to state-sponsored and international business support projects. For instance, the issues of Canadian export are systematically addressed at the Ministry of Economics, the newly established Export Promotion Office, chambers of commerce and industry. Very often, they share analytical materials on the markets of different countries (including Canada) and inform business of the new trends of consumer demand. You should remember, however, that these organizations may steer a company in the direction of necessary data but won‘t do all the homework for it.

Get the basic information, use it to take primary decisions and keep digging further by yourself if you see the potential. The knowledge you get may be very quickly converted into real business opportunities.

No. 2 Communication with an overseas partner.

You will never get a second chance to make a good first impression. This seemingly overused phrase fully describes the specifics of communication with Canadian partners. Preparation to communication and the communication process itself is something that may be either beginning of future cooperation or its end after the first try.

Once again the problem of time arises. There is understanding of what a buyer in Canada wants to see and hear but domestic business cannot find time to prepare a tough presentation or write an interesting letter in professional English. As a result, we get low-quality offers from Ukraine that very soon end up in a spam folder or recycle bin.

How to do everything correctly at the first attempt? Communicate with your potential buyer in the same language and in the format expected from you. An entrepreneur from the North America expects to see commercial offers in the version of 2017 rather than that of early 1990s. Give him time to explore information, answer to your query or ask for clarifications. Respond in an intelligent and moderate manner. Don’t be afraid to remind of yourself. A polite reminder is a common practice in business communications.

No. 3 Readiness to change.

Very often, I hear companies make statements like this: “We can get a certificate required by the buyer only if the contract is guaranteed!”

I can say at once that this is a dead-end road that will immediately worsen your position in the eyes of the Canadian partner. A potential buyer has a choice and the right to insist on certification and standards accepted in his country.

What does this mean for Ukrainian companies? A desire to become an exporter should be certainly coupled with the readiness to invest time into necessary changes. For instance, receipt of a necessary certificate entails preparation and compliance with certain requirements to the manufacturing processes and quality of the products. Yes, this is time and resources. As La Fontaine has it, “Patience and time do more than strength or passion”. Don’t’ hurry, develop and you will get the result.

No. 4 Stereotypes about business in Canada.

“Canada has the largest Ukrainian diaspora. We know how to do business with people like ourselves”. This is another mistake. The number of Ukrainian expatriate community in Canada is a bit more than 1,200,000 out of the total 35 million. The chances are quite low that you will get a partner from the Ukrainian diaspora. It is important to remember that business does not have ethnicity.

Instead of those stereotypes, let me bring to your notice the realistic expectations of Canadian buyers from the Ukrainian side:

  • be ready to a personal meeting in Canada and a presentation of finished product samples;
  • fully comply with preliminarily set requirements and systemically (but not obtrusively) remind of your interest;
  • be patient: it will take time to review your offer and, most likely, Ukrainian companies are not among the top priorities of Canadian buyers.

Once again: slow and steady wins the race.

No. 5 Risk assessment and financial investments.

When designing the plans and strategies for entry into Canadian markets, a Ukrainian company has to weigh:

  • capability of investing the time for work over compliance with relevant Canadian standards;
  • availability of all necessary resources for implementation of the export strategy;
  • whether it is ready to run the risk of possible failure.

Canada’s market is attractive due to its scale. It should be remembered, however, that such spacious markets have high competition, let alone the conservatism and sometimes excessive cautiousness of Canadian business. As with entries into any other markets, there is always a risk to come with a trial batch and remain unwanted.

This is exactly where patience and persistence may yield their fruit. Work on the commodity, analyze all risks and minimize the unfamiliarity factor. There is no other way to become successful overseas.

All the above may be summarized in one sentence: it takes time to enter into the Canadian market. In the developed world, this is the most expensive and, at the same time, free tool to achieve success. The time spent both by top managers and ordinary workers for the search of information, market research, strategy design, communication and negotiations, training and planning, will definitely bring results.

Year after year, the number of companies that export into Canada grows. Maybe your business will be next to bring Ukrainian products overseas. Time will show.

Author: Olga Vergeles, Canada-Ukraine Trade Investment Support project manager

Source: NV.UA