Теги: Canada-Ukraine Trade and Investment support
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.

Zoia Pavlenko: 25% of Canadians are ready to pay more for environmentally-friendly goods

Canada-Ukraine Trade and Investment Support project environmental expert Zoia Pavlenko talked to the First Business Channel about the main environmental stereotypes Ukrainian businesses have and described the prospects for Ukrainian environmentally-friendly products exporters on the international markets.

Main highlights:

“The very notion of “ecological goods” is completely meaningless. Environmental protection is not about the quality of the consumer goods, it affects the environment on three stages: production, operation and utilization.”

“The more GDP per capita is, the greater is the demand for environmentally-friendly goods. Europe, the US and Canada have higher GDP and, consequently, demand for these products there is higher.”

“Organic goods market in Canada is about $ 5 billion, 60% of Canadians surveyed say they are ready to buy products that are manufactured without risks to the environment, and 25% of consumers are willing to pay more for them.”

See the full interview below (in Ukrainian):

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.

 

Olga Vergeles: Canadian Supermarkets are Interested in Ukrainian Goods

The Parliament of Ukraine ratified the Canada Free Trade agreement on March, 14.Now, in order to become effective, the Agreement must be signed by the President of Ukraine, ratified by the Senate and signed by the Governor General of Canada. In a month after the ratification procedures are over the Canada-Ukraine Free Trade Agreement becomes a reality. According to experts, it may happen in summer, 2017.

Last year a Canada-Ukraine project for trade and investment support (CUTIS) was launched in order to help Ukrainian companies to enter the Canadian market. The Project is financed by the Canadian government and aims at technical assistance to Ukrainian exporters. propozitsiya.com learned from CUTIS Project Manager Olha Vergeles, what preferences Ukrainian exporters are going to get after the markets are open and in what goods Canadian customers are interested the most.

Who and how will CUTIS assist?

— We have a very good cooperation with the Ministry of Economy of Ukraine, in particular, the team of the trade representative of Ukraine, Natalia Mykolska and Export Promotion Office at the ministry. Together we support small and medium Ukrainian businesses that plan to enter the markets of Canada. Big holdings are capable of hiring consultants and prepare themselves for entering the market while small businesses often lack knowledge and they don’t know what to start from.

A study is currently underway, on the basis of which five groups of goods and services will be selected, that are of the most interest to Canada as imports from Ukraine. CUTIS will be looking for the producers of these goods and invite them to participate in the project. We have planned seminars and information sessions covering the most important export issues. We will also provide technical assistance on packaging, labeling, certification and, most of all, assist in searching for partners, organize meetings. According to our plan, Ukrainian companies will participate in trade shows and exhibitions in Canada.

How will the 5 groups of priority goods be selected?

— The selection will be done in 2 phases. We have analyzed the dynamics of Ukrainian exports to Canada and Canadian imports in general, in order to find out, which goods are being actively imported by Canada with positive trends during the recent 5 years and in which of these groups Ukrainian producers can compete.

We also looked at export opportunities of Ukraine and excluded the categories that are inaccessible for small and medium businesses. At this point, we have already selected 9 groups of goods and one group of services. The next step is to define five priorities. However, keeping in mind the fast dynamics of export markets, we are prepared to reconsider the five priorities. Apart from that, we always support anyone who wants to export to Canada, even if the goods are not part of the five priorities.

Will there be the goods of the food industry included?

Chocolate and confectionaries, as well as processed and canned fruit and vegetables, food processing equipment (refrigerators, flouring mills, packaging equipment) are already on the top-10 list. The final data on the priority groups will be available in April 2017.

Has CUTIS been frequently approached?

— Yes, we are very active online and tell a lot about Canadian market, using all possible resources. I obtain 2-3 requests from various companies on a daily basis. We have been approached by vegetable and fruit producers and well as gardening businesses. Among the frequently asked questions are: how to find a partner, what Canadian customers are looking for, etc.

We plan a Ukrainian trade mission to Canada in April. The group has been joined by frozen fruit and vegetable producers. They have already got international certification and are prepared to meet with representatives of Canadian retail chains.

How can one start cooperating with the project?

— For the beginning I kindly ask to send a brief information on a company (titles, web page, the range of products, certificates available, the scope of production) – this enables us to collect a company profile, which is included in our database. The applications should be sent to the email address office@cutisproject.org.

We receive requests from Canadian chains occasionally. E.g. we have been approached by Canadian companies interested in leading Ukrainian producers of fresh vegetables and frozen fruit.

Have there been any success stories yet?

— CUTIS co-organized a Ukrainian-Canadian forum in June 2016. 93 meetings took place during the Forum, resulting in 4 signed contracts. A pilot office of one Ukrainian company has been opened in Canada. A Ukrainian producer of birch sap met with the representatives of the biggest Canadian chain of supermarkets. They entered into contractual negotiations, including discussions of insurance and the range of products.

Only 4 contracts have been signed as a follow-up of the Forum. Why so few?

— This is a very good number if you take into account high requirements and conservatism of Canadian market. There are some problems with communication and compliance to product requirements. A lot of Ukrainian companies are not ready to export: they seem to show interest, they write about the advantages of their products, send presentations. However, when asked if they are ready to modify their business for exports, the businessmen realize that they are not prepared for it so far.

What are the three major requirements for the products?

— Certification, the required volumes, and terms of delivery are the main ones.

Is this feasible for the products to get straight on the shelves of supermarkets?

— It is quite feasible. But one should have patience. We’ve been working with a number of powerful chains. They file their requests with product groups. Ukrainian companies also have to be prepared to produce under the private label, when goods, produced in Ukraine, are sold under Canadian brand. It is quite profitable for a Ukrainian producer, for Canadians have little knowledge of our brands, whereas launching ad campaigns is very expensive and doesn’t guarantee further sales.

Indeed, there is a powerful diaspora, who buy Ukrainian goods in small stores, but this isn’t a big Canadian market. End buyers don’t know a lot about Ukrainian goods. Apart from that, in order to supply branded products, there need to be large volumes delivered, which is not always affordable to small and medium-sized producers.

Which products are of demand in Canadian supermarkets?

— Primarily, frozen berries and vegetables. Processing companies are interested in fresh vegetables for further production of mixes, salads, sandwiches. Apples are potentially interesting, but it comes down to the price and logistics because Canada gets apples from nearer countries resulting in their relatively lower prices. We’ve been talking to a Ukrainian company, that wants to enter Canadian market with its fresh vegetables. They are aware that, in order to make this happen, they need to have a logistics center in Canada, where the vegetables are packaged and quickly distributed among relevant stores. This option is sensible from the exports stand point because small producers can be engaged in forming big batches to Canada if they are dictated the technology of growth or production.
What should one be prepared for when planning exports to Canada?

— There is a false impression that, once the meeting took place, the contract can be signed in a month. Developed markets don’t work this way. Negotiations often last up to one year. Canadians are very conservative. They want to contact one specific person. They build relationships and communications slowly. To be honest, nobody is looking forward to seeing us in Canada. Therefore, we have to promote our products.

What are other main mistakes of new exporters?

— If a company visited a conference or a forum, it doesn’t mean that they are going to get a flow of clients and contracts right after. This will not happen. They have to visit a few more forums. And not just they visit but also fix appointments beforehand. Because, by the way, big Canadian chains will not pay attention to the proposal sent to a general office address, even if all relevant certificates are available.

Exports take time, resources and energy. The main mistakes are a lack of strategy and financial calculations. For example, juice producers, we have been taking care of, lower the price for the sake of entering the Canadian market. However, they do not guarantee exclusive terms. The common issue and the major factor of entering the Canadian market are the search of a partner and building mutual understanding.

What are the specificities of Canadian business culture?

— Conservatism. Digital tools commonly used here are not so widespread there. And not because they cannot afford them, but because a telephone is a tool for conversation and nothing more. Therefore, during a business meeting, people don’t exchange email addresses to make things faster. Rather, a Canadian businessman comes back to his office, opens his mailbox and gets to your message, probably, the next day. If the information isn’t given in appropriate format, he will not open the file at all.

There are specific standards involved. Thus, you either follow them or you’re out. If a company has certain proposal review procedure, it will not make any exceptions. These are the things Ukrainians do not understand, because they think, “hey, they are Ukrainians too, so we always find common ground”. It all goes in a profound and consistent way, step by step, as it is supposed to be. This is a major difference and the first thing that needs to be considered. Nobody is going to meet with you without preliminary arrangements made, without company information and presentation.

Why is it worth to export to Canada

— This country depends on its imports, which comprise 31% of Canada’s GDP. The National diversity of Canada is also an advantage. Every 5th citizen of Canada was born outside the country. On top of that, Canada is a regional hub, from which one can enter the markets of the US and Mexico.

What advantages is the Free Trade Agreement going to bring?

— Canada provides full and instant access to its markets, which is zero custom rate for most of the goods. However, some of the goods will be subject to quotas. Ukraine will go through gradual liberalization process – 3 to 7 years. Ukraine will also use tariff quotas for some goods, in particular, for frozen pork and lard. Sugar is excluded from the terms of the Agreement.

The Agreement provides for the Parties to work towards mutual recognition of accreditation authorities. In medium terms this means that Canada acknowledges Ukrainian accreditation authority (National Accreditation Agency of Ukraine) and a Ukrainian producer doesn’t need to go through more expensive certification in Canada.

The Agreement contains provisions on public procurement. Canada spends almost CAD 15 billion on procurement and Ukrainian companies will become eligible to participate.

How will the quotas be administered?

— Limitations are applied to wheat, barley, poultry, dairy produce, eggs, cheese, and sugar. It applies to all countries, not just Ukraine, though. Some quotas are not taken up. For instance, only 54% of dry milk whey quota was taken up in 2015 marketing year. Within the quota, 0% duty rate is applied. The specificity of Canada is the responsibility for imports, including the quality of goods, getting a license to supply within the tariff quota, taken by the importer. Even if the goods are shipped with violations or don’t comply with customs regulations, all the fines and penalties will be charged on the importer. Therefore, when a Ukrainian importer finds a partner in Canada, the latter will tell him about all the details because he is primarily interested in having the goods complied with all the requirements and no violations. Administering quotas is also a responsibility of an importer.

As far as margarine, wheat and barley are concerned, it works on “first come – first served” basis. For other goods limited by quotas, a preliminary distribution principle applies, i.e. one need to get the right to supply product within the quota by filing a respective application. This is within the authority of the Ministry of Foreign Affairs of Canada.

Do European exporters use the resource of the Еxport help desk. Is there any similar resource in Canada?

— Using the resource of Automatic Importing Reference System, by the code of goods (4 digits) you can get all the compliance requirements for agricultural produce. It is worth pointing out the purpose of imports: participation in trade shows, sales. All this information is available on the web pages of Canadian state control authorities.

Are there any special requirements to packaging and labeling?

— They frequently forget that food product should be labeled in two languages, with none of the language given the priority, i.e. fonts and lay-outs should be equal. An interesting detail: an expiry date is put in a “reverse” order as for Ukraine: year, month and date. There is a list of acronyms of months – the mix of English and French. As far as the indication of the country of origin, there is a list of produce (wine, dairy produce, honey, fish, meat, eggs, fruit, and vegetables) which must contain this indication.

— Developed countries practice responsible consumption. Is this relevant to Canada too?

— 60% of Canadians consider themselves responsible consumers and over quarter of them are prepared to pay for additional environmental and social benefits, such as: equal employment opportunities for women, equal pay, no adverse environmental impact. Right environmental labeling can inform the consumer of the advantages.

Is organic produce also popular?

Canadian organic market is the world’s top fifth – around $5 billion. The best-sold produce are fresh fruit and vegetables. The volumes of Canadian organic imports are constantly growing. Thus, 20 million Canadians report buying organic food on a weekly basis. They are prepared to pay a higher price for organic produce. The margin may reach 90-300%. The biggest margins can be obtained on organic juices and yogurts. It is important to note, that American organic certificate is also valid in Canada.

How much will the exports grow after the market is open?

— We will not see the instant growth of exports in 2017 because of the specificity of Canadian business mentality and unpreparedness of Ukrainian companies to supply big volumes. Ukrainian counterparts will most likely become more active. At least a year is required to have a substantial shift.

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

Paul Darby: Free Trade may cause a rapid investment growth

It is possible that the Parliament of Canada will ratify Canada-Ukraine Free Trade Agreement at its current session. This is the opinion by Paul Darby, the Canadian co-chair of Canada-Ukraine Trade and Investment Support project (CUTIS). He supervises the activities within the international technical assistance project aimed at increasing trade among Ukraine and Canada. The project entered its active phase after the Canada-Ukraine Free Trade Agreement had been signed in July with Prime Minister Justin Trudeau involved.

Paul Darby: Canada-Ukraine Free Trade Agreement was signed in summer 2016, and this is a clear indicator of how Canada treats economic relations with Ukraine.

We hope that the Parliament of Canada will ratify the Agreement in the course of the current parliamentary session, and we expect the same from the Ukrainian side.

Iryna Slavinska: Why has the Agreement been concluded? Is Ukraine such a promising economic partner?

Paul Darby: Yes, Ukraine is a bright example of a good country for Canadian investments. One should also remember about a huge Ukrainian minority in Canada that creates a lot of social and economic links among the countries.

Iryna Slavinska: It is obvious that signing of an agreement between Canada and Ukraine has a political dimension, isn’t it?

Paul Darby: Canada has always supported Ukraine; in particular, it was the first country to recognize independence of Ukraine, therefore, these links were always strong.

Iryna Slavinska: Can we predict any numbers regarding benefits Canada may get as a result of the Agreement signed with Ukraine?

Paul Darby: We have conducted an in-depth analysis survey regarding the impact of the Agreement over the economy of Ukraine. It has showed that the Trade Agreement will affect Ukraine’s GDP, taxes, jobs. There will be increase in jobs for Ukrainians related, in our opinion, to Canada’s investments to Ukraine. When we check similar Canada’s agreements with other countries, we see that it there is always a sharp increase in investments. And when the investments rise that high, they will stay at this level. We hope that it is just this sharp increase in investments that will occur in Ukraine.

The number of jobs for Ukrainians will increase due to Canadas investments to Ukraine

Iryna Slavinska: What are the Canadian goods that may be interesting and competitive in Ukraine and will Ukrainian products be able to win their respectable share so that to be present on Canadian supermarkets’ shelves?

Paul Darby: It is semi-finished goods, clothes, pumping machinery, various hardware, washing machines that may be interesting for Canada. In other words, we try to seek the goods with added value instead of focusing on raw materials.

We are also confident that Ukrainian confectionary goods and footwear will be popular at Canada market; they are highly competitive products.

Recently we also observe the growth in Canada’s demand for Ukraine’s IT services.

Our project funded by the Government of Canada will focus on the commodities and services like these with potential to be popular in Canada. But we shall be open to all companies. That means that, irrespective of your being selected or not for the final short list of the goods in the highest demand in Canada, the CUTIS project will be happy to provide you with assistance in terms of finding partners, buyers, trade fairs, clarifications on Canada’s regulations, etc.

This is a technical assistance project, and we shall be trying to reduce poverty in Ukraine by means of supporting, primarily, small and medium enterprises as they constitute the driver for the economy.

Iryna Slavinska: I have talked with some experts, and they underscore that Ukraine’s IT industry exports mostly raw staff –not the ready products.

Paul Darby: Yes, this is true. However, within the frame of our project we shall be seeking not only the companies that produce just coding for abroad; we shall be looking for those who develop ready products – specific applications and alike.

Iryna Slavinska: You have mentioned that you would provide support for small and medium enterprises, particularly in terms of opening access to the list of promising manufacturers or partners. Is there any procedure how it will work? What should an advice-seeker do?

Paul Darby: Our project has a representative office in Kyiv; you can find us on Facebook – CUTIS account; there is also the web site. Using these channels you may approach us with questions, particularly, Ihor Sanzharovsky, the Project Director in Ukraine.

The short-listed companies will be provided not just with advice. We are going to bring consultants from Canada so that they will hold training sessions with the selected companies to prepare their products for the Canadian market in cooperation with us. That means joint work to develop packaging, elaborate marketing strategies and the steps to meet Canadian standards.

The companies working in the selected areas will be even provided with an opportunity to visit Canada or USA.

Iryna Slavinska: What are the eligibility criteria for the companies to be short-listed?

Paul Darby: First, we are going to conduct a general analysis of the products and services, which may be interesting for Canada. Then we shall pick top-5 of products and services. The next step is that within this range of goods and services we are going to transparently choose the companies that will participate in our project.

The requirements to these companies will include the capacity to supply adequate volumes of goods for the Canada market. We shall also check whether the products of a company meet the environmental protection standards. The companies owned by women will be particularly focused by our project.

Iryna Slavinska: When should we expect that the Agreement will be ratified?

Paul Darby: It is a hard question; however, the Canada-Ukraine Free Trade Agreement’s ratification is in the agenda of the Canada’s Parliament’s current session. The session meetings will be over by April-May 2017. We hope to see the Agreement ratified till Christmas.

Source: Hromadske Radio

Zenon Potoczny: Canada will help Ukrainian business people to enter Canadian market

In the course of the first official visit of Justin Trudeau, the Prime Minister of Canada, to Ukraine the final draft of the Agreement on creating Free Trade Area between Ukraine and Canada was signed at last. Remembering the current modest trade turnover, one should hardly expect any immediate benefits as a result of the Agreement, but in the long-term perspective, 500 billion Canadian market has got a lot of interesting things to offer to Ukrainian manufacturers.

Ukrinform talked about the new trade agreement and the specific aspects of bilateral economic relations with Zenon Potoczny, the President at Canada-Ukraine Chamber of Commerce and one of the most active lobbyists for trade facilitation among the countries

CHOOSING TOP-5 OF THE INDUSTRIES

– First of all, please tell us your evaluation regarding Canada-Ukraine Business Forum held in late June in Toronto?

– Very positive! The Forum was attended by a multitude of participants: more than 150 Ukrainian and 230 Canadian companies. Besides, high profile official delegations from both countries took part. All in all, everything went very well. Bilateral meetings deserve special mentioning. Business people literally were standing in queues to communicate with each other. This is a very good sign, confirming that there may be potential specific business deals.

Businessmen literally were standing in queues to communicate with each other.

– What specific deals are you referring to? What are the achievements of the Forum, in general?

– I can tell about my own organization. We signed the Memorandum on Cooperation with the Ministry of Economic Development of Ukraine, and we are going to work on promoting exports of Ukrainian goods and services to Canada as well as on analyzing the investment projects and engaging investors from Canada.

– As far as I understand, you are referring to CUTIS (Canada-Ukraine Trade and Investment Support project) aimed at promoting Ukrainian exports to Canada, aren’t you?

– Exactly. The Government of Canada allocated 13.6 million dollars to implement this project within 5 years. The project partners include Canada-Ukraine Chamber of Commerce, Conference Board of Canada and the Ministry of Economic Development and Trade of Ukraine. With this latter we are supposed to have consultations, provide recommendations and agree on our activities. In fact, Canada-Ukraine Business Forum was held under the auspices of CUTIS.

– So, do your plans include holding similar events in future to promote bilateral relations, especially Ukrainian exports?

– Yes, they do, we have these ideas. Generally speaking, CUTIS primary objective is to analyze Ukrainian economy in order to identify 4-5 areas that constitute the most interest for Canada from imports’ perspective. After we identify these fields, we shall choose specific Ukrainian companies ready to export. Also, we shall be able to train them, inform them about the local (Canadian) laws and policies, Canadian tax and other regulations, and, more broadly, to assist them in producing marketing strategies. Finally, we are going to bring the companies’ representatives with ready marketing offers to Canada as members of the trade missions. There they will have an opportunity to pitch their projects and services and to tell the potential clients about them.

– When shall we expect the first findings of the CUTIS surveys on perspective areas?

– The work will be started very soon and the first findings will be published in 6 months – 1 year.

HELPING UKRAINIAN EXPORTERS

– What are the prospects the FTA offers for Ukrainian manufacturers? Why does Ukraine need this Agreement?

– At present there are lot of customs duties that constitute the barriers for Ukraine-Canada trade. The FTA will remove 99% of these barriers. This will help both Ukrainian and Canadian companies significantly enhance their volumes of exports. However, the Agreement is not restricted to removing the customs duties; it will withdraw other trade barriers as well.

The Agreement is not restricted to removing the customs duties; it will withdraw other trade barriers as well

– Will the Ukrainian goods be able to compete realistically with Canadian ones, remembering the difference in standards and approaches to production in our countries?

– This is also a constituent part of the CUTIS project: within the frame of it we must help Ukrainian exporters to meet the regulatory requirements of Canada. If they succeed in meeting them, their products will enter the market.

– True, but whereas the FTA comes into force late this year, the change in standards may take years…

– The Agreement comes into force through its ratification by the Parliaments. However, we should start preparatory work right now. We are already in position to clarify the requirements of Canadian private and public sectors for Ukrainian companies. The sooner we start to work with Ukrainian exporters and train them the better. If we want to launch trade immediately after the Agreement’s ratification, one should not lose time now.

– Do you have concerns regarding potential harm to Ukrainian domestic producers as a result of opening the markets?

– Certain problems may occur, but if you check some examples globally, then, irrespectively of the countries having FTAs, in most cases they are mutually beneficial. Otherwise, such practices as free trade areas agreements simply would not exist.

TOUGH CANADIAN TARIFF RATE QUOTAS

– Does the FTA Agreement include provisions on changes in the sphere of investments?

– Yes, it does. In fact, the Agreement is quite comprehensive and does not include only goods, but also workforce exchange as well as other aspects of bilateral trade, such as customs’ documents. There are chapters on intellectual property and environmental issues. Besides, Ukrainian companies are provided with access to Canadian public procurement.

– The Government of Ukraine perceives IT as one of the most promising industries of Ukrainian economy. How do you evaluate the perspectives of Ukrainian IT industry in Canada?

There are a lot of Canadian companies that use the services of Ukrainian IT sector

– It is obvious that IT is a significant and successful sector in Ukraine and it will be very interesting to Canada. In fact, there are already a lot of Canadian companies using the services provided by Ukrainian IT sector; they place orders for Ukrainians to develop software and suggest other types of outsourcing activities. The Agreement also includes all these issues.

– Maybe it is too early to talk about that, but are there any discussions on amending the present Agreement or about signing a new broader one?

– So far everyone focuses on the valid agreement. However, in due course when we start to operate within its framework, there may be a need in some additions.

– Canada was quite skillful in introducing tariff rate quotas for the most successful Ukrainian exports, such as chicken meat or grain. Will this story with EU tariff rate quotas very quickly exhausted by Ukraine repeat in the case with Canada?

– It is true that tariff rate quotas have been set for some Ukrainian goods; but Canada practices this approach with all the countries. There were a lot of talks and discussions on this issue, but no other way out was identified. Hence, there will be tariff rate quotas for some goods and Ukrainian companies will have to fit into them.

THE WINDOW TO USA AND MEXICO

– What are the concerns the Canadian investors have when investing in Ukraine?

– First of all, it is corruption. However, despite the fact that it is not that easy, the situation is improving, especially in view of current Government’s resolute position. The overall situation is much better than it was 20 years ago. One more problem is about judiciary system, but here there are also hopes for positive changes related to the adoption on the new law.

– Are there any Ukrainian investments in Canada?

The sooner the FTA comes into force the earlier a nice window to USA opens

– There are small investments in the construction area, but I have not heard about any large-scale investments. There are also a lot of Ukrainian companies that have some unique inventions, and they try to open an office in Canada to sell these inventions here. Some businessmen even discuss the opportunities to start additional production here to enter the US market. So, the sooner the FTA comes into force the earlier a nice window to USA opens.

– You mean to say that Canada-Ukraine FTA may become a bridge for Ukrainian companies to reach the US and Mexico, don’t you?

– Yes, exactly. In due course the process will reach this stage; however, the US has not launched discussions with Ukraine on free trade yet, therefore, it is the FTA with Canada that opens up this window of opportunities for Ukraine. However, taking into account the rules on the country of origin, you will not be able just to transport goods from Canada to the US. If you want to reach huge NAFTA members’ markets, Ukrainians will have to produce their goods in Canada or assemble them there.

CANADIAN BUSINESS CONSERVATIVE STAND

– In Ukraine’s early years of independence, Canadian investors had some very negative experience in Ukraine. Has the situation changed now?

Ukraine has never been internationally interesting as a country to invest in, so you should inform Canadians about its strengths

– As soon as Ukraine became independent, numerous Canadian companies (most of them owned by the Canadians of Ukrainian descent) attempted to start doing business here. They wanted not only to make some money, but to help the country where their ancestors had been born. Unfortunately, these “pioneers” faced huge disappointment. As a result, the investments from Canada to Ukraine almost ceased to exist. When Kuchma was President, the Canada-Ukraine Chamber of Commerce had to even close down its office, because there was no investment base due to excessive practices of hostile takeovers and fraud. We resumed our work when Yushchenko was elected President. And we felt a new wave of interest within the recent years. The Forums like the one held in Toronto promote this interest, because Ukraine has never been internationally interesting as a country to invest in, so you should inform Canadians about its strengths. Unfortunately, many businessmen think that occupation of Crimea and the war in the East makes it dangerous to stay at the most of Ukraine’s territory.

– What is the image of Ukraine as viewed by Canadian business community currently? Has the country managed to improve it?

– Indeed, the political situation’s change in Ukraine influenced its image beneficially. At present the democracy level is much higher than it was earlier. Every TV channel broadcasts journalist investigations. The schemes are revealed: the country’s transparency is rising. This helps not only average citizens, but businesses as well: they feel that they are able to expose their problems for the public, and they are not afraid of this.

– Why is the Canada-Ukraine trade turnover so low then; 280 million dollars per year for such countries is a very small sum.

– Canadian businessmen are quite conservative. If you want to draw their attention, the investment climate inside the country must be better. However, in due time, after the FTA Agreement is ratified, the mutual trade and investments will grow.

– Has the Canadian investors’ interest in Ukraine grown after FTA Agreement was signed this year?

– Yes, the mutual interest has grown. The number of CUCC members has significantly increased both in Ukraine and Canada.

THE ART “TO SELL”

– What objectives does the CUCC set and how does it reach these objectives?

– Our key role is to promote trade relations among two countries. We provide advice on search of business partners, facilitate dialogue among businessmen, we are looking for interesting Ukrainian projects, which are not currently fit to be presented for an investor. We can help with finishing a presentation, developing a business plan, make calculations and present the project in the best possible way. Our organization also fixes up workshops, business meetings, group visits from Ukraine, etc.

– How often do businessmen approach you to get advice?

Launching FTA is a priority for the Government of Canada. And for the Government of Ukraine as well

– We are receiving a lot of various proposals; most of them are not even ready to be presented, because Ukrainian companies often do not know how to “sell” themselves to an investor. We focus on small and medium sized companies, because it is the sector that is able to improve the well-being of the people. The large rich companies order perfect investment proposals themselves, they have no need in a chamber of commerce.

– Why did the FTA negotiations take such a long time – seven years?

– I assume that taking into account the trade turnover among the countries, FTA was not a priority. On the other side, this Agreement may be viewed as an attempt of Canadian Government to help Ukraine, because within recent two years the negotiations were very intense. In contrast, in Yanukovych times the dialogue was almost stopped. At present, Justin Trudeau said that FTA’s launch will be a priority for the Government. We hear the same comments from the Ukrainian side; thus the process is likely to accelerate.

Source: Ukrinform / Maksym Nalyvayko, Ottawa – Kyiv

Photo: Oleksiy Kovalyov, Yuriy Rylchuk / Ukrinform.