Ukrainian Export Commodities Benefiting from the FTAs between Ukraine, Canada and the EU

The Ministry of Economic Development and Trade of Ukraine in partnership with the Canada-Ukraine Trade and Investment Support Project (CUTIS) and the European Business Association presented a report “Ukrainian Export Commodities Benefiting from the FTAs between Ukraine, Canada and the EU” on February 15.

The research was conducted by the experts of the Ministry of Economic Development and Trade and the SE “Ukrainian Industry Expertise”, and supported by the CUTIS project.

According to CUTIS Project Director Brenda Lafleur, the main goal of the research was to support the development of Ukrainian export to Canada. ‘I met the authors of the report in Canada during their visit to Ottawa. In Ottawa they worked with the experts from The Conference Board of Canada. I am sure the results of the research will help Ukrainian businesses to find business opportunities and new niches both in the Canadian and European markets,’ Brenda Lafleur said.

Svitlana Mikhailovska, Deputy Director of EBA, paid attention to the importance of export diversification for Ukrainian business.

‘The results of the research help to identify the Ukrainian export commodity groups benefiting from three free trade agreements: between Ukraine and the EU, Ukraine and Canada, Canada and the EU. These trade agreements allow Ukrainian producers to import raw materials or export their products on preferable terms, mainly without paying any customs tariffs,’ Maxim Boroda, Senior Trade and Investment Analysis Expert at CUTIS said.

The research consists of two stages. At the first stage, Ukraine’s participation in value-added chains under FTAs between Ukraine, Canada, and the EU was analyzed. At the second stage, Ukrainian exports commodities benefiting from potential rules of origin cross-cumulation between Ukraine, Canada, and the EU were determined.

The research analyzed three possible value-added chains:

Option 1. A company imports raw materials from the EU, produces products in Ukraine and subsequently exports them to Canada. According to this business model, there are nine Ukrainian commodities benefiting from the FTA between Ukraine and the EU (DCFTA) and/or the FTA between Ukraine and Canada (CUFTA). In particular, apparel (including costumes), rubber and plastic products, and some machine engineering positions.

Option 2. A company imports raw materials from Canada, produces products in Ukraine and exports to the EU. According to the second business model, there are six Ukrainian commodities benefiting from the DCFTA and CUFTA. In particular, rubber and plastics, footwear, and some machine engineering positions.

Option 3. An EU based company imports raw materials from Ukraine and exports commodities to Canada. There are 28 Ukrainian commodities benefiting from the DCFTA and the CUFTA (mining, chemical industry, metallurgy, and machine engineering).

‘Although cross-cumulation is a theoretical opportunity at the moment, there are few successful cases of Ukrainian companies using preferable terms from both free trade agreements – the DCFTA and the CUFTA,’ Olzhana Rukas, Deputy Head of the Division of Regional and Preferential Trade Agreements, Department of Market Access and Cooperation with WTO, Ministry of Economic Development and Trade of Ukraine mentioned.

For example, one Ukrainian apparel producer, participating in the U CAN Export program of the CUTIS project, imports raw material from the EU and exports clothes to Canada.

Serhiy Kovaliov, Deputy Director of the Department of Export Development, Ministry of Economic Development and Trade of Ukraine summarized: ‘The research helps the Ministry not only to lay out priorities for Ukrainian exports promotion to Canada and the EU markets, but also to find out the best opportunities for investment in/outsourcing of production in Ukraine.’

To download the presentation please use the link

The Canada-Ukraine Trade and Investment Support (CUTIS) Project is a 5-year (2016-2021) Canadian development assistance initiative designed to lower poverty in Ukraine through increasing exports from Ukraine to Canada and investment from Canada to Ukraine.

The CUTIS project implements U CAN EXPORT Support Program in five priority sectors: clothing, footwear, furniture, confectionery, and IT services.