Теги: export
How to start export of organic products to Canada

Canada is one of the world leaders in the consumption of organic products: an average Canadian spends about CAD 150 a month for organics. The Canadian organic food market is the fifth largest in the world (about CAD 5.4 billion).

How to get into this market, and which niches are the most profitable for exporters?

Today, the issue of organic production is on everyone’s lips among farmers like never before. On the one hand, it requires more costs for alternative methods of soil cultivation and plant protection with limited use of agrochemicals, as well as the need for product certification. On the other hand, the sale of organics can be much more profitable than conventional agricultural products. That is why the number of organic producers in the last 10 years has increased in geometric progression.

As of 2018, there are 550 organic producers registered in Ukraine, of which 300 are agricultural producers mainly oriented to foreign markets.

The market of Canada falls into the sphere of interests of Ukrainian exporters of organic products. After all, due to the Free Trade Agreement between Ukraine and Canada (that came into force in August 2017), the trade turnover between our countries increased significantly.

According to Vice Prime Minister, Stepan Kubiv, exports of Ukrainian goods to Canada over the past year grew by 74.4%, and for the first half of 2018 – by 37.1%. In addition, Canadian investments since the beginning of 2018 increased by $ 47 million, with 31% of them targeting manufacturing industry. As experts admit, however, Canadian market is rather specific, and one cannot do without proper strategy and tactics here.

Tip 1. Analyze the market

As of 2017, Canadian sales of organic products amounted to CAD 4.2 billion. As Zoya Pavlenko, Environmental Protection Expert of the CUTIS Technical Assistance Project, assures, there is shortage of organic products in Canada’s market despite the fact that the country is a large producer of organics.

For example, 202 million kg of organic products worth CAD 637 million were imported in 2016. This is more than the volume of exports from Canada indicating a shortage and a market opportunity for Ukrainian producers. Although Canada is also an exporter for a number of organic positions.

The Canadian government does not sit idle and tries to promote domestic production: large-scale support programs for farmers were launched in 2017 in Manitoba. Therefore, the gap between demand and supply will decrease over time. “Now is a good time to start exporting to this market. However, one should pay attention to a number of details”, Pavlenko advises. For instance, any agricultural product called organic is regulated by the Canadian Food Inspection Agency (CFIA). It is also worth focusing on packaging and labeling of organic products as they can differ from both Ukrainian and European approaches.

Tip 2. Focus on popular positions

Organic food and drinks make up about 90% of the organic “basket”. In particular, fresh vegetables and fruits – 40%, drinks – 13%, dairy products and eggs – 12%, cereals, macaroni and bread – 9%.

It should be noted that Canada has become one of the first countries to monitor organic exports and imports. Imports are tracked by 65 categories, and exports – by 18. If you look at import statistics, organic coffee, bananas, strawberries, green salads, tomatoes and tomato paste are among the top 20 most popular organic products. However, this does not mean that one should concentrate only on those products.

If you can advertise your product and present it as efficiently, as possible, there is a chance for almost any product. For example, TEKMASH Institute, a research and production enterprises, which is particularly known in Ukraine for manufacturing organic berry paste Liqberry, has succeeded in entering the Canadian market. They even managed to sell not only the product but also the technology of processing agricultural raw materials to Canada.

“Canada is far, but if it comes to supply of processed goods, for which sanitary and phytosanitary requirements are significantly lower or sometimes not applicable, it is profitable. With a processed product that has a longer shelf life, you can overcome the logistical constraint – territorial remoteness of Canada from Ukraine. It is therefore logical to recommend organic producers to start selling processed goods. The most popular ones will be Ukrainian juices, confectionery products, dried and frozen vegetables, sauces, vegetable oils and snacks”, says Zoya Pavlenko.

Tip3. Find your buyer

In order to get to the Canadian organic market as efficiently as possible you should clearly know the profile of your consumer.

According to the Canadian Organic Trade Association (COTA), these may be both men and women (since both family members do shopping in Canada), young enough – 18-34 years, and mostly residents of large cities. Mostly residents of British Columbia or Alberta are interested in organic products. These are not the largest provinces, so Quebec and Ontario should not be ignored.

As in Ukraine, there is some correlation in Canada between the level of welfare, education and purchases of organic products. People with higher earnings, respectively, are more aware of the benefits of organics and willing to pay for it. “Also, families with children are more willing to spend money for organic products. Therefore, organic food and products for children are a promising niche “, – says Zoya Pavlenko.

Important to know:

An indispensable condition for all exporters of products declared as “organic” is the organic certificate issued under the Canadian Organic Standard (COR). Organic products are subject to the usual rules and conditions similarly to other agroindustry products. They are individual for each product. Detailed requirements for each product are specified in the Automated Import Reverence System (AIRS).

Tip4. Importance of documents

Regarding the regulation of the Canadian organic market, it is significantly different from the Ukrainian and European markets. Canada has its own national organic standards (Canada Organic Regulations) adopted in 2009.

More detailed production requirements and a list of permitted substances are contained in CAN/CGSB 32.310-2015 standards – Organic Production Systems – General Principles and Standards of Management, and CAN/CGSB 32.311-2015 – Organic Production Systems – List of Permitted Substances.

At present, Canada, just like Ukraine, goes through active deregulation of the agricultural production and processing sector. Just in June this year, a new regulatory act, which brings together more than 10 legislative acts, called Regulation of Safe Food for Canadians was published. It includes organic products among others. Review of the above standards is scheduled for 2020. Therefore, interested organic producers should keep abreast as the requirements may vary.

Tip 5. Focus on organic certificates

Serhiy Halashevskyi, Director of the Organic Standard Company, says that organic products sold in Canada use the Canada Organic (COR) logo. At the beginning of 2018, Organic Standard became the only entity in Ukraine entitled to certify manufacturers for exports to Canada. “Organic certification is an important point that helps entrepreneurs in selling their products and the consumer in consuming them confidently. Certification identifies a company, opens up access to the premium segment, allows selling at a higher price and more profitably, as well as make yourself known on the market. In addition, certification has become cheaper because some organizations, such as CUTIS project, compensate half the cost of the procedure”, – he said.

Organic certification is a voluntary procedure. If manufacturers call their products organic, however, they are required to get certified. Otherwise, financial sanctions for unfair competition cannot be avoided.

Interestingly, the Canadian organic standard is equivalent to the American (NOP). Therefore, if a company is certified under the NOP standard, this certificate is recognized in Canada. And vice versa, Canadian organic certification is recognized in the United States.

There is also an agreement between the EU and Canada on mutual recognition of organic standards. These provisions, however, are tightly bound to production specifically in the EU and Canada. Therefore, Ukrainian organic products certified according to EU standards will still have to undergo additional organic certification to enter the North American market. This can be either NOP, or COR. COR is cheaper, however, so it is more profitable for the manufacturer to get it “, – recommends Halashevskyi.

He also emphasizes such an important point as a reputation in organic production. “On the one hand, organic producers have a better image in the market and often have better opportunities. On the other hand, it is easier to spoil the reputation of organic production. One unscrupulous manufacturer can spoil reputation of the whole sector “, – assures Halashevskyi.

Tip 6. “Break through” to the market

Another quite problematic issue is sanitary and phytosanitary regulation in Canada. If you use the “organic” prefix for the product this does not mean a complete grace as a series of stringent requirements is applied, which can be found through the Automated Import Reference System (AIRS). It is similar to the well-known European Export Help Desk but focused solely on food and agricultural raw materials.

As Pavlenko notes, sanitary and phytosanitary norms and certificates between Canada and Ukraine are being harmonized as of November 2018 only with regard to chicken. For all other categories of subquarantine goods (for example, beef, pork, eggs), there is no progress. There is a ban on the import of Ukrainian grains and wheat into Canada, as pests were found in the grain imported by one of Ukrainian suppliers. Because of that, the ban on deliveries was applied to all Ukrainian grain companies.

“If business starts showing greater interest in the Canadian market, more active work on harmonizing certificates between countries will begin. This requires additional communication of business with state bodies (in particular, the State Service for Food Safety and Consumer Protection of Ukraine). Manufacturers themselves should take the initiative to “break through” the market rather than sit idle”, – says CUTIS Expert Zoya Pavlenko.

Source: Delo.UA

What Surprises Ukrainian Food Exporters to Canada Should Be Prepared for?

The Canada-Ukraine Free Trade Agreement (CUFTA), which entered into force in summer of 2017, may potentially open a wide range of opportunities for Ukrainian exports. Now, there is just a little left to do – to take advantage of these opportunities.

Taking into account the fact that Canada, as well as Ukraine, is an export-oriented country, the issue of veterinary and phytosanitary control of imports is a serious challenge.

Canadians strictly control agricultural products crossing their borders, since the importation of a product contaminated by plant pests or pathogens compromises Canada’s own export potential and undermines safety of its citizens.

The Way to Canada

Safety guarantee of the imported goods in Canada has to be supported by:

1) phytosanitary certificate (for products of plant origin that are subject to quarantine);

2) veterinary certificate (for products of animal origin) issued by the competent authority of the exporting country.

The central authority that establishes veterinary and phytosanitary regulations for Canadian manufacturers and importers at the federal level is the Canadian Food Inspection Agency. This is essentially an equivalent of the Ukrainian State Service for Food Safety and Consumer Protection (SSUFSCP).

How does it work in practice? For instance, Ukrainian beef producer sees good prospects for selling its products in Canada. But for the importation to the Canadian territory the Canada Border Services Agency (CBSA) requires that the products have veterinary certificates.

The producer itself or together with the representatives of the respective association of producers approaches the SSUFSCP asking it to initiate the procedure for the approval of veterinary certificates for beef with the Canadian regulatory authority.

In line with the current Canadian official procedure, the Ukrainian party has to provide comprehensive information (questionnaire responses) regarding the legal framework, the competent authority network, the existing state control system and procedures, statistics in Ukraine, etc. Once the Canadian party has processed the information provided to it, the SSUFSCP and the concerned exporters undergo an audit by the Canadian regulatory authority.

Only upon the receipt of positive audit findings and approval of the veterinary certificate form for a specific product category, the SSUFSCP will be given permission to export the appropriate type of product.

It is worth noting that this procedure will not occur automatically, but should be initiated by the concerned Ukrainian producers.

It should also be understood that elimination of these barriers takes time, sometimes years.

Phytosanitary and Veterinary Certificates Approval Procedures

  1. Producer or association of producers sees good prospects for its products in the Canadian market and approaches the SSUFSCP.

  2. The SSUFSCP approaches the appropriate Canadian regulatory authorities and initiates the procedure of certificate approval.

  3. The Ukrainian party provides the Canadian party with all appropriate information on the product safety control in Ukraine.

  4. The Canadian regulatory authority conducts audits of the SSUFSCP and the concerned exporters.

  5. If the audit has been successfully passed, the SSUFSCP is entitled to issue appropriate certificates that are recognized in Canada.

The procedure for recognizing the control system as described above is applicable to both Ukrainian exports to Canada and Canadian imports to Ukraine. Presently, competent Ukrainian and Canadian authorities have approved 15 international veterinary certificates for importing to Ukraine.

Who is Next

However, Ukraine’s trade potential with Canada is much higher. In Ukraine, there is a strong interest in exports of poultry, packages of bees (i.e. live bees) and confectionery and other products to the Canadian market.

Efforts to open the Canadian market for Ukrainian chicken meat continue. In October 2016, the SSUFSCP submitted to the Canadian Food Inspection Agency under the Canadian Ministry of Agriculture and Food three requests for the accreditation of Ukraine to export poultry and poultry products to Canada. While in April 2017, an additional request was sent for the assessment of Ukraine’s status with regard to the export of bee packages to Canada. So far, the only response including additional questions and clarifications that has been received is the one related to the poultry meat. It is currently being processed by the SSUFSCP experts.

The Ukrainian dairy product producers’ will benefit from learning more about the Supply Management System that operates in Canada. This system is based on monitoring the dairy product consumption and a milk quota system for the Canadian farmers.

Canadians strive to satisfy the demand by the local dairy products to the extent possible. Insufficient amounts of these products are compensated through import quotas. Thus, even regardless of sanitary restrictions, market opportunities for dairy products in Canada are very limited.

Communication with the Canadian Food Inspection Agency has revealed that, currently, a ban has been put on the Ukrainian cereals imports to Canada. This is due to the fact that a few years ago, pests were found in one of the lots of imported Ukrainian cereals, although appropriate phytosanitary certificate had been provided.

The lifting of the ban requires additional communication between the relevant authorities of both countries. It is worth noting that the SSUFSCP has not received any requests to resolve this issue from Ukrainian exporters.

Things You Need to Know

Systematically organized information on the documents required to import food products to Canada can be found in the Automated Import Reference System (AIRS) at the Canadian Food Inspection Agency’s website.

It is important to remember that in Canada it is the importer who is responsible for the compliance of the imported products with the local legislation. To this end, a Market Access Secretariat has been established under the Canadian Ministry of Agriculture and Food, which through an ‘open window’ service operating as a publicly accessible e-mail server processes inquiries from Canadian businesses and provides recommendations on ways to access both the domestic and foreign markets.

It is also important that in the second half of 2018 legislative changes will come into effect in Canada that will change the approach to food safety control. These will be based on the risk analysis principle and the need for importers to obtain import licenses for the controlled shipments in the future.

Ukrainian exporters already now need to pay attention to the new Canadian preventive food safety controls.

The implementation of the Free Trade Agreement requires a systematic cooperation between Ukrainian and Canadian government authorities, which has become more active now. In November 2017, with the support of the Canada-Ukraine Trade and Investment Support Project the SSUFSCP delegation visited Canada and established important contacts with local regulatory authorities.

We are sure that in 2018 our joint efforts will make the Canadian market closer to Ukrainian food exporters.

Authors:

Boris Kobal, Director, Food Safety and Veterinary Service Department, State Service of Ukraine for Food Safety and Consumer Protection

Olena Kuryata, Chief of Unit for Foreign Relations and European Integration Deputy Chief of Directorate for International Cooperation State Service of Ukraine on Food Safety and Consumer Protection

Source: European Pravda

How to sell organics to Canada

In August, a year has elapsed since the conclusion of the Free Trade Agreement with Canada. Among other things, this offers great opportunities for exporting organic products. 

It is most expedient to export organic processed products to Canada, while paying attention to territorial features, national standards, as well as tariff and non-tariff restrictions.

Canadian organic goods market is the fifth largest in the world. It is outweighed by China and France. And yet, it is also geographically close to the leader in the consumption of organics in the world – the United States. As to the cost volume of the Canadian organic market, it is worth EUR 3 billion. This is an interesting market opportunity. With regard to the volume of consumption, statistics show that people living in these two countries spend most money on organic products per year. For the US market, it is €121 per year, and Canada is slightly less than €83 per person annually.

As of 2017, the sales of organic products in Canada amounted to 4.2 million CAD. Interestingly, organic foods and drinks constitute the bulk of this market – about 90%. In particular, these are fresh vegetables and fruits (40%), beverages (13%), dairy products, eggs (12%), cereals, pasta, bread (9%). Despite the fact that the country is a powerful producer of organic products itself, its output is not enough. As of 2016, for example, 0.2 million tons of organic products were imported for the total of 637 million CAD. This is much more than produced within the country, which means a shortage and a market opportunity for Ukrainian producers. Of course, the Canadian government is trying to motivate domestic production: in 2017, the Canadian provinces of Manitoba and British Columbia launched significant farmer support programs, so the gap between supply and demand will gradually decrease over time. It is now quite a good time, however, to start exporting to this market.

Quite interestingly, Canada has become one of the first countries to track organic exports and imports. In particular, imports are tracked by 65 categories in a specialized system, while exports are represented in 18 categories. If you look at the imports statistics for the TOP-20 positions, organic coffee, bananas, strawberries, green salads, tomatoes and tomato paste, etc. are the most popular organic products.

Useful statistics are provided by the Canada Organic Trade Association (COTA) concerning a typical organic purchaser in Canada in order to direct producers towards their consumers, which can be both male and female (traditional purchases are usually made by both spouses), of a younger age (18-34 years old), a city dweller, with the greatest interest in organic produce among residents of British Columbia or Alberta. However, these provinces are not the most populated, and Quebec and Ontario should not be disregarded. There is also correlation between the level of income, education and activity in the organic market: people with higher earnings, therefore, are more aware of the details of organic products and more willing to pay for them. Also, families with children are more inclined to spend money on organic products, so organic food and goods for children is a very promising niche as well.

Regarding the regulation of the Canadian organic market, it also significantly differs from the Ukrainian and European approaches. Canada has national organic standards. As of today, the industry is guided by Canada Organic Regulations adopted in 2009. More detailed requirements for the manufacture and the list of permitted substances are provided by CAN/CGSB 32.310-2015 standards – Organic Production Systems – General Management Principles and Standards, CAN/CGSB 32.311-2015 – Organic Production Systems – List of Permitted Substances. However, Canada goes today through an active phase of deregulation; in June, a new regulatory act was published which combines more than 10 legislative acts and is called Regulation on Safe Food for Canadians. Likewise, it deals with organic products. A review of the above standards is scheduled for 2020. Therefore, it is important for organic producers to keep abreast, since the situation is changing quite dynamically. Certified organic products sold in Canada must bear the Canada Organic logo.

A separate topic is sanitary and phytosanitary regulations. If you use the “organic” prefix for the product, this does not mean a complete grace as a series of stringent requirements is applied anyway. Interestingly enough, the requirements for a particular food product in Canada can be traced back to the Automated Import Reference System (AIRS), which is something like the well-known European Export Help Desk.

With regard to the harmonization of certain sanitary and phytosanitary regulations and certificates, the wheel has set to motion only concerning chicken meat. For all other categories of quarantinable goods (such as beef, pork, eggs), the problems remain. Accordingly, if the business begins to demonstrate interest in the Canadian market the process will begin to harmonize those certificates between the governing bodies. Also, the ban on import of Ukrainian grain and wheat into Canada continues, because pests were found in the imports of one of the corn suppliers, and a precautionary measure was immediately taken. Therefore, there is a need for additional communication of state authorities to make this ban lifted.

With regard to dairy products, the principle of protection of domestic producers is applied, and there is a high import tariff for imported goods. Therefore, the opportunities for Ukrainian producers including organic manufacturers are limited in this segment. On the one hand, it would seem that with such a list of restrictions is not worth trying to supply to this market. Those looking for opportunities, however, will necessarily find them. Although Canada is far, for supplying the processed goods even logistics will not be a financial constraint. Moreover, there are significantly lower requirements for processed goods. Therefore, it is logical to recommend manufacturers of processed organic products to commence sales on this market. The most popular products are juices, confectionery products, dried and frozen vegetables, sauces, ketchup, vegetable oils and snacks.

Standards in Canada: How to Overcome Barriers and Take Advantage of the Free Trade Agreement

It will soon be six months since the free trade regime came into force between Ukraine and Canada. How can Ukrainian exporters leverage the regime to get the highest possible advantage?

It is not a secret that after the abolition of tariff barriers, it is the non-tariff requirements that are sometimes rather difficult to overcome. Accordingly, the compliance of Ukrainian products with the regulatory requirements of the Canadian market becomes the key issue for exporters.

It is known that requirements for goods are usually issued in the form of standards and technical regulations. The former is voluntary, while the latter is mandatory to comply with. However, in Canada, one will not find such a clear division.

The standards in Canada can be conventionally divided into:

  1. Standards developed by standardization bodies;
  2. National standards;
  3. “Obligatory” standards. Right, don’t be surprised, I mean the obligatory standards.

Now, let’s take a detailed look. In Canada, nine organizations have an accreditation of the Standards Council of Canada to develop standards.

It is important that the Standards Council of Canada does not develop any standards. It accredits standardization organizations and compliance assessment bodies. However, the Council has the right to approve the standards as national standards of Canada (which, however, remain voluntary). There are currently around 3 thousand of such national standards.

Although the standardization organizations in Canada compete with each other, they have a certain specialization. 

For example, Canadian General Standards Board (CGSB) is traditionally specialized in developing standards for public procurement, organic products, office equipment, fireproofing of textile products, etc. It was CGSB that developed the standard for Canada’s national flag.

This organization, by the way, has existed since 1934, and works based on the principles of self-sustainability without receiving any state funding.

Importantly, it is currently the only one of the nine Canadian standardization organizations whose standards can be obtained for free.

Canadian Standardization Association (CSA Group) is another influential Canadian standardization organization specializing in products like electrical appliances, construction materials, vehicles, etc. For example, CSA is the author of the Canadian Electrical Code – a collective name for the standards that set requirements for underground and terrestrial electricity distribution networks, street lighting, household appliances, etc.”

Standards become obligatory when they are referenced in Regulations of Canada.

The Regulations of Canada are somewhat similar in nature to by-laws in Ukraine – they detail and supplement the provisions of Laws (in Canada – Acts). For example, in addition to the Consumer Product Safety Act, about 35 Regulations were adopted.

Public authorities in Canada increasingly use standards when drafting Regulations – the standards (or their parts) are incorporated into Regulations and thus become mandatory.

According to recent estimates, there are references to approximately 1,000 standards in the Regulations at the federal level. Hundreds of standards are referenced in provincial-level Regulations.

As for the compliance assessment bodies, there are more than 400 of them in Canada. They are also accredited by the Standards Council of Canada.

What does this mean for a Ukrainian exporter in practice?

The key question is “How to find out what requirements are put forward to your product?” The best way is to get in touch with a regulatory authority in Canada. Believe it or not, but this recommendation came from the Canadian regulatory authorities themselves. Our experience shows that requests are taken seriously and responses are sent by the authority within one to two weeks (depending on complexity of the request).

For example, medical equipment, toys, pesticides, pharmaceuticals, radiation equipment are managed by Health Canada. Innovation, Science and Economic Development Canada is engaged in management of telecommunication equipment, and Transport Canada deals with vehicles and tires.

In addition, attention should also be paid to provincial-level requirements that may differ from those of the federal level.

For example, the requirements for electrical appliances are contained in the Canadian Electrical Code developed by the CSA and adopted at the federal and provincial levels (in ten provinces and three territories of Canada). However, there are additional requirements in Ontario (so-called “deviations”) outlined in the Ontario Electrical Safety Code.

Taking into account the existence of the Free Trade Agreement between Ukraine and Canada, many producers consider Canada as a hub for exports to North America or as a starting point for exports to the United States. In terms of technical regulation, this approach may be fully justified as many US and Canadian standards are harmonized or developed jointly.

Thus, CSA has the accreditation of the American National Standards Institute, and the Air-Conditioning, Heating and Refrigeration Institute (AHRI) is accredited by the Standards Council of Canada.

Finally, it is worth remembering the famous phrase: where there is a will there is a way.

There are many more ways to export to Canada than reasons to be afraid of the Canadian standards. So, feel free to contact Canadian regulatory authorities, bring your products to the level of Canadian standards and expand your business horizons.

Author: Oleksandra Brovko, CUTIS Senior Trade and Investment policy expert

Source: European Pravda

Ecology for exporters to Canada

Understanding the global consumer and production trends is a prerequisite of success in the international markets. One of those trends is, undoubtedly, the increased attention to environmental protection.

Governments of developed countries increasingly focus on sustainable economy development motivating manufacturers to take measures for the protection of the environment. Throughout the world, specifically in the developed countries (Europe, US, Canada), consumers are getting more inclined to “ethical consumption”: selection of goods and services that bear lesser risks for the environment even if they turn out to be more expensive.

Relevance of these issues also stimulates those willing to speculate and groundlessly associate themselves with environmental protection and «pseudo-ecological» goods. This phenomenon (greenwashing) is present not only in Ukrainian markets but also abroad.

Such speculations may confuse not only consumers but also exporters who try to keep abreast of the environmental trend. Therefore, when entering Canada’s market, for instance, one should be aware of the terminology and understand the practices of environmental protection in order not to get under sanctions and obtain maximum advantages from the funds invested into a «green brand».

So, let us avoid stereotypes and try to take an unbiased look at the issues of ecology and environmental protection that are important for exporters.

1. Good/bad ecology.

What people typically think. Bad ecology is when it has much waste and contaminants that cause harm to human health.

What is reality. First of all, there is a principal difference between the concepts of «ecology» and «environmental protection».

Ecology is a science that explores interaction of living organisms, their adaptation to the life with one another and dependence upon the conditions of existence. Simply speaking, this is a science of who eats whom in the nature and how they adapt to the environment and influence the environment.

Human being is a living organism and a part of the nature as well. In the middle of the 20th Century, it became obvious that due to considerable consumption of natural resources, contamination of water and air humans became a specie that determines living conditions for all other organisms. The misbalances created by humans also impact their own lives.

Understanding of these dependences resulted in the establishment of «environmental protection» – a system of measures aimed to mitigate the consequences of human activities for the environmental conditions and relations between other living organisms in the environment. Those measures may be aimed to change the population’s behavioral habits, develop and implement engineering solutions, policies and restrictions, etc.

It is important to understand, therefore, that “ecology” is a science. Thus, the phrase “bad ecology” is equivalent to expressions like “bad physics / philosophy / jurisprudence». Instead, it would be correct to speak in this context of «inappropriate environmental condition».

2. «Ecologically clean» goods.

What people typically think. Ecologically clean goods do not contain toxins that negatively impact human health.

What is the reality. When consuming certain goods or services people mainly focus on their influence on their own organisms. Usually consumers are not familiar with the processes of manufacturing and consumption waste management. Therefore, they mistakenly transfer environmental impacts on the consumer qualities of the goods themselves, that is, their usefulness for the human organism. This is where the confusion starts between ecology and quality of goods, which is used by dishonest manufacturers to speculate.

In reality, however, “ecological” features of the goods are determined by environmental impacts in the course of their manufacturing (emissions of contaminants into the air and water, production wastes, etc.), operation (for instance, emissions of contaminants by automobiles, energy efficiency of electric equipment) and at the end of the life cycle (possibility of recycling, biodegradability).

For instance, detergents may be considered environmentally friendly unless they contain phosphate compounds. The logic is simple: as phosphates get into water reservoirs through sewerage systems they cause rapid regeneration of algae known as «water blooming». Such algae consume a significant share of the oxygen in the water causing its deficit for fish. As a result, fish die, which is obviously negative for the environment.

Another example is furniture made of solid wood, which is positioned as “ecological”. Indeed, it may be ecological if made from legally procured but not poached wood.

Therefore, an «ecological» commodity does not mean its purity/contamination or consumer qualities. This is an issue of environmental impacts in the course of manufacturing and consumption. Moreover, both in Ukraine and Canada, for instance, legislation prohibits using such markings as «ecologically clean products» or «100% natural product» without a third-party confirmation and application of a standardized ecological mark.

3. Ecological packing.

What people typically think. Ecological packing neither contains toxic substances nor influences the quality of goods.

What is the reality. Lack of understanding of the «ecological packing» is directly connected with the previous stereotype regarding «ecologically clean goods». Instead, emphasis should be made on the packing’s influence on the environment rather than the product quality.

Currently, packing wastes constitute up to 30% of total solid wastes in Ukraine. Under existing model of business: «extraction – production – use – removal», these 30% end up in landfills along with a lot of valuable resources that, in fact, were never utilized.

Since a larger share of wastes in Ukraine finally gets to the landfill or roadside/field/forest, it is important to make sure they do not remain there for thousands of years. One of the ways of possible optimization, therefore, is biodegradability of packing. This means, for example, that a paper cup thrown away at the roadside may become food for the soil microorganisms and disappear from the roadside in a couple of months. Even in this case, however, the problem of irrecoverable loss of resources is not resolved. Therefore, biodegradable packing may be considered as the “best of the worst” solution.

From the environment viewpoint, the best approach to the waste treatment is when packing is reused or becomes a material for manufacturing of other goods. In this case, less garbage comes to the landfills and fewer production processes are initiated for extraction and processing of raw materials. This approach of «circular economy» has already become a strategic development area in the developed countries. In this context, production of simple packing that may be easily involved in the waste recycling system that exists, for instance, in Canada may contribute to success in the Canadian market.

4. Organic products.

What people typically think. Organic products definitely do not contain any toxins and, therefore, are ecological.

What is the reality. The statement of «organic» may apply to the goods made from agricultural raw materials: nutrition products, feeds, clothes, cosmetics. A specific feature of the organic agricultural production and processing is that it excludes artificial chemical fertilizers, pesticides, genetically modified organisms, preservatives, growth stimulants and hormones from the technological processes. Therefore, the probability of their content in the end product is minimal. Once again, however, the quality of foodstuffs is an issue of standardization and food safety rather than ecology.

Instead, the value of organic practices for the environment is due to restricted use of mineral fertilizers and pesticides that pollute surface and ground waters and kill the soil microorganisms. Organic agricultural practices are focused on stimulation of functioning of the soil as a natural ecosystem that contributed to accumulation of carbon compounds in it. In this process, carbon is withdrawn from the atmosphere, which contributed to combating of climate changes.

5. Reduction of energy/water consumption.

What people typically think. This helps saving money. Does this have any impact on the environment?

What is the reality. It is worth reviewing the data on electricity generation in Ukraine. In total, 90% is generated at nuclear (NPP) and thermal (TPP) power stations. Alternative power generation takes less than 1%. It should be remembered that NPPs use nuclear fuel for power generation and TPPs mainly burn gas and coal. Consequently, this brings nuclear risks and causes emission of contaminating substances and greenhouse gases into the atmosphere.

 

Thus, reduced consumption / generation of electricity in Ukraine will result in the decrease of required volumes of nuclear fuel and its wastes; fewer geological and landscape shifts during extraction of coal and uranium ore; lower atmospheric pollution. Water consumption is closely connected with energy. Due to the needs of pumping, preliminary treatment and final purification, energy resources amount to 30% of the production cost of water. At the same time, water is a working element in today’s system of energy generation (for instance, steam that moves generator turbines at TPPs and NPPs and working fluid at HPPs). Therefore, reduced use of water will, in fact, decrease the need of energy resources while the latter will make a contribution into combating climate changes.

The better exporters orientate in the ecological aspects of production and consumption, the higher «market power» they have. Consumers will be willing to support reduction of negative impacts on the environment with their money. That is why it is important to understand the key concepts of ecology and environmental protection. This will prevent from «backsliding» to greenwashing and allow commencing the development of a long-term «green» strategy of production and promotion of goods in the international markets.

Source: Liga.net

Author: Zoia Pavlenko, Ukrainian Environment Expert, Canada-Ukraine Trade and Investment Support project

Four stereotypes about trade with Canada: What blocks Ukrainian export

March 14, 2017, will undoubtedly go down in the history of Canadian-Ukrainian friendly relations, because on that day the Ukrainian parliament has ratified Canada-Ukraine Free Trade Agreement (CUFTA).

Now we are waiting for ratification from the Canadian side, the exchange of the instrument of ratification – and the free trade zone will work in full.

Therefore, in 2017 we will celebrate not only Canada’s 150th anniversary but also the beginning of our free trade with the country.

The team of the Ministry of Economic Development and Trade managed to fix in the Agreement positions that are more favorable for domestic exporters and a broader time frame for abolishing import duties. The agreement will immediately open for Ukrainian exporters duty-free access to 98% of the Canadian market. This applies to both industrial goods and agricultural (except 108 tariff lines, which can be exported without duties within Canada’s global quotas).

Deputy Minister of Economy, Ukraine’s trade representative, Natalia Mykolska noted Ukrainian exporters would get short-term and long-term prospects for entering the Canadian market, and national producers would have incentives to improve the quality and competitiveness of their products.

The time does not wait, and Ukrainian exporters should start exploring the Canadian market and the tastes and preferences of Canadian consumers regarding their goods. So when the agreement enters into force, they can begin exporting the first lots of goods without paying import duty. The Office for Export Promotion under the Ministry of Economic Development might help conquerors of overseas markets to find business partners and necessary information.

Related: Senate of Canada ratifies free trade agreement with Ukraine
Unfortunately, the long-term orientation to the markets of the nearest neighbors generates a lot of fears among Ukrainian exporters about the free trade agreement with Canada.

Many Ukrainian businessmen are convinced that Canada is far away, so transporting would be expensive, and Ukrainian products does not hold water before competitive American goods – accordingly, there is no place for Ukrainian goods in the Canadian market. That is, the tariff and non-tariff barriers are paralleled with the mental ones.

In this article, we will try to analyze how these and other stereotypes are justified.

Stereotype 1: “Canada is far away. Transport costs would make the goods uncompetitive”

CUFTA is the first transatlantic free trade agreement concluded by Ukraine. Although the Canadian market may seem distant, and the delivery of goods to Canada can look expensive and long, technological progress allows you to ignore the long distances in international trade of the 21st century.

Look at the shelves in supermarkets in Ukraine. You will see pears from China, wine from Chile, and these goods are sold at relatively reasonable prices.

Imagine that according to the Sea Distances portal the cargo from Shanghai to Odesa (8379 nautical miles of distance) would be delivered in 35 days, moving at a speed of ten knots per hour. In the case of Chile, time and distance are almost the same. Overcoming so many kilometers is not cheap. In addition, Ukraine still has no free trade with China and Chile. This means that the goods are imported with payment of import duties on the Ukrainian border.

Undoubtedly, transportation costs determine the potential for entering foreign markets, and the cost of delivery affects the variable costs of doing business. Moreover, a long distance can become a challenge if the product spoils rapidly (for example, fresh fruits, and vegetables) or depends on consumer preferences (for example, high fashion collections).

However, at present, logistics and shipping companies offer individual personalized solutions for the delivery of cargo anywhere by air, sea, rail, road transport.

If you plan to export fresh fruits and vegetables to Canada, choose air or sea shipping with temperature control. If your collection is to be shown at the fashion week in Montreal, use fast air travel or even express delivery. If you cannot fill the entire container with your goods, join the group of cargo, which consists of many individual deliveries.

Long sea transport also has the advantage: according to some estimates, an additional kilometer of land transportation will be seven times more expensive than an additional kilometer by sea.

In fact, there is no single solution for all exporters of the issue of the long distance between Canada and Ukraine. Yes, indeed, if the marginality of goods in the Canadian market is low, transportation costs can affect competitiveness.

However, distance is not a problem, because the development of transport technologies offers a variety of options for reducing costs and optimizing the duration of transportation to Canada.

Stereotype 2: “Canada imports everything from the US, Canada has no place for Ukrainian goods”

Common borders and geographical proximity have made Canada and the US the most important trading partners for each other. Canadian consumers are important for US producers, as last year Canada purchased goods and services for $ 337.8 billion from its southern neighbor.

The economies of the two countries are highly integrated, and this process was accelerated by the bilateral free trade agreement of 1988 and the NAFTA in 1994. In addition, a large percentage of Canada’s bilateral trade with the United States consists of intermediate products that enter the integrated supply chain between the two countries.

As a rule, neighboring countries trade more than geographically remote ones. Bilateral trade between close countries is facilitated by a developed regional logistics network, the similarity of the business environment and bilateral customs cooperation.

Think about Ukraine. Now the largest trading partner of Ukraine is the EU. In 2015, almost 40% of Ukrainian goods and services were exported to the EU. The bilateral trade is growing due to a deep and comprehensive free trade agreement between Ukraine and the EU.

However, free trade with the EU does not prevent the presence of pears from China, wine from Chile and Georgia, and dairy products from Belarus on the Ukrainian market.

In addition to NAFTA, Canada has 10 existing free trade agreements, in particular with Korea, Israel, Jordan, and the European Free Trade Association (EFTA).

Obviously, Canada seeks for free trade, and the diversity of intercontinental free trade agreements demonstrates that Canadian foreign trade is multi-vector.

Ukrainian exporter will face competition with the American one and other foreign manufacturers in the Canadian market. However, this competition will stimulate it to improve its products and offer new values to Canadian consumers.

Stereotype 3: “Ukraine would be able to export its goods to the US through Canada without paying import duties”

The free trade regime between Canada and the US can lead to the idea that due to duty-free access to the Canadian market can enable exporting goods through Canada to the US without paying import duties on the Canadian-American border.

Given that there is no free trade agreement between Ukraine and the United States, goods of Ukrainian origin are subject to customs rates based on the most-favored-nation treatment (except for goods falling under the US general preferences system).

In addition, free trade agreements contain rules of origin that the goods must comply in order to have preferential access to the partner market by agreement. According to CUFTA, goods produced in Ukraine have preferential access to the Canadian market.

Remember that in order to cross the Canadian-American border on preferential terms, the goods must be of Canadian or American origin respectively, since NAFTA is still a free trade agreement, not a customs union.

At the same time, Canada might be a regional hub for export sales, logistics planning, distribution, marketing and working out a strategy for entering other markets.

Stereotype 4: “Canadian consumers buy products which are made in Canada only”

Polls show that consumers in Canada are really inclined to buy Canadian products, since the purchase of “made in Canada” products positively affects the economy of the country, creates jobs, etc. A 2013 study indicates that 45% of Canadians are trying to buy goods produced in Canada.

Nevertheless, two out of three consumers indicate that the main factor in buying goods is still a low price.

Thus, to consider that Canadians only buy “made in Canada” products is a big exaggeration. Supporting your country, when the crisis is still palpable, is a completely justified behavior. The same thing is happening in Ukraine in the last two years.

First, remember that the diaspora of Ukrainians in Canada amounts to more than 1.3 million people. Diaspora can help spread information about the product, establish the first business contacts, and reduce initial costs when entering the Canadian market.

The presence of Canadians of Ukrainian origin makes Canada a very welcoming place for Ukrainian small and medium-sized businesses.

Secondly, remember that Canada is a big country, and consumer preferences can be different in Ottawa, Montreal, and French-speaking Quebec City.

Canada is a very diverse country with a multinational population. In 1971, it became the first country in the world where multiculturalism became part of official state policy. One-fifth of Canadians were born not in Canada. Thus, diversity is the strength of Canada and a good opportunity for Ukrainian exporters to find a new market for their goods.

And finally, Ukrainian companies have something to offer to Canadian consumers. We are able to create, surprise, and create a quality product. Even before the era of free trade with Canada, Ukrainian companies successfully establish business contacts, meet with potential partners, participate in exhibitions, calculate logistics, sign contracts, and deliver goods.

When you have a quality product that meets the requirements of the Canadian market and the consumer preferences of Canadians, then there no distance, and competition is not a hindrance.

Author: Oleksandra Brovko, CUTIS Senior Trade and Investment policy expert

Source: European Pravda