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Minister of Export Promotion, International Trade and Economic Development appearance before the Standing Committee on International Trade (CIIT) on the subject matter of Bill C-57, An Act to implement the 2023 Free Trade Agreement between Canada and Ukraine

November 7, 2023
Published: February 23, 2024

Opening Remarks

Implementation of the Modernized Canada-Ukraine Free Trade Agreement (CUFTA)

November 7, 2023

Thank you and good morning, Madam Chair and esteemed committee members.

It is always a pleasure to appear before you and support your important work – and I am especially pleased to be here to speak to today’s agenda item.

As you know, Bill C-57, or An Act to implement the 2023 Free Trade Agreement between Canada and Ukraine, continues to be considered by the House of Commons, and this committee's deliberations are an important part of the Parliamentary process.

This modernized trade agreement represents an historic milestone in the Canada-Ukraine commercial relationship and is a clear demonstration of Canada’s steadfast and unwavering support to Ukraine in the face of Russia’s illegal and unjustified invasion.

As we all know, Canada and Ukraine have enjoyed close bilateral relations since 1991, when Canada became the first Western country to recognize Ukrainian independence. These bilateral relations are strengthened by shared values and warm people-to-people ties rooted in the Ukrainian-Canadian community of approximately 1.3 million people.

In recent years, our bilateral relationship has been marked by Canada’s whole-of-government, multifaceted support to Ukraine’s sovereignty, independence, and territorial integrity, both since Russia’s invasion of Crimea in 2014, and in response to its full-scale invasion of 2022.

Since 2014, the Government of Canada has provided roughly $9.5 billion in multifaceted support, spanning diplomatic, humanitarian, military, and financial lines.

The modernized CUFTA, which we have gathered here today to discuss, is the latest demonstration of Canada’s unwavering support.

The original CUFTA, which entered into force in 2017, was comprehensive from a trade-in-goods perspective, but did not include chapters on services, investment, inclusive trade, and other areas that Canada now often seeks in its modern FTA model.

As a result, in July 2019, Ukrainian President Zelenskyy and Prime Minister Trudeau announced plans to modernize the agreement to add these and other areas.

Following delays due to COVID-19, my Ukrainian counterpart, First Deputy Prime Minister and Minister of Economy Yulia Svyrydenko, and I announced the launch of modernization negotiations in January 2022.

As we know, less than one month later, Russia began its full-scale invasion of Ukraine, causing another delay in progress until May 2022, when Minister Svyrydenko conveyed to me her government’s readiness to initiate and indeed expedite negotiations to strengthen the bilateral relationship, and support Ukraine’s long-term economic and trade interests.

She further shared the value Ukraine places on its relations with Canada, particularly with respect to our firm recognition of and long-term confidence in Ukraine as a sovereign and independent partner.

In June 2022 Canadian and Ukrainian trade officials set to work, and despite several periods of delay due to Russian attacks on Ukraine’s energy and communications infrastructure, our teams completed highly collaborative discussions for a modern, high-standard FTA in April 2023.

The conclusion of negotiations was announced by Prime Minister Trudeau and Ukrainian Prime Minister Denys Shmyhal on April 11, 2023, during a visit to Toronto.

Over the summer months, officials undertook the mandatory preparations for the agreement’s entry into force, including the completion of a legal review and translation of the treaty text into French and Ukrainian.

Recently, the landmark initiative came full circle: Prime Minister Trudeau and President Zelenskyy signed the final, modernized CUFTA in Ottawa in September, just over four years since President Zelenskyy’s previous visit, when he and Prime Minister Trudeau first announced their intention to modernize the Agreement.

Distinguished colleagues, if I may, I would like to say a few words about this historic agreement.

It is a highly ambitious and comprehensive deal, with commitments on par with those contained in some of Canada’s most state-of-the-art agreements such as the CUSMA and the CPTPP.

Canada and Ukraine have added 9 dedicated new chapters, including on cross-border trade in services, investment, financial services, telecommunications, and good regulatory practices.

It also includes dedicated new chapters on inclusive trade, including trade and gender, trade and Indigenous Peoples, and trade and small and medium-sized enterprises, to ensure that the opportunities and benefits of the agreement are widely shared.

We have also expanded and improved 9 chapters from the existing agreement, including on rules of origin and origin procedures, digital trade, competition policy, designated monopolies and state-owned enterprises, labour, environment, and transparency, anti-corruption and responsible business conduct.

The ultimate outcome is a modern, ambitious, and fully comprehensive FTA that will underpin the Canadian-Ukrainian bilateral commercial relationship for years to come, and support Ukraine’s long-term recovery and trade interests.

In fact, by serving as a demonstration of Ukraine’s ability to adhere to ambitious commitments in a range of areas, our Ukrainian counterparts have affirmed the value this Agreement will have as a new model for its efforts to advance economic integration with other partners around the world.

Furthermore, this Agreement provides a strong bilateral legal framework to support and encourage Canadian firms to initiate and expand their operations in Ukraine, and for Canada to participate in Ukraine’s reconstruction and longer-term recovery.

In fact, later this month, I will be participating in the second annual “Rebuilding Ukraine” Conference in Toronto, where I and my counterpart, Minister Svyrydenko, have been invited to speak about the modernized CUFTA as well as engage with Canadian companies interested in investing and playing a role in Ukraine’s reconstruction.

As I announced when I tabled the modernized CUFTA and Bill C-57 in the House of Commons, I am also planning to lead a business mission to Ukraine next year. This mission will build on the momentum of the modernized CUFTA to create new connections between Canadian and Ukrainian businesses, and allow Canadian businesses to learn first-hand how they can participate in the reconstruction of Ukraine.

Distinguished colleagues, I thank you again for your interest in this historic agreement. Along with our Canadian trade officials responsible for this initiative, who I am joined with here today, I stand ready to discuss and respond to any questions raised by the Committee.

Thank you.

Private Member’s Bill C-282: An Act to Amend the Department of Foreign Affairs, Trade and Development Act (supply management)

Top Line Messages

• Bill C-282 is consistent with the longstanding Government of Canada policy to defend the integrity of Canada’s supply management system.
• With the support of the Government, the Bill was adopted by the House of Commons at Third Reading on June 21, 2023.
• The Bill is currently being considered by the Senate.

Latest Developments

• On June 21, 2023, PMB C-282 was adopted in the House of Commons at Third Reading by a vote of 262 (in favour) to 51 (against). The Bill was introduced in the Senate at First Reading the same day.
• To date, three debates (September 26, October 18 and October 24) have been held during Second Reading at the Senate. Second Reading debate will continue at a yet to be determined date.

Current Positions And Upcoming Milestones

• The Government supported Bill C-282 as its intent is consistent with the longstanding Government of Canada policy to defend the integrity of Canada’s supply management system.
• If passed at Second Reading, the Bill would be remitted to a Senate Committee for further study

Context

PMB C-282 is a Bloc Québécois bill introduced by MP Luc Thériault (Montcalm). The Bill seeks to amend the Department of Foreign Affairs, Trade and Development Act such that the Minister of Foreign Affairs cannot, on behalf of the Government of Canada, make any new commitment in an international treaty that would have the effect of increasing tariff rate quota (TRQ) volumes or reducing over-quota tariff rates for dairy products, poultry or eggs (supply-managed goods). This Bill would apply to negotiations towards new free trade agreements (FTAs) or renegotiating existing FTAs.

Canada’s approach in its FTAs has been to seek the elimination of tariffs on the vast majority of goods, while seeking to exclude the most sensitive agriculture goods from tariff commitments, including products covered by supply management. New market access commitments for supply-managed products have been undertaken in only three FTAs: the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the Canada-United States-Mexico Agreement (CUSMA). Such commitments were accepted only where it was deemed necessary to conclude trade agreements that were in Canada’s overall economic interests. While new access for supply-managed products was provided in those agreements, the integrity of the supply management system itself, including its three pillars (pricing, production, and import controls), was fully maintained.

Since CUSMA, the Government has made clear its commitment to make no further market access concessions for supply-managed products in future trade negotiations. In line with this publicly stated commitment, notably, the Canada-United Kingdom Trade Continuity Agreement did not provide new market access for cheese or any other supply-managed products even though this was an important issue for the United Kingdom.

During debate in the House of Commons and study at the Standing Committee on International Trade (CIIT), supporters of this Bill noted Canada’s three trade agreements and the increase in market access in supply-managed products as the reason why Bill C-282 is necessary. Stakeholders from the supply-managed sectors also expressed their support through written submissions and witness testimony at the CIIT.

On the other hand, opposition to the Bill was expressed by certain Members of Parliament and export-oriented industry stakeholders. Expressed concerns focused on the unintended consequences of the Bill for Canada’s international trade agenda, in particular vis-à-vis the United Sates. In particular, opposing stakeholders considered that:

1. By reducing possible outcomes in FTAs, the Bill would limit Canada’s negotiating capacity with new partners and existing partners, in particular the United States should it seek new concessions in the context of the 6-year review of CUSMA.
2. The Bill would set a precedent for other sectors to seek similar protection.
3. The Bill could restrict the Crown Prerogative on the Minister of Foreign Affairs in conducting international affairs.

PMB C-282 is a verbatim reintroduction of PMB C-216 from the 43-2 Parliamentary session which was studied by the CIIT and reported back to the House of Commons on division. It died on the Order Paper when the general election was called in August 2021. During the CIIT study of C-282, concerns were raised by the CPC regarding the changes in officials’ testimonies from C-216 and C-282.

Investment Arrangement Negotiations with Taiwan

Top Line Messgaes

• Foreign investment is an important driver of Canada’s economy and will be critical in our continuing economic recovery from the COVID-19 pandemic.
• Canada and Taiwan have a robust economic relationship built on shared values and people-to-people ties.
• Taiwan is Canada’s sixth largest merchandise trading partner in the Indo-Pacific. In 2022, the value of Canadian direct investment in Taiwan reached $ 127 million; and Taiwanese foreign direct investment in Canada was $ 475 million.
• Under its Indo-Pacific Strategy, Canada is committed to expanding trade and investment and supply chain resilience with key economies in the Indo-Pacific.
• The new investment arrangement between Canada and Taiwan will create more avenues for trade and economic collaboration including sustainable growth, and good jobs.

Questions

What is an investment arrangement?

• An investment arrangement is designed to help protect and promote Canadian investment in Taiwan, as well as attract Taiwanese investment to Canada.
• An investment arrangement contributes to building greater confidence for investors by fostering a fairer and more predictable environment.
• Once it comes into effect, the Arrangement will help promote investment flows that will contribute to job creation and economic growth in Canada.

Why are we pursuing an investment arrangement with Taiwan?

• Under the Indo-Pacific Strategy, Canada is committed to growing its trade and economic and people-to-people ties with Taiwan while supporting its resilience.
• Canada has a complementary and growing trade and economic relationship with Taiwan, based on robust business-to-business ties, shared values, and significant science, technology and innovation collaboration.
• Taiwan is a world-leading manufacturer of semiconductors and is recognized for its critical role in global Information and Communications Technology (ICT) supply chains, serving as a contract manufacturer for major foreign brands of consumer electronics. Many of its largest electronics manufacturing and engineering firms are investing to diversify and looking for new markets to expand their presence in global supply chains.
• Given Canada’s role in the integrated North American economy, Canada offers Taiwanese companies significant opportunities to find strategic Canadian partners or advantageous locations to play a more expansive joint role in global supply chains. At the same time, Taiwan offers Canada a strong trade partner in the region that can contribute to the resiliency of Canadian supply chains.

Does this new investment arrangement include an Investor-State Dispute Settlement mechanism?

• The arrangement envisages a mechanism to facilitate the resolution of differences that may arise with respect to investments and that takes into consideration Taiwan’s unique status.
• It includes consultations, mediation, and a coordination mechanism between jurisdictions to resolve issues in a timely fashion.

Will the government be allowed to regulate in the public interest?

• Canada’s investment trade policy has always balanced investor protection with our government’s right to regulate in pursuit of legitimate policy objectives.
• Canada has not departed from that long-standing approach.

What areas of investment is this new arrangement anticipated to increase?

• We cannot predict exactly, but Canada and Taiwan have significant complementarities in sectors such as clean tech, critical minerals, electric vehicles and hydrogen.

Responsive Only – One China Policy

• Canada continues to uphold its One China Policy. This position remains unchanged. Under Canada’s One China Policy, Canada does not recognize Taiwan as a sovereign state, but we continue to maintain unofficial but valuable economic, cultural and people-to-people ties with Taiwan.
• The conclusion of an investment arrangement is consistent with Canada’s One China Policy, as an investment arrangement would promote commercial and people-to-people ties with Taiwan.
• Taiwan is a member and active participant in various economic organizations, including the WTO and APEC, in which Canada maintains membership.

Responsive Only – What is the difference between a Foreign Investment Promotion and Protection Agreement (FIPA) and an investment arrangement?

• A FIPA is [REDACTED], that Canada negotiates with a partner, to offer protection to Canadian investments abroad and to attract foreign investment in Canada.
• Canada has negotiated an investment arrangement with Taiwan, [REDACTED], seeks to achieve similar objectives.
• [REDACTED]
• This investment arrangement aims to cover the same areas as a FIPA – while recognizing Taiwan’s unique status.
• Canada’s expectation is that it will have a similar effect on trade and investment and deliver on Canada’s objectives.

Responsive Only – [REDACTED]

Responsive Only – Does this mean Canada will support Taiwan’s accession to the CPTPP?

• Canada acknowledges Taiwan’s formal application for CPTPP accession.
• [REDACTED]
• Canada also takes note of Taiwan’s efforts to bring its regulatory regime up to CPTPP standards and to regularly inform CPTPP Parties of its progress in that regard.
• Canada supports the expansion of the CPTPP to include economies that are willing and able to comply with the Agreement’s high standards, and have a demonstrated history of compliance with their trade obligations.
• [If pressed for timelines] There are no set timelines to initiate another accession process, following the recent conclusion of the U.K. accession process. Parties are currently discussing next steps with respect to accessions.

The United Kingdom’s Accession to the CPTPP

Top Line Messages

• The Comprehensive and Progressive Agreement for Trans-Pacific Partnership is a key platform for Canada’s long-term economic security and a bulwark against authoritarian threats in the Indo-Pacific region.
• Canada supports the expansion of the Agreement through the accession of new members that meet the CPTPP’s high standards and is pleased to have concluded the U.K. accession process.
• The United Kingdom’s accession to the CPTPP will reinforce the economic and geopolitical credibility of the Agreement and complement the preferential access Canadians already enjoy under the Canada-United Kingdom Trade Continuity Agreement (TCA).

Supplementary Messages

• CPTPP Parties and the United Kingdom are now undertaking their respective domestic ratification processes to bring the U.K. Accession Protocol into force.
• CPTPP Parties have not made a decision on other accession applicants; recent engagement under the Agreement has been focused on implementation.

Responsives

Responsive: Parallel nature of the U.K. CPTPP accession and the Canada-U.K. FTA

• The U.K.’s accession establishes a single set of rules between Canada, the United Kingdom and other Parties to the Agreement, making trade more transparent, predictable and accessible for Canadian businesses and integrating the United Kingdom into CPTPP supply chains.
• It will expand the value of the CPTPP for Canada and all Parties to the Agreement by offering greater sourcing flexibility across the member economies.
• Negotiation of a bilateral FTA between Canada and the United Kingdom is an opportunity to create an agreement tailored to our specific bilateral interests and serve to further deepen the Canada-United Kingdom relationship.

Responsive: Concerns expressed by the meat sector

• Some meat sector stakeholders have raised concerns with their ability to export to the United Kingdom under present market conditions.
• Bringing an ally like the United Kingdom into this Agreement does not mean Canada has taken a step back from advancing the interests of these Canadian exporters.
• Canada continues to undertake technical work with the United Kingdom to address specific technical issues, and is engaging with the United Kingdom to remedy trade irritants in the sector, including for Canada’s beef and pork producers.
• Beef and pork producers have historically been amongst the largest beneficiaries of Canada’s ambitious FTA negotiation agenda, and the CPTPP has opened up significant opportunities in high growth markets in the Indo Pacific region – which industry has identified as a priority region for exports.
• Since the CPTPP entered into force in 2018, Canada’s beef exports to CPTPP members increased by 156.3% in value and 117.1% in quantity, compared to a 69.3% increase in value and 27.9% increase in quantity in Canada’s beef exports globally.
• Canada will continue to work with the meat sector to promote and defend their interests in our free trade agreement negotiations.

Responsive: Canada’s position on other accession applicants (China, Taiwan, Ecuador, Costa Rica, Uruguay, Ukraine)

• The CPTPP is designed for expansion and Canada is supportive of an efficient accession process.
• Canada welcomes the accession of economies that are willing and able to meet the CPTPP’s high standard rules and ambitious market access commitments, and have a demonstrated history of compliance with their existing trade commitments.
• All accession-related decisions are made by consensus among Canada and other CPTPP Parties.
• Canada’s position on any aspirant economy will always be guided by what is in the best interest of Canadians.

Responsive: Ukraine’s CPTPP accession application

• In May 2023, Ukraine submitted a notification to accede to the CPTPP.
• To join the CPTPP, any interested economy must demonstrate that it is willing and able to meet the Agreement’s high standard rules and market access commitments.
• With the Canada-Ukraine FTA modernization, Ukraine is demonstrating precisely that commitment to advance rules-based trade.
• CPTPP accession would benefit Ukraine in three key ways:
  1. It would improve commercial, political, and people-to-people links between Ukraine and the dynamic economies of the Indo-Pacific.
  2. It would lower the costs of goods and services, making Ukraine more competitive in the global marketplace.
  3. CPTPP accession would send a powerful signal to the world that Ukraine is strong and open for business.

Update

Following the signing of the U.K. accession protocol on July 16, CPTPP Parties and the U.K. are now undertaking their respective domestic ratification processes to bring the U.K. Accession Protocol into force. The CPTPP U.K. Accession Protocol will enter into force under a “universal” approach, 60 days after the United Kingdom and all of the Parties have ratified the Protocol. In the event that not all Parties and the United Kingdom have ratified within a period of 15 months, the approach pivots to “critical mass”, and the Accession Protocol will enter into force 60 days after both the United Kingdom and at least six Parties to the CPTPP have ratified, for the United Kingdom and Parties that have ratified the Accession Protocol. Timelines for Canada’s ratification of the Accession Protocol are still in flux.

Supporting Facts and Figures

• With the United Kingdom, a fully implemented CPTPP includes three G7 economies, covers more than 15% of global GDP (an increase from 12.4% without the United Kingdom), and comprises around 590 million consumers.
• K. accession to the CPTPP establishes a single set of rules between Canada, the United Kingdom and other Parties to the Agreement, integrating the United Kingdom into CPTPP supply chains and making trade more transparent, predictable and accessible for Canadian businesses.
• Adding the United Kingdom to the CPTPP will create a stronger bulwark against authoritarian threats in the Indo-Pacific region, including countering the rise of protectionism, unfair trade practices, and economic coercion.

Background

On February 1, 2021, the United Kingdom became the first economy to submit its application to accede to the CPTPP. On June 1, 2021, Canada and its CPTPP partners agreed by consensus to start the process for the United Kingdom to join the CPTPP. Through an Accession Working Group established in September 2021, the United Kingdom worked with Parties to demonstrate that its regulatory regime complies with the rules of the Agreement. On March 30, 2023, CPTPP Parties and the United Kingdom announced the substantial conclusion of accession negotiations. At a signing ceremony on July 16, CPTPP Parties officially welcomed the United Kingdom as the Agreements 12^th member, and first and only successful accession candidate.

Israel-Gaza war

Topline Messages

• Support Israel’s right to self-defence, in accordance with international law, while affirming the rights of both Israelis and Palestinians to live in peace and security.
• Continue to push for urgent access to humanitarian aid into Gaza, and demonstrate Canadian leadership in provision of humanitarian aid for Gazan civilians through announcement of new funding ($60 million).
• Engage meaningfully on possible avenues towards a resolution to the conflict. Support articulation of a political horizon which allows both Palestinians and Israelis to see their societies living in peace and security, in accordance with Canda’s long-standing position on two-state solution.
• Canada unequivocally condemns the brutal terrorist attacks perpetrated by Hamas against Israel. Nothing can justify these acts of terror. Call for the immediate release of hostages and their humane treatment.
• Deeply concerned about the ongoing humanitarian situation in Gaza and its impact on civilians. Imperative to enable rapid and unimpeded access of humanitarian relief for civilians. Call on all parties to protect civilians and respect international humanitarian law.
• Canada is encouraged by the decision of Israel and Egypt to allow the entry of urgent humanitarian aid. This is an essential first step for Palestinian civilians to receive access to humanitarian assistance.
• Canada stands with Israel and fully support Israel’s right to defend itself in accordance with international law. Israeli and Palestinian peoples deserve the right to live in peace, security, with dignity and without fear.

Objective

• Reaffirm Canada’s support for Israel and it right to self-defence in accordance with international law; demonstrate Canadian leadership in provision of humanitarian aid while continuing to push for humanitarian access and a resolution of the conflict that allows for a political horizon in accordance with the two-state solution.

Background

This is a transformational war – for both Israel and Hamas. The October 7 attack - unprecedented in scale, brutality and outcome [REDACTED] Israel’s stated objective is the complete destruction of Hamas through all necessary means, [REDACTED]Violence in the West Bank is increasing. Israeli settler violence has risen significantly since the crisis began[REDACTED] As with any conflict, disinformation and misinformation is prevalent and is fueling tensions (the purported bombing of the Al Ahli Arab Hospital in Gaza on October 17 – and the subsequent regional and international outcry in response - is a case in point).

Israel’s ground offensive in Gaza has not yet begun. The conflict has featured heavy IDF airstrikes against Hamas infrastructure and targets, with rockets from several Palestinian terror groups continuing to be fired at southern and central Israel. Tensions on the Israeli border with Lebanon continue to intensify. [REDACTED]

Canadian Position

• Canada unequivocally condemns the brutal terrorist attacks perpetrated by Hamas against Israel.
• Canada stands with Israel and fully supports Israel’s right to defend itself in accordance with international law.
• Canada also calls for the immediate release of all those being held hostage.
• We are deeply concerned about the humanitarian situation in Gaza and its impact on civilians. The rapid and unimpeded access of humanitarian relief for civilians is essential.
• Canada stands firmly with the Israeli and Palestinian peoples in their right to live in peace, security, with dignity and without fear.

G7 Country and Invited Guest Positions

• Given the global dimensions of this crisis, a unified G7 message is important. Japan sought to convene G7 Leaders from the outset, but decision by U.S., U.K., France, Italy and Germany to issue a Quint statement delayed this meeting (reportedly fearing disunity amongst the European Union).
• The S. has been out in front, offering unequivocal support for Israel, including having mobilised two carrier strike groups to the region and enhancing its air force presence to increase deterrence and the risk of the conflict spilling over. Following President Biden’s visit to Israel on October 18, Prime Minister Netanyahu’s office announced that some humanitarian aid would be let in through Gaza’s southern border (under Egyptian control) as long as it does not fall into the hands of Gaza.
• The K. has likewise announced naval support as well as the deployment of a surveillance aircraft to enhance regional military deterrence posture. PM Sunak visited Israel on October 19. Germany’s Chancellor Scholz visited Israel on October 17. In an October 14 statement, France has urged Hezbollah to stay out of the Israel-Hamas conflict, warning the first victim would be Lebanon. President Macron contacted Iranian President Raisi to emphasize this point. Italy dispatched its Foreign Minister to Israel, where Minister Tajani reaffirmed Italy’s unconditional commitment to Israel’s security.
• The EU is internally divided on this issue between Member States and within Commission and agencies. Presidents Von der Leyen and Michel have expressed strong solidarity with Israel, as has FM Borrell, though he has emphasized Palestinian civilian suffering more acutely.
• Historically, Japan has been the least like-minded in the group on the Middle East conflict, maintaining a lower profile to avoid alienating Arab states given its reliance on Middle East energy. PM Kishida has publicly condemned Hamas attacks on Israel while calling for restraint on both sides.
• Arab leaders fear the scale of the Israeli response could ignite already emotional populations. There have been growing and violent demonstrations in Lebanon, Jordan, Qatar and Iraq in recent days. Arab League States continue efforts to identify a diplomatic solution. Despite significant divergences amongst them, publicly they demonstrate alignment with the Palestinian cause.
• Qatar is playing a central role – strongly supported by the US – as mediator, by virtue of its longstanding relationship with Hamas. Iran has equally been on a frenzy of diplomacy across the region, seeking to shore up its regional proxies and benefit from its positioning as Israel’s arch-opponent.

Section Three

Background

Israeli response

Israel responded to the attacks with airstrikes on Hamas targets in Gaza. Skirmishes have also occurred along Israel’s northern boundary with Lebanon. Defense Minister Gallant stated that the goal of Israel’s campaign in Gaza is to “wipe Hamas off the face of the earth.” Israel’s ground invasion has yet to commence. In anticipation of the invasion, last weekend Israel warned all Gazans in the north to evacuate to the south for their own safety. Despite continued IDF airstrikes against Hamas infrastructure and high value targets, rockets continue to be fired at southern and central Israel.

Humanitarian Situation

Following President Biden’s visit to Israel, an announcement was made by Prime Minister Netanyahu’s office that humanitarian aid would be let in through Gaza’s southern border (with Egypt) as long as it does not fall into the hands of Hamas. The announcement also stated that Israel would not allow in aid through its own crossing with Gaza until the hostages are released. Israel has demanded that the Red Cross be allowed to visit the hostages and is working to mobilize broad international support for this demand. The Israel Defense Forces (IDF) claims that Hamas has been obstructing the movement of humanitarian aid and civilians in Gaza and stealing fuel and other supplies. As of October 19, the Rafah border remains closed. Egypt has announced an aid corridor via this border, with the first 20 trucks transporting water, food and medicine planned for October 20. Meanwhile, the humanitarian situation for those trying to leave Gaza is increasingly desperate.

Prime Minister Trudeau has announced $10 million in humanitarian aid to address urgent needs in Gaza and Israel. The new funding will provide life-saving supports, including food, water, emergency medical assistance, and protection services.

Regional Overview

Tensions continue to escalate on the Northern Border, with clashes between Hezbollah and Israeli forces. Iran has demanded an end to Israeli strikes on Gaza and called for an oil embargo against Israel by Islamic countries. Meanwhile, the U.S. successfully thwarted an attack on its forces in Iraq, likely from Iran-backed Shia Militia Groups. On the international stage, Chinese and Russian leaders have condemned Israel's actions in Gaza and called for a ceasefire. Tensions in the West Bank have also intensified, with Palestinian demonstrations against PA President Abbas potentially opening another front of conflict and continued extremist settler violence.

Despite US efforts to deter Iran and its proxies from opening a second front against Israel, the risk of a wider conflagration between Israel and Hezbollah could increase depending on the scale of Israel’s offensive in Gaza.

Prospects for Resolution

Israel is unlikely to be deterred by calls for de-escalation or talks with Hamas until its military objectives – the elimination of Hamas’ political and military infrastructure and leadership – have been met. The holding of hostages by Hamas and affiliated groups will continue to complicate any prospects for talks. Israel has publicly stated that the hostage situation will not impact its decision to undertake a ground invasion of Gaza. Hamas has used the strategy of holding hostages in the past to gain material concessions and the release of Palestinian prisoners.

Economic Effects of July 2023 B.C Port Strikes

Issue

During July 2023, the International Longshore and Warehouse Union announced a strike of over 7,200 workers at the ports of British Columbia. This strike lasted 13-days (July 1-13, 2023) and caused a shutdown of more than 30 terminals, including Canada’s largest and busiest port, the Port of Vancouver. The strike resulted in significant disruptions to trade, and placed strain on supply chains in the months following as backlogs cleared. Statistics Canada estimated that imports cleared in B.C. marine ports fell by 18.5% during July compared with June, while exports leaving B.C. ports fell by 23.0%. On August 4, port workers voted to accept a new four-year long agreement with their employer, marking an official resolution to the dispute.

Background

British Columbia is home to Canada’s largest ports. In 2022, West Coast ports (Prince Rupert and Vancouver) combined, handled 165.5M tonnes of cargo (3.2M tonnes per week) and 4.7M Twenty-Foot Equivalent units (TEU), 3.6M at Vancouver and 1.1M at Prince Rupert.

In particular, the Port of Vancouver is a key terminal for Canada’s commodities trade. Bulk and breakbulk (goods stowed in individual units as opposed to loose or unpacked form) is the largest component of cargo traffic at the ports in the area, making up close to 80% of combined tonnage in 2022. Notably, the Port of Vancouver handles inbound shipments of the following bulk commodities:

• chemicals, basic metal and minerals (37.2% of all inbound cargo as measured in metric tonnes)
• consumer & related goods (25.2%), and
• machinery, vehicles, and construction materials (18.1%).

On the outbound side, the Port of Vancouver handles shipments of:

• coal (35.6% of all outbound cargo as measured in metric tonnes)
• grain, specialty crops & feed (20.7%), and
• forest products (17.4%).

It is estimated that the strike impeded the movement of cargo valued at around $10B in total, significantly impacting Canadian supply chains throughout the country. The ports of Vancouver and Prince Rupert support an estimated 104,000 direct and indirect jobs.

There have been notable disruptions to Canada’s international trade as a result of the strike. Statistics Canada estimated that imports cleared in B.C. marine ports fell by 18.5% during July compared with June. This marks the strongest decline since 2005. Exports leaving B.C. marine ports were also severely affected, falling by 23.0%.

B.C. ports are essential for facilitating Canada’s trade with countries in the Indo-Pacific region and Central and South America. When the data is adjusted for seasonality, widespread declines in overall imports from countries on the Pacific Rim—such as China, Taiwan, South Korea, Peru and Japan—were observed during the strike’s month.

In addition to disrupting trade, it created uncertainty for trading businesses and thus our global partners. For example, Canpotex, a key exporter of Canadian potash withdrew all offers for new potash in July, citing need for greater clarity on supply chain predictability through the Port of Vancouver. Following the resolution of the labour dispute, Canpotex affirmed a commitment to ship potash to global markets.

Another main concern resulting from the strike is the risk posed to the integrated high-value North American manufacturing sector such as auto assembly plants and battery production amid the lack of critical parts and equipment. At the time of work resumption, auto assembly lines were within a week of shutdowns causing concern both domestically and notably with the United States.

Talking Points

• In July 2023, a labour strike led by the International Longshore and Warehouse Union resulted in the shutdown of more than 30 terminals, including the Port of Vancouver, Canada's largest and busiest port.
• The 13-day strike impeded the movement of cargo valued at around $10B in total, significantly impacting Canadian trade and supply chains.
• We also know that the strike resulted in a lot of uncertainty for our global partners. We do not take this lightly, especially as we all know how important trade is to Canada’s economy and economic prosperity.
• Upholding Canada’s reputation as a reliable business partner is a key priority for this government.
• That is why in Budget 2023 Canada announced a commitment of $4.7 billion for the National Trade Corridors Fund for investments to strengthen our ports, roads, railways, and airports
  • Canada will also establish a Transportation Supply Chain Office to work with industry and other orders of government to respond to disruptions and better coordinate action to increase the capacity, efficiency, and reliability of Canada’s transportation supply chain infrastructure.

Ukrainian Legislative Process

Top Messages/Talking Points:

• Both the Canadian and Ukrainian governments are committed and working to finish their domestic processes for the ratification and entry into force of the treaty as quickly as possible.
• The Ukrainian legislative process is much more streamlined than the Canadian process.
• The Government of Canada expects that Ukraine will be flagging CUFTA as priority legislation.
• If pressed: in the last update GAC received from Ukraine, the legislative and ratification package was being prepared for submission and approval by the President before introduction to the Ukrainian Parliament.

Differences Between Canadian and Ukrainian Legislative Processes

• Main difference is that, whereas Canada has two chambers of parliament, Ukraine only has one, the Verkhovna Rada.
• In Canada, each house has three readings, committee stage and report stage and can only give Royal Assent after all stages are complete. In Ukraine, although the process allows for up to three readings of a bill, a majority vote can result in the passage of the bill after the first reading in the Verkhovna Rada.
• Priority legislation can also be flagged for urgent consideration by the President or Cabinet, to ensure quick passage.

Steps Ukrainian Legislative Process

Broadly, there are three steps in Ukraine’s legislative process:

1. An administrative or Cabinet stage
   • If pressed:
   • Preparation of a legislative and ratification package by Ukrainian Ministry of Foreign Affairs
   • Submission and approval of the legislative package to the Office of the President and/or Cabinet

2. A parliamentary stage
   • If pressed:
   • Draft legislation is assigned to a parliamentary committee responsible for the subject matter of the bill.
   • The committee reviews the bill and can either adopt the bill and approve it for first reading, or reject it.
   • If adopted, it is sent for inclusion on the agenda of the plenary session of the Verkhovna Rada, where it is debated and voted on.
   • The bill can be passed as a whole at this stage, OR passed at first reading, after which it would repeat the committee stage and plenary session at a second reading, and can repeat again for a third reading – but third readings are rare.
   • Once passed as a whole, it is signed by the speaker of the Verkhovna Rada and sent to the office of the President.

3. A signature, publication, and entry into force stage
   • If pressed:
   • Once the President receives the law, they can either sign and adopt the law or veto it.
   • Once signed, the law is published on the official newspaper of the Verkhovna Rada and enters into force upon publication (unless otherwise stipulated by the law).

Additional Sources:

Annex: Document Received from Canada’s Embassy in Kyiv

Law-making process in the Verkhovna Rada