The CUFTA Rules of Origin Regulations (SOR/2024-68) implement updates to the Canada-Ukraine Free Trade Agreement (CUFTA), which originally came into effect on August 1, 2017. These updates aim to improve trade relations between the two countries by revising the rules that govern how goods are classified for preferential treatment under the agreement. Established to facilitate trade, the CUFTA promotes economic ties by reducing tariffs and other trade barriers. A crucial aspect of the agreement is the rules of origin, which determine whether a product qualifies for preferential treatment based on its production in Canada or Ukraine. These rules allow goods to be eligible for lower tariffs if a specified percentage of their value is added within either country.

Initially, the CUFTA included a provision for cumulation with non-Parties, which allowed materials sourced from third countries, with which both Canada and Ukraine have trade agreements, to count toward a product’s eligibility for preferential treatment. However, this provision was not implemented at the time due to the need for mutually agreed parameters concerning these third-party countries. The modernized CUFTA addresses this gap by providing specific guidelines for cumulation that can be activated.

The updated regulations in SOR/2024-68 introduce several significant changes. First, the previous CUFTA Rules of Origin Regulations have been entirely repealed and replaced to reflect the modernized agreement. Second, the new rules clarify and streamline the determination of originating goods, allowing for recognition of materials from non-Party countries that have existing FTAs with both Canada and Ukraine. This broadens the scope for manufacturers to claim preferential tariff treatment. Third, the CUFTA’s provisions on government procurement have been revised. Rather than detailing procurement rules that mirrored the World Trade Organization’s (WTO) Agreement on Government Procurement (GPA), the updated CUFTA incorporates GPA commitments directly into its text, simplifying compliance and aligning with Ukraine’s status as a GPA member since May 17, 2016. Additionally, amendments made to the Canadian International Trade Tribunal Procurement Inquiry Regulations reflect the new government procurement rules established under the modernized CUFTA, replacing references to the outdated treaty, updating chapter numbers, and removing obsolete references to previous procurement provisions.

The primary objective of these regulations is to ensure the full implementation of Canada’s commitments under the modernized CUFTA, facilitating smoother trade and economic relations between Canada and Ukraine. By expanding the rules of origin and simplifying government procurement processes, these regulations aim to foster greater trade efficiency and competitiveness. By modernizing the rules of origin and procurement provisions, these regulations seek to improve bilateral trade, increase market access, and provide clearer guidelines for businesses engaged in international trade, thereby advancing Canada’s economic interests while supporting Ukraine’s ongoing integration into the global trade system.

Canada (SOR/2024-68) May 8, 2024