Lessons from the 1990s and Challenges for Canada-Ukraine Free Trade

Michael MacKay and Michael Kostiuk, UCPBA OttawaThe Ukrainian-Canadian Professional and Business Association, Ottawa branch, held a Canada-Ukraine Free Trade Agreement Forum in Ottawa on June 10. Speakers at the forum were Michael MacKay (me) and Michael Kostiuk, pictured, as well as Ron Sorobey.

Here are notes from my presentation:

Canadians and Ukrainians can learn from the successes and failures of the first initiatives to advance civil society in Ukraine, after the resumption of Ukraine’s independence in 1991. Partners in Progress and the Canada-Ukraine Partners Project were Government of Canada initiatives which got started in 1992 and wound down in 1996. They placed Canadian volunteers with Ukrainian partners for projects in support of civil society. I was one of these volunteers, and my project partner was the University of Kyiv-Mohyla Academy (UKMA). The goal of my project was to help UKMA achieve its foundational purpose: to become a self-governing academic institution and a peer to Western universities. Hundreds of Canadian volunteers fanned out across Ukraine, supported with small grants, in what was a period of excited enthusiasm for Ukraine free of the Soviet yoke.

The successes of Partners in Progress and the Canada-Ukraine Partners Project came from direct person-to-person interactions. Canadians extended their connections to Ukraine beyond what they had been, which were strictly family ties. Cultural ties were strengthened in the civil society space that lies between the family and the state. Ukrainians saw real civil society activism, and home-grown initiatives took off. Volunteerism broke free of its Soviet slave labour past. From the Canadians came an impetus for successes in Ukraine like professional associations, environmental groups, election monitoring organizations, and others.

The failure of these initiatives on the Canadian side was that they did not change Canada’s institutional, bureaucratic approach to foreign aid and emphasis on “development.” Canada did not come to treat Ukraine as a peer, and still does not. What the Canadian volunteers and their Ukrainian partners were doing did not stop what was really happening in Ukraine, which was a shift from statist authoritarianism to a hyper-inflationary kleptocracy. The power that civil society exerts on government and business remained something that existed in Canada, but not in Ukraine. Privatization was dishonest, the wealth of the nation was destroyed, and Russian imperialism kept its dead hand on the lives of Ukrainians.

Civil society is the foundation of the rule of law and the enforcement of contracts. It is essential to doing business in a fair market. The rise of the oligarchs in the 1990s in Ukraine and the re-theft of property that ensued, meant that honest business was impossible. Free trade was a dead issue in the 1990s and 2000s. It took the “Maidans” of 2004 and of 2013-14 for civil society in Ukraine to exert some power, and to make a free trade agreement between Canada and Ukraine possible.

The decommunization law which should have been passed in 1992 was passed in 2015, and is a great leap forward. This law is as essential to post-Soviet Ukraine as denazification laws were to post-Nazi Germany.

The challenge that lies ahead is that the Canada-Ukraine Free Trade Agreement is only a traditional deal eliminating tariffs on most goods and services. It needs to be “deep and comprehensive” like the combination of the EU-Ukraine DCFTA plus the EU-Ukraine Association Agreement to really make a difference to Canadians and Ukrainians.

Canada does not have visa-free reciprocity with Ukraine but the EU does; until Canadians meet Ukrainians in Canada as true peers there will be no trade boom coming from the Canada-Ukraine FTA. Ukrainians can travel without visas to all the countries in the EU Schengen Zone and to EFTA countries, but not to Canada. The Government of Canada disgraces itself and embarrasses Canadians by keeping up senseless and cruel barriers to Ukrainians.

Lustration in Ukraine has not reached the judiciary. Until corrupt judges are rooted out, there can be no confidence in the enforcement of contracts. Starting with Partners in Progress and the Canada-Ukraine Partners Project, Canada has had mentorship programs with Ukrainian judges. These need to become less polite, advisory, and “Canadian” and much more intimately tied to lustration and to the drive to eliminate corruption. Canada has been helping Ukraine transition from Soviet-style militia to Western-style police for law enforcement, but without honest judges in place all this effort will be for nought.

The IMF has pushed for an end to the moratorium on land sales. Honest enjoyment of property rights rests on clear and unambiguous title to land. You can only sell land if you truly own it. Theft of land in the Soviet period (collectivization) and theft of land in the oligarch period (1992 to EuroMaidan) means that land ownership is mostly illegitimate in Ukraine. Ukraine needs to extend decommunization to land ownership, and implement restoration and restitution to the original owners and to their heirs. The Baltic countries of Estonia, Latvia, and Lithuania have done this successfully. The laws of the Soviet Union, forced on Ukraine, are illegitimate on their face, and that applies to laws about land ownership, possession and use. After EuroMaidan, Ukraine is understanding itself as a country having recovered independence, from the 1918-1921 Republic, and not as having gained newly-found independence in 1991. The Soviet/Russian period was an interregnum. Land ownership and the enjoyment of property rights will only be on a firm foundation when it is tied to decommunization.

Canada has been fortunate to inherit political structures from Great Britain with a minimum of political violence. Ukraine has suffered appalling political violence from Russia. Ukrainians have to reach back further for examples of successful civil society, independence, and honest trade: to Kyivan Rus’, to the viche direct democratic assemblies, to the Ukrainian People’s Republic, to the Organization of Ukrainian Nationalists and the Ukrainian Insurgent Army. Canada has had time to mature into an advanced democracy, not having suffered invasion since the Fenian Raids and the Battle of Ridgeway in 1866. Ukraine has been re-invaded by Russia starting in 2014. Ukrainians have the burden of defeating foreign invaders from Muscovy at the same time they’re establishing free trade with peer democracies like Canada.

There is formal free trade between Canada and Ukraine: the removal of tariffs and regulatory barriers. But peerage as nations and as peoples demands much, much more. We need to start by understanding that in this relationship Canada is the “Old Country” and Ukraine is the “Young Turk.”

For us Canadians, we have to keep supporting civil society and the rule of law in Ukraine, and we have to help liberate the occupied territories in Crimea and Donbas. It is incumbent on every Western nation, led in the vanguard by Ukraine, to defeat Russia. Only then will we have real free trade.Canada-Ukraine Free Trade Agreement