Ukraine. Thirteen Years of Independence.
Internal development, foreign policy and bilateral relations with Canada

On 24th of August 2004 Ukraine celebrates the thirteenth anniversary of its independence. Over the last years the absence of ethnical and national conflicts, irreversibility of democratic transformations, active reforming of economic, political and social life have become inalienable features of state-building processes in Ukraine.

A new stage of internal reform in Ukraine is aimed at securing profound systematic transformations in the country's life, corresponding to the standards of a democratic state with socially-oriented market economy.

Ukraine's internal development.

Over several consecutive years Ukraine's economy has demonstrated one of the highest growth rates in Europe. Against the background of stable financial situation the exports are rapidly growing, the Ukrainian goods strengthen their competitive capacity on the domestic market; the volumes of investments and construction are growing, as do the volumes of consumption and household income.

The real GDP growth in January - June 2004 reached a record level of 12.7% (9.2% last year), the volumes of industrial output grew by 15.9%. In the first five months of 2004 the exports of goods increased by 51.3% compared with the same period last year, the imports - by 32.5%. The foreign trade surplus totalled over $ 2 bln (almost $ 409 m in the same period in 2003).

Last year Ukraine reached considerable progress in implementation of tax and pension reforms, resumed the privatisation of big enterprises and improved the legislation in mortgage and land regulation and crediting. There was established the flat personal income tax rate of 13%; the corporate income tax rate was also reduced.

As a result of socially-oriented policy of the Government in January-May 2004 the nominal household income grew by 19.7%, the real salary by 26.7%. Constructive dialogue between Ukraine and the international financial institutions, the implementation of the external debt payment schedule and the considerable potential of further economic growth resulted in upgrading of Ukraine's credit rating by the leading international credit agencies. Ukraine met in full the FATF requirements on fighting the money-laundering and was excluded from the organisation's "black list" in February 2004. The country's economic achievements became possible owing to the formation of the coalition Government and its backing by the parliamentary majority. The prospect of implementation of the constitutional reform, initiated by the President, which would consolidate the responsibility of the Parliament for the forming of Government and its policy, is currently being discussed in the country.

One of the key priorities in the Government activity at present is the conduct of free, transparent and democratic presidential elections in accordance with the national legislation and the European norms and standards. First of all, it is about creation of equal opportunities for all candidates during the election campaign and securing the unimpeded activity of independent media.

Foreign policy of Ukraine.

During the recent years the necessary mechanisms for implementing the whole complex of measures in the internal and external policy, that will bring Ukraine closer to integration to the European Union and NATO, have been created in Ukraine. The course towards European and Euro-Atlantic integration is based on clear awareness of the Ukrainian national interests and corresponds to the realities of our country's development.

During the Ukraine-EU Summit in Hague in July 2004 the parties agreed to continue discussions on the development of the Ukraine-EU Action Plan. The document, as both the Ukrainian side and its EU partners are convinced, should build upon the principles of joint ownership, differentiation and added value. Ukraine confirmed its interest in adoption of such a plan, which would define specific steps of each side, contain specific tasks and obligations and will be aimed at securing real positive achievements for Ukrainians and qualitatively improve the relations between Ukraine and the EU. The Ukraine-NATO Commission Summit in Istanbul confirmed the strategic character of relationship between Ukraine and NATO, and the principal support by the NATO countries of Ukraine's course towards integration into the Euro-Atlantic security structures. It also recognized a significant progress in implementation of the Ukraine-NATO Action Plan and annual Target Plans, underlying the intention to further pragmatic cooperation.

Ukraine took responsible position towards the Iraqi issue, the participation in Stabilization Force and the rebuilding of the country. Starting from September 2003 the 1800-strong Ukrainian peacekeeping contingent carries out its mission in Iraqi Vasit province, maintaining security in this part of the country, delivering Humanitarian Aid to its inhabitants, being actively involved in infrastructure reconstruction.

Ukraine remains one of the most active countries in preserving peace and security in the hot spots around the globe: at present it is represented by over than 1400 peacekeepers in 9 UN peacekeeping operations.

During the last year the progress in completion of the legal procedure of the boundary delimitation of Ukraine was achieved. Treaties between Ukraine and Russia on the Ukrainian-Russian State Border and on cooperation in use of the Azov Sea and Kerch Strait were signed and ratified. A long negotiating process was completed by signing the Treaty on the Ukrainian-Romanian State Border. Transition to a new stage of preparation the agreement on delimitation of the continental shelf and exclusive economic zones of Ukraine and Romania in the Black Sea has been secured.

Ukraine gradually and confidently moves on the way towards joining the World Trade Organization. On the whole Ukraine has signed 24 bilateral protocols with the WTO member-states.

Ukraine made its contribution to the international efforts on protection of environment by ratification of the Kioto Protocol by the Parliament of Ukraine in February 2004.

The global changes in the architecture of European cooperation, connected, in particular, with the EU and NATO enlargement, demand from Ukraine the intensification of its foreign policy and pragmatic upholding its national interests on the international arena.

Ukraine will continue to give priority importance to the European and Euro-Atlantic integration, the integration into the world economy, strengthening its position on the external markets, strengthening of regional stability, development of bilateral relations with neighboring countries and its strategic partners.

Ukraine sees its main task at present in consolidation of European values and standards in a politics, economy, and social sphere, regarding it as a pledge of its social stability and sustainable development.

Bilateral relations with Canada.

The friendly relations of Ukraine with Canada started prior to its official Independence proclamation. On December 2, 1991 Canada became the first western country to recognize Ukraine as a sovereign state.

Diplomatic relations between Ukraine and Canada were introduced on January 27, 1992. Starting from April 1992 there is the Embassy of Canada in Ukraine and from November 1992 - the Embassy of Ukraine in Canada.

The further development of relations between Ukraine and Canada can be characterized as a steady one. As a part of Canadian Liberal Government's policy aimed on mutually beneficial cooperation with Ukraine relations between Ukraine and Canada received the status of Special Partnership as stipulated by the appropriate Joint Declaration signed on March 31, 1994 in Kyiv.

The last 13 years saw substantial efforts from governments of both Ukraine and Canada that resulted in creation of a comprehensive legislative base for development of bilateral relations in social, economic and cultural spheres.

Among the most effective mechanisms for deepening economic relations between the countries the cooperation at the level of regions and provinces is worth special attention. The history of Ukraine's relations with Canada is, to a large extend, a history of interregional relations with Alberta, Saskatchewan and Manitoba - the provinces with traditionally numerous and powerful Ukrainian communities. Now a number of municipalities in the most populated and economically powerful province of Ontario are also developing partnerships with cities and regions of Ukraine.

However Ukraine and Canada still face a task of bringing up actual levels of their bilateral trade and investment cooperation to its potential that would correspond to special partnership status of bilateral relations.

The need for further development of economic cooperation between Ukraine and Canada is illustrated by the statistical data. In particular, the volumes of Canadian FDI attracted into the Ukrainian economy amount to only USD 100mln, annual trade turnover between the two countries has the same level. However in recent years trade relations have been developing rather dynamically - in 2002 and 2003 volumes of bilateral trade grew by 40% and in the first half of 2004 by 20%.

And while growth in value of Canadian exports to Ukraine in 2003 was reached due to large shipments of grains, this year's growth is contributed by a wide variety of products. Canadian exports in January-June 2004 grew by more than a half and included substantial volumes of different mechanic machinery, automobiles and pharmaceutical products.

Though the product structure of Ukrainian exports to Canada is fairly unstable it is still dominated by raw materials and semi-finished products. At the same time some Ukrainian products, particularly mineral fertilizers, are imported into Canada in substantial and steady volumes indicating a stable demand and existing potential for Ukrainian export's expansion.

In general, the trade relations between Ukraine and Canada still have to be developed in terms of both volumes and structure to correspond to mutual interests of the two national economies.