Revised Canada-Ukraine free-trade agreement does not contain carbon tax, Ukraine says

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Ukraine’s embassy in Canada says the upgraded free-trade agreement between Ottawa and Kyiv does not contain “taxation instruments” to reduce carbon emissions, contrary to Conservative Leader Pierre Poilievre’s allegation that it imposes a carbon tax on the European country.

The Conservative Party voted en masse Tuesday against the enabling legislation for a revised Canada-Ukraine free-trade agreement (CUFTA) and Mr. Poilievre explained that his MPs could not support a deal that imposes a carbon tax on Ukraine.

It’s rare to see a partisan split in Parliament on matters related to Ukraine, a subject on which the Liberals and Conservatives have traditionally agreed. Ukraine has been battling an all-out military assault by Russia since February, 2022, and Canada has to date provided Kyiv with more than $9-billion in support.

The revised Canada-Ukraine trade treaty, signed by Prime Minister Justin Trudeau and Ukrainian President Volodymyr Zelensky, replaces the original deal that was negotiated under former prime minister Stephen Harper’s government, which was signed in 2016 and took effect in 2017. The updated agreement includes new chapters on investment and trade in services, among other things.

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On Thursday in Toronto, Mr. Poilievre doubled down on his allegation, defending the vote his party took this week and insisting the new trade deal with Kyiv would impose a damaging carbon tax on Ukraine. “We voted against Justin Trudeau forcing a carbon tax into that pre-existing agreement,” he told reporters.

“The people of Ukraine are now going to – he expects them to rebuild from a war with a devastating and crippling tax on their energy. The Ukrainian farmers, he expects them to pay a carbon tax while they’re trying to feed their hungry people. This is cruel and, frankly, it is disgusting.”

The Ukrainian embassy in Canada, however, said Thursday the revised trade deal contains no specific measures to decrease greenhouse gas emissions.

The “modernized CUFTA does not include any specific instruments on decreasing carbon footprint, including specific taxation instruments,” embassy spokesperson Marianna Kulava said in an e-mailed statement.

She also noted Ukraine is in the process of devising a plan to fight climate change as part of its campaign to seek admission to the European Union. “On the path toward EU membership, Ukraine is developing policies to address climate change in line with EU regulation,” Ms. Kulava said.

The text of the new trade deal does not commit either Canada or Ukraine to a carbon tax, also known as a levy on fossil fuels. It says both sides are expected “to promote carbon pricing and measures to mitigate carbon leakage risks.”

A carbon tax already exists in Ukraine. It was introduced in 2011 to reduce greenhouse gas emissions. The U.S. State Department in a 2023 report called the carbon tax rate “virtually ineffective in strengthening energy efficiency or reducing carbon emissions.”

Mr. Trudeau’s Liberals accused the Conservatives of turning their back on Ukraine by failing to support the enabling legislation for the new trade treaty.

Government House Leader Karina Gould, whose party is trailing the Conservatives in public opinion polls, accused Mr. Poilievre of copying anti-Russian sentiment among some U.S. Republican politicians and said this should give voters pause. “There have been calls from U.S. Congress members to stop funding Ukraine’s fight for freedom. This is something that we’re seeing across the United States from right-wing Conservative politicians.”

The Conservative Party under Mr. Poilievre has made fighting charges on fossil fuels arising from carbon pricing – what it calls a carbon tax – a central focus of its work as Official Opposition.

Bill C-57, the legislation underpinning the new treaty, survived the Tuesday vote because of the support of the governing Liberals, the NDP, the Bloc Québécois and the Greens. The vote passed 205-109 and the bill now heads to a committee for study.

Mr. Poilievre said his party solidly supports Ukraine, noting it was the former Harper Conservative government that “led the charge to kick Russia out of the G7″ over its invasion and annexation of Ukraine’s Crimean peninsula.

Sebastian Skamski, director of media relations for the Opposition Leader’s Office, said the Liberal attacks on the Conservatives Thursday are designed to distract from domestic problems.

“With Canadians suffering under the weight of their devastating economic policies, it’s clear that the desperate Liberals are looking to talk about anything other than their disastrous economic record at home,” he said in a statement.

Earlier this month, Dean Foster, a director of trade negotiations at the Department of Global Affairs, told MPs the reference to carbon pricing in the deal is merely aspirational and is meant to lay out “principles for co-operation” in this area between the two countries.

The original CUFTA was primarily focused on the trade in goods. It included a provision that within two years both countries could review the treaty with the view of modernizing it and adding chapters on services and investment.

The modernized agreement includes dedicated chapters on trade in services, financial services, investment, temporary entry for business persons, telecommunications and updated chapters on labour, environment, digital trade, and transparency and anti-corruption, among other areas, the federal government said Thursday.