Canada-Ukraine Free Trade Agreement annual report to Parliament on responsible business conduct for the year ended December 31, 2025

Pursuant to the CUFTA Implementation Act, s.15.1 

Table of contents

• Introduction
• Context – Canadian business in Ukraine
• Canada’s approach to responsible business conduct
• Recent engagement

Introduction 

The second annual report to Parliament outlines the Government of Canada’s efforts to support Canadian companies operating in Ukraine in complying with the responsible business conduct (RBC) principles and guidelines cited in the modernized Canada-Ukraine Free Trade Agreement (CUFTA).  These include the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises on Responsible Business Conduct and the United Nations (UN) Guiding Principles on Business and Human Rights. 

The first CUFTA came into force on August 1, 2017, marking an important milestone in Canada’s bilateral relationship with Ukraine. Building on that foundation, negotiations to modernize the agreement began on January 27, 2022, and the updated CUFTA was signed on September 22, 2023, in Ottawa. Following Royal Assent of the Canada-Ukraine Free Trade Agreement Implementation Act on March 19, 2024, the modernized agreement entered into force on July 1, 2024.  

Section 15.1 of the Act requires the Minister of International Trade to table an annual report within the first 30 sitting days of each calendar year. The report outlines activities undertaken to ensure Canadian companies operating in Ukraine comply with the principles and guidelines set out in the CUFTA. 

Context – Canadian business in Ukraine 

Canada continues to stand resolute in its support of Ukraine’s sovereignty and territorial integrity and continues to strengthen relations with Ukraine on all fronts, including trade.   This strong commitment is reflected in Canada’s growing engagement in Ukraine’s recovery and reconstruction efforts. 

According to Canada’s 2021 census, approximately 1.3 million people in Canada self-reported as having some Ukrainian heritage. Canada is home to the second largest Ukrainian diaspora population in the world (after Russia). Canada was the first country (along with Poland) to recognize Ukrainian independence in 1991. Prior to Russia’s full-scale invasion of Ukraine on February 24, 2022, these deep historical and people-to-people ties had been developing into strong commercial relations, including significant investment in Ukraine by Canadian companies.   

In February 2025, the World Bank estimated Ukraine’s reconstruction costs at over US$524 billion, a figure that increased from US$480 billion in 2024.^{Footnote 1} The scale of the rebuilding effort, the largest in Europe since the Second World War, will require sustained private-sector involvement alongside multilateral and bilateral assistance. Strong RBC practices are essential to Ukraine’s recovery, helping ensure reconstruction efforts are robust, sustainable, and transparent. They also play a critical role in de-risking investments and building trust among international partners and local stakeholders. Many stakeholders, including civil society organizations and international donors, continue to seek greater transparency and anti-corruption reforms to address the issue of corruption in Ukraine. There are notable efforts underway, reflected by measurable progress in judicial independence and high-level corruption.^{Footnote 2} Nevertheless, corruption continues to be perceived as a primary business risk. 

Canadian companies have generally demonstrated strong adherence to internationally recognized RBC standards. This reputation positions Canadian firms, particularly in sectors such as mining, infrastructure, and engineering, as credible and reliable partners for Ukraine’s recovery, where transparency, sound practices, and adherence to international norms are essential. 

Ukraine is also pursuing membership in the European Union and the OECD, which entails adopting regulatory and legal norms aligned with international standards. These reforms are expected to strengthen the country’s business environment and create conditions conducive to responsible business conduct. In 2025, Ukraine was invited to join the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and participated in meetings of the OECD Working Group on Bribery.^{Footnote 3} These steps signal Ukraine’s commitment to international anti-corruption standards and are expected to create a more transparent and predictable environment for businesses, including Canadian companies seeking opportunities in Ukraine’s reconstruction and modernization. 

Canada-Ukraine Trade 

In 2024, Canada’s merchandise exports to Ukraine totalled $487.6 million, with armored fighting vehicles and parts, unmanned aircrafts, and firearm parts and accessories occupying the top three categories on the export list. In 2024, Canadian direct investment in Ukraine stood at $93 million (total book value). In 2025, Canadian exports to Ukraine are on track to significantly surpass 2024 levels, having increased by 62.4% from January to August 2025 compared to the same period in 2024. This upward trend reflects Canada’s continued engagement in Ukraine’s economic recovery. 

Canada’s approach to responsible business conduct 

Responsible business conduct (RBC) refers to the positive contributions that enterprises can make to economic, environmental, and social progress and their minimization of adverse impacts. At its core, RBC integrates risk management related to people, society, and the environment into business operations. This approach helps companies anticipate and address supply chain risks - whether operational, financial, or legal - while also enhancing resilience. Beyond risk mitigation, RBC can drive investment attraction, strengthen brand reputation, and improve employee and customer loyalty as stakeholders increasingly value ethical and sustainable practices. 

The Government of Canada expects Canadian companies active abroad to abide by all relevant laws, to respect human rights in their operations, to conduct due diligence across their business relationships and to adopt globally recognized standards such as the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights.  

The Government of Canada’s RBC approach is balanced and combines preventative measures, legislation in select areas and access to non-judicial dispute resolution mechanisms.   It emphasizes building awareness among Canadian companies about the importance of responsible practices and the benefits of integrating RBC into their operations. It also promotes the adoption of world-leading RBC standards, including robust supply chain due diligence and alignment with international frameworks. In addition, Canada works to strengthen the global RBC ecosystem by engaging in international fora, advancing RBC considerations in trade and investment agreements, and facilitating partnerships among diverse stakeholders. Through these efforts, the Government of Canada seeks to position Canadian companies as leaders in responsible business conduct, helping them to succeed abroad while contributing to a sustainable global economy.  

Preventative Measures

In terms of prevention, the Government of Canada provides guidance to help Canadian companies mitigate risks and implement RBC best practices.  The Trade Commissioner Service, Canada’s network of trade professionals, supports Canadian businesses succeed internationally by providing market intelligence, advice, and connections. All Trade Commissioners complete RBC training prior to foreign assignments, which provides foundational RBC knowledge and practical scenarios they may encounter in market.  Canadian companies doing business in Ukraine are served by the trade section at the Canadian Embassy in Kyiv.  In 2025, the Trade Commissioner Service in Kyiv supported over 100 Canadian clients, many of whom received briefings on responsible business conduct expectations and market-specific risks. Before receiving any enhanced services, such as advocacy with local governments, companies must also complete a declaration attesting that they have not been convicted or sanctioned for violations such as bribery, corruption, or human rights abuses.   

Global Affairs Canada also works with other departments and Crown corporations to integrate RBC into programs and services. The services provided by Export Development Canada (EDC) and the Canadian Commercial Corporation (CCC) are critical to enabling Canadian exporters to access financing, secure contracts, and compete effectively in international markets. Both Crowns have robust RBC frameworks in place, assessing Canadian companies against integrity and human rights criteria; successful completion of these due diligence evaluations is a prerequisite for receiving their support. 

EDC maintains rigorous Environmental, Social, and Governance (ESG) practices and comprehensive financial-crime policies that apply to all transactions, including those involving Ukraine. EDC has a zero-tolerance approach to bribery, corruption, and unmitigated sanctions risks and applies enhanced due diligence to Ukrainian transactions. All EDC-supported business must comply with the corporation’s ESG policies. Despite the elevated risk environment, EDC continues to support trade, investment, and reconstruction efforts in Ukraine by assessing each transaction on a case-by-case basis. EDC also collaborates with trusted partners on the ground, including clients and third-party advisers in Ukraine, to obtain localized intelligence and legal assessments that strengthen risk evaluation and provides guidance to Canadian companies to help them mitigate exposure to bribery and other financial-crime risks. Looking ahead, Budget 2025 announced plans for EDC to introduce new trade finance tools, including a concessional financing envelope, to help Canadian exporters engage in infrastructure and reconstruction projects in Ukraine. 

At the same time, CCC supports the Government of Canada in delivering military and humanitarian assistance to Ukraine through its Sourcing business line and has adapted its due-diligence processes accordingly. In response to increased corruption risks, CCC introduced a bespoke exporter due-diligence questionnaire for Sourcing transactions in Ukraine that examines interactions with foreign public officials and the use of third-party intermediaries. CCC also works to ensure that commercial agreements include comprehensive anti-bribery and anti-corruption provisions. 

Legislation

Canada has also enacted legislation to address critical issues related to RBC. Key measures include the Corruption of Foreign Public Officials Act, which criminalizes bribery of foreign officials; the Extractive Sector Transparency Measures Act, which requires companies to disclose payments made to governments; and an amendment to the Customs Tariff that prohibits the import of goods produced using forced labour. 

Non-judicial Dispute Resolution Mechanisms

Finally, Canada offers two non-judicial dispute resolution mechanisms: the National Contact Point for RBC and the Canadian Ombudsman for Responsible Enterprise (CORE). Both promote adherence to the OECD Guidelines and provide accessible, cost-effective alternatives to traditional judicial avenues. Each of the 52 countries adhering to OECD Guidelines, including Ukraine, maintains a National Contact Point for RBC which enable cross-border cooperation on cases involving multinational enterprises.  For the year ended December 31, 2025, no active cases were under review by either mechanism involving Canadian companies operating in Ukraine.   

Recent engagement 

Global Affairs Canada’s work to promote responsible business conduct (RBC) in Ukraine continues to include building awareness among enterprises, supporting the adoption of internationally recognized RBC practices, and contributing to a stronger RBC ecosystem. These efforts are particularly relevant as Ukraine advances its reform and recovery agenda, where transparency, accountability, and anti-corruption measures remain essential for sustainable economic development. Canada participates in international coordination mechanisms, including the Ukraine Donor Platform, to help ensure that reconstruction efforts are linked to these priorities. In 2025, Canada’s G7 Presidency provided strategic opportunities to advance RBC objectives in Ukraine’s recovery. At the G7 Leaders’ Summit, Canada announced a package of assistance including reconstruction financing, alongside measures aimed at financial transparency. The G7 also advanced the Roadmap to Promote Standards-Based Markets for Critical Minerals, a framework that was endorsed by Ukraine, reinforcing commitments to sustainable and transparent supply chains. Canada also co-chairs the G7+ Ukraine Energy Coordination Group, which promotes decentralization and diversification of Ukraine’s energy systems as part of a climate-aligned reconstruction approach. 

While the conflict in Ukraine continues, Canadian companies continue to assess opportunities to participate in the country’s reconstruction. In 2025, several firms joined key Ukraine-focused events, including the Ukraine Recovery Conference in Rome and the ReBuild Ukraine Conference in Warsaw. A Canadian delegation of 24 companies and government representatives participated at the Warsaw event, engaging in over 100 business-to-business meetings. 

The Canada-Ukraine Chamber of Commerce also hosted its annual Rebuild Ukraine Business Conference in Toronto. This year’s conference, held in December, focussed on Canada–Ukraine–EU–UK collaboration in advancing Ukraine’s long-term recovery, reconstruction, and modernization. The conference underscored Ukraine’s remarkable resilience amid ongoing challenges, while emphasizing that rebuilding is a complex, long-term process requiring sustainability and continued reforms. Participants highlighted the need for strong collaboration among governments, businesses, and international partners to mobilize investment, reduce risks, and seize opportunities in Ukraine’s recovery. 

In 2025, the Prime Minister reaffirmed Canada’s long-term commitment to Ukraine’s recovery by appointing Chrystia Freeland as Special Representative for the Reconstruction of Ukraine. In this role, she actively engaged stakeholders to advance Canada–Ukraine economic cooperation and joint partnerships. Her efforts included participating in a recent roundtable in Kyiv with business leaders, where she emphasized the importance of transparency, anti-corruption reforms, and stronger governance to create a predictable and sustainable investment environment.

Global Affairs Canada, through its Trade Commissioner Service and international trade portfolio partners, is actively engaging the private sector in Ukraine’s reconstruction. These efforts include exploring opportunities for Canadian businesses to participate in rebuilding Ukraine while continuing to promote Canada’s commercial interests and ensuring that Canadian companies understand and apply RBC principles. Current priority sectors in Ukraine include defence, energy and infrastructure. Specifically, Canada is looking at transportation infrastructure (rail, roadways, and waterways), natural resources and critical minerals, and seeking to help Ukraine decentralize and diversify its energy systems. By focusing on these priority sectors, Global Affairs Canada supports Canadian businesses in understanding and managing both the potential opportunities and RBC risks in industries critical to Ukraine’s reconstruction. 

In 2025, Global Affairs Canada’s engagement with stakeholders inside and outside government contributed to a better understanding of the RBC environment for Canadian companies in Ukraine and perspectives on the evolving landscape in-market. These discussions indicate that Ukraine’s business environment is making positive strides in transparency and accountability. The Government of Canada is committed to helping companies navigate the market, ensuring they can seize opportunities while upholding responsible business practices.