Canada and Ukraine sign new Defence Cooperation Agreements, statements from Ukrainian MOD Denys Shmyhal

Canada and Ukraine have signed new Defence Cooperation Agreements aimed at bolstering defence ties and establishing a framework for Joint Production between both countries.

Prime Minister Mark Carney and a number of other Canadian officials are currently taking part in a European tour aimed at bolstering Economic and Defence ties with European partners.

As part of this trip the Prime Minister was invited today by President Zelenskyy as a Guest of Honor to celebrate the 34th anniversary of Ukraine’s Independence from the Soviet Union.

As part of this trip a number of new defence related agreements have been signed.

Minister of Defense of Ukraine Denys Shmyhal and Minister of National Defense of Canada David McGuinty signed a Letter of Intent between the Ministry of Defense of Ukraine and the Department of National Defense of Canada concerning the joint production of defense materiel in Canada and Ukraine.

President of Ukraine Volodymyr Zelenskyy and Prime Minister Mark Carney were also both oresent for the signing of an Action Plan for the Implementation of the Agreement on Security Cooperation between Ukraine and Canada.

This plan defines the key areas and mechanisms for implementing bilateral cooperation in the security sphere. It covers military training, the development of defense capabilities, intelligence sharing, cybersecurity, and the fight against terrorism and hybrid threats.

The document confirms Canada’s intention to finance joint production of Ukrainian-origin defense materiel in Canada and Ukraine to support Ukraine’s war effort and improve jointly manufactured products.

Minister of Finance of Ukraine Sergii Marchenko and Ambassador Extraordinary and Plenipotentiary of Canada to Ukraine Natalka Cmoc also signed the Agreement between Ukraine and Canada on Mutual Administrative Assistance in Customs Matters.

The document provides for the exchange of information on customs legislation and its application practices, the development of training and professional development programs, cooperation in organizing customs control, combating customs violations, and the involvement of international technical assistance.

While the Canadian government has yet to release a statement, Ukrainian Minister of Defence Denys Shmyhal released the following statement:

“Ukraine and Canada have agreed on joint production of defense products.

The corresponding agreement was signed today, on Ukraine's Independence Day, with Canada's Minister of National Defence David McGuinty in the presence of Ukraine's President Volodymyr Zelensky and Canada's Prime Minister Mark Carney.

The agreement aims to deepen bilateral defense-industrial cooperation, expand and create new production capacities in Ukraine and Canada, and enhance the resilience and continuity of defense product supplies.

Importantly, today's agreements will not only simplify the establishment of Ukrainian companies in Canada and promote technology exchange, but also help provide the Armed Forces of Ukraine with modern samples of weapons and military equipment in the long term. This will significantly strengthen our resilience and ability to counter the Russian threat.

We thank Canada for its solidarity and unwavering support of Ukraine in our fight for freedom and independence.”

These agreements have been in the works for a long while, and while details remain scarce we do know that this now officially opens up the pathway to allow Ukrainian companies to set up production in Canada.

For the longest time Ukrainian defence companies have been restricted from exporting products abroad. This has been a long-standing grievance of the Ukrainian defence industry that has been looking for new ways to acquire capital amid the ever increasing production demands the war has put on them.

To fix this, the Ukrainian government has launched the ‘Defence City’ concept. This concept is currently making its ways through several seperate bills in the Verkhovna Rada, the aim of which is to bolster and help promote growth in Ukraines defence industry.

The ‘Defence City’ will provide certain, approved companies greater support and freedom through things like Tax Breaks such as income tax breaks if companies choose to reinvest funds into expanding production, as well as exemptions from certain land and enviornmental taxes.

Customs rules are also being loosened and a new export license is being introduced (with a fee) to allow larger defence companies to begin exporting abroad. There will also be a new system put in place for the selling of defence technologies and the establishment of production overseas, subject to approval.

New legal protections are also being introduced to protect company data, as well as a new relocation mechanism to support companies who have to move production to new regions of Ukraine deemed safer. You can read a good rundown here on the whole lost of changes. Theres quite a few.

These new agreements aims to ease these restrictions and officially establish a process and necessary legal framework for Facilitation Joint Production opportunities.

Combined with the current Defence City laws, Canada is now well positions to be a clear, key partner for expanding Ukrainian defence production abroad. These agreements will, in hope, make it easier for Ukrainian companies to choose Canada first over other potential, mainly European, partners who do not have agreements.

Sweden also signed similar today as well as Denmark, who has already been established as a partner in this area with the Danish model. There were also talks with Latvia, funny enough. So we aren't the only one, obviously, but this does put us in the club.

The Canadian government has not released a statement yet on this, nor has the details of these agreement been released in full, so we still have to wait for the real details to come forward. However we do know now the base of this agreement.

This has been in the works for a long-time. Since before Carney. Shmyhal met last week with Natalka Cmoc, Ambassador of Canada to Ukraine today discuss this agreement and iron out details.

Of course we don't know exactly who the Canadian government has been is discussions with. I asked around and was told that at least one drone manufacturer is close to signing an agreement to establish a production line in Canada. The federal government and Ukroboronprom have also been in discussions with each other.

While the primary focus will be on supporting Ukraine, the Federal government also aims to create a viable, steady supply of unmanned systems for the Canadian Armed Forces, including a fleet of long-range strike drones to augment Canadas Long-Range strike capability.

This is seen as an importsnt step in that process, leveraging Ukrainian designs and development to establish a backbone to build off of.

Of course we did try a similar concept with GPUAS, an initative that essentially took the US Blue list and tried to create a system for units to purchase unmanned systems. That didnt work very well.

Second times a charm though! There is still things to iron out and I have inquired with the MND about the agreement. They have not responded yet.

These agreememts also firmly established Canada's tole as a premier trainer for the Ukrainian Armed Forces, a role we have played since 2014 with OP UNIFIER. As we look towards a NATO presence in Ukraine, and the Security Garuntees that come with it, the role of training and cooperation of joint developments becomes even more paramount.

Our current commitments already put a massive strain on what Canada can provide and support as part of these Garuntees, so focusing on our established roles, and expanding upon them is one of the easiest and most effective options we have to support Ukraine.

We do not need to have a large-scale, boots in the ground presence to be useful and supportive. This is a role that we are unlikely to play.

We already do several things really well, and have an established system for doing it. Building up and expanding these systems, while further finding ways to build both our and Ukrainian capabilities, is perhaps the best thing we can do at this time.

Much is yet to be revealed, and I hope in the coming days we will hear more. I certainly hope I can get some key details on these agreements clarified for the Newsletter tomorrow.