Association Agreement: Legislative Changes in Food Industry 1. Changes in the effective Ukrainian legislation • • • а) Food safety and quality b) Registration and identification of farm animals The Law of Ukraine “On Amending Certain Legislative Acts of Ukraine as regards to Food Products” No. 1602-VII dated 22 July 2014 provides for: The Law of Ukraine “On Amending Certain Legislative Acts of Ukraine as regards to Registration and Identification of Farm Animals” No. 1648-VII dated 14 August 2014 provides for: establishing the State Service of Ukraine on Food Safety and Consumer Rights Protection. As a result the State Veterinary and Phytosanitary Service, the State Inspectorate on Consumer Rights Protection and the State Sanitary and Epidemiological Service cease to operate; implementing of GMO source registration principles, rather than registration of the products made therefrom; cancellation of permits and procedures which are not inherent in the EU (e.g. requirements to conduct sanitary and epidemiological, as well as veterinary and sanitary expertise). The law comes into effect on 20 September 2015 except for its selected provisions (e.g. those providing for implementation and use of permanent procedures based on HACCP principles by market operators). The law provides for special regime of taking effect by such provisions. • identification of all farm animals on the territory of Ukraine in all households, notwithstanding the property regime; • implementing of group identification number (the number, assigned to an animal or to a group of animals, which shall remain unchanged); • liability for violating of laws in the sphere of registration and identification of farm animals (e.g. liability for failure to provide the data on identified animals for registration, relocation of animals without identification documents). The law came into effect on 26 September 2014 except for the provisions that establish liability for violating of laws in the sphere of registration and identification of farm animals. Such provisions shall come into effect on 1 January 2015. с) Products of animal origin The Draft Law of Ukraine “On Side Products of Animal Origin not Intended for Human Consumption” has been adopted at the first reading. The draft law provides for main requirements to decrease human and animals’ health risks arising from side products of animal origin (e.g. depending on risk category of such products it specifies certain requirements of refining into organic fertilizers and biogas, usage for diagnostic, educational or research purposes, etc.). As of the date of preparation of this Alert, the draft law is being prepared for the second reading in the Verkhovna Rada of Ukraine. © 2014 KPMG-Ukraine Ltd., a company incorporated under the Laws of Ukraine, a member firm of the KPMG network of independent member fi rms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. 1 Association Agreement: Legislative Changes in Food Industry 2. Further Steps as regards to the Agreement implementation By Resolution No. 847-p dated 17 September 2014, the Cabinet of Ministers of Ukraine has endorsed a threeyear action plan on implementation of the Agreement requirements (hereinafter – the “Action Plan”). According to the Action Plan, further legislative changes in the food industry sector are to be introduced. Particularly: • • December 2014 – start of implementation of certification principles and procedures for trade facilitation (as regards to organization of veterinary inspections of goods imported into the Community from third countries); December 2014 – developing an action plan on adaptation of Ukrainian legislation to the EU law in part of quality policy, organic farming, genetically modified crops, biodiversity, marketing standards for plants, seeds of plants, products derived from plants, fruits and vegetables, as well as marketing standards for live animals and animal products; • January 2015 – developing a strategy of reforming sanitary and phytosanitary measures; • August 2016 – developing draft legislative acts in order to implement the provisions on tracking and labeling of genetically modified organisms, food products produced from genetically modified organisms. In case additional consultation required on the abovementioned issues, please do not hesitate to contact Tetiana Zamorska or Yuliana Revyuk, also contact us at general office number +380444905507. More about services 3. Conceptual measures in the Agreement implementation The Agreement also provides for comprehensive changes to be implemented into Ukrainian legislation from a long-term perspective. In particular: а) Usage of geographical names Within the scope of the Agreement the parties undertook to abandon use of certain geographical names after supplies of goods, produced before the effect of the Agreement under respective brands (e.g. Parmigiano Reggiano, Roquefort, Feta, Champagne, Cognac etc.), have been exhausted. Ukraine also has reserved approximately 100 geographical names, which can be used exclusively by local producers (medok (honey) and kawa (coffee)). b) Origin of goods The Agreement provides that the goods produced by European companies from Ukrainian raw materials shall be considered to be produced in the EU. The food products, in order to obtain the status of a “Ukrainian product”, must be produced from raw materials cultivated in Ukraine. In some groups of goods (e.g. fruit juice, jelly etc.) usage of sugar of other origin is permitted, provided that its weight does not exceed certain percantage from the final product’s weight. с) Inspections The Agreement sets out the general principles of control over food supplies and audits (such audits may include inspection of documents, visits to production, processing or food storage facilities, to control laboratories in order to verify the information reflected in the documents). Frequency of physical inspections at import is also clearly defined. For example, the dairy products inspection rate is 50%, the inspection rate for fish and meat products is 20%. Import inspections consist of inspection of documents, identification and physical inspections. © 2014 KPMG-Ukraine Ltd., a company incorporated under the Laws of Ukraine, a member firm of the KPMG network of independent member fi rms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. 2