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Legal Alert: Ukrainian Parliament May Prohibit Use of Palm Oil in Dairy Products and Food Products

On May 15, 2018, the Verkhovna Rada (the Parliament of Ukraine) passed in the first reading Law #3871 to prohibit the use of palm oil in dairy and food products in Ukraine. If Law #3871 is passed in the second reading and enters into force, the use of palm oil in dairy and food products will be prohibited in Ukraine. Moreover, trade in food products containing palm oil may also be prohibited.

In 2017 more than 150 000 tons of palm oil were imported into Ukraine at the average price of US$ 700 per ton3 for the total value exceeding US$ 100 million.

As palm oil is mostly imported into Ukraine from Indonesia and Malaysia, the contemplated prohibition may significantly reduce or eliminate the import of palm oil into Ukraine. The prohibition may be regarded as a hidden barrier to international trade contrary to Ukraine’s treaty obligations under the GATT and may result in WTO legal claims against Ukraine from Indonesia and Malaysia.

Moreover, the prohibition, if enacted, may harm business and investments of international companies engaged in processing of and trade in palm oil in Ukraine. The affected investors may consider investor-state claims against Ukraine for damages to their investments under applicable bilateral investment treaties.

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