RUSSIA 2021 Overview of Chestny ZNAK Compliance for Key Industries
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RUSSIA 2021 Overview of Chestny ZNAK Compliance for Key Industries rfxcel Moscow March 15, 2021 Material is provided for information only. rfxcel does not guarantee accuracy. Please consult original sources for the latest details before taking business decisions.
Russia has the strictest supply chain regulations in the world. Are you ready to comply? T he Russian supply chain is undergoing traceability and rich, actionable data mined right massive change. The transformation, due down to the unit level. to be complete by 2024, will affect virtu- ally every industry, from pharmaceuticals rfxcel is the leader in Russian supply chain com- and footwear to tires and tobacco. The pliance. We are an official software and integra- goal is to protect consumers by keeping counter- tion partner of the CRPT and accredited as an IT feit and substandard products out of the market. company by the Ministry of Digital Development, Communications, and Mass Media. We are one of The regulations in Federal Law No. 425-FZ are only a few providers with in-country implementa- complex. The gist is that companies must connect tions. We’ve tripled our workforce in Russia over and comply with the National Track and Trace the last year. Our team in Moscow provides our Digital System, Chestny ZNAK, which is operated clients, which include global consumer goods and by the Center for Research in Perspective Tech- pharma companies, the quickest time to market nologies (CRPT). Requirements vary by industry, while automating their compliance reporting. Plus, but hallmarks include DataMatrix codes, serializa- our rfxcel Traceability System (rTS) works seam- tion, aggregation, crypto codes, and electronic lessly with Chestny ZNAK, including a Russian-lan- reporting and records management. guage user interface that makes integration and start-up much quicker. rfxcel has been prepared for these regulations since 2018. Our powerful software ensures com- Contact us at russia@rfxcel.com for more infor- panies in any industry will remain compliant while mation and visit us at rfxcel.com. mastering their supply chains with end-to-end
CONTENTS INTRODUCTION & REGULATORY OVERVIEW ................................................................................ 1 REGULATED INDUSTRIES ................................................................................................................. 4 Bicycles ..........................................................................................................................................................................4 Dairy ................................................................................................................................................................................4 Footwear .......................................................................................................................................................................6 Fur .................................................................................................................................................................................... 7 Light Industry ..............................................................................................................................................................8 Medications...................................................................................................................................................................9 Perfumes ...................................................................................................................................................................... 10 Photo Cameras & Flashbulbs .............................................................................................................................. 10 Tires ................................................................................................................................................................................ 11 Tobacco ....................................................................................................................................................................... 12 ONGOING & SCHEDULED PILOTS ................................................................................................... 14 Bottled Drinking Water ......................................................................................................................................... 14 Wheelchairs ................................................................................................................................................................ 15 Biologically Active Food Additives .................................................................................................................. 15 Brewing Products & Low-Alcohol Drinks ...................................................................................................... 17 APPENDIX 1. ACRONYMS ................................................................................................................. 19 APPENDIX 2. RFXCEL RESOURCES ............................................................................................... 20
INTRODUCTION & REGULATORY OVERVIEW The icons below represent 12 of the 14 industries that must comply with Chestny ZNAK regu- lations: bicycles, bottled drinking water, dairy, footwear, fur, light industry, medications, per- fumes, photo cameras and flash bulbs, tires, tobacco, and wheelchairs. At the time of publica- tion, bottled drinking water and wheelchairs were still in the “experiment” (i.e., pilot) phase, and the government had announced pilots for two other industries, beer and beer-based mixed drinks and biologically active food additives, both of which are scheduled to begin April 1 of this year. Source: Chestny ZNAK Chestny ZNAK, which is sometimes translated as Honest SIGN or Honest BADGE, is managed by the Center for Research in Perspective Technologies (CRPT), a public-private partnership akin to the European Medicines Verification Organization. Phased implementation of the sys- tem began in 2019 and is on track to conclude in 2024. The Russian government says its main objective is “to guarantee the authenticity and de- clared quality of goods being purchased by customers.” Deadlines and labeling requirements have changed, but the fundamentals have remained constant: serialization, aggregation, unit- and batch-level traceability, crypto codes, and electronic reporting and records management. Products must be marked with DataMatrix codes with an alphanumeric sequence that con- tains at least four groups of information: a Global Trade Item Number (GTIN), a serial number, a verification key, and a verification code (i.e., crypto code). As shown in the box below, a typical alphanumeric sequence comprises 85 characters, includ- ing two non-printable, machine-readable group separators. Chestny ZNAK’s illustrative marking code. Note the two gaps where the non-printable, ma- chine-readable group separator is located. • The first two numbers are the application identifier. • The next 14 numbers are the GTIN. • The next two numbers are an application identifier. • The next 13 numbers and letters are the unique serial number. • Next is a non-printable group separator (ASCII code 29, right). • The next two numbers are another application identifier. • The next four numbers and letters are the verification key. • Next is another group separator. • The next two numbers are another application identifier. • The last 44 characters are the verification code (crypto code). 1
Only an authorized representative can request crypto codes from the CRPT, in order to print and apply the marking on products. rfxcel is an approved partner of the CRPT. Furthermore, the owner of goods must create a Universal Transfer Document (UTD) at the moment of ownership, then transfer it to the CRPT. It’s prudent here to note that the regulations use the term “economic agent” as a catchall for manufacturers, importers, wholesalers, and retailers. Though these stakeholders are also men- tioned by name in Chestny ZNAK materials, it’s also common to see language such as, “Codes are requested, generated, and delivered in an electronic form through the web interface of the economic agent’s personal account.” We use “economic agent” throughout this white pa- per; please keep this definition in mind as you’re reading. Chestny ZNAK also envisions com- plete traceability all the way to consumers. As the figure, right, depicts, every product will go through five steps, starting with manufacturers and ending with consumers. Products are to be scanned at each step, which Chestny ZNAK says will help “guarantee the authenticity and declared quality of goods being purchased by customers.” A product’s last step occurs when a consumer makes a purchase. In Source: Chestny ZNAK most cases, stores are required to use point-of-sale cash registers that are connected to the internet. When the cashier scans the DataMatrix code on a product, the data is synchronized with the information in Chestny ZNAK’s catalogue of marked goods and the item is officially removed from circulation. If the data doesn’t match, the product is deemed counterfeit or otherwise illegitimate and cannot be sold. Chestny ZNAK wants consumers to be active participants in Russia’s supply chain. To facili- tate this, it developed an app for smart devices that it describes as every consumer’s “main assistant for product quality tracking and counterfeit detection.” The app “considers the man- ufacturer's type of labeling and instantly gives the result of the test.” At the time of publica- tion, the app was in version 4.7.0 and had been downloaded more than 1 million times. By using the app to scan DataMatrix codes on packaging, consumers get instant access to rich product information directly from Chestny ZNAK. This can include the date, time, and place of production, the expiration date, and details about the product’s journey from the farm or factory to the store. If a scan reveals a “violation” — meaning the product is counter- feit or not in compliance with marking regulations — consumers can report it directly to the CRPT. They can also send questions about how the app works and suggestions to improve it. The images on the next page are from the Chestny ZNAK app’s home page. They show how to use the app and many of its features. 2
As we said in our introduction, labeling requirements vary by industry. More precisely, the requirements can vary greatly by industry. Solution providers cannot simply claim to be “Chestny ZNAK compliant”; they have to thoroughly understand the regulations for every in- dustry, and they have to be able to act quickly and with certainty when a client has a ques- tion. And last but certainly not least, they have to be certified by the CRPT. This means having teams in Russia who speak the language, have a first-hand view of the en- tire regulatory landscape, closely monitor changes in requirements and deadlines, and who have been vetted, verified, and approved by the CRPT. Structure of this paper This paper discusses all the industries regulated by Chestny ZNAK, as well as current and scheduled pilots. Industries are presented in alphabetical order. We discuss timelines, labeling requirements, requirements for key stakeholders/economic agents (e.g., manufacturers, wholesalers, and importers), and what makes the regulations unique in the world. We provide Russia’s product classification code (OKPD2) and/or the Eurasian Economic Union (EAEU) Combined Nomenclature of Foreign Economic Activity (TN VED) code 1 for many categories, as well as the official corresponding product description. We have taken pains to be thorough. However, because regulations and deadlines change — often unexpectedly and without a timely public announcement from authorities — we do not guarantee the accuracy of the information presented in this paper. Readers should not base decisions solely on the information herein. For the most up-to-date, accurate information about Chestny ZNAK, we encourage you to contact us at russia@rfxcel.com. Thank you, The rfxcel Team 1 We obtained the OKPD2 and TN VED codes from Chestny ZNAK. 3
REGULATED INDUSTRIES BICYCLES A 7-month pilot for bicycles ended on May 31, 2020, and mandatory labeling is scheduled to begin on September 1 of this year. At the time of publication, rfxcel was the only official CRPT software or integration partner for bicycles. As in other industries, products must be marked with a DataMatrix code with a 14-digit GTIN; a 13-digit serial number generated by the CRPT or the economic agent; a 4-digit verification key from the CRPT; and a 44-digit crypto code from the CRPT. At the time of publication, Chestny ZNAK reported that 2,676 supply chain participants had been issued 5,186 codes. The table below shows the OKPD2 and TN VED codes of the products that must be labeled, as provided by Chestny ZNAK. Note that the “bicycles” category is not limited to two- wheeled vehicles. BICYCLES (ALSO WITH AUXILIARY MOTOR AND TRICYCLES) AND BICYCLE FRAMES Mandatory labeling scheduled to begin September 1, 2021 OKPD2 Code Description 30.91.11.120 Bicycles with a piston internal combustion engine with a working volume of cylin- ders not exceeding 50 cm3 30.91.20 Parts and accessories for motorcycles and motorcycle prams (for bicycle frames only) 30.92.10 Two-wheeled bicycles and others, without engine 30.92.30.110 Components (spare parts) of two-wheeled and other bicycles without an engine, which do not have independent groups (for bicycle frames only) 32.40.31.121 Children's tricycles Corresponding TN VED codes: 8711; 8712 00; 8714 91 100; 9503 00 100 9 DAIRY The pilot for dairy began on July 15, 2019, and More About Dairy Requirements ended on December 31, 2020. Mandatory label- ing for cheese and ice cream is scheduled to • Product packaging must have a blank begin June 1 of this year. Labeling for products field up to 15×15 mm to accommodate with specific shelf lives is to begin on September the code. 1 and December 1. (See tables, pp. 6–7.) • For PET bottles, caps must be able to accommodate either printing or mark- Products must be marked with DataMatrix ing with a laser. codes containing four data points: a 14-digit GTIN; a 13-digit serial number generated by the • If a manufacturer has concerns about CRPT or the economic agent; a 4-digit verifica- marking a certain type of packaging — tion key from the CRPT; and an expiration date. an unusually shaped carton or bottle, Products with a shelf life of fewer than 3 days, for example — it can submit a sample of the packaging for testing to determine must express the expiration date in the 10-digit if the codes will adhere to it and if the YYMMDDHHMM format, which describes the ex- form factor affects the accuracy/relia- piration down to the hour and minute. Products bility of scanning. with a shelf life longer than 3 days must use the 6-digit YYMMDD format. • Aggregation is required, and the par- ent-child relationship must be main- The setup for dairy is unique because Chestny tained between the aggregation and ZNAK will share track and trace duties with the individual units within it. 4
another government system, the “Mercury” electronic veterinary certification system, which tracks animal products in Russia and is part of the Federal State Information System (FGIS). Mercury will track dairy products from farms to processing plants, and Chestny ZNAK will track them onward to customers. The Ministry of Agriculture and the Federal Service for Vet- erinary and Phytosanitary Surveillance approved this scenario. In the shared Mercury–Chestny ZNAK system, the codes are associated with “veterinary accompanying documents” that provide a provenance for the product. This information is passed along the supply chain and reported electronically to both Chestny ZNAK and the national Goods Marking State Information System via the mandated UTD. rfxcel is an official CRPT software and integration partner for dairy. At the time of publication, Chestny ZNAK reported that 11,113 supply chain participants had been issued more than 107.4 million codes. CHEESE, ICE CREAM & OTHER EDIBLE ICE, NOT CONTAINING OR CONTAINING COCOA* Mandatory labeling scheduled to begin June 1, 2021 OKPD2 Code Description 10.51.40.100 Cheeses 10.51.40.210 Milk-containing products with milk fat substitute made using cheese technology 10.52.10 Ice cream Corresponding TN VED codes: 0406; 2105 00 *Except for dairy products, the net weight of which is 30 grams or less, dairy products packaged in a non-indus- trial way in retail outlets, baby food for children under 3 years old, and specialized dietary therapeutic and preven- tive dietary food DAIRY PRODUCTS WITH A SHELF LIFE OF MORE THAN 40 DAYS*, EXCLUDING CHEESES, ICE CREAM & OTHER TYPES OF EDIBLE ICE THAT DO NOT CONTAIN OR CONTAIN COCOA Mandatory labeling scheduled to begin September 1, 2021 OKPD2 Code Description 10.51.11 Milk other than raw 10.51.12 Cream 10.51.21 Powdered milk, freeze-dried skimmed milk, no more than 1.5% fat 10.51.22 Powdered milk and cream, freeze-dried, including whole milk 10.51.30 Butter, butter pastes, ghee, milk fat, spreads, and melted butter-vegetable mixtures 10.51.40.300 Cottage cheese 10.51.51 Milk and cream, condensed or with added sugar or other sweetening substances, not dry 10.51.52 Fermented milk products (except cottage cheese and cottage cheese products) 10.51.55 Whey 10.51.56 Dairy products not included in other categories 10.86.10.110 Drinking milk for baby food, pasteurized, sterilized, and ultra-pasteurized (ultra- high-temperature processed), including fortified 10.86.10.140 Dairy products for preschool and school children 10.86.10.190 Other dairy products for baby food Corresponding TN VED codes: 0401; 0402; 0403; 0404; 0405; 0406; 2202 99 910 0; 2202 99 950 0; 2202 99 990 0 *Except for dairy products, the net weight of which is 30 grams or less, dairy products packaged in a non-indus- trial way in retail outlets, baby food for children under 3 years old, and specialized dietary therapeutic and preven- tive dietary food 5
DAIRY PRODUCTS WITH A SHELF LIFE OF UP TO 40 DAYS* (INCLUSIVE), EXCLUDING CHEESES, ICE CREAM & OTHER TYPES OF EDIBLE ICE THAT DO NOT CONTAIN OR CONTAIN COCOA Mandatory labeling scheduled to begin December 1, 2021 OKPD2 Code Description 10.51.11 Milk other than raw 10.51.12 Cream 10.51.21 Powdered milk, freeze-dried skimmed milk, no more than 1.5% fat 10.51.22 Powdered milk and cream, freeze-dried, including whole milk 10.51.30 Butter, butter pastes, ghee, milk fat, spreads, and melted butter-vegetable mixtures 10.51.40.300 Cottage cheese 10.51.51 Milk and cream, condensed or with added sugar or other sweetening substances, not dry 10.51.52 Fermented milk products (except cottage cheese and cottage cheese products) 10.51.55 Whey 10.51.56 Dairy products not included in other categories 10.86.10.110 Drinking milk for baby food, pasteurized, sterilized, and ultra-pasteurized (ultra- high-temperature processed), including fortified 10.86.10.140 Dairy products for preschool and school children 10.86.10.190 Other dairy products for baby food Corresponding TN VED codes: 0401; 0402; 0403; 0404; 0405; 0406; 2202 99 910 0; 2202 99 950 0; 2202 99 990 0 *Except for dairy products, the net weight of which is 30 grams or less, dairy products packaged in a non-indus- trial way in retail outlets, baby food for children under 3 years old, and specialized dietary therapeutic and preven- tive dietary food FOOTWEAR Mandatory labeling for footwear was supposed to begin on March 1, 2020, but the govern- ment postponed the deadline to July 1, 2020. Production and import of unlabeled shoes is prohibited, as is wholesale and retail sale of unlabeled footwear. At the time of publication, rfxcel was the only official CRPT software or integration partner for footwear. DataMatrix codes must contain 10 data points, including a GTIN, a serial number, a verification key and verification code (i.e., crypto code) generated by the CRPT, a taxpayer personal identification number (TIN), the brand name, and the materials used to make the shoes. Manufacturers and importers are responsible for printing the codes and applying them to products and packaging. The codes remain “active” for several years so returned items can be recirculated in the supply chain and continue to be verified as genuine. At the time of pub- lication, Chestny ZNAK reported that 80,256 supply chain participants had been issued more than 2.2 billion codes. SHOE GOODS (OTHER THAN THOSE MADE BY ARTISANS) Mandatory labeling began July 1, 2020 OKPD2 Code Description 15.20.11 Waterproof footwear with soles and uppers of rubber or plastic, excluding foot- wear with a protective metal toe cap 15.20.12 Shoes with soles and uppers of rubber or plastic, other than waterproof or athletic shoes 6
SHOE GOODS (OTHER THAN THOSE MADE BY ARTISANS) Mandatory labeling began July 1, 2020 15.20.13 Shoes with leather uppers, except sports shoes, shoes with a protective metal toe cap, and various special footwear 15.20.14 Shoes with uppers of textile materials, excluding sports shoes 15.20.21 Shoes for tennis, basketball, gymnastics, training shoes and the like 15.20.29 Other sports footwear, except ski boots and boots with skates 15.20.31 Safety shoes with metal toe cap 15.20.32 Wooden footwear, various special footwear, and other footwear not included in other categories 32.30.12 Ski shoes Corresponding TN VED codes: 6401; 6402; 6403; 6404; 6405 FUR Mandatory labeling of furs began on August 12, 2016. At the time of publication, Chestny ZNAK reported 14,256 supply chain participants had been issued more than 22.7 million codes. “Articles of apparel, clothing accessories, and other articles of furskin” (TN VED group 4303) must be labeled. This includes items made from natural furs such as mink, nutria (also known as coypu or swamp rat), arctic fox, fox, rabbit, hare, raccoon, and sheepskin; items made of other materials that have a natural fur lining; and items made with natural fur on the outside, except when the fur is used as a finishing material (e.g., for normal-sized collars and lapels). All regulated products must be marked with a control identification mark (CIM), an “account- ing form” with anti-counterfeiting elements with a built-in RFID tag for marking goods. CIMs must be sewn into the garment, glued onto its label, or attached with a fastener or through a button hole. They must measure 25×160mm or 53×80mm. A red CIM indicates imported goods; a green CIM indicates goods produced in Russia. The table below shows what information stakeholders must transmit to Chestny ZNAK. Manufacturers Recipients of Goods • TIN • Identifier for the CIM and/or the type of • TN VED code (TN VED category 4043) RFID tag and/or an SGTIN • Identifier for the CIM • The TIN of the legal entity or individual pur- • GTIN chasing the goods • Serialized GTIN (SGTIN) • Country of origin country code • The kind of RFID tag used in the CIM • Value of the goods Importers Wholesalers Same as manufacturers, plus: • Identifier for the CIM and/or the type of • Declaration of goods registration number RFID tag and/or an SGTIN • The type of fur used in the goods • How the goods will circulate (e.g., sale, com- mission/agency agreement) • Seller’s TIN • Buyer’s TIN and date of the documents con- firming the circulation of goods • Value of the goods 7
Certain goods made with fur do not have to be labeled. These include products in TN VED groups 4202 and 4203, which, broadly, include gloves and mittens made of leather and travel items such as handbags. Certain types of footwear (TN VED group 64), hats (group 65), and toys, games, and sports equipment (group 95) are also exempt. LIGHT INDUSTRY Mandatory labeling for light industry products, primarily items of clothing and linens, began on January 1, 2021. All light industry products must have a DataMatrix code with a 14-digit GTIN; a 13-digit serial number generated by the CRPT or the economic agent; a 4-digit verifi- cation key from the CRPT; and a 44-digit verification code from the CRPT. At the time of publication, rfxcel was the only official CRPT software or integration partner for light industry. Economic agents are responsible for obtaining codes in the following circumstances: • Newly manufactured goods made in Russia • All imported goods • Leftover stock • Returned goods with missing/lost codes • Goods that need a code (e.g., if the original code was lost) • Goods commissioned by individuals New goods made in Russia must be marked before they leave the factory. For importation from other EAEU countries (Armenia, Belarus, Kazakhstan, and Kyrgyzstan), codes must be applied before the goods enter Russia; for imports from all other countries, the codes are ap- plied before customs processes begin. Furthermore, economic agents must create a “product card” for the catalogue of marked goods before codes can be issued. Steps for Registering Light Industry Products • Create a product card. These must have four product attributes: product name, the 4-char- acter TN VED code, the GTIN (if any), and trademark (if any). • Order the codes: A unique code is required for every product. There are several ways order codes. They easiest way is to import an XML file into Chestny ZNAK’s order management system. Chestny ZNAK has an XML template. • Obtain the codes. Codes are available as PDFs, Encapsulated PostScript (EPS) files, and comma-separated values (CSV) files. Recipients have 60 days from the time of approval to obtain the codes, which can be printed on any kind of printer. • Provide all additional required information. This varies by product and can include the prod- uct category, product model, color, raw materials, and country of origin. Economic agents must have an encrypted digital signature and equipment to handle codes, including bar code scanners, printers, and point-of-sale cash registers connected to the inter- net (for retail sales). They must also have a Chestny ZNAK account. Agents, though they can use an integrator, such as rfxcel, to do the required work within the system. At the time of publication, Chestny ZNAK reported that 127,332 supply chain participants had been issued more than 1.3 billion codes. 8
LIGHT INDUSTRY GOODS Mandatory labeling began January 1, 2021 OKPD2 Code Description 13.92.12 Bed sheets 13.92.13 Table linen 13.92.14 Toilet and kitchen linen 14.11.10 Clothing made of natural or composition leather 14.13.21 Coats, raincoats, jackets, raincoats, hooded coats, anoraks, windbreakers, wind- breakers, and similar textile articles for men or boys, other than knitted or cro- cheted 14.13.31 Women's or girls' coats, jackets, raincoats, hooded coats, anoraks, windbreakers, windbreakers and the like of textile materials other than knitted or crocheted 14.14.13 Blouses, shirts, and body shirts, knitted or crocheted, for women or girls Corresponding TN VED codes: 4203 10 000; 6106; 6201; 6202; 6302 MEDICATIONS 2 As of July 1, 2020, all medications, including over-the-counter medications, were required to be labeled. Like the EU Falsified Medicines Directive (FMD) and the U.S. Drug Supply Chain Security Act (DSCSA), Russian law requires a DataMatrix code on all individual units, with a GTIN, a serial number, a batch number, and an expiration date. As in other product categories, Russia requires a verification key and a verification code (i.e., crypto code). A TN VED code is also required. At the time of publication, Chestny ZNAK re- ported 86, 178 supply chain participants had been issued almost 7 billion codes. There are special requirements for aggregation and separate serialization requirements for batches. Individual units must be serialized and a code must be placed on the box or bottle, and each batch must also be serialized with a code on the box. Aggregation requires supply chain stakeholders to report every change in individual batches. Reports must be produced for each change made to a batch, and stakeholders must report how much of the batch is left together and where the removed units went. Manufacturers shoulder most of the reporting responsibility; foreign manufacturers have a more rigorous set of requirements and can expect to be required to report up to 36 compliance events. By comparison, the FMD has a maximum of seven compliance events. Serialization is centralized through a database called the Federal State Information System for Monitoring Drug Circulation (FSIS MDC). Manufacturers must onboard with the FSIS MDC and report all serial numbers and batch numbers to it. rfxcel is an official CRPT integration, software, and tested solution partner for medications. “Notification mode” in effect until mid-2021 At the end of 2020, Russia’s Drug Circulation Monitoring System (MDLP) was compelled to develop new reporting requirements after technical problems created serious issues in the pharma supply chain. In late October, the MDLP moved into so-called “notification mode” to help supply chain ac- tors continue importing, distributing, and selling medicines in the event of errors or failures in 2An in-depth examination of Russia’s regulations for medications is beyond the scope of this paper. For more infor- mation, visit Chestny ZNAK or contact us directly. 9
Chestny ZNAK’s reporting system. This applied to over-the-counter and prescription medi- cines manufactured in Russia or imported into the country, including from EAEU countries. Then, in early November, Decree 1779 consolidated measures to simplify and expedite report- ing. This is why notification mode has also been referred to as “simplification mode.” In essence, stakeholders can proceed with distribution or dispensing 15 minutes after they submit the required product information to the Government Information System for Marking (GIS MT), which catalogs all marked goods, even if they do not receive confirmation that the information has been accepted/approved in the system. (The “product information” pertains to serialization requirements, such as serial numbers and GTINs.) The decree also simplifies importation, giving custom officials a 2-hour window to request product information. At the time of publication, notification mode was scheduled to remain in effect until July 1, 2021, and Chestny ZNAK reported that 86,579 supply chain participants had been issued more than 7.2 billion codes. PERFUMES The pilot for perfumes and eau de toilette products was held from July 1 to November 30, 2019, and mandatory marking began on October 1, 2020. rfxcel is an official CRPT software and integration partner for perfumes. DataMatrix codes for perfumery products must have a Required Labeling Information 14-digit GTIN, a 13-digit serial number, a 4-digit verifi- cation key, and a 44-digit crypto code. for Perfumes • TIN All companies must register an electronic signature for • GTIN (if any) their CEO or sole proprietor. They must also provide • Name of product contact and banking information and specify their • The first 4 digits of the TN VED product group(s). And because the regulations require code economic agents to exchange documents electroni- • Trademark (if any) cally, companies must specify what solution provider • Country of origin or providers they will use to send documents. Chestny • Type of product ZNAK offers free electronic exchange service, but not • Declared volume (L, mL) for all types of documents. • Type of package(s) • Packing material(s) Information required for the catalogue of marked goods covers individual items (i.e., single bottles) and perfume sets. Probes and testers are not regulated. At the time of publication, Chestny ZNAK reported 13,018 supply chain partici- pants had been issued approximately 89.5 million codes. PERFUME Mandatory labeling began October 1, 2020 OKPD2 Code Description 20.42.11 Perfume and eau de toilette (excluding probes and testers) Corresponding TN VED code: 3303 00 PHOTO CAMERAS & FLASHBULBS Mandatory labeling for photo cameras and flashbulbs began on October 1, 2020. The cate- gory includes only photo cameras; it does not include equipment that records moving images, such as video cameras and camcorders. Flashtubes, also called flashlamps, are included under 10
the umbrella term “flashbulbs.” At the time of publication, the CRPT had not announced any software or integration partners for this product category. As in other industries, companies must register with Chestny ZNAK and mark products with a DataMatrix code that contains a 14-digit GTIN; a 13-digit serial number generated by the CRPT or the economic agent; a 4-digit verification key from the CRPT; and a 44-digit crypto code from the CRPT. At the time of publication, Chestny ZNAK reported 1,427 supply chain partici- pants had been issued about 290,000 codes. New goods made in Russia must be marked at the factory or a company storage facility. For importation from EAEU countries, codes must be applied before the goods enter Russia; for imports from all other countries, the codes are applied before customs processes begin. Fur- thermore, economic agents must create a “product card” in the system’s catalogue of marked goods before codes are issued. CAMERAS (EXCLUDING CINEMATOGRAPHIC CAMERAS), PHOTO FLASHES & FLASH LAMPS Mandatory labeling began October 1, 2020 OKPD2 Code Description 26.70.12 Cameras for preparing printing plates or cylinders, cameras for filming documents on microfilm, microfiche and other micro-carriers 26.70.14 Snapshot cameras and other cameras 26.70.17.110 Photo flashes 27.40.31 Photographic flash lamps, “cube” type photographic illuminators and similar prod- ucts Corresponding TN VED code: 9006 (not including 9006; 91 000 0, 9006; 99 000 0) TIRES Mandatory labeling for tires (technically “new pneumatic and rubber tires”) began on Novem- ber 1, 2020. Only tires with OKPD2 and TN VED codes need to be marked. Tires that are inte- grated into another product, such as a car or bicycle, or that are pre-assembled with a hub, spokes, or rim, do not need to be marked. At the time of publication, rfxcel was the only CRPT software or integration partner for tires. Furthermore, based on the results of the pilot (June–November 2019), the government ex- cluded several types of tires from the regulations, including new bicycle and aviation tires and tire casings and rubber tubes, flaps, and interchangeable protectors. Retread/refurbished and used tires are also exempt. As with other industries, codes for tires must have a 14-digit GTIN; a 13-digit serial number generated by the CRPT or the economic agent; a 4-digit verification key from the CRPT; and a 44-digit crypto code from the CRPT. Tires do not come in packaging, so labels must be placed directly on the product. Manufacturers are re- sponsible for ensuring they use an adhesive that will stick to their products. Markings do not have to be af- fixed in a certain location, but the industry seems to have defaulted to placing them on the sides or on the treads, as shown in the photos from Chestny ZNAK to the right. Before economic agents can request DataMatrix codes for new products and leftover stock, they must submit 11
15-point product descriptions to their personal GS1 account; if they’re registering only leftover stock, they must submit a 5-point description to their Chestny ZNAK account. The information required for these descriptions is similar to what’s required for perfumes, though the full description goes to a much deeper level of detail, including the model, width, height-to-width ratio, load capacity, speed category, and tire type by sealing method. The 5- point description is limited to customs-centric information, such as the company’s TIN, the GTIN and trademark (if any), tire model, and the product code. At the time of publication, Chestny ZNAK reported 17,130 supply chain participants had been issued a little more than 80.2 million codes. TIRES Mandatory labeling began November 1, 2020 OKPD2 Code Description 22.11.11 Tires and tires pneumatic for passenger cars new 22.11.12.110 Pneumatic tires for motorcycles, sidecars, scooters, mopeds, and quadricycles 22.11.13.110 Tires and tires pneumatic for buses, trolleybuses, and trucks new 22.11.14 Pneumatic tires and tires for agricultural machines; tires and tires pneumatic other new 22.11.15.12 Solid rubber tires or semi-pneumatic Corresponding TN VED codes: 4011 10 000 3; 4011 10 000 9; 4011 20 100 0; 4011 20 900 0; 4011 40 000 0; 4011 70 000 0; 4011 80 000 0; 4011 90 000 0 TOBACCO Two product groups are regulated under the “tobacco” category: cigarettes and “alternative tobacco products.” As the table below shows, the latter category includes cigars, pipe to- bacco, chewing tobacco, and snuff. TOBACCO Mandatory labeling began July 1, 2019 (cigarettes), and July 1, 2020 (alternative tobacco products) OKPD2 Code Description 12.00.11.130 Cigarettes 12.00.11.140 Cigarettes made from tobacco or tobacco substitutes 12.00.19.130 Hookah tobacco 12.00.11.110 Cigars, cropped cigars (cheruts) 12.00.11.120 Cigarillos (thin cigars) 12.00.11.150 Bidi (a.k.a. beedi) 12.00.11.160 Kretek (unfiltered clove-flavored cigarettes originally from Indonesia) 12.00.19.110 Smoking abacus (tobacco blend) 12.00.19.120 Pipe tobacco 12.00.19.140 Chewing tobacco 12.00.19.160 Snuff tobacco Corresponding TN VED codes: 2402 20 900 0; 2403 11 000 0; 2402 10 000 0; 2402 20 900 0; 2402 20 100 0; 2403 19 100 0; 2403 99 100 0 Cigarettes The pilot for cigarettes began on January 15, 2015, and included both Russian and interna- tional tobacco companies, distributors, and retailers. Chestny ZNAK has cited research that 12
found that, in the first quarter of 2018, 7.7 percent of cigarettes on the Russian market were illegal/counterfeit, up more than 3 percent from 2017. According to official guidelines for the pilot dated December 25, 2017, three levels of ciga- rette packaging must be marked. Single packs sold at retail must have a DataMatrix code with three data groups: a 14-digit GTIN, a 7-digit serial number, and an 8-digit verification code. “Group packages” (i.e., cartons) must have a GS1 DataMatrix code and shipping containers must have a GS1-128 barcode. Alternative Tobacco Products Mandatory marking was introduced on July 1, 2020. Unmarked packages that are already in the supply chain are allowed to circulate until July 1, 2021; after that, they will be illegal. As with cigarettes, consumer-level packaging must have DataMatrix codes with a 14-digit GTIN and a 7-digit serial number; however, the verification code is 4 digits, not 8 digits. There are a few other differences as well: • DataMatrix codes may be affixed directly to products at the unit level, such as individually wrapped cigars and single boxes of snuff. • The DataMatrix codes do not contain the minimum retail price. • Authorities are considering a process for marking leftover stock and replacing damaged labels. • There will be additional steps/elements to calculate excise duty. At the time of publication, Chestny ZNAK reported 108,423 supply chain participants had been issued more than 15.6 billion codes. rfxcel is an official CRPT software and integration partner for tobacco. 13
ONGOING & SCHEDULED PILOTS The only active pilots at the time of publication were for bottled drinking water and wheel- chairs, both due to conclude on June 1 of this year. The government announced two new pilots in October 2020 and February 2021, respectively: brewing products and low-alcohol drinks, which includes beer and beer-based drinks, and biologically active food additives. Both are scheduled to begin on April 1, 2021, and last about a year. BOTTLED DRINKING WATER The pilot for bottled drinking water began on Pilot Milestones and Goals April 1, 2020, and is scheduled to end on June • Economic agents order DataMatrix codes 1, 2021. At the time of publication, the govern- and apply them to finished products. ment had not announced when mandatory • All labeling information transferred elec- marking would begin. The category includes tronically to Chestny ZNAK. mineral and carbonated waters, waters without sweeteners or other flavoring, and non-car- • Aggregation of products in shipping bonated water. packages and aggregation of codes for each unit in the aggregation. The pilot is testing end-to-end tracking and • Marked products enter circulation. tracing of marked goods, from manufacturing sites or import/customs locations to final sale • Track and trace of products in the supply to consumers. Another goal is to determine the chain and Universal Transfer Documents best approaches for marking and tracing prod- (UTDs) to record transfer of codes be- ucts, including testing methods of applying tween stakeholders. codes to different types of packaging. • Goods withdrawn from circulation at time of purchase via communication with The DataMatrix codes being used in the pilot point-of-sale cash registers and scanning must contain three data points: a 14-digit GTIN, devices. a 13-character serial number, and a 4-character verification code. An optional fourth data point can include information such as the minimum retail price and expiration date. Product pack- aging is required to have a blank field up to 15×15mm to accommodate the code. Bottled water illustrates the three-stage approach the CRPT is taking to roll out regulations in every industry. First is the preparatory stage to determine the best methods of applying marking codes, set up the track and trace system for the product category, and conduct in- dustry outreach. Next is the pilot itself, with real-world testing and adjustments, sharing results with stakehold- ers, and preparing for deployment. Last, the system goes live and all economic agents imple- ment the system and comply with the regulations. rfxcel is an official CRPT software and integration partner for bottled drinking water. BOTTLED DRINKING WATER Pilot: April 1, 2020–June 1, 2021 TN VED Code Description 2201 Beverages and spirits and vinegar: waters, including natural or artificial mineral wa- ters and aerated (i.e., carbonated) waters, not containing added sugar or other sweetening matter nor flavored; ice and snow No OKPD 2 codes provided by Chestny ZNAK. 14
WHEELCHAIRS On November 22, 2017, Russia’ federal government passed legislation designed to develop a set of measures to modernize the “rehabilitation products” industry. A few days later, on De- cember 5, members of the government and supply chain stakeholders met with people with disabilities and representatives of groups that support and advocate for them. The legislation and first-hand input from people who would be affected by federal regulations helped shape the pilot for wheelchairs, which began on September 1, 2019. The Ministry of In- dustry and Trade, federal authorities, and pilot participants worked to develop milestones and the methodology to test end-to-end traceability and prepare for mandatory marking. Directed by the CRPT, the pilot is being conducted in two phases: 1. September 1, 2019–December 1, 2020: Testing for hand-powered wheelchairs 2. December 1, 2020–June 1, 2021: Testing for wheelchairs with an electric engine or other mechanical means for locomotion. The DataMatrix codes used in the pilot for hand-powered wheelchairs had to contain a 14- digit GTIN, a 13-digit serial number generated by the CRPT or the economic agent, a 4-digit verification key from the CRPT, and a 44-digit crypto code from the CRPT. At the time of publication, rfxcel was the only official CRPT software or integration partner for wheelchairs. WHEELCHAIRS Pilot Dates: September 1, 2019–June 1, 2021 TN VED Code Description 8713 10 Carriages for disabled persons, whether or not motorized or otherwise mechani- cally propelled, not mechanically propelled (i.e., hand-powered wheelchairs) 8713 90 Carriages for disabled persons, whether or not motorized or otherwise mechani- cally propelled, other (e.g., other wheelchairs equipped with an engine or other me- chanical devices for movement) No OKPD 2 codes provided by Chestny ZNAK. BIOLOGICALLY ACTIVE FOOD ADDITIVES At the time of publication, the Russian government had not released any substantive infor- mation about the pilot other than what products will be labeled. We will provide updates when more information is made available. BIOLOGICALLY ACTIVE FOOD ADDITIVES Pilot scheduled for April 1, 2021–March 1, 2022 TN VED Code Description 1210 20 9000 Oil seeds and oleaginous fruits; miscellaneous grains, seeds, and fruit; industrial or medicinal plants; straw and fodder 1212 21 000 0 Locust beans, seaweeds, and other algae, sugar beet and sugar cane, fresh, chilled, frozen or dried, whether or not ground; fruit stones and kernels and other vegeta- ble products (including unroasted) 1504 10 1000 Fish liver oils and their fractions with Vitamin A content not exceeding 2500 iu/g 1504 20 900 0 Other fish fats, oils, and their fractions, other than fish liver oils, other than solid fractions 15
BIOLOGICALLY ACTIVE FOOD ADDITIVES Pilot scheduled for April 1, 2021–March 1, 2022 1516 10 900 0 Other animal fats and oils and their fractions 1517 90 990 0 Other edible mixtures or preparations of animal or vegetable fats or oils or fractions of different fats or oils of this chapter, other than edible fats or oils 1702 90 950 0 Other, including invert sugar and other sugar and sugar syrup blends containing in the dry state 50% by weight of fructose 1704 90 550 0 Throat and cough lozenges not containing cocoa 1806 31 0000 Other product containing cocoa, in blocks, slabs, or bars, filled 1806 32 100 0 Cocoa and cocoa preparations (other preparations containing cocoa, not filled, but with added cereal grains, fruits, or nuts in blocks, slabs, or bars) 1806 32 900 0 Other preparations containing cocoa, but not filled, in blocks, slabs, or bars 1806 90 700 0 Preparations containing cocoa and intended for manufacture (preparation) of drinks 1806 90 900 0 Other preparations containing cocoa 2101 12 920 1 Preparations with a basis of extracts, essences, or concentrates of coffee 2106 10 800 0 Other protein concentrates and textured protein substances 2106 90 590 0 Other sugar syrups with flavoring or coloring additives 2106 90 920 0 Other food preparations not containing butter fat, sucrose, isoglucose (i.e., high- fructose corn syrup), glucose, and starch, or containing less than 1. 5% by weight of butter fat, 5% by weight of sucrose or isoglucose, 5% by weight 2106 90 980 3 Mixtures of vitamins and minerals for use as a balanced dietary supplement 2106 90 980 9 Other food preparations not elsewhere specified or included 2106 90 9801 Sugar- (sucrose) free chewing gum and/or with a sugar substitute product 2202 90 100 9 “Others” under Code 2202: “Beverages and spirits and vinegar” 2202 99 190 0 Other beverages not containing preparations of headings 0401 to 0404 or fat ob- tained from preparations of headings 0401 to 0404: • 0401: Milk and cream, not concentrated nor containing added sugar or other sweetening matter • 0402: Milk and cream, concentrated or containing added sugar or other sweet- ening matter • 0403: Buttermilk, curdled milk and cream, yogurt, kephir (a.k.a. kefir), and other fermented or acidified milk and cream, whether or not concentrated or containing added sugar or other sweetening matter or flavored or… • 0404: Whey, whether or not concentrated or containing added sugar or other sweetening matter; products consisting of natural milk constituents, whether or not containing added sugar or other sweetening… 2936 21 000 0 Vitamins A and their derivatives 3002 90 500 0 Cultures of microorganisms 3204 19 000 0 Synthetic organic coloring matter and preparations based thereon, including mix- tures of coloring matters of the subheadings 320411 to 320419: • 320411: Disperse dyes and preparations based thereon • 320412: Acid dyes, whether or not premetallized, and preparations based thereon; mordant dyes and preparations based thereon • 320413: Basic dyes and preparations based thereon • 320414: Direct dyes and preparations based thereon • 320415: Vat dyes (including those usable in that state as pigments) and prepa- rations based thereon • 320416: Reactive dyes and preparations based thereon • 320417: Pigments and preparations based thereon 16
BIOLOGICALLY ACTIVE FOOD ADDITIVES Pilot scheduled for April 1, 2021–March 1, 2022 • 320419: Tanning or dyeing extracts; tannins and their derivatives; dyes, pig- ments, and other coloring matter; paints and varnishes; putty and other mas- tics; inks 3503 00 100 9 Other gelatin and its derivatives 3507 90 900 0 Other prepared enzymes not elsewhere specified or included No OKPD 2 codes provided by Chestny ZNAK. BREWING PRODUCTS & LOW-ALCOHOL DRINKS Russia’s Ministry of Industry and Trade announced the pilot in October 2020. Scheduled for April 1, 2021, to February 28, 2022, it will test labeling for products that are not required to bear federal special and excise stamps. The CRPT, industry representatives, regulators, retailers, and other stakeholders have been discussing parameters, technical features, and timing. Progress reports are due to the govern- ment on October 29 of this year and February 14 next year, and a final decision about when mandatory labeling will begin will be made after a full review of the pilot. Any company can volunteer to participate; however, the organizers have indicated they are particularly interested in companies that use several packaging form factors and have more than one product line. Companies that want to participate must send a letter of consent on official letterhead to the Beer and Beer Drinks Commodity Group. Information for manufacturers The CRPT will assign a dedicated project manager, technical manager, and business process specialist to every manufacturer in the pilot. These people will work at the manufacturer’s fa- cilities and oversee pilot operations. Manufacturers’ representatives are expected to attend working group meetings to discuss progress and make recommendations for the regulatory framework, which will be finalized after the pilot is over. Manufacturers are also expected to: • Understand the business processes required for digital labeling • Choose a technology partner to supply and install labeling and integration systems • Determine how to apply the marking codes • Determine what technical solution is most suitable for their production line(s) • Arrange delivery and perform commissioning/start-up of labeling equipment • Integrate the equipment with the Automated Control Systems of the Enterprise and Tech- nological Process (ACSTP) • Adapt their inventory systems to work with labeled goods • Adapt their business processes to new requirements for digital marking • Train key personnel to work with digital marking • Ensure their suppliers are sufficiently prepared to work with digital marking As with the other product categories regulated in Chestny ZNAK, manufacturers must follow a few core steps for labeling and track and trace processes. First, they must register with Chestny ZNAK. Next, they must describe their products in Russia’s catalog of marked goods, which is managed by the Government Information System for Marking (GIS MT). Last, they have to order unique codes for each item (or, in some cases, for a group of goods), and put a DataMatrix code on each package, after which the goods may be to put into circulation and transferred for sale to wholesale or retail networks. 17
Information for retailers Retailers must scan the DataMatrix codes when they accept goods. This sends the product information to Chestny ZNAK and notifies the system that the products have arrived at the retail location. When a consumer purchases a product, the cashier scans the code on the packaging using a scanner connected to a point-of-sale cash register. The data is synchronized with the catalog of marked goods and the item is officially removed from circulation. If the data doesn’t match, the product is deemed counterfeit or otherwise illegitimate and cannot be sold. BREWING PRODUCTS AND LOW-ALCOHOL DRINKS Pilot scheduled for April 1, 2021–February 28, 2022 OKPD 2 Code Description 11.01.10.400 Low-alcohol products 11.03.10.211 Cider 11.03.10.212 Pear cider (a.k.a. perry, poiré, perada) 11.03.10.210 Low-alcohol fermented drinks 11.03.10.213 Mead 11.03.10.219 Other low-alcohol fermented drinks 11.03.10.300 Other low-alcohol drinks, not included in the group “low-alcohol fermented drinks” 11.03.10.400 Honey drinks, excluding mead 11.05.10.120 Beer with a strength from 0.5% to 8.6% inclusive 11.05.10.130 Beer with a strength over 8.6% 11.05.10.110 Beer with a strength of up to 0.5% 11.05.10.160 Beer-based drinks (beer drinks) 11.07.19.129 Other fermented drinks Corresponding TN VED codes: 2203 00 010 0; 2203 00 090 0; 2203 00 100 0; 2202 91 000 0; 2203 00 090 0; 2206 00 310 0; 2206 00 510 0; 2206 00 810 0; 2206 00 390 1; 2206 00 590 1; 2206 00 890 1; 2208 90 690 1; 2208 90 780 1 18
APPENDIX 1. ACRONYMS CIM control identification mark CSV comma-separated values file DSCSA Drug Supply Chain Security Act (United States) EAEU Eurasian Economic Union EPS Encapsulated PostScript file FGIS Federal State Information System (Russia) FMD Falsified Medicines Directive (European Union) FSIS MDC Federal State Information System for Monitoring Drug Circulation (Russia) GTIN Global Trade Item Number MDLP Drug Circulation Monitoring System (Russia) OKVED Russian National Classifier of Economic Activities SGTIN Serialized Global Trade Item Number TIN taxpayer personal identification number (known elsewhere as INN) TN VED Combined Nomenclature of Foreign Economic Activity (EAEU) UTD Universal Transfer Document 19
APPENDIX 2. RFXCEL RESOURCES WEBINARS • Russian Pharma Compliance Update (February 2020) • Everything You Need to Know About the Russian Serialization Requirements (Decem- ber 2019) • Serialization Requirements in Russia (May 2019) • Serialization Requirements in Russia (July 2018) ARTICLES • What the Dairy Industry Needs to Do to Comply with Strict Russian Regulations in 2021, Food & Drink Industry Magazine (October 2020), by rfxcel Operations Manager, Russia, Victoria Kozlova • Steps to Compliance: How Best to Prepare for Russia’s 2020 Pharma Regulations, World Pharma Today (May 2019), by rfxcel Operations Manager, Russia, Victoria Ko- zlova • Asian pharma companies prepare for Russian regulations, BioSpectrum (October 2019), by Victoria Kozlova • Top Four Questions About Russia’s Serialization Laws, Answered, Supply Chain Brain (March 2020) by Victoria Kozlova • An Overview of Russia’s Pharma Serialization Regulations and its National Track and Trace Digital System, Chestny ZNAK, World Pharma Today (March 2020) by Victoria Kozlova BLOG • New Russian Serialization Pilot for Biologically Active Food Additives • Russia Dairy Serialization Update: Mandatory Labeling for Cheese and Ice Cream • Russia Serialization Pilot to Combat Counterfeit Beer Set to Begin This Spring • Russia Pharma Serialization Update: “Notification Mode” Expedites Product Circulation • Russia Chestny ZNAK Track and Trace: A Refresher Course • rfxcel Continues Winning Streak in Russian Serialization, Track and Trace • rfxcel Takes Big Step as Leader in Russian Aggregation, Serialization & Supply Chain Compliance • Quick News: Russia Changes 2020 Serialization Deadlines for Footwear • Major Deadline Coming for the Footwear Industry in Russia’s Chestny ZNAK Track and Trace System • Russia Serialization Deadlines: More Changes for Pharma & Other Industries | rfxcel Up- date • rfxcel’s Ultimate Guide to the 2020 Russian Track & Trace Requirements • How Asian Pharma Companies Can Comply with Russia’s New Serialization Require- ments • Russia Serialization Update: Changes to Crypto Code Requirements and Packaging • Simplifying Russian Serialization & Crypto Code • 5 Aspects of Russian Pharma Compliance You Should Know Right Now PRESS RELEASES • rfxcel Ready to Help Dairy Industry Comply with Russia’s 2021 Serialization Regulations • Russia Reporting Update • rfxcel Named Russia CRPT Software and Integration Partner for Nine Industries • rfxcel Enhances Pharmaceutical Track and Trace Solution for Russia • rfxcel Becomes Official Partner with Russia’s CRPT • rfxcel Continues Rapid Growth, Success in Russia 20
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