The hygiene changes, under regulation (EC) 854/2004, aim to improve food safety throughout the supply chain and require all businesses processing fish oils, including omega-3, to be officially approved by the companies' local authority.
GOED today said fish oil suppliers are not motivated to meet the strict criteria imposed by the EU because the majority are outside of the union.
Adam Ismail, executive director of GOED, said: "The reality is that most crude fish oil comes from countries like Peru, Chile and Morocco.
Very little of this production is intended for human consumption and only a portion of that is imported into Europe.
"As a result, there is little incentive for producers of crude fish oil to implement substantial infrastructure changes to meet European requirements, particularly when these changes will not make measurable differences to the quality of refined fish oils sold to consumers."
Just last week the European Federation of Health Product Manufacturers (EHPM) spoke out against the hygiene rule's timescale which gives a deadline of November this year for processing plants to become compliant with hygiene checks.
GOED insists that current hygiene standards of crude fish oil production are acceptable and similar to conditions already accepted by the EU for gelatin production.
A worse case scenario forecast by GOED is that the hygiene law as it stands today would effectively remove fish oil omega-3 products from retail shelves in the European Union after the end of 2007.
Ismail added: "This is a matter of great urgency and importance because time is running out to enact changes in the legislation.
The result will be lost jobs inside and outside of the EU and a shortage of omega-3 products in the EU marketplace for consumers who depend on them."
Under the hygiene rules, "Regulation (EC) 854/2004 laying down specific rules for the organisation of official controls on products of animal origin intended for human consumption", businesses are required to meet tough health checks to avoid fish contamination with parasites or harmful substances.
Omega-3 from fish oil is a rich source of EPA and DHA for the 50-80 million European consumers who use omega-3s to maintain heart health, brain health and overall wellness.
GOED and EHPM are in the midst of calculating the potential impact to businesses and the market.
According to the latest Frost and Sullivan figures the European omega-3 market was worth around €160m (£108m) in 2004 - and is expected to grow at around 8 per cent a year until 2010.
The potential benefits of omega-3 supplements are said to be wide and varied, with a clinical study last month linking the fatty acids to having a positive effect in combating depression and agitation symptoms associated with Alzheimer's disease.
Omega-3 has also been linked to weight loss, cardiovascular health, infant development and joint health.