European CommissionEuropean Parliament Conference Facilitating Commercial Activity Across the Green

1
European Commission/European Parliament
ConferenceFacilitating Commercial Activity
Across the Green Line

• Presentation
• The facts, the Constraints the Opportunities
• By Costas Apostolides
• EMS Economic Management Ltd

2
Objective

• The aim of this paper is to describe the known
  factors that have occurred because of the changes
  that have taken place in Cyprus following the
  relative freedom of movement as from April 2003,
  the measures introduced to assist the Turkish
  Cypriots, and the accession of Cyprus to the EU
  in May 2004.

3
Factors Affecting Emerging Situation

• The legal situation regarding northern Cyprus is
  difficult to change because it relates to UN
  Security Council resolutions.
• The Accession of Cyprus to the EU establishes an
  EU legal context that cannot be ignored.
• The Acquis Communautaire does not cover northern
  Cyprus, though agreed relaxations of this appear
  to be possible.
• The 45,000 Turkish Cypriots that have obtained
  ROC birth certificates may enjoy the benefits of
  EU citizenship.
• An EU Green line directive on inter-Cyprus trade
  is in place.
• The EU is preparing a Euro 259 mln aid package
  over 3 years for Turkish Cypriot development.

4
Factors Affecting Emerging Situation

• Turkey provides 400 to 500 mln a year in
  assistance to northern Cyprus and is compensating
  deposits of failed banks.
• Turkey will probably apply the EU-Turkey customs
  union to the Republic of Cyprus.
• Turkey is an EU accession candidate and is
  progressively adjusting to the Acquis
  Communitaire.
• In April 2003 restricted freedom of movement was
  allowed across the Green Line.
• Measures were announced by ROC to assist Turkish
  Cypriots, but not Turkish Settlers.
• EU citizens may enter northern Cyprus directly
  even though that technically is considered
  illegal by the ROC there appear to be no
  repercussions.
• Turkey has allowed visits by ROC passport
  holders, but for the time being maintains
  restrictions on Cyprus ships and aircraft.

5
Effect of Partial Freedom of Movement

• By 24/9/04 Turkish Cypriots obtained
• ROC Birth certificates 55,734.
• ROC ID Cards 45,609
• ROC Passports 21,101
• From 23/4/04 to17/10/04 the following numbers
  crossed the Green line
• GCs 2,063,335 July 03 spending CYP 9.8 per
  day
• TCs 3,006,762 spending CYP 8.9
  per day
• Surveys show that 6.3 foreign tourists in
  southern Cyprus visited the northern part
  spending CYP 26 per day.
• Turkish Cypriots working in South 3642 have
  social insurance
• Estimated that at least 5000 TCs work south
  of Green Line.

6
Turkish Cypriot Trade

• Turkish Cypriot Exports ( mlns)
• 1977 23.9 1996 70.5
• 1985 - 46.3 1997 - 57.7
• 1990 - 65.5 1998 - 53.4
• 1991 - 52.5 1999 - 52.4
• 1992 - 54.6 2000 - 50.4
• 1993 54.5 2001 - 34.6
• 1994 - 53.4 2002 - 45.4
• 1995 - 67.3 2003 49.0
• European Court of Justice Decision 5.7.1994
• Source Economic and Social Indicators 2002
• 2003 Rodger Manring

7
Green Line Trade

• 24 August to 28 October CYP 52140
• Shipments 133
• Average CYP 400
• Main items lead ingots,quarrying materials
  (umber), agricultural (melons, olives),
  furniture, baskets ware.
• Many shipments experimental.
• Last 7 days of period aveage CYP 1000.

8
Economic Implications of Mobility

• The following calculations for 2004 were made
• Tourists from south CYP 3.8 mln
• GCs visiting CYP 13.0 mln
• TC working south CYP 40.0 mln
• Total CYP 56.8 mln
• Subtracting expenditure of CYP 16 mln south, the
  net gain to northern Cyprus is estimated at CYP
  41 mln or 90 mln.

9
Constraints on Commercial Interaction

• The following constraints exist
• Dependence on Turkey including financial
  assistance and a tendency to follow Turkish
  norms.
• The financial system and its dependence on Turkey
  and its exchange rate and interest rate policies.
• Non-Application of the Acquis communautaire.
• Violations of the European Convention of Human
  rights on property.
• Continuing formalities and restrictions on
  mobility.
• Lack of reciprocity (on trade and employment).
• Turkish Settlers and their implications.

10
Opportunities
The following changes in policies are considered
necessary to facilitate commercial interaction
and economic convergence

• Improvement of the economic climate and
  environment
• Encouragement of Commercial relations and
  contacts between companies.
• Information on trade and employment
  opportunities.
• Uniform standards and legal framework harmonized
  with the EU.
• Cyprus pound for trading.
• Improve access across the greenline and minimise
  time and other costs.
• Ensure reciprocity in arrangements.
• Respect for ECHR judgments on property rights.
• Adoption of the acquis.

11
Opportunities

• Harmonization with EU tariffs and excise duties
  south of Green Line.
• Introduce EU competition policy.
• Respect intellectual property rights.
• Improve the financial system in northern Cyprus.
• Avoid actions that would make the solution of the
  Cyprus Problem more difficult.

12
Conclusion
In general to bring the northern part of Cyprus
in line with European norms and standards, and
the impending extension of the EU-T customs Union
to the ROC. The idea of shadowing the ROC in
terms of policy and adopting the acquis would
facilitate convergence, and would make the
solution of the Cyprus problem easier.