11 Trade with northern Cyprus
| (25807)
11278/04
COM(04) 466
| Draft Council Regulation on special conditions for trade with those areas of the Republic of Cyprus in which the Government of the Republic of Cyprus does not exercise effective control
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| Legal base | Article 133 EC
|
| Document originated | 7 July 2004
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| Deposited in Parliament | 13 July 2004
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| Department | Foreign and Commonwealth Office
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| Basis of consideration | EM of 15 July 2004
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| Previous Committee Report | None
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| To be discussed in Council | To be determined
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
11.1 In March, the Commission drafted a Regulation setting out
special rules concerning persons, goods and services crossing
the Green Line dividing the Greek Cypriot and Turkish Cypriot
communities after the accession of Cyprus to the EU on 1 May 2004.
To ensure its effectiveness, this also covered the boundary between
the northern part of Cyprus and the Eastern Sovereign Base Area
(ESBA). We cleared the draft Regulation on 31 March.[22]
The hope was that a settlement of the Cyprus problem before 1
May would render it redundant.
11.2 However, in the 24 April referendums on the
UN Settlement Plan for Cyprus, the (southern) Greek Cypriot community
rejected the Plan, while the (northern) Turkish Cypriot community
voted in favour. This meant that it was not possible for a united
Cyprus to join the EU on 1 May 2004. Following this result, the
26 April General Affairs and External Relations Council (GAERC)
stated:
"The Council is determined to put an end to
the isolation of the Turkish Cypriot community. The Council invited
the Commission to bring forward comprehensive proposals to this
end, with particular emphasis on the economic integration of the
island and on improving contact between the two communities and
with the EU."
11.3 It was therefore necessary to put a revised
Regulation in place before 1 May reflecting the GAERC's determination
that post-accession arrangements should encourage the Turkish
Cypriot community to see its future as being in a united Cyprus
within the European Union. A revised Green Line Regulation was
agreed on 29 April that, with the exception of animals and animal
products (on food safety grounds), enabled goods wholly or substantially
produced in the north to cross into the south, as long as they
met EU requirements. We cleared this proposal on 18 May.[23]
The proposed Council Regulation
11.4 The current proposal is likewise designed both
to minimise the division of the island, by reducing the economic
isolation of the north, and to send a positive message to the
Turkish-Cypriot community about the benefits of a pro-settlement
path. In his Explanatory Memorandum of 15 July, the Minister
for Europe (Mr Denis MacShane), describes it as follows:
"The current proposal is designed to encourage
the economic development of the Turkish Cypriot community and
to facilitate a possible future settlement on the unification
of Cyprus. It offers a preferential regime for products entering
the Customs Territory of the EU and contains, inter alia,
detailed rules concerning the documents which would certify the
origin of goods and which would be issued by the Turkish Cypriot
Chamber of Commerce or another duly authorised body, as well as
phytosanitary inspection, food and product safety, taxation issues,
communication obligations, and safeguard measures in the event
of ineffective co-operation, irregularities or fraud. It is proposed
that the preferential regime take the form of a tariff quota system
which should be established with a view to encouraging economic
development while avoiding the creation of artificial trade patterns
or facilitating fraud."
11.5 He adds that:
"To the extent that the Regulation does not
determine special conditions applicable to the north, the general
rules governing the Community's external trade are applicable."
The Government's view
11.6 The Government fully supports the proposed
new trade arrangements for northern Cyprus. It is, the Minister
says,
"an important measure to put an end to the economic
isolation of the Turkish Cypriot community as it facilitates trade
between the northern part of Cyprus and the EU Customs Territory.
The Government believes that this regulation should improve prospects
of a possible future settlement on the unification of Cyprus and
adoption of the acquis communautaire in the northern part
of the island."
11.7 On its legal aspects, the Minister says that:
"the proposal for a Council Regulation is presented
under Article 133 of the EC Treaty. The Government agrees that
the use of Article 133 is appropriate. Northern Cyprus is in
a unique situation not covered by other Treaty articles and, although
the whole of the island joined the EU on 1 May, the suspension
of the acquis communautaire in the north means that that area
is outside the Community Customs Territory. Consequently, there
is a need to establish the applicable Community rules relating
to imports of goods originating in the north, notwithstanding
the fact that northern Cyprus is not a third country."
11.8 The Presidency hopes to agree the Regulation
— which is currently under discussion in the Council's ad
hoc Cyprus Working Group — by 23 July.
Conclusion
11.9 Although the circumstances are peculiar,
the preferential arrangements themselves are tried and tested.
The objectives of the proposal, though probably unwelcome to
some in the Greek-Cypriot community, are reasonable. There are
no questions that we need to put to the Minister. But, given
the continuing interest in Cyprus, we considered a short Report
to the House appropriate.
22 (25450) 7174/04; see HC 42-xvi (2003-04), para 8
(31 March 2004). Back
23
(25640) 8208/04; see HC 42-xx (2003-04), para 21 (18 May 2004). Back
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