GREEN LINE REGULATION NORTH of THE LINE

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GREEN LINE REGULATIONNORTH of THE LINE

• Facts, Opportunities and Constraints

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Starting point of the GLR

• The Turkish Cypriot community has expressed their
  clear desire for a future within the Eurpoean
  Union. The Council is determined
• to put an end to the isolation of the Turkish
  Cypriot community and
• to facilitate the reunification of Cyprus by
  encouraging the economic development of the
  Turkish Cypriot community.

3
Goals and Instruments of the Green Line
Regulation

• Not only to contribute the development of the
  economy of the North Cyprus but also, to promote
  reconciliation, by
• Developing trade of goods and services between
  two communities
• Facilitating the passage of persons to North and
  South.

4
Contribution of the Green Line Regulation
together with the opening of the Green Line in
2003

• Tourists from the South to the North( increased
  tourism revenues of the North and South),
  tourists from the North to the South
• Greek Cypriots visiting the North, Turkish
  Cypriots visiting the South
• Turkish Cypriots working in the South (WR for
  North, promotion of labor market flexibility of
  South)
• Goods produced in the North traded to the South
• Raw materials (provisional trade) from the South
  to the North
• To find out the economic contribution of the GLR
  to the North and South, we need to make surveys
  and studies on the a/m areas except trade.

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Green Line Trade realized !

• GLT (23rd August 2004) -Summary of the current
  situation
• Total volume by end of October (140 thousand
  euro)
• Goods subject to the trade (Lead ingot), paper
  pulp products, color stone, vegetables and friuts
  etc.)
• Exporting to EU countries from the south (no
  activity)
• GLR managed to initiate trade (internal trade,
  border trade, external trade, shuttle trade,)
  Green Line Trade.
• Figures There is a need to improve it.

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The actors of Green Line Trade What are they
thinking?

• North-
• Turkish Cypriot Chamber of Commerce
• Companies already doing business(GLT)
• Companies looking for partner(GLT)
• Related NGOs
• Consensus in Northern Cyprus The Green Line
  Trade could improve by adopting some changes.
  However the effect of the Green Line Trade on
  Economic Development will be minimum.

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Problems of Green Line Trade?

• Administrative barriers, red tape, psychological
  factors
• Lack of mechanism for networking, advertisement
  (only personal contacts)
• Commercial vehicles of the North (no entry to the
  South)
• Problems with Provisional raw material trade
  from the South
• Double taxation, registration requirement
• No Training (businessmen, customs officers)
• Lack of communication of the authorities,
  one-sided effort is not enough
• Lack of immediate problem solving precedures
  (delegate).

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Developing the GLT? EU, GC and TC

• Easing bureacruacy (Origin certificate for every
  shipment, customs procedures, line controls
  etc.)
• Series of trainings for custom officers,
  businessmen, related authorities
• Creating networking mechanisms including
  sectoral-bicommunal fairs (contributes to
  reconciliation), effective advertisement
• Elimination of registration requirements and
  prevent double taxation
• Solving the commercial vehicles problem of the
  North
• Involvement of related NGOs

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more

• Open the way for provisional raw material trade
  from the South in all sectors
• Measures to improve communications of the
  related bodies (regular meetings)
• Accelerate the precedure of EU inspections and
  detailed information to the farmers and SMEs on
  EU inspections
• Securing permanent stay of the necessary EU
  inspectors. Especially for potatoes and citrus
  fruits.

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Is the instrument of the Green Line Trade enough
to achieve the objectives of the EU?

• Two communities, two economies. South economy is
  developed North economy is developing and has a
  low level of per capita income(1/3 of Souths)
• Every community needs to finance its expenditures
  by creating, maintaining and increasing revenues
  from economic activities.
• Trade promotes economic growth which generates
  income for development (trade activates many
  sectors and increase investment within the
  economy). Here the definition of trade includes
  internal and external trade (import-export) from
  and to one particular economy.
• Exporting to EU from ports in the South means
  increase activity at the port of the developed
  economy, pay VAT to developed economy, register
  (move your business) in the developed economy.

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Direct Trade Regulation Advantages of the
Community living North of the Line

• Distributing the risk of relying only to the
  South (landlock island) unclear political
  environment
• Increase the competitiveness of the SMEs
• Increase in economic activity, activates
  different sectors , creates employment
• Contributes to regional development (investment
  to the areas close to sea-air ports)
• Together with the contribution of the Financial
  Assistance of the EU, sustainable development in
  the northern economy could be achieved, as well
  as overall the objectives of the EU.

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If the EU approves only Financial Assistance
Regulation for Northern Cyprus and not Direct
Trade Regulation The worst case scenario.

• GLT will increase the cost of goods, increase
  bureacruacy, risk of relying only on the South.
  Investment environment will become riskier for
  the new and current businesses.
• As a result
• To avoid this and to benefit from customs unions
  between Turkey and the South, some of the
  businesses might move their businesses to the
  South
• The rest of the companies will suffer from unfair
  competition and close their businesses down. No
  new businesses
• Economic activity will be reduced and it would be
  impossible to achieve the objective of the EU.
  The situation may become worse than today. It
  will be the worst case scenario for northern
  Cyprus.

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WTO AND EU TRADING WITH DEVELOPING ECONOMIES

• Trade Vital tool for development efforts
• Special and differential treatment provision
  of WTO to help developed economies to treat
  developing economies more favourably then other
  WTO members
• Longer time for transition
• Technical assistance
• Preferential market access (through such schemes
  as the GSP or Everything But Arms initiative of
  EU which is non-reciprocal and available to many
  developing economies).

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• GSP The Generalised system of Preferences allows
  developed economies to grant autonomous and
  non-reciprocal trade preferences to developing
  economies
• Rule of the General Agreement on Tariffs and
  Trade (GATT), Part 4
• When developed economies grant trade concession
  to developing economies they should not expect
  the developing economies to make matching offers
  in return.

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• EU-CCP instruments for trade are tariffs,
  quotas,voluntary export restraints and
  anti-damping measures. (non-EU)
• Some examples of the EUs Preferential Trade
  System
• Mediterenean Economies (Algeria, Egypt,Jordan
  etc.) non-reciprocal free access for most
  industrial products
• Cyprus,Maltapartial abolition of tariffs and
  quotas on industrial products since 1973
• Switzerlandreciprocal abolution of tariffs and
  quotas of industrial products since 1973
• 145 developing economies are beneficiaries of the
  Generalized System of Preferences (GSP) of EU
• 70 economies covered by Lome conventionnon-recipr
  ocal free access for industrial and agricultural
  products.

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Todays Challenge is to maximise trades
contribution to a sustainable development Case
of the North targeting Trade Liberalization

• 1-Revise the GLR and bring new initiatives to
  improve Green Line trade
• 2-Direct Trade Regulation in place
• 3-Financial Assistance- initiate shorter
  transition period for trade liberalization
  improving legal environment ,supporting SMEs,
  complementary policies to support trade
  liberalization
• 3 Measures (3M) together with intensive and
  efficient technical assistance and capacity
  building provided by the EU is necessary.

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• First Phase( during shorter transition period)
• Only goods produced in the South and the North
  sell to the domestic market in the North and
  South (GLT rules for both sides)
• Preferential direct trade with North Cyprus-EU
• Alternatives for businesses -goods produced in
  the South, export via Famagusta Port
• Second Phase(after shorter transition period)
• Adopting the CCP Liberal Trade Policy with
  North Cyprus-EU (Reciprocal Basis)
• Adopting Intra-EU trade between the North and the
  South
• Contribute to the establishement of a
  Euro-Mediterranean Free-Trade Area and ENP.