Scrap the direct trade regulation
The Turkish Cypriot Chamber of Commerce (KTTO) has proposed scrapping the stalled direct trade regulation that would lift restrictions on trade in Turkish Cypriots goods, in favour of a free trade zone of the European Economic Area that would incorporate the whole island of Cyprus as well as Turkey.
“The Direct Trade proposal envisages two detached economies… whereas Free Trade proposal aims to merge and integrate the economies in the area, namely Turkey, north Cyprus, south Cyprus and other EU member states, building further interdependence between them, which will be a step forward to a settlement of the Cyprus Problem,” said the KTTO in a statement.
Under the terms of Cyprus’ accession to the European Union, the EU acquis communautaire (body of EU law) is “suspended” in the north, which means that the EU customs union does not apply there.
The Green Line regulation, which allows trade in a limited number of Turkish Cypriot goods across the dividing line, has resulted in only a small amount of goods going south, no goods going north, and no exports at all of Turkish goods through ports in the south.
Secondly, the so-called direct trade regulation, which would have effectively lifted restrictions on exports of Turkish Cypriots goods to EU countries, has been opposed since the beginning by Greek Cypriots who fear that this entails some sort of recognition of a Turkish Cypriot state.
Extend the Green Line regulation
The KTTO’s free-trade proposal implies, in practice, applying the customs union of the European Economic Area (EEA) to both Turkey and all of Cyprus. The KTTO proposes extending the Greenline Regulation in order to allow the free movement of goods within the island and the EEA, irrespective of their origin (currently Turkish goods are not allowed to travel south via the Green Line).
The ports in north Cyprus, instead of operating outside the EU acquis, as they would in the Direct Trade regulation, would be operated under the rules and regulations of the acquis, the same as any other community entry point.
Importantly for the politics behind all of this, it merges the two issues at stake, namely Turkish Cypriot trade and Turkey’s obligations to Cyprus under the EU customs agreement. The amendment to the Greenline Regulation is proposed to take place together with the opening of Turkey’s ports to Greek Cypriot commercial vehicles.
In practice, therefore, this means Turkey not just signing an extension of the EU customs union agreement to all new member states including Cyprus, but actually implementing it as well.
“Unifying the economies will be a big step taken towards reunifying the island,” said the KTTO in a statement.
Benefits to Greek Cypriot economy
The KTTO listed a number of benefits to the Greek Cypriot economy of such a move, including:
*A reversal in the declining trend of tourism revenue, as new tourists enter from Turkey.
*A reduction in costs to troubled Cyprus Airways as it no longer has to by-pass Turkey on flights to Europe.
*Last but not least, huge opportunities for the shipping sector and the declining Cyprus ship register, especially with the 1 mln barrel/day Baku-Tblisi-Ceyhan oil pipeline.
Better than a forced Ankara agreement
The KTTO noted that although it is a widely accepted notion that Turkey will be forced to implement the Ankara Agreement and open her ports to Greek Cypriot ships, “it’s of vital importance to realise that bureaucracies are capable of creating various obstacles in practice.”
“Nothing can be achieved by forcing the other party for partnership, especially with regards to trade, which should be mainly based on good will. This proposal therefore will satisfy all parties related and grant Turkey the tool to willingly open its ports and encourage its citizens to trade with Cypriots, both Turkish and Greek speaking.”
