Green line crossings up, but trade disappoints

According to the available data 3,375,409 crossings of Greek Cypriots and Turkish Cypriots altogether were registered through the Green Line separating Cyprus during the period May 2005 until April 2006, according to the EU of whom 1,195,594 were Greek Cypriots and 2,179,815 Turkish Cypriots.

The Green Line Regulation has been operational since 1 May 2004. It defines the terms under which the provisions of the EU law apply to the movement of goods and persons across the line between the areas of the Republic of Cyprus in which the Government of the Republic of Cyprus exercises effective control and the areas in which does not.

 

Value of trade

According to the Turkish Cypriot Chamber of Commerce the total value of goods for which accompanying documents were issued in the reporting period, amounted to €2,237,869 whereas the value of goods actually traded was about €1,933,067compared to €1,000,617 in the last reporting period (however, it is to be noted that the previous reporting period was shorter as the Green Line Regulation became fully operational only in August 2004). The monthly average value of traded goods has significantly increased from €99,000 in the last reporting period, to €161,089.

The figures on the types of traded goods show a limited number of new products crossing the line (e.g. electronic equipment and kitchen equipment), however their introduction contributed in some cases to a significant (though temporary) increase in the monthly trade value.

Wooden products, furniture, vegetables, electronic equipment, plastic and paper products constituted the main groups of products traded.

Pursuant to Article 4 (2) of the Green Line Regulation, the authorities of the Republic of

Cyprus applied duties to agricultural products eligible for export refunds or intervention measures. Trade across the Green Line was solely for the purposes of intra-island trade with one single exception: on one occasion goods crossed the Green Line with a final destination outside the Republic of Cyprus. A consignment of 1,112 kg of Cyprus Delights (confectionery) for a value of 1,112 CYP was traded via Limassol Port to the UK on 30 December 2005.

Since November 2005 seven cases of irregularities have been reported in which the goods were not allowed to cross the line. In four of them (concerning furniture, kitchen furniture, a heating appliance and animal food) an accompanying document was not produced.

 

Obstacles and difficulties

Many obstacles for trade across the Green Line continue to exist. Turkish Cypriot commercial vehicles such as buses, lorries, taxis, minibuses and rented cars cannot move freely through the island. The Republic of Cyprus does not accept roadworthiness certificates of commercial vehicles nor professional driving licences issued by the Turkish Cypriot authorities.

The Republic of Cyprus began preparatory work on legislation with the aim to facilitate

Turkish Cypriot lorries to transport goods across the Green Line. However, no decisions

regarding this issue were taken during the reporting period. On several occasions protests of Greek Cypriot truck drivers were organised to express objections against attempts to liberalise the use of Turkish Cypriot lorries for the Green Line trade.

Difficulties for Turkish Cypriot traders to advertise in parts of the press in the Republic of Cyprus were reported as another example of a barrier which could limit trade across the line.

The Commission received some complaints from Turkish Cypriot traders regarding delays in clearing of goods crossing the line including those crossing the line temporarily to be exhibited at trade fairs in the government-controlled areas. These delays were explained by the authorities of the Republic of Cyprus as resulting from food safety requirements or the need to assess whether goods contained any ingredients subject to export refunds or intervention measures (e.g. sugar) for which (according to the Green Line Regulation) duties are to be applied.

In one case the Commission was made aware by the Republic of Cyprus of suspicions that tomatoes traded through the Green Line originated from Turkey. The Commission examined the issue and came to the conclusion that this was not the case.

 

Temporary crossing of goods

Difficulties were encountered as far as the temporary crossing of goods was concerned. There are three main categories of goods where this issue comes up:

– temporary crossing of goods needed for the provision of a service (example: music

instruments of a Turkish Cypriot rock band performing a concert in the government controlled areas; interpretation equipment of a Turkish Cypriot interpretation company

rendering a service in the government controlled areas)

– temporary crossing of Turkish Cypriot goods to be exhibited at a fair in the government controlled areas

– temporary crossing of Turkish Cypriot technical devices to be repaired in the government controlled areas.

The Green Line Regulation does not offer a clear cut solution for this problem. The Republic of Cyprus is applying a system of ad hoc decisions which does not seem to be sufficiently transparent. De lege ferenda this issue should be taken up in a future amendment to the Green Line Regulation.

 

Facilitation of trade

The following measures have been taken to facilitate the trade in certain products:

Citrus fruits

As reported above on 4 October 2005, the Commission adopted Regulation (EC) No

1624/2005 allowing citrus fruits to cross the Green Line without being subject to customs

duties or charges having equivalent effect.

Independent experts from several Member States appointed by the Commission carried out an annual pre-harvest inspection in the autumn of 2005. They confirmed the results of previous checks performed in 2003 and 2004 that harmful organisms do not occur in the northern part of Cyprus. The Commission envisages continuing survey work as a collateral monitoring activity besides inspections and controls of orchards and of consignments of citrus fruit intended for trade across the Green Line.

Potatoes

Independent phytosanitary experts conducted sampling and surveys during two growing seasons in order to check whether the EU requirements/standards have been fulfilled. This included laboratory testing. After completion of the procedures the green light for trade in potatoes was given by the competent service of the Commission in early 2006.

All stakeholders were informed about the opportunity to trade potatoes across the Green Line.

The Commission continues its monitoring activities in order to ensure the possibility of trade. Potatoes are not subject to tariffs. During the reporting period no trade in potatoes took place.

Honey and fish

The Commission is currently working on a Decision on lifting prohibitions and laying down conditions applicable for trade of certain animal products in the framework of the Regulation (EC) No 866/2004, allowing for trade in honey and fish across the Green Line.

 

VAT issues

The Republic of Cyprus renewed its request to the Commission to propose amendments to the Green Line Regulation and/or the 6th VAT Directive in order to simplify certain VAT provisions concerning the trade across the Green Line. The proposals included a request to  apply a reverse charge mechanism for supplies made by taxable persons established in the areas to taxable persons in the government-controlled areas, a request to apply simplified procedures for the collection of tax on goods supplied by taxable persons established in the areas when these are supplied in the government-controlled areas to non-taxable persons, a request to allow for supplies made to the areas to be treated as export transactions (amending

Article 5 of the Green Line Regulation) and the request to allow for simplified procedures when goods are crossing the line with a view to be transferred to other Member States. The Commission has seriously examined these proposals and communicated to the Republic of Cyprus extensively why the majority of the proposals would have deviated too much from the acquis to be taken up by the Commission, even though some of them may be attractive from the point of view of simplification.

 

CONCLUSIONS

The Regulation continues to provide a stable legal framework for the free movement of

Cypriots and other EU citizens who daily cross the line at the crossing points. However

increasing figures of illegal migration through the Green Line give reasons for serious

concern.

Taking into consideration the registered trends concerning the number of persons crossing the line illegally the Commission is of the opinion that the surveillance conducted by the Republic of Cyprus pursuant to Article 3 of the Regulation needs further improvement.

The overall conclusion is that the Green Line Regulation continues to provide a workable basis for allowing the passage of goods and people to and from the government-controlled areas of the Republic of Cyprus although the flow of goods remains limited. The Commission will continue to monitor the implementation of the regulation.