Cyprus Must Work To Remove Barriers With Turkey, Says EC

by Lorys Charalambous, Tax-News.com, Cyprus

23 May 2003

As Cyprus prepares to enter the European Union as a full time member next year there remains much work to be done in order to open up labour markets and remove trade restrictions with its Turkish neighbour, the EC has announced.

Speaking to the Financial Mirror recently, the European Commission's Head of Delegation Adrian van der Meer stated that from the date of Cypriot accession to the EU on May 1 2004: "there should be free circulation of goods between ... Turkey and Cyprus."

There remain many issues that need to be ironed out if this is to be achieved. For example, Cyprus desires the removal of a Turkish moratorium that prevents Cypriot flagged vessels from docking in Turkish ports. Given that the Cypriot merchant fleet is claimed to be the sixth largest in the world, van der Meer ranks this issue as "one of the most important factors" affecting Cyprus's accession. "It is quite undeniable that this will be very, very important for the shipping industry here to be part of this one big family and new market," he announced.

However, the Commissioner noted that there is still work to be done in relation to safety and working practices, such as the phasing out of single hulled ships, and curtailing working hours, issues which have kept the Cyprus flag on the Paris Memorandum of Understanding blacklist.

Van der Meer also stressed that by May 1 next year all restrictions regarding the establishment of European citizens should be lifted. This will mean the country opening its labour market to all 25 member states, and permitting the establishment of firms from these countries. However, the Commissioner stressed that Cypriot workers and firms would have reciprocal rights in this regard. He also observed that members of the Cypriot Turkish community holding passports issued by the Republic of Cyprus (ie the south) would gain "full establishment rights as EU citizens as from May 1, 2004."

The EU has awarded Cyprus EUR52.8 million in funds for infrastructure improvements and human resource developments. In addition, Cyprus will receive EUR91 million in budgetary compensation, which is intended to ensure that the country's budget situation does not deteriorate in the run-up to accession.

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