THE TURKISH Cypriot ‘council of ministers’ passed a motion on Tuesday, further opening up the north to imports from the Republic.
The move comes in response to a recent broadening of the Green Line regulation, a mechanism put in place after Cyprus joined the EU last May allowing Turkish Cypriots limited access to markets in the south.
“We are trying to say to Greek Cypriots that anything they allow under the Green Line regulation will be matched by the north,” the north’s economy ‘minister’ Dervish Deniz told the Cyprus Mail yesterday.
Turkish Cypriot Chamber of Commerce head Ali Erel welcomed the move, describing it as “a positive development”.
“We have been trying to get the message over [to the north’s authorities] for some time now that we need to reciprocate,” Erel told the Mail yesterday, adding: “One-way movement is not trade”.
Cyprus Government Spokesman Kypros Chrysostomides also welcomed the move, saying it would help “promote cooperation, understanding and trade exchanges between the two communities”.
He also expressed hope that more such measures would follow, thereby demonstrating the workability of the Green Line Regulation.
The Greek Cypriot government is keen to see the regulation work, as its smooth functioning will be seen to reduce the strength of Turkish Cypriot demands for direct trade with the EU through ports in the north.
The new Turkish Cypriot measures are yet to be implemented, but once they are, similar rules will apply to goods passing through the Green Line, irrespective of which side they are coming from. Individuals, therefore, will be allowed to take across a personal allowance of 135 euros worth of purchases, including 40 cigarettes and one litre of alcohol.
There, however, are a number of differences between the Green Line regulation and what the Turkish Cypriot authorities hope to implement.
“Because the south is regarded as part of the EU, most customs rates are zero,” Deniz explained, but added that the north imposes protectionist rates on a number of product groups. There are no customs duties on any products brought across the Green Line from the north.
Another difference is that while the south does not charge VAT on the sale of Turkish Cypriot products, the north will insist on charging the tax on Greek Cypriot products.
“VAT rules remain unaltered for the time being. There have been no adjustments,” Deniz said, meaning that if the charges are not dropped, Greek Cypriot producers wishing to sell in the north will be paying VAT both sides of the Green Line.
A further divergence between the Green Line regulation and the Turkish Cypriot initiative is that the north may not require Greek Cypriot goods vehicles and their drivers crossing the buffer zone to obtain licences from the north’s authorities.
“This is something that will be decided in the next two days,” Deniz said yesterday.
As with the Green Line regulation, the north’s move requires that goods crossing the buffer zone are “wholly produced” in south Cyprus.
