GREEN LINE trade fell from €6.1 million to €5.2 million between the 2008/2009 and the 2009/2010 economic period, but could be substantially increased with the lifting of certain trade restrictions, according to economists.
Speaking at a bicommunal trade seminar in Nicosia on Monday evening, Head of the EC’s representation in Cyprus, Androulla Kaminara also said the number crossings to the north fell between 2009 and 2010 – from 730,310 to 670,910, while crossings to the south rose from 1,185,073 to 1,287,126 in the same period.
Economists and members of the chambers of commerce from both communities at the seminar attributed the declines to the recession, but all agreed that EU trade restrictions, resulting from the north’s de jure EU territorial status, but where the acquis is suspended, were hampering trade opportunities.
Cyprus Chamber of Commerce director Leonidas Paschalides said: “Last year there was a reduction but you have to remember there was a recession. That was the main reason trade was down.”
He said that had there not been a recession, the rate of trade could have continued on its upward trend: “Before the recession there was an increasing trend year on year. Logically we can assume that it would continue.”
However, several participants highlighted systemic obstacles that impeded trade between the two communities, and which if lifted, could even double current levels of trade.
One such obstacle is VAT.
Economist Costas Apostolides said: “The EU policy on VAT is a major problem for Greek Cypriot companies selling across the Green Line” and which kept northbound goods at a fifth of the total of southbound goods.
Under EU regulations, Greek Cypriots must charge VAT to buyers in the north, which is considered intra-national trade because neither the government nor the EC recognise the ‘TRNC’ as a foreign country. However, Turkish Cypriots cannot claim this back from the ‘authorities’ and so products from the south are 15 per cent more expensive than from Turkey.
One Limassol based iron casting plant owner said she had offered her products to buyers in the north at a cheaper price than her Turkish competitor but lost the sale due to the added VAT.
Paschalides described another common problem: Turkish Cypriots are required to obtain a permit from their ‘authorities’ to import Greek Cypriot products, which are issued on an ad hoc basis.
“Greek-Cypriots are asking ‘why should my order be subjected to a permit?’ and sometimes Turkish Cypriots don’t get the permit and cannot buy the products,” Paschalides added.
Turkish Cypriots are also limited by EU regulations. For example, with no infrastructure for checking milk and fish meet EU standards, none can be sold in the south.
Secondly, no supermarkets have yet agreed to stock Turkish Cypriot products out of a fear of alienating customers. Thirdly, as Apostolides noted: “The assumption that TC firms are more competitive because wages are lower in northern Cyprus is too simplistic and often wrong.”
“South of the Green Line the economy is more competitive and competition is not just with GC business but with the world,” he said.
While the situation may be prohibitive, there is some cause for hope: There is both a supply of products and a demand by consumers on both sides, as Cyprus Consumers’ Association President Petros Markou said during his presentation: “There is no problem with the quality of Turkish Cypriot products. When they reach our shelves they are gone in a few days.”
Several participants agreed that Green Line trade is necessary for a solution to the Cyprus Problem. However, this solution is needed to lift restrictions and boost trade, so it seems that for now, consumers and traders and service industry personnel will remain in a “chicken and egg” trade situation.
