Revival of Trade Ties Remains Tricky in Cyprus

The new regulations, adopted by the European Commission in July and which came into effect on Monday this week, are meant to revive trade ties between the Turkish and Cypriot part of the divided island. Trading between the two sides came to a standstill following the division of Cyprus in 1974 and has been non-existent until now.

According to the EU regulations, Turkish entrepreneurs in the northern part of the island can for the first time sell their products in the Greek south. From there the goods can also be exported to other EU countries without further checks and bureaucratic hurdles.

The rules dictate that the goods have to comply with EU standards on food safety and plant health. Further, the Turkish Cypriot Chamber of Commerce will have to ensure that products must actually originate from northern Cyprus and not Turkey.

The move is part of an EU package to rebuild the north's economy and end the isolation of Turkish Cypriots after they voted in favour of reunification of the island in an April referendum. However Greek Cypriots rejected the peace plan, allowing only the Greek part of the island to join the European Union.

Rules not free of hurdles

But despite the good intentions, implementing the trade regulation will turn out to be tougher than it appears on paper.

For one, all animal and agricultural products -- goods with probably the most significant export potential -- are excluded from the regulation as are goods originating from Turkey.

This week just a day after the regulation came into effect, Greek Cypriots sent back a Turkish truckload of fish, which fell foul of the law.

Adrian van der Meer, the EU's representative in Cyprus said the rejection of the fish by Greek Cypriot veterinary authorities was a regrettable necessity.

"From a legal point of view the certificate of origin issued was correct because the fish originated in the northern part of Cyprus, but the second clause says that no animal produce is allowed to cross, and we take a zero tolerance on this," he told Reuters.

Mutual trust needed

In addition, Turkish Cypriot businessmen need a Greek Cypriot partner who will buy their products and sell them. Given the island's division and troubled past, few believe it will be an easy task.

"Goods, whose origin is difficult to conceal such as consumer goods, will be difficult to sell in the South," Heinz Kramer, Cyprus expert at the Science and Politics Foundation told DW-WORLD.

It also seems likely that Greek Cypriot businessmen would watch out for their interests and be wary of opening the door to possible competitors from the other end of the island.

Kramer said building materials and textile products count among the few goods that have a chance of being sold in the southern market. "It will probably hardly interest anyone where his bricks are coming from," Kramer said.

Symbolism rather than real benefits

As far as economic benefits go, hardly anyone expects the regulation to have a major impact. Flourishing trade between the two parts of the island remains an unrealistic hope.

"I believe that the move is highly politically symbolic, one that's meant to show that the North shouldn't be isolated. But, its economic significance is very minimal," Kramer said.

A real breakthrough in trade relations between the two parts of the divided island might instead come from a proposal that's currently making the rounds in the EU Council of Ministers. According to it, Turkish Cypriot products will be directly exported to the EU without a diversion via the southern Greek Cypriot part of the island.

But it remains unclear whether the proposal will actually see the light of day. Greece and new EU member Cyprus, which represents the Greek part of the island, have already indicated that they are against full free trade for the north.