EMBARGO: NOT FOR PUBLICATION
BEFORE 13:00 GMT 26JUNE 1997
PRESS/TPRB/55
17June1997
CYPRUS WORKS ITSWAY TOWARDS EUMEMBERSHIP AND
WTO CONFORMITY
Cyprus 'tradepolicy isdetermined bytwomajor goals: harmonizing itslawsandpolicies with
those oftheEU,andensuring theconformity ofthese lawsandpolicies withtheWTO Agreements.
Salient features ofCyprus aretheopenness ofitseconomy andthegrowing importance ofitsservices
sector, notes anewWTO Secretariat report onCyprus 'trade policies andpractices.
TheWTO 'sreport andoneprepared bytheGovernment ofCyprus willbethesubject oftwo
daysofdiscussion on25and26June1997. Services, thereport notes, account today inCyprus for
70percentofbothGDP andforeign exchange receipts. Inthelastdecade, tourism andmore recently
business services forabooming offshore sector have become themain contributors toeconomic
growth. Asaresult, Cyprus 'percapita income hastripled from $4,570 in1985 toaround $13,650
in1996. Tourism generates 40percentofcurrent account receipt andmore than20percentofGDP.
Ledbytourism, services export earnings were nearly $3billion in1995, compared to$1.2billion
from merchandise exports.
According tothereport, Cyprus suffers fromastructural trade deficit. Merchandise imports
represent nearly 40percentofGDP, outweighing exports byafactor ofalmost three. Although
different sorts ofexport incentives exist, Cyprus isanetimporter ofmanufactures. In1996,
merchandise exports amounted to$1.4billion, imports were $3.9billion andthecurrent account
deficit widened to5percentofGDP.
Even though theshare ofCyprus 'exports totheEUhasfallen inthelastfiveyears, the
European Union isstillCyprus 'most important trading partner. Cyprus hasapplied forEU
membership andisharmonizing itslaws, policies andinstitutional structure withtheEU's"acquis
communautaire". Cyprus already meets theMaastricht "convergence" criteria: inflation islow,the
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fiscal deficit stood at2.9percentin1996 anditspublic debtwasreduced to54percentofGDP in
1995. Onthebasis oftheexisting Customs Union Agreement, Cyprus willadopt theEU'sCommon
Customs Tariff bytheendof1997. Theprocess ofharmonization ofCypriot standards withthose of
theEUwascompleted recently. Cyprus hasadopted EClegislation oncompetition policy andis
liberalizing itsfinancial sector according toEUrequirements. Cyprus hasentered specific
commitments onprofessional andfinancial services inGATS bywhich itgenerally accords national
treatment. While financial andinsurance services areopen toforeign service suppliers, the
telecommunications services sector isstillcontrolled byagovernment monopoly.
TheWTO report states thatCyprus, inorder toconform withUruguay Round commitments,
abolished itsdiscretionary import licensing andisintheprocess ofrevising itsanti-dumping and
countervailing legislation. Itintroduced anewforeign direct investment policy in1997andhasmade
efforts toimprove competition onthelocal market. Most price controls, forexample, havebeen
removed. Adraftlawonpublic procurement iswiththelegislature. TheGovernment estimates that
roughly 95percentofprocurement isexecuted through competitive tendering.
In1996, theaverage applied m.f.n. tariff was16.4percent(7.2percentfortheEU,a
preferential supplier). Inthesame year, theSecretariat report notes, Cyprus 'simple average m.f.n.
tariff onagricultural products was37.6 percentwhile thepreferential tariff, applicable toEU
imports, stood at23.3percentbutthere isawide dispersion ofm.f.n. tariffs. Close tohalfof
agricultural tariff linescarry acompound orspecific duty. Thus fruits, vegetables andtobacco carry
average ratesabove 60percent.Exports subsidies of$17.5 million onagricultural products (mainly
forvegetables, fruits andwine) willbeprogressively reduced by24percentby2004. Forcertain
crops, semi-governmental organizations arethesolebuyers andsellers. Forexample, theCyprus
Grain Commission isthesoleimporter ofgrains andtheVineProducts Commission isthesolebuyer
ofgrapes. Cyprus 'agriculture accounts for5.5percentofGDP.
Initsconclusions thereport suggests thatCyprus could takefurther steps toconform with
multilateral rules. Currently, Cyprus usesmany nonadvalorem duties which reduces thelevel of
transparency initsimport tariffs andstillresorts tomeasures suchasreduced taxrates forexport
manufacturing orpreferential treatment fordomestic content. Thereport suggests thatbecause tariff
quotas oncertain farmproducts areunderutilized, tariffs inthese areas could belowered withlittle
effect onimports.
Note toEditors:
TheWTO Secretariat 'sreport, together withareport prepared byCyprus willbediscussed
bytheWTO Trade Policy Review Body (TPRB) on25and26June 1997. TheWTO 'sTPRB
conducts acollective evaluation ofthefullrange oftrade policies practices ofeachWTO member at
regular periodic intervals andmonitors significant trends anddevelopments which mayhaveanimpact
ontheglobal trading system. Thetworeports, together withareport oftheTPRB 'sdiscussion and
oftheChairman 'ssumming up,willbepublished induecourse asthecomplete Trade Policy Review
ofCyprus andwillbeavailable from theWTO Secretariat, Centre William Rappard, 154ruede
Lausanne, 1211 Geneva 21.
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Thereports cover thedevelopment ofallaspects ofCyprus 'tradepolicies, including domestic
lawsandregulations, theinstitutional framework, trade policies bymeasure andbysector. Since the
WTO came intoforce, the"new areas" ofservices trade andtrade-related aspects ofintellectual
property rights arealsocovered. Attached arethesummary observations from theSecretariat and
government reports. Fullreports willbeavailable forjournalists from theWTO Secretariat on
request.
Since December 1989, thefollowing reports havebeencompleted: Argentina (1992), Australia
(1989 &1994), Austria (1992), Bangladesh (1992), Bolivia (1993), Brazil (1992 &1996), Cameroon
(1995), Canada (1990, 1992, 1994 &1996), Chile (1991), Colombia (1990 &1996), Costa Rica
(1995), Côte d'Ivoire (1995), theCzech Republic (1996), theDominican Republic (1996), Egypt
(1992), ElSalvador (1996), theEuropean Communities (1991, 1993 &1995), Fiji(1997), Finland
(1992), Ghana (1992), Hong Kong (1990 &1994), Hungary (1991), Iceland (1994), India (1993),
Indonesia (1991 and1994), Israel (1994), Japan (1990, 1992 &1995), Kenya (1993), Korea, Rep.
of(1992 &1996), Macau (1994), Malaysia (1993), Mauritius (1995), Mexico (1993), Morocco (1989
&1996), NewZealand (1990 &1996), Nigeria (1991), Norway (1991 &1996), Pakistan (1995),
Peru(1994), thePhilippines (1993), Poland (1993), Romania (1992), Senegal (1994), Singapore (1992
&1996), Slovak Republic (1995), South Africa (1993), SriLanka (1995), Sweden (1990 &1994),
Switzerland (1991 &1996), Thailand (1991 &1995), Tunisia (1994), Turkey (1994), theUnited
States (1989, 1992, 1994 &1996), Uganda (1995), Uruguay (1992), Venezuela (1996), Zambia
(1996) andZimbabwe (1994).
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