RESTRICTED
WORLD TRADE G/SCM/Q2/CYP/5
16May1997
ORGANIZATION(97-2043)
Original: English Committee onSubsidies
andCountervailing Measures
SUBSIDIES
Replies toQuestions from theEUROPEAN COMMUNITY1Regarding
theNewandFullNotification ofCYPRUS2
Thefollowing communication, dated 9May1997 hasbeenreceived from thePermanent of
Mission ofCyprus.
_______________
Ihavethepleasure inproviding thereplies ofthecompetent Ministry oftheRepublic ofCyprus
toanumber ofquestions posed bytheEuropean Community. Thereplies totherestofthequestions
willbecommunicated before thedeadline.
Q. Industrial FreeZone
Arethelocation ofthecompanies inthezoneandexport performance theonlycriteria for
eligibility?
Answer
Thecriteria which aretaken intoconsideration inassessing theapplications arethefollowing:
- Theviability oftheproject (afeasibility study isrequested inallcases)
- Thepercentage value added tothefinished product
- Theemployment opportunities tobecreated
- Theproposed production methods (priority isgiven toprojects utilizing advanced
technologies)
- Therequested utility loads inrelation totheavailable capacity
- Environmental impact
1G/SCM/Q2/CYP/1.
2G/SCM/N/3/CYP.
./.G/SCM/Q2/CYP/5
Page2
- Useofrawmaterials andequipment from localsources
- Theimpact onthelocalindustry.
Itshould benoted, however, thattheabove criteria carry different weights andeachproject
isexamined onacase-by-case basis.
Q. Howarecompanies approved bytheMinistry ofCommerce Industry andTourism?
Answer
According totheFreeZoneLaw(No.69/75) theMinister ofCommerce, Industry andTourism
haspower, afterconsultation withtheMinister ofFinance, togrant orrefuse togrant toanyperson
alicence authorizing thecarrying onwithin theFreeZone ofanytrade, business ormanufacture.
Anyperson mayapply totheMinister forthegrant ofalicence. Persons orenterprises towhich a
permit tooperate within theFreeZone isgranted arerequested tosignacontract ofleasefortheland
allocated tothem. Theleaseisinforcefor33years withtheoption toberenewed fortwomore 33year
periods. Thelease rental ispresently setat$880 per1,000 m2perannum.
Q. Cyprus states thattheduration oftheprogramme is"yearly". Could Cyprus comment onthe
compatibility ofthisprogramme withArticle 3.1(a) oftheSubsidies Agreement?
Answer
The"yearly" programme actually refers totheannual budget oftheLarnaca FreeZone. The
budget provides fortheadministration andother overhead expenses. Thescheme doesnotprovide
forsubsidies and,therefore, isnotincompatible withArticle 3.1(a) oftheSubsidies Agreement.
Q. Promotion oflocally manufactured goods
Answer
There isnodefinition of"locally manufactured goods". However, manufacturing activities
areclassified onthebasis ofNACE Rev.1 (Statistical Classification ofEconomic Activities inthe
European Community).
Theaimofthisprogramme istochange consumers 'attitudes towards domestic goods. For
many years nowthere hasbeenapreconception amongst consumers thatdomestic goods areofa
relatively lowquality.
Under thisprogramme financial aidisgranted tothevarious Industrial Associations tocarry
outanadvertising campaign forthepromotion ofgoods manufactured inCyprus.
ThereisnoincompatibilitywithArticle3.1(b)oftheSubsidiesAgreementbecausetheassistance
doesnotdepend ontheuseofdomestic overimported goods. Moreover, theassistance isnotgranted
tospecific firms forthepromotion oftheirownproducts andbrand names.