Proposal for a COUNCIL REGULATION on a regime under Article 2 of Protocol No.10 of the Act of Accession

(presented by the Commission)

EXPLANATORY MEMORANDUM

According to Article 2 of Protocol No. 10 of the Act of Accession the Council shall, on the basis of a proposal by the Commission, define the terms under which provisions of EU law will apply to the line between the areas in which the Government of the Republic of Cyprus does exercise effective control and the areas in which it does not exercise effective control (hereafter the "line").

Pending a settlement of the Cyprus problem the application of the acquis in the northern part of Cyprus will be suspended pursuant to Article 1 of Protocol No. 10. As the line does not constitute an external border, special rules concerning the crossing of persons, goods and services need to be established.

The draft takes account of the particularity of the situation and the political sensitivities on the island. It covers, inter alia, issues like prevention of illegal immigration, customs, food safety, taxation, and travel facilities. It was important to find a balance between the need to establish a clear legal framework and the need to avoid the deepening of the divide.

Even in the event of a settlement before accession the Regulation may need to enter into force for a transitional period, because the acquis will not necessarily be fully extended to the northern part by 1 May 2004. A second draft Regulation comprising all the decisions to be taken by the Council in the event of a settlement before accession is currently under preparation. It can however only be finalised once the terms of the comprehensive settlement are known.

Proposal for a COUNCIL REGULATION on a regime under Article 2 of Protocol No.10 of the Act of Accession

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to Protocol No. 10 on Cyprus of the Act concerning the Accession of the Czech Republic, the Republic of Estonia, the Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Republic of Hungary, the Republic of Malta, the Republic of Poland, the Republic of Slovenia and the Slovak Republic and the adjustments to the Treaties on which the European Union is founded, and in particular Article 2 thereof,

Having regard to Protocol No. 3 on the Sovereign Base Areas of the United Kingdom of Great Britain and Northern Ireland in Cyprus of the said Act of Accession, and in particular Article 6 thereof,

Having regard to the proposal from the Commission, [1]

[1] OJ C ..., ..., p. ...

Whereas:

(1) The European Council repeatedly underlined its strong preference for accession by a reunited Cyprus. Regrettably, a comprehensive settlement has not yet been reached.

(2) Pending a settlement, the application of the acquis has therefore been suspended in the areas not under effective control of the Government of the Republic of Cyprus pursuant to Article 1 (1) of Protocol No. 10.

(3) This suspension makes it necessary to provide for the terms under which the relevant provisions of EU law will apply to the line between the above-mentioned areas and those areas in which the Government of the Republic of Cyprus exercises effective control. In order to ensure the effectiveness of these rules their application has to be extended to the boundary between the areas in which the Government of the Republic of Cyprus does not exercise effective control and the Eastern Sovereign Base Area of the United Kingdom of Great Britain and Northern Ireland.

(4) Since the above-mentioned line does not constitute an external border of the EU, the prime responsibility for determining which goods, services and persons are allowed to cross the line belongs to the Republic of Cyprus. As however the above-mentioned areas are temporarily outside the customs and fiscal territory of the Community and outside the area of freedom, justice and security, some special rules have to be applied to the line which should however secure an equivalent standard of protection of the security of the EU with regard to illegal immigration and threats to public order and of its economic interests as far as crossing of goods is concerned.

(5) Article 3 of Protocol No. 10 explicitly states that measures promoting economic development in the northern part of Cyprus are not precluded by the acquis suspension.

(6) Regarding persons, the policy of the Government of the Republic of Cyprus allows the crossing of the line by all citizens of the Republic, EU citizens and third country nationals who are legally residing in the northern part of Cyprus, and by all EU citizens and third country nationals who entered the island through the Government Controlled Areas.

(7) While taking into account the policy of the Government of Cyprus, it is necessary to set the minimum rules to carry out both checks on persons at the line and an effective surveillance of it, in order to prevent the illegal immigration of third country nationals as well as any threat to the public security and public policy. It is also necessary to define the conditions under which third country nationals are allowed to cross the line.

(8) Regarding checks on persons, the present Regulation should not affect the provisions laid down in Protocol No. 3 of the Act of Accession.

(9) Regarding goods, the policy of the Government of the Republic of Cyprus allows in principle only the crossing of goods wholly obtained in the northern part of Cyprus. Under these circumstances it is possible to apply simplified controls and formalities and to reduce charges to a minimum.

(10) This Regulation does not affect in any way the mandate of the United Nations in the buffer zone.

(11) Since any change in the policy of Cyprus with regard to the line may pose problems of compatibility with the rules established by the present Regulation, such changes should be notified to the Commission, prior to their entry into force, in order to allow it to take the appropriate initiatives avoiding inconsistencies.

(12) The Commission should also be allowed to amend the Annexes I, II, and III to the present Regulation because the need to proceed to changes may occur and require immediate action,

HAS ADOPTED THIS REGULATION:

TITLE I GENERAL PROVISIONS

Article 1 Definitions

For the purpose of this Regulation the following definitions shall apply:

1. the term "line" means:

(a) for the purpose of checks on persons, as defined in Article 2, the line between the areas under the effective control of the Government of the Republic of Cyprus and those areas in which the Government of the Republic of Cyprus does not exercise effective control;

(b) for the purpose of checks on goods, as defined in Article 4, the line between the areas in which the Government of the Republic of Cyprus does not exercise effective control and both those areas in which the Government of the Republic of Cyprus exercises effective control and the Eastern Sovereign Base Area of the United Kingdom of Great Britain and Northern Ireland;

2. the term "third country national" means any person who is not a citizen of the Union within the meaning of Article 17 (1) of the EC Treaty.

TITLE II CROSSING OF PERSONS

Article 2 Check on Persons

1. The Republic of Cyprus shall carry out checks on all persons crossing the line with the aim to prevent illegal immigration of third country nationals and to detect and prevent any threat to the public security and public policy. Such checks shall also be carried out on vehicles and objects in the possession of persons crossing the line.

2. All persons shall undergo at least one such check in order to establish their identity.

3. Third country nationals shall only be allowed to cross the line provided they:

a) possess either a residence permit issued by the Republic of Cyprus or a valid travel document and, if required, a valid visa for the Republic of Cyprus, and

b) do not represent a threat to public policy or public security.

4. The line shall be crossed only at crossing points authorised by the competent authorities of the Republic of Cyprus. A list of these crossing points is laid down in Annex I.

5. Checks on persons at the boundary between the Eastern Sovereign Base Area and the areas not under effective control of the Government of the Republic of Cyprus shall be carried out in accordance with Article 5 (2) of Protocol No. 3 of the Act of Accession.

Article 3 Surveillance of the line

Effective surveillance shall be carried out by the Republic of Cyprus all along the line, in such a way as to discourage people from circumventing checks at the crossing points referred to in Article 2 (4).

TITLE III CROSSING OF GOODS

Article 4 Treatment of Goods arriving from the areas not under the effective control of the Government of the Republic of Cyprus

1. Without prejudice to Article 6, only the goods mentioned in Annex II, under the condition that they are wholly obtained in the areas not under effective control of the Government of the Republic of Cyprus within the meaning of Article 23 of Council Regulation (EEC) No. 2913/92, [2] may be introduced in the areas under effective control of the Government of the Republic of Cyprus without being subject to customs duties or charges having equivalent effect nor to a customs declaration.

[2] OJ L 302, 19.10.1992, p. 1

2. The goods shall cross the line only at the crossing points mentioned in Annex I and the crossing points of Pergamos and Strovilia under the authority of the Eastern Sovereign Base Area.

3. If required by EC legislation, the goods have to undergo the checks mentioned in Annex III.

4. Goods shall be accompanied by a document issued by the Turkish Cypriot Chamber of Commerce duly recognised for that purpose by the Government of the Republic of Cyprus.

5. The competent authorities of the Republic of Cyprus shall check, after the goods have crossed the line to the areas under effective control of the Government of the Republic of Cyprus, the authenticity of the document referred to in paragraph 4 and whether it corresponds with the consignment.

6. The Republic of Cyprus shall treat the goods referred to in paragraph 1 as not being imported within the meaning of Article 7 (1) of Council Directive 77/388/EEC [3] and Article 5 of Council Directive 92/12/EEC [4], provided the goods are for use in the Republic of Cyprus.

[3] OJ L 145, 13.6.1977, p. 1

[4] OJ L 76, 23.3.1992, p. 1

7. Paragraph 6 shall not have any effects on the European Communities' own resources accruing from VAT.

8. The movement of live animals and animal products across the line shall be prohibited.

9. The authorities of the Eastern Sovereign Base Area are allowed to maintain the traditional supply of the Turkish Cypriot population of the village of Pyla with goods coming from the areas which are not under the effective control of the Government of Cyprus. They shall strictly supervise the quantities and nature of the goods in view of their destination.

10. Goods complying with the conditions set out in paragraphs 1 to 9 shall have the status of Community goods, within the meaning of Article 4 (7) of Council Regulation (EEC) No. 2913/92.

Article 5 Goods sent to the areas not under the effective control of the Government of the Republic of Cyprus

1. Goods which are allowed to cross the line shall not be subject to export formalities. However, the necessary equivalent documentation should be provided by the authorities of the Republic of Cyprus upon request.

2. No export refund shall be paid for agricultural and processed agricultural goods when crossing the line.

3. Supply of goods shall not be exempt under Article 15 (1) and (2) of Directive 77/388/EEC.

4. Movement of goods whose removal or export from the customs territory of the Community is prohibited or subject to authorization, restrictions, duties or other charges on export by Community law, shall be prohibited.

Article 6 Travel facilities

Council Directive 69/169/EEC [5] shall not apply, but goods contained in the personal luggage of travellers, including maximum 200 cigarettes and 1 litre of alcoholic beverages, shall be exempt from turnover tax and excise duty if they have no commercial character and their total value does not exceed 30 EUR per person. The Republic of Cyprus may impose additional quantitative restrictions for alcoholic beverages and tobacco products for travelers under 15 years of age.

[5] OJ L 133, 4.6.1969, p. 6

TITLE IV SERVICES

Article 7 Taxation

To the extent that services are supplied across the line to and from persons established or having their permanent address or usual residence in the areas of the Republic of Cyprus which are not under the effective control of the Government of the Republic of Cyprus these services shall for VAT purposes be deemed to have been supplied or received by persons established or having their permanent address or usual residence in the areas of the Republic of Cyprus under the effective control of the Government of the Republic of Cyprus.

TITLE V FINAL PROVISIONS

Article 8 Implementation

The authorities of the Republic of Cyprus and the authorities of the Eastern Sovereign Base Area in Cyprus shall take all appropriate measures in order to ensure full compliance with the provisions of this Regulation and to prevent any circumvention of them.

Article 9 Adaptation of Annexes

The Commission may, at the request of the Government of Cyprus, amend Annexes I, II, and III.

Article 10 Change of Policy

Any change in the policy of the Republic of Cyprus on crossings of persons or goods shall only become effective after the proposed changes have been notified to the Commission and the Commission has not objected these changes within one month. If appropriate, the Commission may propose modifications to this Regulation in order to secure compatibility of national and EU rules applicable to the line.

Article 11 Entry into Force

This Regulation shall enter into force on the day of accession of Cyprus to the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels,

For the Council

The President

Annex I

List of crossing points referred to in Article 2 (4) of the Regulation

- Ledra Palace

- Agios Dhometios

Annex II

List of goods referred to in Article 4 (1) of the Regulation

- citrus fruits (falling within HS heading 0805): fruits of Citrus L., Fortunella Swingle, Poncirus Raf., and their hybrids

- terra umbra (falling within HS heading ex2530)

Annex III

List of checks referred to in Article 4 (3) of the Regulation

- phytosanitary control: citrus fruits shall have undergone phytosanitary checks by duly authorised experts to verify that the provisions of the EU phytosanitary legislation (Council Directive 2000/29/EC) are complied with before they cross the line to the areas under effective control of the Government of the Republic of Cyprus.