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Country Commercial Guides FY 2000: Cyprus Report prepared by U.S. Embassy Nicosia, released July 1999 Note*

VI. TRADE REGULATIONS AND STANDARDS

Trade Barriers

Cyprus began full implementation of the Uruguay Round agreement January 1, 1996. Under this agreement, the Government of Cyprus eliminated quantitative restrictions and other non-tariff barriers to trade. This opened up the Cypriot market to most U.S. goods, most of which previously had been severely limited.

Additionally, completion of the first phase of the EU-Cyprus Customs Union agreement on January 1, 1998 liberated the island's trade regime further, allowing most goods to be traded between Cyprus and the EU with a zero tariff rate. Under the same agreement, Cyprus has also adopted the EU's Common Customs Tariff (CCT) for most products from third (non-EU) countries. Significantly, the preference now given to EU products under the CCT is less than the preference Cyprus gave to EU countries under its previous tariff regime. These developments are helping U.S. exports to Cyprus become more competitive than ever.

As mentioned in Section IV., under "Selling to the Government," the 20 percent price preference granted to locally produced goods and services for public tenders is clearly discriminatory against foreign bidders. It is also contrary to EU practice and the WTO's Government Procurement Agreement. The U.S. Embassy will continue to urge the Government of Cyprus to rescind this law.

Customs Valuation

Customs duties are regulated by a tariff system based on the harmonized commodity description and coding system (HS). Goods are classified according to their composition, description and purpose and carry various rates of duty. Luxury items carry the highest duties. Other than import tariffs, there is an 8.0 percent value added tax (VAT) which is destined to increase substantially (to 10-15 percent) in the near future. The Temporary Refugee Levy (TRL), a temporary tax on imports introduced in 1974 in addition to tariffs, has been abolished for most products as of January 1, 1998 (a very small number of "luxury" products such as cookies and whiskey still carry a 5.0-6.0 percent TRL).

Import Documentation

The following documents should be presented at Customs at the time goods are cleared: delivery order for the goods; an invoice; and a packing list.

Various other documents according to the nature of each import will be required. A health certificate and listing of ingredients are required for imported food products.

Temporary Entry

The temporary entry of goods allows the importation without payment of duty. Other than the temporary importation of motor vehicles, this facility is extended to goods for processing or repair prior to their re-exportation, goods for exhibition, and commercial samples, provided they do not change their form or character. The initial temporary permit is valid for three months and can be extended by application to Customs headquarters.

Labeling, Marking Requirements

In 1995, Cyprus adopted a stricter law on the labeling of food products, requiring that the product name, ingredients, net contents and country of origin be in the Greek language. A sticker with a Greek translation on the product is acceptable, provided it does not conceal the original label and it has the approval of the Ministry of Commerce, Industry, and Tourism. Implementation of this law has been mandatory for all food products since February 1, 1997.

The "Safety of Consumer Products Law" of 1994 outlines the legal responsibilities of those involved in the production or distribution of consumer products requiring safety warnings (including household appliances, pharmaceuticals, and many other products). One of these responsibilities concerns the proper labeling and packaging of consumer products to render them completely safe to the public. This includes having the necessary safety warnings for consumer products in Greek. The government has re-doubled efforts for stricter enforcement of the law.

Prohibited Imports

The importation of certain items is prohibited. The principal ones are listed below:

--- Rifles and repeating firearms, automatic and semi automatic, repeating and semi-repeating shotguns, airguns, air rifles and air pistols of a caliber exceeding 0.177 inches.

--- Narcotics.

--- Seditious Publications.

--- Counterfeit or false coins or currency notes.

--- Goods bearing a false trade mark.

--- Agricultural products such as fresh vegetables, fruits and plants.

--- Dogs, cats, tropical fish, parrot and other birds can be imported into Cyprus after the issuance of a special permit from the Director of the Veterinary Services.

Standards

Increasingly, Cypriot standards and regulations are being harmonized with corresponding EU provisions, in line with the Government's efforts to remove all potential obstacles to EU accession.

A good example of this policy was the recent adoption by Cyprus of legislation requiring "CE" marking on certain products. (Note: "CE" certification stands for "Communaute Europeuenne." This is the standard used in EU countries to indicate conformity to European standards for a number of products which are critical to consumer safety. Currently, 18 product categories, including, toys, home appliances, construction products, telecommunications terminal equipment, and medical devices are required to bear the CE mark in the EU.) Cyprus has passed a series of legislation, beginning March 1998, requiring "CE" certification for 18 product categories (starting with toys, low-voltage appliances, and home appliances), in line with EU practice. This is something that U.S. exporters of these products need to bear in mind for the future: CE marking is becoming mandatory for most imported products.

There are numerous other examples of how the Government's efforts to harmonize the Cypriot economy with the EU have affected Cypriot legislation and standards. These include the adoption in 1997 of a modern banking law, which conforms to the EU's directives for banking supervision, adoption of a modern patents law, as well as adoption of minimum EU programming requirements for television stations.

On the issue of standards in general, it should be noted that many companies in Cyprus have achieved the ISO standard. Semi-government organizations such as the Cyprus Telecommunications Authority and the Electricity Authority request tendering companies to meet ISO requirements.

Free Trade Zones/Transit Trade

In recent years, transit trade through the island has become an increasingly important source of business for Cyprus. This business is transacted through free trade zones in the two ports of Limassol and Larnaca or through bonded warehouses where goods are kept for onward transshipment. Permission for foreign participation in transshipment activities through Cyprus is usually granted easily by the Central Bank.

The total value of goods re-exported through Cyprus to neighboring countries has increased from USD 378.6 million in 1990 to USD 652.0 million in 1997. (During the same period, Cyprus' domestic exports declined from USD 575.3 million in 1990 to USD 411.3 million in 1998.) Safe port facilities, reasonable storage rates, safety of storage facilities in free port areas, and good business connections are the leading reasons behind this booming trade.

Re-exports of U.S.-origin tobacco to Eastern European countries (primarily Russia and Bulgaria) have accounted for more than half of Cyprus' total re-exports in recent years. Last year, for the first time in a decade, the value of this trade recorded a decrease from USD 526.9 million in 1997, to USD 305.9 million in 1998. Of these, all but USD 16.0 million were re-exported.

Membership in Free Trade Arrangements

On March 31, 1998 Cyprus began formal accession negotiations for entry into the EU and is currently one of six countries scheduled for the EU's next enlargement. A Customs Union Agreement initiated in 1972 and partially completed in 1998, allows 80.0 percent of the goods traded between Cyprus and the EU to have zero tariffs. Under the same agreement, Cyprus has adopted the EU's Common Customs Tariff (CCT) for third countries on most products since January 1, 1998.