CYPRUS: TRADE AGREEMENT COMPLIANCE AND MONITORING

UNCLAS NICOSIA 001690

SIPDIS

SENSITIVE

SIPDIS

USDOC FOR TCC/4110
DEPT PASS USTR FOR HIRSH
STATE FOR EB/TPP/MTA (ECOCH) AND EUR/SE
USDA FOR ITP/FAS/BERTSCH

E.O. 12958: N/A
TAGS: ECON ETRD CY
SUBJECT: CYPRUS: TRADE AGREEMENT COMPLIANCE AND MONITORING

REF: STATE 152063

(U) This cable is sensitive but unclassified. Please protect
accordingly. Not for internet distribution.


1. (U) Answers below are keyed to reftel questions.


2. (U) Q1: Description of how Post is organized to monitor (trade)
agreements and respond to foreign trade barrier complaints:

Embassy Nicosia does not have a Foreign Commercial Service (FCS) or
Foreign Agricultural Service (FAS) office. Our commercial work,
including trade agreement compliance and monitoring, is done through
our Economic and Commercial Office, which falls under the Department
of State. One American FSO supervises two FSNs in the Commercial
Office and one FSN in the Economic Office. Our FSO and FSNs are in
regular contact with business and economic circles on the island,
helping resolve trade issues and to report on developments that
might affect negatively bilateral trade relations. Being a Partner
Post with the FCS office in Embassy Athens, our office often draws
upon FCS Athens for training, advice and guidance.


3. (U) Q2: Name of Contact Person at Post to coordinate periodic
compliance reporting, field general compliance inquiries, and ensure
complaints are reported promptly to relevant Washington agencies:

Michael S. Dixon
Economic, Commercial, and EXBS Officer
American Embassy
Metochiou and Ploutarchou Streets
P.O.Box 24536
CY-1385 Nicosia
CYPRUS
Tel. +357-22-393359
Fax: +357-22-393923
E-mail: DixonMS@state.gov
Website: http://cyprus.usembassy.gov


4. (SBU) Q3: Description of complaint response activities at Post
including examples of recent compliance successes and ongoing
compliance issues:

Cyprus does not have a bilateral trade treaty with the United
States. Since Cypriot Independence in 1960, Cyprus and the United
States have signed several agreements on various other issues,
including an exchange of notes relating to investment guarantees
(1963); a customs cooperation agreement (1987); environmental
cooperation on the GLOBE program (1998); a double tax avoidance
treaty (1984); mutual legal assistance in criminal matters (1999
revised 2006); and an agreement against WMD proliferation by sea.
Cyprus has also "inherited" several dated agreements signed between
the United Kingdom and the United States prior to 1960, such as an
arrangement relating to pilot licenses to operate civil aircraft
(1935); an economic cooperation agreement (1948); and a declaration
for reciprocal protection of trademarks (1877). In effect, the
legal framework defining trade and investment issues between Cyprus
and the United States depends mostly on multilateral agreements,
such as the WTO and U.S.-EU agreements, rather than bilateral
treaties.

Post is not aware of any cases of non-compliance with any trade or
investment treaties. Post did raise concerns with the GoC and
Cypriot House of Representatives last year over a proposed law on
products containing biotech content that appeared to be inconsistent
with the EU Acquis and may have violated Cyprus's WTO obligations.
In the end, this bill was withdrawn. The trade complaints we
receive periodically from U.S. companies concern mostly customs
issues, such as detention of products by customs for procedural
reasons. However, such problems usually arise due to Cypriot
customs officers' strict (and sometime overly strict) interpretation
of EU regulations, rather than violating any bilateral or
multilateral customs agreement. As we do not have a resident U.S.
Customs officer at Post, we often refer some of these issues to the
U.S. Customs Offices in Rome and Athens.

Some of the issues that have been brought to our attention as
barriers to trade and investment (although not necessarily outright
violations of any trade agreement) include market access
restrictions for U.S. pharmaceuticals, stricter regulations against
biotechnology products, shortcomings in implementing IPR
legislation, real property acquisition restrictions, investment
restrictions in education and mass media, excise taxes on large
automobile engines, and restrictions on registration of real estate
companies. These issues are highlighted in our annual submission to
USEU for inclusion in the National Trade Estimate Report (NTER) on
the European Union. We regularly raise these issues with our GoC
counterparts and have organized a series of seminars on IPR
enforcement together with the Cyprus-American Business Association.
Partly as a result of these seminars, the GoC has strengthened its
IPR legislation and has established a dedicated IPR-unit in the
Police. The level of CD, DVD, and software piracy, however, remains
worryingly high.

U.S. firms trying to do business in Cyprus also encounter problems
with standards and labeling issues, such as "CE" marking, or Greek
labeling, but these are no different than anywhere else in the EU.
In these situations we try to help the U.S. firms understand and
comply with the regulations.


5. (SBU) Q4: Description of proactive monitoring efforts at Post:

In our regular contacts with the resident U.S. business community
and local agents of U.S. companies we are constantly vigilant of
issues that might hamper bilateral trade and investment. Our key
function as liaison between U.S. business and the Government of
Cyprus (GOC) often results in providing answers to questions and
helping U.S. business navigate the bureaucracy. We work with the
business community to follow planned legislative changes that may
impact on U.S. interests such as IPR or biotech, and raise our
concerns when appropriate.

SCHLICHER