Europaudvalget 2003-04
EUU Alm.del Bilag 172
Offentligt
Comprehensive monitoring report
on
Cyprus's
preparations for membership
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A.
B.
INTRODUCTION ................................................................................................................................ 3
ECONOMIC ISSUES ........................................................................................................................... 5
1.
Economic developments............................................................................................................ 5
2.
Implementation of recommendations for improvements ........................................................... 8
COMMITMENTS AND REQUIREMENTS ARISING FROM THE ACCESSION
NEGOTIATIONS ............................................................................................................................... 10
1.
Administrative and judicial capacity ....................................................................................... 12
Public administration............................................................................................................... 12
Judicial capacity ...................................................................................................................... 12
Anti-corruption measures ........................................................................................................ 13
2.
The chapters of the
acquis.......................................................................................................
15
Chapter 1: Free movement of goods ....................................................................... 15
Chapter 2: Free movement of persons .................................................................... 16
Chapter 3: Freedom to provide services ................................................................. 17
Chapter 4: Free movement of capital ...................................................................... 19
Chapter 5: Company Law ....................................................................................... 20
Chapter 6: Competition Policy................................................................................ 22
Chapter 7: Agriculture ............................................................................................ 23
Chapter 8: Fisheries ................................................................................................ 26
Chapter 9: Transport policy .................................................................................... 28
Chapter 10: Taxation .............................................................................................. 29
Chapter 11: Economic and monetary union ............................................................ 30
Chapter 12: Statistics .............................................................................................. 31
Chapter 13: Social policy and employment ............................................................ 31
Chapter 14: Energy ................................................................................................. 33
Chapter 15: Industrial policy .................................................................................. 34
Chapter 16: Small and Medium-sized Enterprises .................................................. 35
Chapter 17: Science and Research .......................................................................... 35
Chapter 18: Education and training ........................................................................ 35
Chapter 19: Telecommunications and information technologies ............................ 36
Chapter 20: Culture and audio-visual policy........................................................... 37
Chapter 21: Regional policy and co-ordination of structural instruments............... 37
Chapter 22: Environment........................................................................................ 39
Chapter 23: Consumer and health protection.......................................................... 41
Chapter 24: Justice and home affairs ...................................................................... 42
Chapter 25: Customs union..................................................................................... 45
Chapter 26: External relations ................................................................................ 46
Chapter 27: Common foreign and security policy .................................................. 47
Chapter 28: Financial control.................................................................................. 48
Chapter 29: Financial and budgetary provisions..................................................... 49
CONCLUSION ................................................................................................................................... 50
C.
D.
STATISTICAL ANNEX .............................................................................................................................. 52
2
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A.
I
NTRODUCTION
The accession negotiations with Cyprus were successfully concluded on 13 December
2002 and the Treaty of Accession was signed on 16 April 2003. Following ratification of
the Treaty of Accession, Cyprus will join the EU on 1 May 2004.
In its Strategy Paper “Towards the enlarged Union”, which accompanied the 2002
Regular Reports, the Commission stated that:
“Acceding countries need to implement the acquis by the date of accession, except in
cases where transitional arrangements have been agreed. Commitments undertaken
in the negotiations must be fully met before accession. The Regular Reports point to
a number of areas where further improvements need to be made in the context of the
political and economic criteria and in relationship to the adoption, implementation
and enforcement of the acquis. These should be vigorously pursued. In order to
analyse progress and to facilitate successful membership of the European Union, the
Commission will regularly monitor this and report to Council. The Commission will
produce six months before the envisaged date of accession a comprehensive
monitoring report for the Council and the European Parliament.”
The Copenhagen European Council in December 2002 concluded that:
“Monitoring up to accession of the commitments undertaken will give further
guidance to the acceding states in their efforts to assume responsibilities of
membership and will give the necessary assurance to current Member States.”
and the Thessaloniki European Council in June 2003 stated that:
“…the ten acceding States are encouraged to keep up their efforts so that they are
fully prepared to assume the obligations of membership by accession. This also
includes the necessary translation of the Community acquis. With a view to making a
success of enlargement, the monitoring of these preparations has been intensified on
the basis of reports submitted regularly by the Commission.”
As the accession date of 1 May 2004 draws closer, this report presents a comprehensive
state of play of the findings of the regular monitoring carried out by the Commission,
building upon the findings of the 2002 Regular Report for Cyprus. The report contains
two main parts.
The first part deals with economic issues. It describes briefly economic developments in
Cyprus, and then goes on to assess the implementation of the necessary economic
reforms in the areas highlighted in the conclusions of the 2002 Regular Report for Cyprus
as being in need of further improvements.
The second part gives an overview of where Cyprus stands in implementing all
commitments and requirements arising from the accession negotiations for each
acquis
chapter, both in terms of legislation and from the perspective of implementing structures,
including administrative capacity and enforcement. In view of their importance for the
implementation and enforcement of the
acquis,
the overall state of readiness of the public
administration and the judicial system and the development of effective anti-corruption
measures are assessed in an introductory section to this part.
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This report reflects the situation at the end of September 2003. It records decisions
actually taken, legislation actually adopted, measures actually implemented and structures
actually in place and functioning by that date.
The Commission strongly believes that a solution to the Cyprus problem can still be
found before 1 May 2004 in order to allow the accession of a united Cyprus. However, in
case a comprehensive settlement of the Cyprus problem is not reached before the date of
accession, Protocol No. 10 annexed to the Accession Treaty envisages the suspension of
the
acquis
in the areas of the country which are not under the effective control of the
Government of Cyprus. As such a comprehensive settlement has not yet been reached,
this report only monitors the application of the acquis in the government controlled part
of Cyprus. Any specific measures required to deal with the terms under which EU law
will apply to the line between the north and the government controlled areas would be
defined before accession.
For each chapter of the
acquis,
this report identifies the areas in which Cyprus is expected
to be, or is already, in a position to implement the
acquis
and the areas where further
action is still needed. Where relevant, the report also points out issues where lagging or
deficient preparations are a cause of serious concern. This assessment starts from the
premise that Cyprus must be fully prepared for membership from the date of accession. In
cases where transitional arrangements have been agreed in the accession negotiations,
their effect on Cyprus’s obligations is duly reflected in the assessment.
Numerous sources of information have been used to compile this report. Cyprus was
invited to provide information on its state of preparedness. The Report also draws on
information provided by Cyprus within the framework of the Association Agreement and
the accession negotiations, as well as on peer reviews that have taken place to assess its
administrative capacity in specific areas. Council deliberations and European Parliament
reports and resolutions have been taken into account in drafting it.
1
Where relevant, the
Commission has also drawn on assessments made by various international organisations
such as the Council of Europe, the OSCE and the international financial institutions, and
by non-governmental organisations.
1
For the European Parliament the rapporteur is Mr Jacques Poos.
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B.
E
CONOMIC ISSUES
In its 2002 Regular Report, the Commission concluded that
“Cyprus is a functioning market economy and it should be able to cope with
competitive pressure and market forces within the Union.
Further improvements can be made to the functioning of markets by keeping to
plans to liberalise the telecom, energy, air transport and postal services sectors.
Adherence to the fiscal consolidation programme will contribute to reducing the
current account deficit. Care must be taken to improve co-ordination of the
supervision of co-operative financial institutions and banks”.
The principal purpose of this part of the Comprehensive Monitoring Report is to assess
the implementation of recommendations for improvements in the areas identified in last
year’s Regular Report. The focus is on the change since last year and not on the overall
degree of functioning of the market economy or degree of competitiveness. The
assessment can be found in Section 2. Section 1 briefly describes recent economic
developments in Cyprus including the continuation of the reform path since last year’s
Report.
1.
Economic developments
2
The Cyprus economy slowed down in 2002 -although remaining resilient while inflation,
the current account and the government deficit deteriorated.
For 2002, GDP growth in
Cyprus nearly halved to 2.2%, caused mainly by the weak performance of the external
sector and in particular tourism, which accounts for around 20% of GDP and
employment. Great geopolitical and economic uncertainty hit exports, and in particular
the service account was affected by the drop in tourist arrivals of more than 10%.
Consequently, total exports dropped by nearly 5%. At the same time, imports declined by
3%. Overall, the current account deficit deteriorated in 2002 to 5.3% of GDP, largely
financed by large inflows of foreign direct investment. Domestic demand was the leading
growth factor in 2002, despite a marked deceleration of private consumption expansion,
related,
inter alia,
to declining consumer confidence. At the same time, investment
growth accelerated sharply in 2002, largely explained by high activity in the construction
sector and one-off factors linked to government investment. The Iraq war and SARS in
early 2003 further negatively affected this year’s tourist season -exacerbated by low EU
2
This report covers those areas of the Republic of Cyprus in which the government of the Republic of
Cyprus exercises effective control. As regards the areas where the government of the Republic of
Cyprus does not exercise effective control, per capita income stands at around € 4 400 against € 15
010 for the rest of the island. The monetary union and high trade dependence of the northern part of
Cyprus with Turkey effectively make the economy an extension of the economic situation there.
Modest growth was reported in the north in 2002. Inflation, directly imported from Turkey, has been
coming down but is still unsustainably high (24.5% in 2002). The fiscal deficit reached about 17% of
the GDP, entirely financed by transfers from Turkey whereas the current account deficit fell below 1%
of GDP. Behind seemingly full employment numbers, there is large hidden unemployment in the
economy where the public sector is the largest employer. Public ownership or control is widespread,
and price control is pervasive. Reform programmes have been put into effect during the last two years
but there is still a long way ahead and a great need for technical and financial assistance to construct
and implement structural transformation. Note that the data on the areas where the government of the
Republic of Cyprus does not exercise effective control could not be independently verified.
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growth- despite various policy measures to counter the effects, and growth for this year
therefore is likely to remain relatively weak. Despite being affected by the economic
slowdown, the relatively flexible labour market (as also noted in the Joint Assessment of
the Employment Policy Priorities and subsequent progress reports) has held up relatively
well and continued to operate at near full-employment levels. The unemployment rate
decreased to 3.8% in 2002 and stood at 4.3%
3
in August of this year. Inflation climbed to
2.8% in 2002, mainly due to domestic reasons such as increases in VAT linked to EU
harmonisation. Similarly, this year the expected rate peaks at 4.6%, again mostly linked
to tax harmonisation. By August 2003 inflation was running at 2.4% year-on-year. The
fiscal performance in 2002 was negatively influenced by the slowdown, as lower
economic growth and tax avoidance led to marked revenue shortfalls in that year. At the
same time, expenditure pressures, notably in wages and salaries and in defence
expenditure, pushed spending. Altogether this brought the budget shortfall to 3.5% of
GDP in 2002, instead of a previously planned 2.6%. For this year the fiscal deficit is now
expected to reach over 5% of GDP, rendering the fiscal consolidation program defunct,
and a new fiscal consolidation programme was adopted. Monetary policy somewhat
relaxed in 2002 as the Central Bank of Cyprus (CBC) cut interest rates by 50 basis points
in December, mirroring a rate cut by the European Central Bank. Rates were lowered
again by the same magnitude in April 2003 as one of the measures to counter negative
effects of the Iraq war on the economy. The rising inflation was mainly considered a
temporary phenomenon, much like previous spikes linked to tax changes. Despite higher
exchange rate risk following the widening of the fluctuation bands against the euro in
2001, the Cyprus pound kept stable against the euro in the course of 2002 and 2003 so
far.
3
Seasonally unadjusted.
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Cyprus
Real GDP growth rate
Inflation rate
- annual average
- December-on-
December
Unemployment rate
- LFS definition
General government
budget balance
Current account balance
per cent
per cent
per cent
Main Economic Trends
1998
1999
2000
5.0
2.3
0.8
:
per cent
per cent of
GDP
per cent of
GDP
million
ECU/Euro
Per cent
of exports
of goods
and
services
million
ECU/Euro
Per cent
of GDP
million
ECU/Euro
237
642
872 p
-4.9
-6.7
-541
139.4
-4.5
-2.3
-204
164.2
-3.1
-5.1
-494
162.5
4.8
1.1
3.6
:
5.2
4.9
3.7
5.2
2001
4.2
2.0
2.1
4.4
-3.0
-4.3
-441
149.7
2002
2.2
2.8
3.1
3.8
-3.5 p
-5.3 p
-575
b
:
2003
latest
2.4 Q1
3.9
August
a
2.4
August
:
:
:
Gross foreign debt of the
whole economy
- debt export ratio
:
:
4 937
2.9
6 350
7.4
7 236
9.1 p
7 152
7.1 p
:
4.3 p
:
:
Foreign direct investment
in flow
- balance of payments
data
728 p
466
b
:
Sources: Eurostat. National sources. OECD external Debt Statistics
a
b
Moving 12 months average rate of change.
Source: Website of the National Bank.
P= provisional figures
Structural reform has continued slowly but some long-term issues remain.
The crisis in
the tourist sector in Cyprus has underlined the increasing economic dependence on this
sector, while traditional sources of export earnings, particularly within the manufacturing
sector, show a structural decline. The government is well aware of these issues and policy
is oriented toward the development of other service sectors (telecom, IT and business
services, education), as taken up in the new Strategic Development Plan 2004-2006 as
well. Nevertheless, in the past these policies tended to be overwhelmed by the
comparative advantage of the tourism sector. With a relatively high employment rate and
low unemployment rate, there is a risk of labour shortages in certain sectors and therefore
a need to mobilise the potential labour force and make it more adaptable. This calls for an
active policy approach to make education and training more responsive to labour market
requirements. Capital liberalisation is nearly complete and has not led to increased
exchange rate volatility. Cyprus is now in the third (final) stage of the capital account
liberalisation process. An important step was the - partial - liberalisation of portfolio
investment and real estate for individuals. This contributed to a shift in 2002 toward
‘permanent’ tourism that partly offsets the volatility in that sector. Some restrictions are
still in place but so far capital account liberalisation has not led to any major problems
and has been accompanied by both increased inward and outward flows, while the
Cyprus pound remained stable against the euro. Water is a crucial scarce asset on the
island and poses pressing environmental challenges, but the supply side situation has
been improving somewhat through the construction of desalination plants and more
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normal rainfall in 2002 and 2003 so far. Nevertheless, the island’s aquifers remain in a
bad state after long draughts, leading to environmental degradation. However, water
rationing has now effectively stopped and water supply prices for the agricultural sector
are still low. Therefore, the need to further address the medium- and long term water
demand and supply issues remains.
Main Indicators of Economic Structure in 2002
Population (average)
GDP per head
a
Thousand
PPS
Per cent of EU average
798.9 P
73
4.3
5.3
18.7
70.0
43.1
:
:
0.8
Share of agriculture in:
- gross value added
- employment
Gross fixed capital formation/GDP
Gross foreign debt of the whole
c
economy/GDP
Exports of goods & services/GDP
Stock of foreign direct investment
Long term unemployment rate
Source: Eurostat
P
a
b
c
d
provisional data
Figures have been calculated using the population figures from National Accounts, which may differ from those used in demographic statistics.
Agriculture, hunting, forestry and fishing.
Data refer to 2001.
Data refer to 2000.
d
b
Per Cent
Per Cent
Per Cent
Per Cent
Per Cent
Million Euro
Euro per head
Per Cent of labour force
2.
Implementation of recommendations for improvements
Liberalisation of the telecom, energy, air transport and postal services
by 2003 has
been implemented in some sectors, but remains to be put into practice in others.
The
enactment of new legislation aimed at liberalising telecommunications and postal
services in January 2003 is a positive step forward, as is the establishment of a new
regulator in this sector. Implementation, however, is slow, as decrees to ensure
competition in the telecom sector are missing so far while liberalisation in air transport
remains to be completed by the time of entry. For the energy sector there is a similar
delay, and the opening up of the electricity market is to take place upon accession only.
Fiscal consolidation
went markedly off target and the current account deficit widened.
The Strategic Fiscal Consolidation Plan, introduced in 1999, was revised and extended in
2001 and again in 2002. It aimed at reducing the deficit to 2.0% of GDP by 2002 while
reaching fiscal balance by 2005. However, fiscal performance in 2002 as well as the path
to the medium-term fiscal targets slipped again through expenditure overruns and
revenue shortfalls, with the government deficit increasing to 3.5% of GDP. Indications
are that it will move further upward to an unsustainable 5.3% for this year, with the fiscal
consolidation program effectively abandoned. To counter this alarming development, the
government adopted a new fiscal consolidation plan in early September 2003, which no
longer targets fiscal balance over the medium term but aims to reduce the deficit to 2.2%
of GDP by 2006. This is perhaps more realistic yet at the same time much less ambitious.
Concomitantly, the current account deficit expanded to over 5% of GDP in 2002.
Although financing of the deficits has not been a problem so far, current account deficits
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continue to be a weak spot in the economy. It is estimated that for Cyprus a deficit of 3%
of GDP would be sustainable in stabilising the ratio of external liabilities to GDP. This
appears achievable in the light of the average current account deficit for 1997-2002 of
4.7% of GDP provided the fiscal consolidation program is implemented, although the
fiscal budget aims are rather modest.
Progress has been achieved in
financial supervision
but further improvements remain
necessary.
Further steps forward have been made in the institutional arrangements for co-
operative bank supervision although the Department of Co-operative Development
continues to be the supervisory agency for the co-operative sector. This means that
similar financial institutions, i.e. commercial banks and the co-operative banks, are still
supervised by different agencies. The Central Bank of Cyprus and the Department did,
however, recently conclude a co-operation agreement to provide consolidated
supervision. Furthermore, the CBC, Securities and Exchange Commission (SEC) and the
Superintendent of Insurance signed a protocol agreement aiming at a closer and more
effective regulation of the financial system. Under the agreement, in effect in January
2003, the three regulatory bodies co-ordinate and co-operate on a wide range of financial
control issues. As for the supervisory competition between the SEC and the Cyprus Stock
Exchange (CSE) pointed at in last year’s Regular Report, a blueprint for legislative action
clearly delineating the supervisory duties for the SEC and the CSE has been finalised but
needs to be further implemented.
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C.
C
OMMITMENTS
NEGOTIATIONS
AND
REQUIREMENTS
ARISING
FROM
THE
ACCESSION
As we approach the actual date of accession and the entry into force of the mutual rights
and obligations enshrined in the Treaty of Accession, it is necessary to focus efforts on
ensuring that Cyprus is fully prepared in all areas of the
acquis
from the start of its
membership. In other words, Cyprus must meet its commitments and requirements
arising from the accession negotiations.
In the 2002 Regular Report on Cyprus, the Commission found that:
“Cyprus is generally meeting the commitments it has made in the negotiations.
However, delays have occurred with regard to the establishment of the fishing vessel
register, and in the legal alignment as regards oil stocks and with the electricity
Directive. These issues need to be addressed.
Bearing in mind the progress achieved since the 1998 Regular Report, the level of
alignment that Cyprus has achieved at this point in time, and its track record in
implementing the commitments it has made in the negotiations, the Commission
considers that Cyprus will be able to assume the obligations of membership in
accordance with the envisaged timeframe. In the period leading to accession, Cyprus
needs to continue its preparations, in line with the commitments it has made in the
accession negotiations.”
As regards the administrative capacity to implement the
acquis,
the overall findings were
as follows:
“Cyprus has further strengthened its administrative capacity. Additional staff has
been recruited in key areas and has been included in the Supplementary Budget for
2002, which is not yet approved. In important areas such as capital movement,
competition, agriculture, taxation, customs, environment, and justice and home
affairs enforcement structures have been reinforced. Close attention is required as
regards the structures which are necessary to implement the acquis which will be
applicable only upon accession, in particular as regards sound and efficient
management of EC funds.”
As part of its continuous monitoring, the Commission services addressed two letters to
Cyprus in February and June 2003 expressing concern over the transposition of the
electricity directive (including removal of price distortions) and the gas directive as well
as the transposition of the legislation on oil stocks within the energy chapter, the drafting
and approval of a new Internal Audit Act within the financial control chapter and the
preparation for the application of the
acquis
within the customs union chapter, and
calling for urgent action to remedy these shortcomings.
In order to give further guidance to Cyprus in its preparation efforts and to give the
necessary assurance to current Member States and other future Member States, this part
of the comprehensive monitoring report, in Section 2, gives an overview of where Cyprus
currently stands in implementing all commitments and requirements arising from the
accession negotiations for each of the 29 chapters of the
acquis.
It covers the whole body
of the
acquis,
on a chapter-by-chapter basis, both in terms of legislation and from the
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perspective of implementing structures, including administrative capacity and
enforcement.
The principal commitment undertaken by Cyprus in the accession negotiations is to be
fully prepared for membership in all areas by the date of accession. In a number of areas,
however, commitments were made to put in place and implement the
acquis
according to
specific timetables even before accession. This report examines the extent to which these
commitments have been met, and where delays have occurred, but the principal focus of
the assessment remains the requirement that Cyprus must be fully prepared as from
accession. Naturally, in cases where transitional arrangements have been agreed, their
effect on Cyprus’s obligations is duly reflected in the assessment. On the other hand, it
should be underlined that, in order for Cyprus to make effective use of its eligibility for
Community structural funds from 1 January 2004, the relevant
acquis
in areas such as
public procurement, state aid and environmental protection will need to be fully respected
from 1 January 2004 in relation to the implementation of structural funds actions
4
.
For each chapter, a conclusion is provided, which is structured in the following way.
Firstly,
it identifies those areas where Cyprus is essentially meeting the commitments and
requirements arising from the accession negotiations and is expected to be, or is already,
in a position to implement the
acquis
from accession. This does not exclude the
possibility that certain actions are still to be taken, but these should under foreseeable
circumstances not pose particular difficulties.
In a
second
paragraph, the assessment identifies any areas where important further action
is still needed in order to complete preparations for membership. In some cases these
preparations are ongoing, but enhanced efforts or quicker progress may be called for.
These are issues which can still be remedied taking into account the accession date of 1
May 2004 but which require the special attention of the authorities.
Thirdly,
where relevant, the assessment also identifies issues that are of serious concern.
These are areas where serious shortcomings exist which are likely to persist after
accession unless immediate remedial action is taken. These issues require the urgent
attention of the authorities. In view of their importance for the implementation and
enforcement of the
acquis,
the
overall
state of readiness of the public administration and
the judicial system and the development of effective anti-corruption measures are
evaluated in a separate Section 1.
4
See also the Commission Communication on the implementation of commitments undertaken by the
acceding countries in the context of accession negotiations on Chapter 21 – Regional policy and
coordination of structural instruments, 16 July 2003 (COM(2003) 433 final).
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1.
Administrative and judicial capacity
Public administration
The central government consists of the institutions of the President and the Council of
Ministers (11 ministers). At the local level Cyprus as a whole is subdivided into six
districts with two types of local government, municipalities (33) and community councils
(570), which are mainly financed from the central budget.
The Public Service Law of 1990 is the framework for the functioning of the civil service.
There are more than 15 000 posts of statutory civil servants, of which only 12 700 are
actually taken up. The power to appoint, promote, transfer, retire and exercise
disciplinary control over public officers is vested in the Public Service Commission, a
five-member body provided for in the constitution. All its members are appointed by the
President. There has been public criticism of the appointments made as being too
political in view of the impartial character of the civil service. Decisions of the Public
Service Commission can only be challenged before the Supreme Court. The appraisal
system for civil servants shows weaknesses which the Public Service Commission
considers as undermining the principles of justice and merit in the civil service.
As regards equal opportunities, there has been a marked improvement over the years in
the appointment of female candidates to the civil service, who now account for more than
50 % of new appointees.
Whereas an internal code of conduct for the administration is still under development, a
“citizens’ charter” assists citizens in exercising their rights vis-à-vis the administration.
Citizens' information centres are soon to operate in all ministries offering direct services
to the citizen. The Cypriot administration has introduced in some ministries an
automation system that accelerates access to documentation.
Administrative decisions can be challenged only before the Supreme Court as there are
no specialised administrative courts. Apart from this, an Ombudsman (Commissioner for
Administration) raises individual citizens’ complaints (around 1 500 annually) with the
administration. Most cases concern the areas of labour, education and immigration.
The reform of the state public administration is an ongoing process. The prospect of EU
membership has accelerated the establishment of new structures aimed at coping with the
requirements of the acquis. However, the level of staffing and training in some areas is
still too low. This concerns particularly bodies implementing the
acquis
in the field of
asylum, telecommunication, energy, maritime safety and agriculture. A large recruitment
package of 344 posts in view of EU accession has been approved in 2003 by the House of
Representatives. Special training on EU issues is being offered by the Cyprus Academy
of Public Administration and needs to be continued and extended. There is a considerable
number of lawyers dealing with EU law in the public administration. However, they are
concentrated in the horizontal Law Office of the government, whereas in the medium
term their presence will be crucial in the ministries themselves.
Judicial capacity
Cyprus has a two-tier judicial system consisting of first-instance courts and the Supreme
Court. Under the constitution judges are obliged to be impartial. They are independent
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from the government. Whereas first-instance judges are appointed, transferred and
promoted by — and are subject to the disciplinary jurisdiction of — the Supreme Council
of Judicature (composed of members of the Supreme Court), the Supreme Court judges
are appointed by the President. The remuneration and tenure of judges are protected by
law against arbitrary interference. The total number of Cypriot judges is 88 with four
vacancies to be filled by end October 2003. The right to fair trial is guaranteed by the
constitution.
The length of court proceedings gives grounds for concern, in particular in civil matters,
where it takes an average of three years at first instance until a judgement is issued. The
appeals procedure consumes another 12 to 15 months. This regrettable situation has
already been stressed by two judgements of the European Court of Human Rights, which
found that civil proceedings were not handled in a reasonable time by the District Court
of Nicosia in 1986-1997
5
and 1998-1999
6
.
The number of cases pending at first instance is still very high (67 332 at the end of 2002,
almost one case per 10 citizens), although this figure has been slowly decreasing in recent
years. As regards the Supreme Court, the number of pending cases at the end of 2002 was
3 841 for all jurisdictions. In criminal cases, the average length of proceedings in the first
instance is about one and a half years. Some criminal proceedings have had to be
invalidated on account of inordinate delay. This shortcoming has also been highlighted by
the European Court of Human Rights, which concluded in May 2002
7
that a criminal case
that lasted over six years was not handled in a reasonable time at the District Court level.
Further efforts to reduce the length of proceedings are necessary in order to ensure the
proper enforcement of the acquis. The establishment of an automated Court
administration system and of a legal information bank would help.
The training programme on EU law established by the Supreme Court is aimed at
meeting the urgent need of judges to become familiar with the
acquis
and needs to be
widened.
Anti-corruption measures
Cyprus has a comprehensive legal framework against fraud and corruption. The penal
code defines a series of offences of official corruption, such as extortion by public
officers, abuse of office, or neglect of official duty. In addition, the Prevention of
Corruption Law provides for sanctions to be taken against both public and private
corruption. The Public Service Law of 1990 contains special anti-corruption provisions
and a corresponding code of conduct allows for compulsory retirement or dismissal after
a disciplinary punishment.
The Unit for Combating Money Laundering "MOKAS" (see
also Chapter 4 - Free
movement of capital),
the Financial Crime Unit of the Police and the Special
Investigation Unit at the Department of Customs and Excise are responsible for
5
Alithia Publishing Company v. Cyprus, Application no. 53594/99 of 11 July 2002.
Markass Car Hire Ltd. v. Cyprus, Application no. 51591/99 of 2 July 2002.
Georgiades v. Cyprus, Application no. 50516/99 of 14 May 2002.
13
6
7
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enforcement. Furthermore, investigation units in the Income Tax and VAT Departments
continue to deal with cases of irregularities, including fraud. The Attorney General co-
ordinates all investigations concerning fraud and corruption. He may also appoint an
independent criminal investigator upon a written complaint against a member of the
Police Force for an alleged criminal offence. The above-mentioned bodies are now part
of a new anti-fraud co-ordination structure which has been established to improve co-
operation among them, as the lack of a common approach has so far been one of the main
weaknesses of the system.
Cyprus ratified the Council of Europe Convention on Laundering, Search, Seizure and
Confiscation of the Proceeds from Crime in 1997. Whereas the Council of Europe
Criminal Law Convention on Corruption entered into force in Cyprus in July 2002,
ratification of the Civil Law Convention on Corruption that it signed in November 1999
is still outstanding. Cyprus’s application to join the OECD Convention on Combating
Bribery of Foreign Officials in International Business Transactions is pending
(see also
chapter 24 - Justice and home affairs).
As a member of the Group of States Against Corruption (GRECO) of the Council of
Europe, Cyprus received a mission from three experts in December 2000. According to
the evaluation report that was adopted and made public in December 2001, Cyprus
appeared to belong to the group of GRECO members that are least affected by corruption.
However, the report adds that there were several factors that rendered the country to a
certain degree vulnerable.
While the authorities appeared to be well aware of the risks and had taken a number of
initiatives with a view to tightening up their criminal legislation on corruption, Cyprus
still lacks a comprehensive anti-corruption policy in the wider sense as is evidenced by
the absence of any regulation on the funding of political parties. The report further finds
that, although the country can rely on a range of independent and adequately skilled
authorities for the fight against corruption, its law-enforcement mechanism does not use
sufficiently proactive methods and its intelligence-gathering system has several pitfalls.
The report adds that the internal complaints system of the police has not been sufficiently
tested in practice, and that the powers of the Audit Office are in some respects unduly
restricted. In conclusion, GRECO addressed 10 specific recommendations to Cyprus that
should be taken into consideration in establishing a national strategy for the fight against
corruption. The Government is making an effort to address the majority of the
recommendations. In particular it decided to set up a co-ordinating body on corruption,
which encompasses representatives of both the public and private sectors. This body is to
advise the Council of Ministers on policy issues concerning corruption and propose
measures for the more effective implementation of the legislation in this area.
Furthermore the government decided to create a specialised complaints unit within the
police to examine complaints about police officers concerning alleged corruption.
Finally, the mandate and power of the Auditor General has been extended vis-à-vis any
person or legal entity using public funding. However, an amendment of the Public
Service Law including an explicit obligation for civil servants to report instances of
corruption still needs to be enacted by Parliament.
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2.
The chapters of the
acquis
As indicated, the following review of Cyprus’s ability to assume the obligations of
membership has been structured in accordance with the list of 29
acquis
chapters.
Accordingly, this section opens with an assessment of the
acquis
relating to the
cornerstones of the internal market which are known as the “four freedoms”, and
continues with a systematic review of each of the chapters, covering all aspects of the
acquis,
including sectoral policies, economic and fiscal affairs, regional policy,
environment, justice and home affairs, external policies, and financial questions.
Chapter 1: Free movement of goods
The principle of the free movement of goods implies that products must be traded freely
from one part of the Union to another. In a number of sectors, this general principle is
supplemented with a harmonised regulatory framework, following the “old approach”
(imposing precise product specifications) or the “new approach” (imposing general
product requirements). The transposition of harmonised European product legislation
represents the vast majority of the content of this chapter. In addition, efficient
administrative capacity to apply horizontal and procedural measures in areas such as
standardisation, certification and market surveillance is essential. This chapter also
covers detailed EC rules on public procurement, requiring specialised implementing
bodies.
In the area of
horizontal and procedural measures,
Cyprus has fulfilled its
commitments with the adoption of the framework legislation for the application of the
acquis
on standardisation, accreditation, certification and notification procedures; it will
enter into force upon accession. Nevertheless, although the relevant administrative
capacities are in place and operational, a need exists for the institutional framework on
standardisation activities to be structured uniformly and transparently. For this purpose,
the Action Plan developed by Cyprus Certification Company should be implemented
without delay. Full membership of CEN and CENELEC should be pursued.
As far as
sector specific legislation
under the
new approach
is concerned, legislative
transposition is advancing at good pace. Implementing legislation should still be adopted
in the sector of cableway installations and medical devices.
As regards
old approach
directives, the
acquis
on pharmaceuticals for human use has
been largely transposed. The only pending measures relate to the adoption of
implementing legislation for good clinical practice in the conduct of clinical trials.
Concerning pharmaceuticals for veterinary use, Cyprus still needs to adopt implementing
legislation on maximum residue limits of veterinary medicinal products and to amend the
framework law for transposition of the directive on the Community Code relating to
veterinary medicinal products.
In the course of the accession negotiations Cyprus has been granted a transitional period
relating to the renewal of marketing authorisations for pharmaceutical products until the
end of 2005.
Concerning foodstuffs, administrative structures for the official control of foodstuffs are
in place. However, Cyprus should improve its institutional framework by reducing
overlaps between the inspection service of the Ministry of Health and the municipalities.
Also no guides to good hygiene practice are yet in circulation. The training of inspectors
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needs to be reinforced. Implementation of Hazard Analysis Critical Control Points
(HACCP) and the control thereof as well as the training of inspectors need to be further
enforced. A HACCP assessment team was established in July 2002 and is co-ordinated
by a senior health inspector from the Ministry of Health. Preparations for participation in
the Rapid Alert System for Food and Feed (RASFF) and for control of genetically
modified foods need to be sustained. Aspects of food safety are also covered under
Chapter 7 – Agriculture.
As regards
public procurement,
a good level of alignment has been reached with the
recently adopted legislation, even if some adjustments are still needed in order to attain
full compatibility with the
acquis.
The institutional structures for the effective
implementation of the
acquis
are in place. There is, however, a need to continue training
and to complete the recruitment of additional staff for the Public Procurement
Directorate. Implementing regulations still need to be adopted for new legislation
transposing the classical sectors and utilities sectors directives.
In the
non-harmonised area,
Cyprus has conducted an initial screening of national
legislation possibly in contradiction with the principle of free movement of goods; the
screening must now be completed and incompatible legislation needs to be removed. The
transposition of the directive on arms control remains to be adopted. Finally, Cyprus
needs to appoint specific contacts points for the implementation of the regulation on
control of product safety at external borders.
Conclusion
Cyprus is essentially meeting the requirements for membership as regards
horizontal
and procedural measures, new approach sectoral legislation
and
public
procurement,
and in the
non-harmonised area,
and should be in a position to
implement this
acquis
from accession. Cyprus needs to complete preparations, in
particular as regards the institutional framework on standardisation, the implementation
of public procurement rules, and the elimination of obstacles contrary to the principle of
free movement of goods.
Cyprus is partially meeting the commitments in the field of sector specific legislation
under the
old approach directives
with regard to food safety. The implementation of the
foodstuffs acquis needs to be improved.
Chapter 2: Free movement of persons
The
acquis
under this chapter provides for non-discriminatory treatment of workers who
are legally employed in a country other than their country of origin. This includes the
possibility of cumulating or transferring social security rights, which requires
administrative cooperation between Member States. In order to facilitate the practice of
certain professions, the
acquis
under free movement of persons also includes specific
rules concerning mutual recognition of qualifications and diplomas; for certain
professions a harmonised training curriculum must be followed to be able to use the
professional title. Furthermore, this area also covers the residence and voting rights of EU
citizens in any Member State.
In the field of
mutual recognition of professional qualifications,
Cyprus has yet to
complete the implementation of its commitments with regard to legislative alignment
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with the
acquis
as some important provisions remain to be adopted. The law transposing
the third general system directive needs to be enacted. With regard to the sectoral
directives, Cyprus still has to adjust legislation on doctors, dentists and architects.
Concerning lawyers, an amendment to the law in force to take into account recent Court
of Justice case law was adopted in September 2003. As regards administrative capacity,
implementation structures need to be strengthened. Cyprus is completing the preparatory
steps for the creation of a national co-ordinator for providing information to EU citizens
on the various regulated professions within the Ministry of Labour and Social Insurance.
Additional staffing and training is needed.
In the area of
citizens’ rights,
transposition is advancing at a steady pace. Cyprus still
needs to enact legislation in order to transpose the
acquis
on voting rights in both
municipal and European Parliament elections. The main administrative structures are in
place but need to be further enhanced in terms of additional staffing and computerisation
within the Migration Department and the Public Registry of the Ministry of Interior.
As for
free movement of workers,
transposition has been completed with the adoption
of the legislation on the right of free movement of workers and residence of the nationals
of the Member States and of the members of their families.
With regard to
co-ordination of social security systems,
no transposition into national
legislation is needed to achieve alignment with the
acquis,
but appropriate administrative
capacity needs to be ensured. In this context, further work to develop the necessary
administrative structures, in particular a substantial reinforcement of staff, needs to be
completed and training needs to be continued.
Conclusion
Cyprus is essentially meeting the commitments and requirements arising from the
accession negotiations in the area of
free movement of persons
and it is expected to be
in a position to implement this
acquis
from accession. In order to complete preparations
for accession, further efforts are required as regards the legislative process so that the
necessary legal and institutional framework is in place upon accession. Cyprus must
ensure that timely preparations be made to allow EU citizens in Cyprus to take part in the
European Parliament elections of June 2004. Concerning administrative capacity,
reinforcement of staff and training is required to put the administration in a position to
effectively implement the
acquis
in the areas of mutual recognition of professional
qualifications and co-ordination of social security systems.
Chapter 3: Freedom to provide services
Under this chapter, Member States must ensure that the right of establishment and the
freedom to provide services anywhere in the EU is not hampered by national legislation.
In some sectors, the
acquis
prescribes harmonised rules which must be respected if the
internal market is to function; this concerns mainly the financial sector (banking,
insurance, investment services and securities markets) but also some specific professions
(craftsmen, traders, farmers, commercial agents). Harmonised rules concerning personal
data protection and certain information-society services must also be respected.
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In the field of the
right of establishment and the freedom to provide non-financial
services,
Cyprus has eliminated most of the identified legal and administrative
restrictions except those concerning private schools and tutorial establishments.
In the field of financial services, Cyprus is completing the implementation of its
commitments with regard to legislative alignment with the
acquis
in the
banking sector.
Among the few outstanding issues is the directive on electronic money institutions, which
still needs to be enacted. Furthermore, the deposit guarantee schemes have not yet been
expanded to cover foreign currency deposits as far as the co-operative credit and savings
societies are concerned. Cyprus has committed itself to ensuring full application of the
acquis
in respect of co-operative credit institutions by the end of 2007, in accordance
with the transitional arrangement it has been granted.
The central bank essentially has the required infrastructure and human resources to deal
with the
acquis-related
tasks as a supervisory authority in the field of banking. There is,
however, a need to maintain the same level of inspections for all banks. Also, the
administrative capacity of the Department of Co-operative Development, i.e. the
competent supervisory authority for the co-operative credit and savings societies, needs
further strengthening, including completion of the computerisation process. Co-operation
between the supervisors in the financial services sector needs to be further intensified.
As regards the
insurance sector,
legislative alignment has been largely completed,
although further fine-tuning is needed. Cyprus will have to make sure that the remaining
off-shore insurance companies continue under the harmonised legal framework, failing
which they will have to be dissolved.
The supervisory authority (Insurance Companies Control Service) is staffed with
competent personnel, but additional staff for the approved posts should be recruited and
further training is needed.
In the field of
investment services and securities markets,
the legislation is broadly in
line, although further legislative amendments are still needed, in particular regarding the
transposition of recent
acquis.
The law implementing the initial directive on undertakings
for collective investment in transferable securities has been in force since March 2003.
The proper implementation of this law should be a matter of priority, bearing in mind the
well-developed market for “off-shore” investment funds which are being phased out.
Moreover, the recent directives in this field still need to be transposed. The same applies
to the directive on financial collateral. The capital adequacy directive has not been
transposed yet for investment firms. The implementation of the investment-services
directive needs some further fine-tuning.
Administrative capacity has reached an adequate level. Regarding supervisory
independence, the Securities and Exchange Commission's budgetary independence still
has to be achieved. Furthermore, the responsibilities and powers of the Securities and
Exchange Commission and the Cyprus Stock Exchange need to be more clearly separated
by spelling out that the former is responsible for licensing and fees and the latter for
membership, facilities, remote trading and sanctions on members. A stable system of
financing the Securities and Exchange Commission that does not endanger the
independence of this institution has still to be found.
Concerning the
protection of personal data and the free movement of such data,
Cyprus has reached a high level of alignment. By accession, a number of provisions of
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the Data Protection Act need to be fine-tuned to achieve full alignment with the relevant
directive including additional elements to strengthen the independence of the supervisory
authority. This authority would benefit from further strengthening with additional
resources, especially more staff and training, to bring it in the position to be fully
operational, particularly as regards on-site inspections.
As regards
information-society services,
only the rules on conditional access have been
transposed. The more recent
acquis
on e-commerce still needs to be transposed and
implemented before accession. The building-up of the necessary administrative capacity
for the implementation of these directives needs to be accelerated.
Conclusion
Cyprus is essentially meeting the requirements for membership in the area of
banking
and
insurance services,
the
protection of personal data
and the
right of establishment
and the freedom to provide non-financial services,
and is expected to be in a position
to implement this
acquis
by the time of accession. Cyprus should lift the remaining
administrative and legal restrictions to EU service providers upon accession, and
preparations in the banking sector should be completed.
Cyprus is meeting the majority of the requirements for accession in the area of
investment services and securities markets,
as well as in the field of
information-
society services.
In order to complete preparations for membership, a number of major
directives still need to be transposed in these areas. This work must now be accelerated.
Chapter 4: Free movement of capital
Under this chapter, Member States must remove all restrictions in national law on the
movement of capital between themselves, but also with third countries (with some
exceptions) and adopt EU rules to guarantee the proper functioning of cross-border
payments and transfers of all forms of capital. The
acquis
under this chapter also includes
harmonised rules on payments systems and the fight against money laundering, requiring
adequate enforcement capacity.
In the field of
capital movements and payments,
the liberalisation of capital movements
has continued and Cyprus is still on course to complete its progressive alignment by
accession. Cyprus has significantly reduced the number of sectors in which foreign
capital is not allowed and abolished certain thresholds (e.g. banking sector). The
elimination of sector-specific restrictions on direct investment is stipulated for most
sectors in legislation that will enter into force by accession (e.g. tourism, electricity,
tertiary education), but some of these restrictions emanating from post-1993 legislation
remain vis-à-vis third countries. Exchange control restrictions which remain to be
abolished relate to short term foreign currency borrowing by residents, borrowing from
non-residents in Cyprus pounds, the free conversion of Cyprus pounds into foreign
currency by residents and some capital transfers such as portfolio investments abroad by
residents other than banks and insurance companies, foreign bank deposits and the
purchase of mutual funds, insurance products, and property abroad.
In the course of the accession negotiations Cyprus was granted a transitional period
which allows the maintenance of national provisions on the acquisition of residences for
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secondary use as in force on 31 December 2000 for a five year period following
accession.
In the field of
payment systems,
alignment has been largely completed and the
administrative capacities required are in place and function adequately. The transposition
of the
acquis
on cross-border credit transfers has been accomplished through of a Central
Bank directive which entered into force in September 2003 and requires institutions
offering money transmission services to comply with the cross border credit transfers
directive. The recommendation on electronic payment instruments has been transposed
through a Central Bank directive issued in August 2003.
As regards
money laundering,
Cyprus has undertaken a series of legislative changes and
its legal structure, based on the existing
acquis
as well as on international anti-money-
laundering standards, is comprehensive. The second money laundering directive has been
very largely transposed, the only exception being the directive’s requirement for real
estate agents and dealers in high value goods to be also subject to the anti-money-
laundering obligations which will be transposed by the end of 2003. The reinforcement of
the Unit for Combating Money Laundering (MOKAS) should be completed with
additional recruitment. The Central Bank must continue to monitor its administrative
capacity, in terms of human resources and technology available and to assure the same
degree of care to all other institutions, including lawyers and accountants. The Central
Bank and MOKAS should continue to promote money laundering awareness issues and
training, particularly with the Money Laundering Compliance Officers (see
also chapter
24 – Justice and home affairs).
Conclusion
Cyprus is essentially meeting the commitments and requirements arising from the
accession negotiations in the area of
free movement of capital
and it is expected to be in
a position to implement the
acquis
in this field from accession. As far as money
laundering is concerned, Cyprus needs to rapidly complete the envisaged reinforcement
of the Unit for Combating Money Laundering (MOKAS) and the Central Bank, and
MOKAS should continue to promote money laundering awareness issues and training.
Furthermore, full alignment with the second Money Laundering directive needs to be
quickly achieved.
Chapter 5: Company Law
Under this chapter, Member States must adopt and apply harmonised rules required for
the proper operation of companies in the internal market. They concern five legislative
fields: company law in the strict sense, accounting law, intellectual property rights,
industrial property rights, and the recognition and enforcement of judgements in civil and
commercial matters as well as of contractual obligations.
With regard to
company law
as such, with the adoption of the amendment to the
Companies Law of June 2003 to fulfil the requirements of i.a. the Second Directive (co-
ordination of safeguards), Third Directive (mergers), Sixth Directive (division of public
limited companies) and Eleventh Directive (disclosure requirements), legislative action
has been taken aimed at completing the alignment to Cyprus commercial law with the
company law
acquis.
As regards administrative capacity, the recruitment of 34 new staff
at various levels to boost the Department of the Registrar of Companies and Official
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Receiver (DRCOR) approved by House of Representatives in July 2003, remains to be
completed. Computerisation of the DRCOR is well advanced and needs to be finalised.
Concerning
accounting,
Cyprus’ legislation is largely in line with the
acquis.
A draft law
incorporating the outstanding alignment with the relevant accounting directives (Fourth,
Seventh and partly Eleventh Directive) has been adopted in September 2003 by the
House of Representatives. There are however concerns about the amendment to the
Company Law adopted in October, which would infringe upon the acquis by allowing
non-qualified auditors to practice, and even to audit the accounts of publicly listed
companies.
In the field of
protection of intellectual and industrial property rights (IPR),
on
copyright and related rights, transposition has been completed to a large extent but still
does not ensure full alignment notably on the exclusions to the rights, term of protection
and exhaustion. Further, full transposition of the Directive on copyright in the
information society needs to be completed.
As a result of the negotiations, specific transitional rules will apply in relation to the
granting of supplementary protection certificates for medicinal and plant protection
products, as well as in relation to the extension of registered or pending Community
trademarks to the territory of Cyprus.
As regards enforcement of IPR, administrative structures are largely in place. In order to
improve the fight against piracy and counterfeiting, a task force with the participation of
all services involved (Police, Ministry of Justice and Public Order, Ministry of Education
and Culture, Law Office of the Republic, Department of Customs, VAT Service, Inland
Revenue Department and Department of the Registrar of Companies and Official
Receiver) was established. However, further efforts are needed especially to cope with
the high level of piracy in music and video products. Staffing has increased and training
has been given but there remains a need to increase overall enforcement capacity.
Training, in particular of judges and prosecutors needs to be intensified. Better co-
ordination among enforcement bodies (in particular customs, police and judiciary) needs
to be pursued.
The
Regulation replacing the Brussels Convention
on mutual recognition and
enforcement of foreign judgements in civil and commercial matters will be directly
applicable upon accession and accession to the
Rome Convention
will only be possible
upon accession. Cyprus has already designated the relevant courts or other authorities to
ensure swift implementation of these provisions.
Conclusion
Cyprus is essentially meeting the commitments and requirements arising from the
negotiations in the field of
company law
as well as the
Regulation replacing the
Brussels Convention
and the
Rome Convention,
and it is expected to be in a position to
implement the
acquis
in this field upon accession. The enhancement of administrative
capacity in the area of company law needs to be completed.
The majority of commitments and requirements arising from the accession negotiations
in the field of
accounting
and the
protection of intellectual and industrial property
rights
have been met. Further legislative adjustments are required in respect of copyright
and related rights, including with respect to the information society. Although the
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administrative structures and the respective legislation on enforcement is mostly in line,
enhanced efforts are in particular needed to strengthen the enforcement of intellectual and
industrial property rights. Better co-ordination and training of enforcement bodies is
required (mainly, customs, police and judiciary) and the efficient functioning of a well-
trained judiciary should be given particular attention. As regards accounting, Cyprus
should ensure that the recently adopted legislation is made fully compatible with the
acquis.
Chapter 6: Competition Policy
The competition
acquis
covers both anti-trust and state aid control policies. It includes
rules and procedures to fight anti-competitive behaviour by companies (restrictive
agreements between undertakings and abuse of dominant position), and to prevent
governments from granting state aid which distorts competition in the Internal Market.
Generally, the competition rules are directly applicable in the whole Union, and Member
States must fully co-operate with the Commission on the enforcement of these rules.
In the
anti-trust
sector, Cyprus has adopted legislation containing the main principles of
Community anti-trust rules as regards restrictive agreements, abuse of dominant position
and merger control. Preparations should continue for the application of the EU's new
procedural regulation.
Cyprus has the necessary implementing structure in place, and the Commission for
Protection of Competition (CPC) is functioning well. In view of the decentralised
application of the antitrust rules under the EU's new procedural regulation, further
strengthening of the administrative capacity would still be opportune. Further efforts are
needed to raise awareness of the anti-trust rules of all market participants and to build up
a credible and transparent competition culture. Special training for judges should be
further developed.
The enforcement record is generally satisfactory. However, in order to ensure further
strengthening, priority needs to be given to cases which most seriously distort
competition. Furthermore, the policy on sanctions (fines on competition infringements)
should be further reinforced.
In the field of
state aid,
Cyprus has adopted state aid rules covering the main principles
of the
acquis.
The necessary implementing structures are in place, and the Office of the
Commissioner for Public Aid is functioning well. Further efforts are needed to raise
awareness of the state aid rules among all market participants and aid grantors. Cyprus
must also pay further attention to training the judiciary.
The enforcement record is generally satisfactory. Cyprus should continue to ensure that
all aid measures are monitored and controlled.
Cyprus benefits from a transitional arrangement to phase out incompatible fiscal aid for
off-shore companies (international business enterprises) by the end of 2005.
As regards public undertakings and undertakings with special or exclusive rights, certain
state monopolies are still in place in the field of processing and marketing of agricultural
products. These include the Cyprus Potato Marketing Board, Cyprus Milk Industry
Organisation, Vine Products Commission, and Cyprus Grain Commission.
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Conclusion
Cyprus is essentially meeting the commitments and requirements arising from the
accession negotiations on
competition policy
and is expected to be in a position to
implement this
acquis
from accession. In completing preparations for membership,
Cyprus must continue to develop a track record of proper enforcement of both anti-trust
and state aid legislation. In completing preparations for membership, full alignment with
the
acquis
still needs to be achieved for the legislation governing the existing
monopolies.
Chapter 7: Agriculture
The agriculture chapter covers a large number of binding rules, many of which are
directly applicable. The proper application of these rules and their effective enforcement
by an efficient public administration are essential for the functioning of the common
agricultural policy. This includes the setting up of management systems such as a Paying
Agency and the Integrated Administration and Control System, which are covered under
”horizontal issues” below, and also the capacity to implement rural development actions.
The acceding countries must be ready to be integrated into the common market
organisations for a range of agricultural products, including arable crops, fruits and
vegetables, and meat. Finally, this chapter covers detailed rules in the veterinary field,
which are essential for safeguarding animal health and food safety in the internal market,
as well as in the phytosanitary field, including issues such as seed quality, harmful
organisms and plant protection products.
Horizontal issues
The Law establishing the
Paying Agency
has entered into force. Substantial work
however remains in order to ensure the full establishment of the Paying Agency before
accession, including staff appointments, development of procedures, agreements with
delegated bodies and completion of IT structures.
A system similar to the
Integrated Administration and Control System
(IACS) is
already operational in Cyprus for a national area based scheme. Cyprus has, in general,
made good progress with implementation of the
acquis
in this area.
The Ministry of Commerce, Industry and Tourism has been designated as the competent
authority for implementing the
trade mechanisms
under the responsibility of the Paying
Agency. The relevant control tasks will be under the responsibility of the customs
services. However, administrative structures and procedures remain to be established and
work needs urgently to be accelerated.
The responsibility of
quality policy
and
organic farming
rests with the Department of
Agriculture which will need to be further strengthened in terms of staffing and training in
this area. Legislation is mainly in place.
The
Farm Accountancy Data Network
(FADN) liaison office and a structure of FADN
regions compatible with NUTS and FSS regions have been established. However there
are problems faced in the collection and processing of data and Cyprus has yet to define
the required sample for this purpose. Enhanced efforts are therefore required if Cyprus is
to have a functioning FADN by accession.
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State aid
measures in the field of agriculture remain to be brought in line with the
acquis
at the time of accession. During the course of the negotiations, Cyprus was granted a
transitional period to provide certain supplementary state aids until 2010.
As concerns direct payments to farmers, Cyprus has not yet decided whether or not to
apply the single area payment scheme (SAPS).
Common market organisations
For
arable crops
the bodies responsible for intervention, export/import licences,
inspection and authorisation of payments have been designated, although actual
administrative capacity remains to be established. The monopoly of the Cyprus Grain
Commission has to be abolished before accession. Cyprus is continuing to progress as
regards the administrative capacity necessary in the area of tobacco.
Implementing legislation as regards marketing standards for
fruit and vegetables
as well
as the establishment of producers organisations has been adopted. Implementing
legislation regarding the procedures for recognition of producers' organisations and for
control of operational funds is at the stage of legal vetting. Attention must be given to the
application of marketing standards on the national market.
In the area of
wine and alcohol,
the Common Market Organisation (CMO) for
wine
remains to be fully set up. However, no particular problems are anticipated at this stage
regarding the complete implementation of the CMO for wine. Legislation on quality
standards for spirit drinks is in place. The vineyard register needs to be fully aligned. The
existing Vine Produce Council needs restructuring and reorganisation and work on ex-
officio protection needs to be completed.
Legislation concerning EU quality standards for
olive oil
is in place. A control agency for
olive oil has been established under the State Food Quality Inspection. The existing
monopoly was abolished and operates now as an olive oil intervention agency. Progress
has been made on setting up the Geographical Information System. The registration of
olive growers has been completed.
The implementing legislation for the marketing standards for
bananas
has been adopted.
Implementing legislation defining the minimum standards and procedures for recognition
of Producer Organisations still needs to be adopted.
Since 1999 Cyprus has had a
milk
quota system in place which remains, however, to be
fully aligned with EU requirements. New rules for the milk quota system are being
prepared. They are based upon a revised law to implement the legislative requirements
needed for setting up the CMO for milk and milk products, which still remains to be
adopted. The Cyprus Milk Industry Organisation will implement most of the mechanisms
of the CMO.
Legislative measures have been adopted regarding carcass classification and price
reporting for
beefmeat, sheepmeat and pigmeat
as well as for beefmeat labelling. The
establishment of appropriate administrative structures is however delayed. Controls on
carcass classification need to be reinforced.
For
eggs and poultry,
legislative measures as well as administrative structures are in
place but marketing standards and price reporting for eggs remain to be set up.
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Rural development
The Law on Rural development sets out the principles for the agricultural and rural
development policy. The department of Agriculture has been designated as the managing
authority for the Rural Development Plan. A formal draft Rural Development Plan for
EAGGF Guarantee expenditure has been transmitted. Legislation on forest fire
prevention has been amended along the lines of the
acquis.
Administrative capacity for
forest fire prevention is fully in place.
Veterinary and phytosanitary issues
Transposition of legislation on transmissible spongiform encephalopathies (TSEs) and
animal by-products
has been largely achieved. Implementation, however, needs to be
accelerated. There is a high risk that the collection system for cadavers will not be in
place at accession. TSE surveillance is close to compliance with some shortcomings.
Rendering plants remain to be upgraded. A total feed ban is now in place.
The draft legislation on the
veterinary control system in the internal market
has to be
implemented. Cyprus has joined the computerised network linking veterinary authorities,
ANIMO. The law transposing the main parts of the
acquis
for identification and
registration of animals is in place. According to information provided by Cyprus, all
bovine animals are eartagged and have been registered in the central bovine database.
The law on financing veterinary inspections and controls has been transposed but not yet
implemented. Legislation regarding veterinary checks of imports from third countries and
rules for imports is in place but has yet to be implemented. The border inspection posts in
compliance with EU requirements at Larnaca airport and Limassol are not yet in full
operation.
Regarding
animal disease control
measures, national contingency plans on foot and
mouth disease, classical swine fever, Newcastle disease, avian influenza and TSE have
been provided. Cyprus has joined the Animal Disease Notification System (ADNS).
Most of the legislation on
trade in live animals and animal products
has been
transposed but remains to be fully implemented.
Legislation on
public health
protection has been largely adopted but only partly
implemented. Significant work remains to be carried out in order to upgrade
establishments, although the main slaughterhouse has been upgraded and is being
screened for approval.
The
acquis
on
common measures
(including zoonoses) has been transposed except that
the legislation on residues has still to be adopted.
The
acquis
in the field of
animal welfare
has largely been transposed but efforts are
needed in order to ensure actual implementation and enforcement.
In the field of
zootechnics,
steps have been taken to align the Cypriot legislation with the
EU
acquis.
Legislation on
animal nutrition
still needs to be adopted and the registration and
approval of establishments needs to be completed. Further efforts will be needed in this
field to build up the capacity of the inspection and control bodies.
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In the field of
phytosanitary
legislation, the Framework Law on Plant Protection and the
Law on Seed Quality Regulation to a large degree transpose the
acquis
on plant health
(harmful organisms) and quality of seeds and propagating material. Legislation pertaining
to the placing on the market of plant protection products is under approval procedure. An
important number of implementing decrees, however, still remain to be adopted.
Cyprus has to ensure that international veterinary and phytosanitary agreements are
brought into compliance with the EU
acquis
by accession.
In order to ensure a comprehensive approach to enhancing food safety throughout the
food chain, the Food Safety Council was established under the joint authority of the
Ministry of Agriculture and the Ministry of Health. Aspects of food safety are also
covered under
Chapter 1 – Free movement of goods.
Conclusion
Cyprus is essentially meeting the commitments and requirements arising from the
accession negotiations, among the horizontal issues as regards the
Integrated
Administration and Control System
(IACS),
quality policy
and
organic farming,
and
state aid;
among the common market organisations (CMOs) as regards
arable crops,
fruit and vegetables, wine, olive oil, bananas, milk, beef, sheep and pigmeat,
and
eggs and poultry;
and as regards
rural development.
In the veterinary and phytosanitary
field, Cyprus is essentially meeting the requirements relating to
animal disease control
measures, trade in live animals and animal products, animal welfare
and
zootechnics.
Subject to good progress being maintained in these areas, Cyprus should be
in a position to implement this
acquis
from accession.
Cyprus is partially meeting the commitments and requirements for membership as
regards the veterinary and phytosanitary field, Cyprus is only partially meeting
requirements relating to
Farm Accountancy Data Network
(FADN),
veterinary
control systems in the internal market, TSE and animal by-products
(as regards
collection of cadavers),
public health
(as regards upgrading of agri-food establishments),
common measures
(as regards residues),
animal nutrition
and
phytosanitary
(as
regards plant passports). Unless efforts are accelerated in these areas, there is a risk that
functioning systems will not be in place at accession.
There are serious concerns about Cyprus’ preparations in the area of the
Paying Agency
and
trade mechanisms.
Substantial efforts are urgently needed in both areas. Unless
immediate remedial action is taken, Cyprus will not have a functioning system in place
and will not be in a position to implement the
acquis
by the date of accession.
Chapter 8: Fisheries
The
acquis
on fisheries consists of regulations, which do not require transposition into
national legislation. However, it requires the introduction of measures to prepare the
administration and the operators for participation in the Common Fisheries Policy (in the
areas of market policy, resource and fleet management, inspection and control, structural
actions and state aid). In some cases, existing fisheries agreements or conventions with
third countries or international organisations need to be adapted.
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In the field of
resource and fleet management, and inspection and control,
the Law on
Fisheries has been amended in line with the
acquis.
Legislation on commercial fishing is
also in line with the
acquis.
The Fishing Vessel Register (FVR) is now operational but it
must be demonstrated in more detail that all the required fleet parameters are recorded in
the register. 75% of the fleet has been re-measured. The number of vessels from foreign
countries longer than 24 metres and under the Cypriot flag has been reduced to eight.
These remaining vessels should leave the Cypriot fleet before accession. An amendment
to the law allowing vessels caught in any port without a valid licence to be deleted from
the register remains to be adopted. Cyprus has ensured the creation, the reinforcement,
and the operational capacity of institutions in this field. However, the satellite monitoring
of fishing vessels is not yet in place and the tendering procedure has had to be re-
launched. The Fishing Vessels Monitoring Centre (FMC) has been established, but two
remote stations and a computer specialist are not yet operational. Furthermore, legislation
on fleet registration and safety requirements has not yet been adopted.
In the area of
structural actions,
the Cypriot Single Programming Document (SPD) is
currently being negotiated with the European Commission. The administrative capacity
in the managing authority (Planning Bureau), paying authority (Treasury), intermediary
body (Ministry of Agriculture, Natural Resources and Environment) and the final
beneficiary (Department of Fisheries and Marine Research) is considered sufficient for
implementation of the fisheries programme.
Regarding
market policy,
a law on the recognition of producers’ organisations for
fisheries and aquaculture products has been enacted. A system for recording land prices
was adopted and is in compliance with the
acquis.
As regards
state aid
to the fisheries sector the subsidy scheme for trawling in
international waters has been terminated.
Concerning
international fisheries agreements,
Cyprus has now ratified the 1993 FAO
Agreement on Conservation, the 1995 UN Agreement on Conservation, the International
Convention for the Conservation of Atlantic Tuna (ICCAT) and the Amendments to the
General Fisheries Commission for the Mediterranean (GFCM).
Conclusion
Cyprus has met its commitments in the area of
international fisheries agreements.
Cyprus is essentially meeting the commitments and requirements arising from the
accession negotiations and is expected to be in a position to implement the
acquis
in the
areas of
structural actions, market policy
and
state aid
from accession. Cyprus needs
to complete the Fishing Vessel Register and proceed with the strengthening of
administrative capacity for structural actions.
Cyprus is meeting the majority of the commitments and requirements for membership in
the areas of
resource and fleet management, and inspection and control.
In order to
complete preparations for membership Cyprus needs to amend its maritime law and the
Law on Fisheries. The Vessel Monitoring System (VMS) is still to be established.
Administrative capacity needs to be strengthened, in particular as regards the Fishing
Vessels Monitoring Centre.
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Chapter 9: Transport policy
EC transport legislation aims at improving the functioning of the Internal Market by
promoting efficient and environment- and user-friendly transport services. The transport
acquis
covers the sectors of road transport, railways, aviation, maritime transport and
inland waterways. Member States are required to adopt and implement legislation
concerning technical and safety standards as well as social standards. In order to further
develop the European Single Transport Market, EC legislation also includes rules on
market liberalisation. An important aspect of EC maritime policy is the establishment of
Union-wide maritime safety standards.
The extension of the
trans-European transport networks
has been defined. The
necessary implementing structures in this area are in place and the capacity of the
Ministry of Transport to prepare, manage and monitor transport projects is established.
In the land transport sector, Cyprus needs to complete legislative alignment with the
road
transport
acquis.
Alignment is still awaited in the field of the transport of dangerous
goods. In the technical field, implementing legislation remains to be adopted, notably
with regard to transportable pressure equipment, technical roadside inspections,
roadworthiness of commercial vehicles and driving licences. Enhanced efforts are
required regarding the enforcement of the social and technical
acquis.
The necessary
administrative structures in this area are in place, but the road transport control division
of the Department of Road Transport needs to be further strengthened.
Cyprus was granted a transitional arrangement until the end of 2005 as regards the
requirement to install and use recording equipment for existing vehicles engaged in
national transport.
In the area of
air transport,
the relevant framework legislation has been transposed and
is largely in line with the
acquis,
but some modifications are needed, notably with regard
to slot allocation and noise restriction. Implementing legislation is still being adopted.
Administrative capacity needs further strengthening. Full membership of the Joint
Aviation Authorities (JAA) remains to be achieved and efforts will need to be made to
become a full member before accession as required by the
acquis
and irrespective of the
setting up of the European Aviation Safety Agency (EASA).
In the field of
maritime transport,
framework legislation is in place and in line with the
acquis.
However, the adoption of implementing legislation remains to be completed, in
particular in relation to the
acquis
on classification societies, port state control, Vessel
Traffic Management Information System, port reception facilities, system of mandatory
surveys for the safe operation of regular ro-ro ferry and high-speed passenger craft
services, marine equipment and fishing vessels. The alignment with the relevant safety
acquis
is at this stage not completed. The
Cyprus Flag
is still on the blacklist of the Paris
Memorandum of Understanding. The relevant administrative structures in this area are in
place, but need further strengthening. The department of merchant shipping needs to
increase staffing levels, provide for a clear allocation of tasks and introduce modern
management techniques. Full computerisation urgently needs to be achieved, in particular
regarding ship-file management. The strengthening of Flag State implementation policy
and resources remains an area for special concern. During 2002, Cyprus hardly carried
out any port state control, but there has been some improvement in 2003. Cyprus must
substantially enhance its efforts to increase the performance on Port State Control.
According to statistics for 2002 under the Paris Memorandum of Understanding, the
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percentage of Cyprus flag vessels detained following Port State control was 7.4%, a
further decrease compared with 2001 (8.9%) and 2000 (9.7%). This compares with an
average for EU-flagged vessels of 3.5% in 2002. Efforts should be sustained to ensure
that Cyprus will meet its objective of removing the Cypriot flag from the Paris MoU
black list.
Conclusion
Cyprus is essentially meeting the requirements arising from the negotiations as regards
trans-European transport networks,
where administrative capacity needs to be
strengthened.
Cyprus is meeting the majority of commitments and requirements in the area of
road
transport and air transport.
In the road transport sector enhanced efforts are needed
concerning the adoption of
acquis
on the transport of dangerous goods and implementing
legislation in the technical field, as well as enforcement in the road transport sector. In
the air transport sector enhanced efforts are needed in order for Cyprus to become a full
member of the Joint Aviation Authorities.
Cyprus must give urgent attention to adopting implementing legislation and further
reinforce its administrative capacity including computerisation to implement the
acquis
in the area of
maritime transport.
There are serious concerns as regards Flag State
policy and resources, as well as Port State control in the maritime sector. The
implementation of these tasks requires urgent improvement. Unless immediate remedial
action is taken, Cyprus risks not meeting the requirements for membership in the area by
the time of accession.
Chapter 10: Taxation
The
acquis
on taxation largely covers a large proportion of indirect taxation, as concerns
VAT (value-added tax) and excise duties. It lays down definitions and principles of VAT.
Excise duties on mineral oils, tobacco products and alcoholic beverages are regulated at
EU level as concerns the structure of the duty, the level of minimum rates and the holding
and movement of excisable goods. As concerns direct taxation, the
acquis
covers some
aspects of corporate taxes and aims mainly at removing obstacles to cross-border
activities between enterprises. Finally, the Community legislation in the area of
administrative co-operation and mutual assistance provides tools to prevent intra-
Community tax evasion and tax avoidance on both direct and indirect taxation.
Concerning indirect taxation, Cyprus is almost fully in line with the
acquis
on
VAT,
and
the remaining alignment is taking place according to schedule. Alignment needs to be
completed in particular as concerns the elimination of zero rates in a few areas, where no
transitional periods have been granted during negotiations (see below). Cyprus will also
have to introduce VAT on immovable property and the provisions for intra-community
transactions. Finally, Cyprus will have to revise its provisions for VAT adjustments for
capital goods. Overall, administrative capacity including the appropriate human resources
to effectively manage, implement and enforce the
acquis
is in place.
In the course of negotiations Cyprus obtained transitional periods relating to the
application of the reduced VAT rate on restaurant services (until 31 December 2007), and
to maintain the zero VAT rate on foodstuffs for human consumption and pharmaceuticals
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(until 31 December 2007). Cyprus also obtained a VAT exemption on the supply of
building land (until 31 December 2007) and was granted the possibility of applying a
cash accounting scheme and a simplified procedure for the value of supplies between
connected persons (until 1 year after accession). Finally, Cyprus obtained derogations as
concerns the application of a VAT exemption and registration threshold of €15 600 for
small and medium-sized enterprises, and to exempt from VAT the supply of international
passenger transport.
As concerns
excise duties,
further efforts are still required to increase the level of duty
rates on some categories of products and to complete the duty suspension arrangements,
including for intra-community movements. Furthermore, Cyprus needs to address certain
discrepancies with regard to the tax structure of sparkling wine and cigarettes and to
complete the elimination of existing import duties and the replacement by excise duties.
The necessary administrative structures for excise duties are in place, although the system
based control methods should be completed.
In the course of negotiations Cyprus obtained transitional periods relating to the
exemption from excise duties for mineral oils used for the production of cement (until 1
year after accession) and to continue to apply reduced excise duty rates on all types of
fuel used for local passenger transport (until 1 year after accession).
In the field of
direct taxation,
Cyprus still needs to transpose the Directive on indirect
taxes on the raising of capital, interest and royalties and on taxation of savings income.
The administrative capacity of the tax administration is satisfactory overall but a formal
risk assessment system should be put in place.
On
administrative co-operation and mutual assistance,
Cyprus is taking the necessary
steps to transpose the
acquis
and implement it by accession, both from the legislative
point of view and as concerns organisational structures including information technology
systems. The Central Liaison Office (CLO) is operational and the Excise Liaison Office
(ELO) is in the process of being established. Cyprus’ level of information technology is
progressing satisfactorily and no problems are expected in achieving the required level
upon Cyprus’ accession.
Conclusion
Cyprus is essentially meeting the commitments and requirements arising from the
accession negotiations in the
taxation
chapter and it is expected to be in a position to
implement the
acquis
from accession. Cyprus needs to adopt some legislation to
complete alignment in all areas. Cyprus should continue its efforts to set up the
information technology systems allowing for the exchange of computerised data with the
Community and its Member States.
Chapter 11: Economic and monetary union
EC legislation on Economic and Monetary Union (EMU) contains specific rules ensuring
the independence of central banks in Member States, prohibiting indirect financing of the
state by the central bank, and disallowing privileged access of the public sector to
financial institutions. These rules must be transposed into the national legislation, despite
the fact that Cyprus will not yet adopt the euro as a currency from accession. EMU policy
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also includes the co-ordination of exchange rate and economic policies, adherence to the
stability and growth pact and the statutes of the European System of Central Banks.
Cyprus has met the commitments and requirements arising from the accession
negotiations in the area of
economic and monetary union
and is in a position to
implement the
acquis
as from accession.
Chapter 12: Statistics
The
acquis
in the field of statistics requires adoption of basic principles such as
impartiality, reliability, transparency, confidentiality of individual data and dissemination
of official statistics. It also covers methodology, classifications and procedures for data
collection in various areas such as statistical infrastructure, macro-economic and price
statistics, business statistics, transport statistics, external trade statistics, demographic and
social statistics, agricultural statistics and regional statistics. The focal point of the
statistical system of a country is the National Statistical Institute, which acts as the
reference point for the methodology, production and dissemination of statistical
information.
Cyprus is essentially meeting the commitments and requirements arising from the
accession negotiations in the area of
statistics
and is expected to be in a position to
implement the
acquis
as from accession. Cyprus needs to enhance its efforts to produce
financial accounts and financial balance sheets and ensure minor improvements
concerning the quality and the timeliness of national account and government finance
statistics. Furthermore, Cyprus needs to build up a data-base on regional data and to
improve the coverage of the business register.
Chapter 13: Social policy and employment
The
acquis
in the social field includes minimum standards in fields such as labour law,
equal treatment of women and men in employment and social security, and health and
safety at work. Specific binding rules have also been developed in public health (on
tobacco control and surveillance and control of communicable diseases) and recently also
with respect to non-discrimination on grounds of racial or ethnic origin, religion or belief,
disability, age or sexual orientation. The European Social Fund (ESF) is the main
financial tool through which the EU supports the implementation of its Employment
Strategy and contributes to social inclusion efforts (implementation rules are covered
under Chapter 21, which deals with all structural instruments). The acceding countries
are expected to be able to participate in social dialogue at European level, and in the EU
policy processes in the areas of employment, social inclusion and social protection.
In the area of
labour law,
transposition of legislation is still required as regards working
time for workers in civil aviation. Some legal adjustments are also necessary to complete
transposition the Working Time (Framework) Directive. Legislation aiming at the
transposition of the Posting of Workers Directive has been adopted and will enter into
force upon accession. Transposition of the new
acquis
concerning involvement of
workers in the European Company and information and consultation of workers is
foreseen after accession. The independent guarantee fund for employees is in place.
Cyprus has transposed all legislation in the field of
equal treatment of women and men,
and, in general, the legislative transposition is in line with the
acquis.
However, the
pensionable age for male and female civil servants will need to be equalised upon
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accession, when the pension scheme constitutes pay within the meaning of the Treaty and
EC case law. Moreover, the exclusion of women from certain activities in the police
force and underground work should be brought in line with the
acquis.
Implementing
structures are in place and have been recently strengthened.
In the area of
health and safety at work,
most of the legislation has been transposed.
However, the Directives establishing lists of indicative occupational exposure limit
values (chemical agents at work) remain to be transposed. Transposition of the Directive
regarding work at a height (new
acquis)
is foreseen after accession. The National Labour
Inspectorate is in place. Additional posts have been approved and the recruitment of
inspectors is ongoing. Further strengthening in terms of technical facilities is needed, too.
Particular attention should be paid to the application of the
acquis
in small and medium-
sized enterprises.
Social dialogue
is well established and the institutional and administrative framework is
in place. Autonomous bipartite social dialogue between employer and worker
representatives should also be developed at more decentralised levels.
In the field of
public health,
the legislative transposition of the tobacco and
communicable disease
acquis
remains to be completed. There is still a lot of work to do
in order to guarantee successful incorporation of the country into the EU structures in the
area of communicable disease surveillance and control. Efforts should continue in order
to complete a health monitoring system with a view to obtaining health data and
indicators comparable with the Community health monitoring system.
Concerning
employment policy,
efforts are still needed to effectively implement the
priorities identified in the Joint Assessment of the Employment Priorities (JAP). It is
important to enhance human resources development in particular through a coherent life-
long learning system, to address the emerging skills gap and to better integrate foreign
labour.
As regards the
European Social Fund (ESF),
the administrative framework is in place.
The management structures to implement the programme need to be set up without delay.
The capacity of the Ministry of Labour and Social Affairs (one of the intermediate bodies
for the human resource development priority) should be strengthened to effectively
monitor, evaluate and financially manage the fund. Preparations for participating in the
transnational operations of the EQUAL initiative need to be reinforced.
The Commission and Cyprus are finalising the Joint Memorandum on Social Inclusion
(JIM), which identifies key challenges and possible policy orientations for promoting
social inclusion.
On this basis, an integrated strategy and a national action Plan on social
inclusion will have to be developed. Analytical work and social statistics systems on
poverty and social exclusion should continue to be developed in line with the EU
commonly agreed indicators on social inclusion.
In the field of
social protection,
special attention needs to be paid to elderly and foreign
workers.
Concerning
anti-discrimination,
legislation remains to be prepared to ensure full
alignment with the
acquis
and the Equality Body required by the
acquis
needs to be
established.
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Conclusion
Cyprus is essentially meeting the commitments and requirements arising from the
accession negotiations in the areas of
labour law, equal treatment of women and men,
health and safety at work, social dialogue, employment policy, social inclusion
and
social protection
and is expected to be in a position to implement this
acquis
from
accession. Certain specific aspects in the field of labour law still need to be put in place.
As regards health and safety at work and equal treatment of women and men, some
further alignments will be necessary for a full transposition of the
acquis.
As regards
employment policy, the effective implementation of the priorities identified in the Joint
Assessment Paper is necessary to prepare for full participation in the European
Employment Strategy.
Cyprus is meeting the majority of the commitments and requirements for membership in
the areas of
public health, European Social Fund
and partially
anti-discrimination.
In
order to complete preparations for membership, attention must be given to completing
legislative transposition and implementation in the field of public health. Enhanced
efforts should be undertaken in order to guarantee a successful incorporation to EU
structures in the area of communicable diseases surveillance and control. With regard to
ESF, including EQUAL, while considerable progress has been achieved during the last
few months, further efforts are urgently needed in order to strengthen the administrative
capacity for management, implementation, monitoring, audit and control at both national
and regional level. Efforts should be accelerated in view of adopting the necessary anti-
discrimination legislation.
Chapter 14: Energy
EU energy policy objectives include the improvement of competitiveness, security of
energy supplies and the protection of the environment. The energy
acquis
consists of
rules and policies, notably regarding competition and state aids (including in the coal
sector), the internal energy market (for example, opening up of the electricity and gas
markets, promotion of renewable energy sources, crisis management and oil stock
security obligations), nuclear energy and energy efficiency. This chapter also covers
important aspects on the safety of nuclear installations.
With respect to
security of supply,
and in particular oil stocks, there is a considerable
delay in the transposition of the
acquis.
Framework legislation is in place, while
implementing legislation remains to be adopted. This framework legislation enables the
establishment of an oil stocks body, which however is not yet in place despite a
commitment to establish such a body by 2002. Actual building up of oil stocks is delayed
too, as current stocks are at 42 days rather than the 60 days required today. During the
course of the negotiations, Cyprus obtained a transitional period until the end of 2007 to
establish the minimum level of stocks required by the
acquis (90 days).
The recent
decision by the government to close an oil refinery and to use its capacity for storage of
oil stocks should help to address the situation.
In the field of
competitiveness and the internal energy market
(electricity and gas
sectors), a Law on Electricity has recently been adopted, but the implementing legislation
still remains to be put in place. Cyprus remains to transpose the gas directive in line with
its commitments, despite the absence of natural gas in its economy. Cyprus remains to
start market opening in the electricity sector upon accession. Cyprus has started recently
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to remove electricity price distortions. In view of catching-up delays a new plan to
remove these distortions has recently been approved. It must now be implemented with a
sense of priority. The Chairman of the Energy Regulatory Authority of Cyprus has very
recently been appointed, but the authority is not yet de facto in place. Cyprus should
transpose the recently adopted electricity and gas directives in line with the timetable laid
down by this
acquis.
In the area of
energy efficiency and renewable energy,
legislative alignment has been
largely completed, except for the newest acquis, which should be transposed according to
the timetables laid down in the directives. Administrative structures in this area are in
place and have recently been strengthened. The government has adopted a new grant
scheme for energy conservation which also addresses renewable energy issues.
In the field of
nuclear energy and nuclear safety,
Cyprus meets the commitments and
requirements arising from the accession negotiations and is in a position to implement the
Euratom
acquis
as from the date of accession. During the accession negotiations, Cyprus
committed itself to providing additional information on measures taken to implement the
recommendations of the June 2001 Council Report on Nuclear Safety in the Context of
Enlargement. Cyprus provided such information in December 2001 and January 2002. In
July 2003, Cyprus submitted additional information covering recent progress made in
various fields of nuclear safety and radiation protection, including
inter alia
legislative
aspects andadministrative structures (staffing, support institutions).
Conclusion
Cyprus is essentially meeting the commitments and requirements arising from the
accession negotiations as regards
efficiency and renewable energy
and in
nuclear
energy and nuclear safety
and is expected to be in a position to implement the
acquis
in
these areas by accession. It needs to complete alignment in particular regarding the
newest energy efficiency
acquis.
Cyprus is partially meeting the commitments and requirements arising from the accession
negotiations in the areas of
security of supply
and
competitiveness and the internal
energy market,
which remain a matter of concern. In order to complete preparations for
membership, Cyprus must urgently focus on completing legal alignment with the
electricity directive by adopting implementing legislation. It needs to ensure the opening
up of the electricity market as planned. Cyprus should accelerate its efforts to de facto
establish the Energy Regulatory Authority, while in general it needs to continue to further
strengthen administrative capacity in the energy sector. Alignment with the gas directive
should also be given attention. On security of supply, Cyprus must urgently adopt the
required implementing legislation. In addition, it must urgently set up the required
administrative capacity and build up oil stocks in line with its commitments. Unless
enhanced additional efforts are made, there is a risk that Cyprus will not be in a position
to comply with the relevant
acquis
by accession.
Chapter 15: Industrial policy
EC industrial policy seeks to enhance industrial competitiveness and rates of
employment, whilst operating in markets open to international competition. Its aim is to
speed up adjustment to structural change, encouraging an environment favourable to
initiative and to the development of undertakings throughout the Community. EC
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industrial policy mainly consists of policy principles and horizontal and sectoral
industrial policy communications.
Cyprus’
industrial strategy
essentially complies with the concepts and principles of EC
industrial policy, i.e. it is market-based, stable and predictable. The industrial policy
guidelines should be further implemented. The necessary administrative structures in this
area are in place, but are still weak.
In the area of
restructuring and privatisation,
Cyprus should ensure that its industrial
policy is implemented in conformity with the EC state aid and competition rules in order
to create efficient and competitive firms. The main administrative structures for
implementation in this sector are in place, but remain to be strengthened.
Conclusion
Cyprus is essentially meeting the commitments and requirements arising from the
accession negotiations in the
industrial policy
chapter and is expected to be able to
implement the
acquis
as of accession. Cyprus should continue to strengthen its
administrative capacities.
Chapter 16: Small and Medium-sized Enterprises
SME policy aims to improve the formulation and co-ordination of enterprise policy
across the internal market with a view to supporting the development of SMEs. In doing
so, it seeks to improve the overall business environment in which SMEs operate. SME
policy consists largely of consultation fora and Community programmes, as well as of
communications, recommendations and exchanges of best practices.
Cyprus is essentially meeting the commitments and requirements arising from the
accession negotiations in the chapter
small and medium-sized enterprises.
Alignment
with the new Commission recommendation on the SME definition should be carried out.
The implementation of the European Charter for Small Enterprises should be maintained.
Chapter 17: Science and Research
Due to its specificity, the
acquis
in the field of science and research does not require any
transposition in the national legal order. However, the necessary implementing capacity
needs to be created to allow for effective participation in activities under the Framework
Programmes in the field of research.
Cyprus has met the commitments and requirements arising from the accession
negotiations in the area of
science and research
and will be in a position to implement
the
acquis
as from accession.
Chapter 18: Education and training
Education, training and youth is primarily the competence of the Member States. The
Community's
acquis
consists of a directive on education of the children of migrant
workers, and of action programmes and recommendations. The necessary implementing
capacity needs to be in place to allow for effective participation in the Community
programmes related to this chapter (Leonardo da Vinci, Socrates and Youth).
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Cyprus has met the commitments and requirements for membership in the area of
Community programmes,
and will be in a position to implement this
acquis
from
accession. The implementing capacity for Community programmes will need to be
enhanced to benefit from additional allocations for decentralised actions following
accession.
In the area of
education of children of migrant workers,
due implementation of the
acquis
needs to be ensured.
Conclusion
Cyprus is essentially meeting the commitments and requirements arising from the
accession negotiations in the area of
education and training
and is expected to be in a
position to implement this
acquis
from accession. Efforts to implement the
acquis
on
education of children of migrant workers should continue.
Chapter 19: Telecommunications and information technologies
The
acquis
in the field of telecommunications consists mainly of the 1998 regulatory
framework and a 2000 regulation, and is aimed at the elimination of obstacles to the
effective operation of the single market in telecommunications services and networks,
and the achievement of universally available modern services. A new regulatory
framework on electronic communications was adopted in 2002 and must be
implemented. As regards postal services, the objective is to implement the single market
by opening up the sector to competition in a gradual and controlled way, within a
regulatory framework which assures a universal service (1997 and 2002
acquis).
In the field of
telecommunications,
Cyprus’ framework legislation is now in line with
the
acquis
adopted in the period 1998 to 2000. The major parts of the implementing
legislation have been adopted. The 2002
acquis
remains to be transposed and
implemented. Several general authorisations and licences have been issued for data and
Very Small Aparture Terminals (VSAT) services as well as the licence for the provision
of leased lines by an alternative network provider. In order to develop further competition
in the market, cost oriented rates for international leased lines have to be introduced,
local loop unbundling needs to be implemented and the price re-balancing process has to
be finalised. The second licence for mobile telephony has recently been issued with the
objective to start the operation of the network before the end of this year. The
administrative capacity in this sector has been strengthened, by completing the
recruitment of the staff of the Office of the Commissioner of Telecommunications and
Postal Regulation; its effectiveness in implementing fair competition needs to be ensured.
In the area of
postal services,
Cyprus’ legislative alignment remains to be completed in
particular as regards the license regime, accounting systems for universal services, market
authorisations, administrative charges and quality of services. The 2002
acquis
remains
to be implemented.
Conclusion
Cyprus is meeting the majority of the commitments and requirements arising from
accession negotiations in the
postal services
sector and is partially meeting
commitments and requirements arising from the accession negotiations in
telecommunications
area. In order to complete preparations for membership
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telecommunication, Cyprus must complete the transposition of the
acquis,
achieve cost-
orientation of prices and put in place local loop unbundling. Attention must be given to
the full liberalisation of the telecommunications markets. The effectiveness of the
regulator has to be strengthened. In order to complete preparations for membership on
postal services, enhanced efforts must be made with regard to the transposition of the
new
acquis
in the postal sector. Cyprus must ensure the correct application of the
universal service
acquis.
Chapter 20: Culture and audio-visual policy
The culture and audio-visual policy chapter requires legislative alignment with the
Television without Frontiers directive and contains the community programmes Culture
2000, Media Plus and Media Training. Alignment with the Television without Frontiers
directive creates the conditions for the free movement of television broadcasts within the
Community. It implies basic common requirements concerning advertising; the
protection of minors and public order; and the promotion of European works.
In order to complete alignment with the
audio-visual
policy
acquis,
Cyprus must
introduce a small number of legal amendments, e.g. to definitions. Administrative
capacity for implementation of the audio-visual
acquis
is satisfactory but the Regulatory
Body should continue to be strengthened in order to ensure adequate monitoring for all
broadcasters.
Cyprus meets the requirements for participation in Community activities in the field of
culture.
Conclusion
Cyprus has met the requirements for membership in the area of
culture.
Cyprus is meeting the majority of its commitments and requirements arising from the
accession negotiations on
audio-visual policy
and is expected to be in a position to
implement the
acquis
by accession, provided the remaining legal changes are introduced
without further delay.
Chapter 21: Regional policy and co-ordination of structural
instruments
The
acquis
under this chapter consists mostly of regulations, which do not require
transposition into national legislation. They define the rules for drawing up, approving
and implementing Structural Funds programmes and Cohesion Fund actions. These
programmes are negotiated and agreed with the Commission, but implementation is the
responsibility of the Member States. It is essential that Member States respect
Community legislation in general, for example in the areas of public procurement,
competition and environment, when selecting and implementing projects, and have the
necessary institutional structures in place to ensure implementation in a sound and cost-
effective manner from the point of view of both management and financial control.
Cyprus has agreed with the Commission on a NUTS classification of its
territorial
organisation.
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As regards the
legislative framework,
the existing legal framework ensures the multi-
annual budget programming for the development budget and sufficient flexibility for its
adjustment.
The legislative framework for financial control and compliance with other Community
policies is monitored in other chapters. However in order for Cyprus to make effective
use of its eligibility for structural funds from 1 January 2004, the relevant
acquis
in the
areas such as public procurement, state aid and environmental protection will need to be
fully respected from that date.
The necessary
institutional structures
for the preparation and implementation of the
Structural and Cohesion Funds have been designated. As regards the division of
responsibilities between the managing authority and the intermediate bodies, certain
tasks have been delegated to the intermediate bodies through a Council of Minister
decision of 30 April 2003. However, no written agreements or procedure manuals
between the managing authority and the intermediate bodies have yet been developed.
Staffing levels in the managing authority and the intermediate bodies need to be
increased, and further training needs to be provided. Attention should also be given to
ensure adequate preparation of final beneficiaries. Delays have occurred in the
preparation of computerised manuals, including project application forms and selection
criteria, monitoring systems and training programmes.
The bodies responsible for the implementation of the specific financial control provisions
have been identified. Cyprus is in the process of establishing a new independent
structure, which will assume responsibility for carrying out system audits as well as the
5% and 15 % on-the-spot checks. The legal basis for this new structure has been created,
but the staff still needs to be recruited. Internal audit units have been established in the
ministries involved in the implementation of the Single Programming Documents. The
questions of their functional independence and legal status as well as procedural matters
have been dealt with satisfactorily.
With regard to
programming,
the three Single Programming Documents (SPD) for
Objective 2, Objective 3 and fisheries have been submitted to the Commission. Each
SPD was accompanied by an ex ante evaluation. Submission of the programme
complements is expected by November 2003.
Broad consultations with partner organisations took place during the programming phase.
It is expected that the Monitoring Committees will be established on the basis of the
consultative structures used for the preparation of the SDPs and will comprise all relevant
stakeholders. Cyprus is planning to use the same computerised management information
system as Greece. The system, however, still has to be adapted and this leaves little time
for testing and adequate personnel training before accession.
Considerable and sustained efforts are needed to establish a pipeline of projects that are
ready to be implemented in technical and financial terms so as to enable Cyprus to benefit
fully from Community funds as soon as the programme starts.
The arrangements for
financial management and control
are generally satisfactory.
Additionality will be verified before approval of the Single Programming Documents.
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Conclusion
Cyprus is essentially meeting the commitments and requirements arising from the
negotiations on this chapter, in particular as regards
territorial organisation,
the
legislative framework, programming
and
financial management and control.
Provided the further work programme is carried out as envisaged, Cyprus should be in a
position to meet all requirements in these areas by the start of the programme.
Concerning the legislative framework Cyprus needs to make sure that final beneficiaries
will be in a position to effectively apply the rules and procedures resulting from the new
public procurement law. As regards programming, Cyprus needs to focus on establishing
an adequate pipeline of well-prepared projects and on setting up a functioning
computerised monitoring system. In the area of financial management and control, staff
recruitment for the new independent structure for financial control needs to be
accelerated.
Cyprus is partially meeting the commitments and requirements as regards
institutional
structures.
Cyprus needs to address staffing needs in the implementation structures,
clarify the division of responsibilities among the different bodies, and accelerate the
preparation of manuals and training programmes.
Chapter 22: Environment
Community environment policy aims to promote sustainable development and protect the
environment for present and future generations, and is based on the integration of
environmental protection into other Community policies, preventive action, the polluter
pays principle, fighting environmental damage at source, and shared responsibility. The
acquis
comprises over 200 legal acts covering horizontal legislation, water and air
pollution, management of waste and chemicals, biotechnology, nature protection,
industrial pollution and risk management, noise, and radiation protection. Ensuring
compliance with the
acquis
requires significant investments, but also brings significant
benefits for public health and reduces costly damage to forests, buildings, landscapes and
fisheries. A strong and well-equipped administration at national, regional and local level
is imperative for the application and enforcement of the environment
acquis.
Horizontal legislation
is in place and is in line with the
acquis,
except for the recent
acquis
on strategic environmental impact assessment, which needs to be transposed and
implemented by July 2004 in line with the Directive. While the relevant administrative
capacities are in place and function adequately, the Environment Service, under the
Ministry of Agriculture, Natural Resources and Environment (MANRE), needs to be
formally designated as the competent authority for strategic environmental impact
assessment.
In the
air quality
sector, legislation is in place and is in line with the
acquis,
except for
the quality of petrol and diesel and the sulphur content of liquid fuels. Administrative
capacities are in place and function adequately. Air quality plans and programmes need to
be completed and monitoring enhanced by accession. As regards the sulphur content of
liquid fuels, a transitional arrangement until 1 May 2005 has been agreed.
As regards
waste management,
legislation is in place and is in line with the
acquis.
Administrative capacities are in place, but require further strengthening. The national
waste management plan has still not been adopted. The supervision system for waste
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shipments will need to be fully implemented by accession. The permit and deregistration
system for end-of-life vehicles needs to be established. The establishment of collection
systems (including for batteries) and recovery and disposal facilities needs to continue.
The development of a hazardous waste management programme is still pending. A
transitional arrangement until 31 December 2005, with intermediate targets, has been
agreed for the implementation of rules on packaging waste.
In the area of
water quality,
legislation is in place and is in line with the
acquis,
except
for some amendments to the sewage and drainage law and the recent framework
acquis
on water, which need to be adopted by accession. Administrative capacities are in place
and function. Zones vulnerable to nitrate pollution need to be designated, and the
inventory of discharges of dangerous substances needs to be updated. Programmes for
nitrates and dangerous substances need to be finalised and adopted by accession. As
regards urban waste water, a transitional arrangement until 31 December 2012, with
intermediate targets, has been agreed.
In the field of
nature protection,
legislation is in place. Fragmentation of responsibilities
may, however, lead to problems in the effective implementation. Enhanced efforts are
required to finalise the preparation of a list of proposed sites of Community interest and
to designate the special protection areas by accession, including the completion of the
consultation process. Cyprus needs to ensure that the relevant protection measures are
applied by accession.
The legislation on
industrial pollution and risk management
is in place and is in line
with the
acquis,
except for the recent
acquis
on large combustion plants and national
emission ceilings, which need to be transposed by accession. Permits need to continue to
be issued and complied with for installations subject to the rules on integrated pollution
prevention and control (IPPC) according to the
acquis
deadlines (until October 2007). As
regards major accident hazards, internal emergency plans need to be revised and external
emergency plans established by accession. Administrative capacities are in place and
function. Special arrangements have been agreed with Cyprus regarding large combustion
plants.
The legislation concerning
chemicals and genetically modified organisms
(GMOs) is
in place and is in line with the
acquis,
except for contained use of GMOs. The law on
biocides has to be adopted. Administrative capacities are in place and function, but
notification procedures for the contained use of GMOs and authorisation systems and
procedures for biocides need to be completed with the adoption of the relevant laws. Co-
ordination between the organisations involved must continue to be ensured.
Transposition of the
acquis
on
noise
is proceeding according to schedule and the
legislation is in line with the
acquis,
except for the recent
acquis
on ambient noise, which
needs to be transposed by July 2004 in line with the Directive. Testing bodies need to be
approved.
On
nuclear safety and radiation protection,
legislative alignment has been completed
and the legislation is in line with the
acquis.
Administrative capacities in this area are in
place and function adequately.
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Conclusion
Cyprus is essentially meeting the commitments and requirements arising from the
accession negotiations and is expected to be in a position to implement the
acquis
in the
areas of
horizontal legislation, air quality, waste management, water quality,
industrial pollution and risk management, chemicals, noise
and
nuclear safety and
radiation protection
by accession. Cyprus still needs to finalise the legal alignment as
regards the following areas: horizontal legislation, air quality, water quality, industrial
pollution, chemicals and noise. It needs to complete air quality plans and programmes
and continue to enhance air quality monitoring. Moreover, Cyprus must complete
inventories of discharges of dangerous substances, finalise the necessary programmes on
water, and complete the identification of zones vulnerable to nitrate pollution. The
administrative capacity for waste management requires particular attention. The national
waste management plans need to be adopted and a supervision system for waste
shipments set up. The establishment of waste collection systems and recovery and
disposal facilities needs to continue. On industrial pollution and risk management,
permits for IPPC installations need to be issued and complied with according to
acquis
deadlines, and the implementation of provisions on major accident hazards needs to be
completed. Authorisation procedures for biocides need to be established.
Cyprus is partially meeting the commitments and requirements in the areas of
genetically
modified organisms (GMOs)
and
nature protection.
In order to complete preparations
for membership, the legislation on the contained use of genetically modified micro-
organisms must be adopted by accession. In the area of nature protection, fragmentation
of responsibilities may lead to problems in the effective implementation of nature
protection legislation. Enhanced efforts are required to prepare the lists of proposed
nature protection sites and special bird protection areas, including the completion of the
consultation process.
Chapter 23: Consumer and health protection
The
acquis
covers protection of the economic interests of consumers (concerning
misleading and comparative advertisement, price indication, consumer credit, unfair
contract terms, distance and doorstep selling, package travel, timeshare, injunctions for
the protection of consumers’ interests, and certain aspects of the sale of consumer goods
and associated guarantees) as well as the general safety of goods (liability for defective
products, dangerous imitations and general product safety). Recently adopted legislation
includes rules on general product safety and distance marketing of consumer financial
services. The acceding countries need to effectively enforce the
acquis
through
appropriate judicial and administrative systems, including market surveillance and a role
for consumer organisations.
With regard to
safety-related measures
Cyprus has completed alignment in most of the
areas but still has to transpose the revised directive on general product safety. The
administrative structures are in place but need to be strengthened.
Market surveillance
relating to general product safety is well developed. However, Cyprus needs to improve
the infrastructure of testing the safety of products to better satisfy the market surveillance
requirements. Consumer associations should take a bigger role supporting market
surveillance activities. Cyprus has created the relevant policy, management structures and
information system. These structures should be strengthened in terms of both financial
and human resources.
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As regards
non-safety related measures,
Cyprus has recently transposed legislation in
the areas of injunctions for the protection of consumer interests and certain aspects of the
sale of consumer goods and associated guarantees. Enforcement activities relating to the
protection of the economic interests of consumers are partly developed. However there is
a need to further develop and strengthen the administrative structure with regard to
arbitration bodies, which play an important role in solving consumer cases.
With regard to
consumer organisations
the role of non-governmental organisations
needs to be further promoted in order to develop and implement consumer policy and
encourage more active involvement in developing consumer product safety standards.
The level of consumers’ and businesses’ awareness of their rights and responsibilities
needs to be increased.
Conclusion
Cyprus is essentially meeting the commitments and requirements arising from the
accession negotiations in the areas of
safety-related measures
and
consumer
organisations
and is expected to be in a position to implement this
acquis
as from
accession. Cyprus needs to complete alignment on the
acquis
of the revised general
product safety directive.
Cyprus is meeting the majority of the requirements for membership in the area of
market
surveillance
and
non-safety related measures.
In order to complete preparations for
membership Cyprus needs to improve market surveillance to ensure the proper
enforcement of legislation on safety and non-safety related measures including by
strengthening the administrative capacity and structures, and transpose and implement
missing legislation in specific areas.
Chapter 24: Justice and home affairs
The most developed part of this chapter is the Schengen
acquis,
which entails the lifting
of internal border controls. However, much of this
acquis
will not apply to the acceding
countries upon accession, but only after a later separate Council Decision. The Schengen
Implementation Action Plan aims at preparing this on the basis of a credible schedule for
the introduction of the Schengen provisions. Binding rules which must be put in place as
from accession include part of the rules on visas, rules on external borders and the acquis
on migration, asylum, police co-operation, combating organised crime, fight against
terrorism, fraud and corruption and drugs, customs co-operation as well as human rights
legal instruments. On issues such as border control, illegal migration, drugs trafficking
and money laundering, organised crime, police and judicial co-operation, data protection
and the mutual recognition of court judgements, acceding countries need to be equipped
to meet adequate standards of administrative capacity. The establishment of an
independent, reliable and efficient judiciary and police organisation are also of paramount
importance.
Preparation with regard to Schengen provisions (Schengen
Action Plan)
relevant for
accession is still satisfactory. Attention needs to be paid to the timely purchase of
equipment in order to ensure the required level of border control. Preparations for the
separation of passengers at air- and seaports are continuing and should be implemented
according to a detailed timetable. Cyprus should continue its preparations for the lifting
of internal borders and full implementation of the Schengen
acquis
on the basis of a
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further decision to be taken by the Council. The preparation for the integration into the
Schengen Information System (SIS) II needs to be continued.
In the field of
data protection,
the legal framework is in place, but the Office of the
Commissioner for Data Protection needs to become fully operational to fulfil all the
obligations arising from the
acquis.
Although additional staff has been recruited in July,
reinforcement of the Office needs to be continued.
Cyprus has aligned its
visa policy
with the
acquis
except in the case of the Russian
Federation, whose nationals are still exempted from the visa requirement, based on a
bilateral agreement. On 30 September 2003, Cyprus gave notice of its decision to
terminate the agreement and to introduce visas for Russian nationals as from 1 January
2004. As regards the issuing of visas at the borders, attention should be paid to the timely
implementation of the
acquis
in this field in particular as regards Gulf States, Jordan,
Ukraine, Belarus and Syria. Cyprus still needs to ensure alignment with the Common
Consular Instructions, which will be done through a comprehensive new law on
migration. As regards implementation and administrative capacity further efforts are
needed in relation to infrastructure and recruitment of staff. Equipment to detect forged
and falsified documents was installed in all diplomatic missions in April 2003.
The management of the future
external borders
is developing in a positive manner. The
facilities and personnel used for border checks and surveillance are of high quality.
However, Cyprus should fulfil its commitments as regards purchase of equipment
(radars, helicopters and patrol boats) which should provide necessary implementation
capacity as regards both situational awareness and reaction capability. Cyprus should
also continue its efforts as regards the conclusion of co-operation agreements, namely
with non-neighbouring countries like Poland, France and Russia.
In the area of
migration,
Cyprus still needs to fully align with the
acquis
as regards in
particular legislation on long-term residents. In this context, Cyprus should accelerate the
adoption of amendments to the Aliens and Immigration Regulations. Cyprus is taking
action to conclude readmission agreements, however further improvement is required, in
particular with regard to neighbouring countries. Administrative structures are in place
but a coherent training system for all migration services needs to be continued as regards
in particular the fight against illegal employment.
In the field of
asylum,
Cyprus has completed legislative alignment. The second
amendment to the Refugee Law of 2001 was adopted by Parliament in June 2003. The
Refugee Law is now also harmonised with the
acquis
regarding manifestly unfounded
applications for asylum, minimum guarantees of asylum procedures, a harmonised
approach to questions concerning host third countries and the rights of recognised asylum
seekers. However, the implementation of the Refugee Law by the relevant authorities
(asylum unit, Refugee Authority, Review Authority) has been seriously hampered due to
the considerable delay in the adoption in June 2003 of amendments to the Refugee Law
of 2001 (originally envisaged for March 2002) and a lack of human resources. This has
also resulted in a considerable backlog in asylum applications. Although Cyprus has
recently recruited additional temporary staff and is envisaging new amendments in order
to make the administrative framework for asylum procedures more efficient, a speedy and
efficient asylum procedure is not fully established. Cyprus should accelerate its envisaged
measures considerably. In September 2003 the Council of Ministers approved the internal
rules and functional procedures of the reception centre in Kofinou. However the centre is
not yet operational. Cyprus should continue its preparation (technical and organisational)
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for active participation in EURODAC and Dublinet, including the establishment of the
corresponding National Action Points, in order to ensure full implementation by
accession.
In the area of
police co-operation and combating organised crime,
Cyprus has made
progress but efforts are still required to ensure that Cyprus has an accountable, reliable
and fully co-ordinated police organisation by accession. Continuous attention is needed
as regards the co-operation and co-ordination between the police and the prosecuting and
judicial bodies. Information sharing in the field of combating economic and organised
crime needs to be considerably improved and sufficient financial means allocated to
implement all the envisaged measures. International co-operation is well established and
supported by sufficient co-operation agreements, in particular the conclusion of an
agreement (signed in July 2003) with Europol. Attention should be paid to the timely
preparation of national procedures in order to ensure the swift ratification of the Europol
Convention upon accession to the EU.
In the
fight against terrorism,
Cyprus has ratified the most important Conventions, in
particular the 1999 UN Convention for the Suppression of the Financing of Terrorism.
Cyprus has yet to designate a National Central Office, dealing notably with the banknote
and coin analysis. Cyprus should accelerate its preparatory efforts in order to accede to
the Convention on Mutual Assistance in Criminal Matters between the EU Member
States upon accession.
As regards the
fight against fraud and corruption,
Cyprus has still to ratify the Council
of Europe Civil Law Convention on Corruption. As regards the protection of the euro
against counterfeiting, Cyprus should ensure full alignment with the Council Framework
Decisions as well as its full implementation. In September 2003 Cyprus ratified the
Convention on the protection of the European Communities' financial interests and its
Protocols. A co-ordinating body on corruption was set up by a Decision of the Council of
Ministers on 23 April 2003. As regards corruption, see also
Section C.1 — Administrative
and judicial capacity.
On the
fight against drugs,
Cyprus has completed the National Anti Drug Strategy.
However, this Strategy will be reviewed with support of Member States experts.
Adoption and implementation needs further attention, including the necessary
administrative capacity and the allocation of sufficient financial resources. The
institutional infrastructure of the National Focal Point for the future co-operation with the
European Monitoring Centre for Drugs and Drug Addiction needs to be further
strengthened particularly as regards the recruitment of additional personnel.
As regards
money laundering,
Cyprus has undertaken a series of legislative changes and
its legal structure, based on the existing
acquis
as well as on international anti-money-
laundering standards, is comprehensive. The second money laundering directive has been
very largely transposed, the only exception being the Directive’s requirement for real
estate agents and dealers in high value goods to be also subject to the anti-money
laundering obligations which is expected to be transposed by the end of 2003.
Administrative capacity needs further monitoring and strengthening. Cyprus should
continue to promote money laundering awareness issues and training (see
also Chapter 4
– Free movement of capital).
In the area of
customs co-operation,
Cyprus is in the process of aligning its legislation.
The Convention on the Use of Information Technology for Customs Purposes still needs
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to be ratified. Cyprus should continue to prepare and conclude Memoranda of
Understanding on co-operation between customs and business organisations in combating
drug trafficking.
In the area of
judicial co-operation in civil and criminal matters
legislative alignment,
where still necessary, is ongoing and Cyprus should be ready upon accession to apply it
and accede to the relevant conventions. Particular attention is needed for alignment with
the Council Framework Decision of 13 June 2002 on the European arrest warrant and the
surrender procedure between Member States. Administrative structures for direct contacts
between competent judicial authorities are in place and need to be further strengthened.
As regards the
reform of the judiciary
in general, a detailed analysis is provided in
Section C.1. — Administrative and judicial capacity.
All the
human rights legal instruments
under the justice and home affairs
acquis
have
been ratified by Cyprus.
Conclusion
Cyprus is essentially meeting the commitments and requirements arising from the
accession negotiations and is expected to be able to implement by accession the
acquis
in
the areas of
Schengen Action Plan, data protection, external borders, migration,
police co-operation and combating organised crime, fight against terrorism, fight
against fraud and corruption, drugs
and
money laundering, customs co-operation,
judicial co-operation in civil and criminal matters
and
human rights legal
instruments.
Cyprus needs to complete preparations in terms of legislative alignment as
well as regards administrative capacity concerning the Schengen Action Plan, data
protection, migration, external borders, police co-operation and combating organised
crime, the fight against terrorism, the fight against fraud and corruption, the fight against
drugs, customs co-operation and judicial co-operation in civil and criminal matters
Cyprus is partially meeting the commitments and requirements for membership in relation
to the
visa policy
and in the area of
asylum.
Cyprus needs to adopt and implement the
necessary legislation as regards the issuing visas at the borders and fully align with the
visa Regulation as regards Russians citizens. Urgent action must be taken in order to
ensure the proper implementation of the existing asylum legislation as well as the recently
proposed measures as regards the enhancement of the administrative structures for which
amendments to the existing legislation are required. Attention should also be given to the
technical and organisational preparations necessary to implement EURODAC and
Dublin II.
Chapter 25: Customs union
The Customs Union
acquis
consists almost exclusively of legislation which is directly
binding on the Member States and does not require transposition into national law. It
includes the Community’s Customs Code and its implementing provisions; the
Combined Nomenclature, Common Customs Tariff and provisions on tariff
classification, customs duty reliefs, duty suspensions and certain tariff quotas; and other
provisions such as those on customs control of counterfeit and pirated goods, drugs
precursors and cultural goods and on mutual administrative assistance in customs matters
as well as Community agreements in the areas concerned, including transit. Member
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States must ensure that the necessary enforcement capacities, including links to the
relevant EC computerised customs systems, are in place.
Cyprus’
customs legislation
is largely in line with the
acquis
up to 2002. Implementation
of the provisions which have not been aligned, such as the provisions on precursors, on
the binding nature of tariff information, on customs warehouses and the new 2003
acquis,
will take place upon accession, when the EC customs legislation becomes
directly applicable. National provisions superseded by the
acquis
are to be repealed at the
time of accession and agreements on mutual administrative assistance in customs matters
are to be amended as necessary.
The preparation of the necessary
administrative and operational capacity
is on track.
Cyprus should implement its plans to issue new authorisations for warehouse operators
based on Community conditions in time for accession in order to avoid disruption in this
area
.
Concerning the implementation of the Department of Customs and Excise
computerisation project, all projects are on track to be functional in time for accession.
Specific training on all elements of the
acquis
planned for customs staff (and in some
cases, traders) for the period October 2003-January 2004 remains to be completed.
Customs services’ capacity to combat fraud and economic crime, in close co-operation
with other enforcement bodies, should continue to be strengthened.
Conclusion
Cyprus is essentially meeting the commitments and requirements arising from the
accession negotiations in this area and is expected to be in a position to implement the
customs union
acquis
with the necessary administrative and operational capacities upon
accession. In completing preparations for membership, Cyprus needs to continue
developing and implementing the computerized customs systems, solve other
interconnectivity-related issues, and carry out planned training on those measures and
provisions which will be introduced at the time of accession
.
Chapter 26: External relations
The main element in this chapter, the common commercial policy, is made up of directly
binding EU legislation, which does not require transposition into national law. The
acceding countries were requested to align before accession with the
acquis
on dual-use
goods and, where applicable, export credits. Acceding countries committed themselves to
ensure compatibility with the
acquis
of their bilateral agreements with third countries. In
the area of humanitarian aid and development policy, countries need to ensure capacity to
participate in the EC’s development and humanitarian policies.
The administrative structures for dealing with the issues related to the
common
commercial policy
are essentially in place and sufficient.
Cyprus has co-ordinated its positions and policies with the Commission with regard to
the Doha Development Agenda. Cyprus should continue close co-ordination and co-
operation with the Commission, mainly in order to carry on preparing the convergence of
its GATS commitments and Most Favoured Nations exemptions into the EU ones
(consolidation EU 25), to be finalised upon accession. Cyprus co-operated with the
Community in the process of its third stage notification under the Agreement on Textiles
and Clothing, thus avoiding further discrepancies between integration schedules.
46
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On trade in dual-use goods, Cyprus has reached a high degree of alignment with the
acquis.
However, further alignment, in particular regarding the list of dual-use items,
needs to be achieved, as export control regimes continue to adopt decisions, which the
EU integrates into its legislation. Membership in all export control regimes is a crucial
factor enabling implementation of export controls by Cyprus. Based on the Thessaloniki
Action Plan to support the acceding countries’ membership in export control regimes, the
EU supports Cyprus’ accession to the regimes to which it has already applied but is not
yet a member (Missile Technology Control Regime). While acknowledging the human
resources cost of participating to all export control regimes, the Commission draws
Cyprus’ attention to the opportunity of applying officially to the Wassenaar Arrangement
before accession to the EU. Full alignment as regards the Community general export
authorisation can only take place upon accession.
Cyprus does not currently provide medium and long term export credits; should it start
doing so, requirements of the
acquis
will need to be strictly followed.
Cyprus still needs to complete the analysis of its
bilateral agreements with third
countries
in order to ensure their compliance with the
acquis
and has provided only a
partial list of the agreements concerned. It has committed itself to keeping the
Commission informed about measures to renegotiate or terminate any agreements that are
found to be incompatible with its EC obligations.
In the area of
humanitarian aid and development policy,
Cyprus needs to pursue the
shaping of a development policy in line with EU principles.
Conclusion
Cyprus is essentially meeting the commitments and requirements arising from the
accession negotiations and is expected to be able to implement the
acquis
on the
common commercial policy
and
humanitarian aid and development policy.
In order
to complete preparations in the area of development policy, Cyprus should take further
steps to provide itself with a policy framework in line with EU principles.
Cyprus is meeting the majority of the commitments and requirements for membership in
relation to
bilateral agreements with third countries.
In order to complete preparations
in this area, Cyprus must take decisive steps towards renegotiating or terminating its
bilateral agreements to make sure that they are compatible with the
acquis
upon
accession.
Chapter 27: Common foreign and security policy
The
acquis
related to the common foreign and security policy (CFSP) is essentially based
either on legally binding international agreements or on political agreements to conduct
political dialogue in the framework of CFSP, to align with EU statements, and to apply
sanctions and restrictive measures where required.
Cyprus continues to participate in the
political dialogue
and has regularly aligned its
positions with those of the Union, including
sanctions and restrictive measures,
statements, declarations and démarches,
if invited to do so. The administrative
structures in this area in Cyprus are in place and satisfactory.
47
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Conclusion
Cyprus is essentially meeting the commitments and requirements arising from the
accession negotiations in the chapter on the
common foreign and security policy,
and is
expected to be able to participate in the political dialogue and to align with EU
statements, sanctions and restrictive measures by accession.
Chapter 28: Financial control
The
acquis
under this chapter consists mostly of general, internationally agreed and EU-
compliant principles of public internal financial control that need to be transposed into
the control and audit systems of the entire public sector. In particular, the
acquis
requires
the existence of adequate ex ante financial control and functionally independent internal
audit systems; an independent external audit of the public internal financial control
systems in the public sector; an appropriate financial control mechanism for EU pre-
accession funding and future structural action expenditure; and arrangements on the
protection of EC financial interests. In addition, an anti-fraud co-ordination service,
capable of co-operating with the Commission’s Anti-fraud Office OLAF at an
operational level, is to be designated.
In the area of
public internal financial control,
Cyprus has put framework legislation in
place which is in line with the
acquis.
However, the implementing legislation still has to
be drafted on the basis of the newly adopted Internal Audit Act. The process of institution
building linked to the adoption of the new Act still has to be completed. The
Commissioner for Internal Audit has recently been nominated. The newly independent
Internal Audit Service needs to be adequately staffed in a permanent manner, and the
relevant training strategy implemented.
In the field of
external audit,
framework and implementing legislation is in place and in
line with the
acquis.
The financial independence of the Auditor General however needs
to be further enhanced. The scope of public external auditing should be extended further
to include state-controlled companies.
As regards
control over structural action expenditure,
framework and implementing
legislation in Cyprus is in place and in line with the
acquis.
Further work needs to be
done in order to enhance the capacity of the Cypriot administration in the field of
monitoring and evaluation.
In the area of the
protection of EC financial interests,
the framework and implementing
legislation needs to be further refined. Cyprus has designated the Attorney General’s
Office as the anti-fraud co-ordination service (AFCOS). Its competencies in the area of
the protection of the Communities' financial interests and its relations with other relevant
institutions and bodies, including OLAF, need to be clarified. Practical co-operation with
OLAF through the anti-fraud co-ordinating service has started, but the AFCOS'
operational capacity should be further reinforced.
Conclusion
Cyprus is essentially meeting the commitments and requirements arising from the
accession negotiations in the areas of
external audit, control over structural action
expenditure
and
protection of EC financial interests
and is expected to be in a position
to implement the
acquis
in this field from accession. As regards external audit, the
48
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financial independence of the Auditor General should be further enhanced, and the scope
of public external audit should be extended to state-owned companies. As regards the
protection of the EC financial interest, the legislative framework should be further refined
and administrative capacities should be further strengthened.
Cyprus is meeting the majority of the commitments and requirements arising from
accession negotiations in the area of
public internal financial control.
In order to
complete preparations for membership, Cyprus must adjust the implementing legislation
to the recently completed legal framework in the area of public internal financial control
and strengthen its administrative capacity in this field.
Chapter 29: Financial and budgetary provisions
Chapter 29 covers the rules concerning the financial resources necessary for the funding
of the EC budget (‘own resources’). These own resources are made up mainly from
contributions from Member States based on 1) traditional own resources from customs
and agricultural duties and sugar levies, 2) a resource based on VAT and 3) a resource
based on the level of gross national income (GNI). Member States must ensure the
creation of appropriate administrative capacity to adequately co-ordinate and ensure the
correct calculation, collection, payment and control of own resources and reporting to the
EU for implementation of the own resources rules.
As regards the
traditional own resources (TOR),
a national reporting system on cases
of fraud and irregularity has been established in Cyprus but fine-tuning of the procedures
for reporting to the Commission in line with the OWNRES system is required.
Procedures and systems for the A and B accounts in line with the EC system still need to
be established. In this respect, the customs clearance and accounting system needs to be
developed according to schedule.
Cyprus must develop further its ability to correctly calculate the
VAT-based resource,
in
particular as regards the calculation of the weighted average rate in accordance with
ESA95.
For calculation of the
GNI-based resource,
continued efforts are needed to further
improve the quality and reliability of the national accounts and GNI calculations in line
with ESA95, including their exhaustiveness.
All institutions necessary for application of the own resources system in Cyprus exist.
The Directorate of Budget and Fiscal Control in the Ministry of Finance is responsible for
co-ordinating own resources issues.
Conclusion
Cyprus is essentially meeting the commitments and requirements arising from the
accession negotiations in the area of
financial and budgetary provisions
and is
expected to be in a position by accession to implement the relevant
acquis.
Cyprus should
now focus attention on completing preparations under this chapter by further improving
the reliability of GNI statistics, establishing the procedures for the A and B accounts,
improving the calculation of the VAT-based resource, and finalising procedures for
reporting on cases of fraud and irregularity to the Commission (OWNRES).
49
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D.
C
ONCLUSION
The Cyprus economy slowed down in 2002 - although remaining resilient - while
inflation, the current account and the government deficit deteriorated. Structural reform
has continued slowly but some long-term issues remain.
As regards the areas where last year’s report suggested improvements, some progress has
been made, but challenges remain. Liberalisation of the telecom, energy, air transport and
postal services by 2003 has been implemented in some sectors, but remains to be put into
practice in others. Fiscal consolidation went markedly off target and the current account
deficit widened. Progress has been achieved in financial supervision but further
improvements remain necessary. As regards overall administrative and judicial capacity,
sufficient conditions are in place for the implementation of the
acquis
by the Cypriot
public administration and judiciary, but there is room for further improvements. In the
field of public administration, the impartial character of the civil service needs to be
strengthened and weaknesses as regards training and staffing concerning a number of
bodies implementing the
acquis
need to be addressed. In the field of the judiciary, the
length of court proceedings should be reduced to ensure the proper enforcement of the
acquis.
Cyprus should continue to fight corruption on the basis of a comprehensive anti-
corruption policy, including regulations on the funding of political parties.
As regards the implementation of the
acquis
in specific policy areas, the findings of this
report are set out below.
Firstly, it should be noted that Cyprus has reached a
high level of alignment with the
acquis
in most policy areas.
It is expected to be in a position to implement the
acquis
as required in the following
areas by accession : horizontal and procedural measures, new approach legislation, public
procurement and the non-harmonised area in the
free movement of goods
chapter; mutual
recognition of professional qualifications, citizens’ rights, free movement of workers and
co-ordination of social security systems, in terms of
free movement of persons;
the
banking sector and insurance sector, the protection of personal data, the right of
establishment and the freedom to provide non-financial services in the area of
freedom to
provide services; free movement of capital,
including money laundering;
company law
and accounting; and
competition policy.
In the area of
agriculture,
Cyprus is expected to
be in a position by accession to implement the
acquis
in a number of horizontal areas
including the Integrated Administration and Control System, in the common market
organisations, in rural development, and in the veterinary issues of animal disease
control, trade in live animals and animal products, animal welfare and zootechnics; and
in
fisheries,
in the areas of structural actions, market policy, state aid and international
agreements.
Cyprus is also expected to be in a position to implement the
acquis
by accession in: trans-
European transport networks in the area of
transport policy; taxation; economic and
monetary union; statistics;
labour law, equal treatment of women and men, health and
safety at work, social dialogue, employment policy, social inclusion and social protection
in the area of
social policy and employment;
efficiency and renewable energy, nuclear
energy and nuclear safety in the
energy
sector;
industrial policy; small and medium-sized
enterprises; science and research; education and training;
culture in the area of
culture
and audio-visual policy;
the legislative framework, programming and financial
management and control for
regional policy and co-ordination of structural instruments;
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horizontal legislation, air quality, waste management, industrial pollution and risk
management, water quality, chemicals, noise and nuclear safety and radiation protection
in the
environment
chapter; safety-related measures and consumer organisations in terms
of
consumer and health protection;
most aspects of
justice and home affairs; customs
union;
the common commercial policy, humanitarian aid and development policy in the
external relations
acquis;
common foreign and security policy;
external audit, control
over structural action expenditure and the protection of EU financial interests in
financial
control;
and
financial and budgetary provisions.
Secondly, in certain areas Cyprus partially meets the commitments and requirements and
needs to make
enhanced efforts
in order to complete its preparations for accession.
This includes the old approach sectoral legislation relating to the
free movement of goods;
in the area of
free movement of services,
the fields of investment services and securities
markets, and information society services; and, within the area of
company law,
the
protection of intellectual and industrial property rights. In the
agriculture
area it concerns
the Farm Accountancy Data Network, the veterinary control system, transmissible
spongiform encephalopathies (TSEs) and animal by-products, public health in agri-food
establishments, common measures, animal nutrition and some aspects of phytosanitary
legislation; and as regards
fisheries
policy, the resource and fleet management, and
inspection and control.
This also includes the fields of: road transport and air transport in the area of
transport
policy;
public health, the European Social Fund and anti-discrimination in the area of
social policy and employment;
security of supply and competitiveness and the internal
energy market in the area of
energy; telecommunications and information technologies,
including postal services; audio-visual policy in the area of
culture and audio-visual
policy;
institutional structures in the field of
regional policy and co-ordination of
structural instruments;
nature protection and genetically modified organisms in the area
of
environment
policy; market surveillance and non-safety related measures in the area of
consumer and health protection;
visa policy and asylum policy in the area of
justice and
home affairs; external relations,
as regards screening of bilateral agreements with third
countries; and public internal financial control in the area of
financial control.
Thirdly, Cyprus must take immediate and decisive action to address three issues of
serious concern
in two chapters of the
acquis
if it is to be ready by the date of accession.
This concerns the field of
agriculture,
in particular Cyprus's preparations to put in place
its Paying Agency, and to prepare for the application of external trade mechanisms. It
also concerns the field of
transport policy,
as regards maritime safety.
51
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1465029_0052.png
S
TATISTICAL ANNEX
1998
Basic data
Population (average)
Total area
National accounts
Gross domestic product at current prices
Gross domestic product at current prices
Gross domestic product per capita b) at current
prices
Gross domestic product at constant prices (nat.
currency)
Employment growth
Labour productivity growth
Unit labour cost growth
Gross domestic product per capita b) at current
prices
GDP per capita b) at current prices in PPS
Labour productivity (GDP per person employed
in PPS)
Structure of production
- Agriculture
- Industry (excluding construction)
- Construction
- Services
Structure of expenditure
- Final consumption expenditure
- household and NPISH
- general government
- Gross fixed capital formation
- Stock variation
- Exports of goods and services
- Imports of goods and services
Inflation rate
Consumer price index
4,698
8.1
11.900
767.3
9,251
774.8
9,251
1999
2000
in 1000
781.9
in km²
9,251
9,251
9,251
789.2
797.8
2001
2002
Mio Cyprus Pound
5,030
8.7
12,600
5,512
9.6
13,800
5,880
10.2
14,500
6,192
10.8
15,000
1000 Mio ECU/euro
ECU/euro
% change over the previous year
5.0
1.1
3.9
-6.6
15.800
4.8
1.1
3.7
-0.1
17,500
:
17,000
5.2
4.0
1.0
:
17,100
4.2
1.9
3.5
:
17,400
2.2
0.3
0.5
in Purchasing Power Standards
in % of EU-15 average
78
79
82
84
75
77
73
75
72
75
% of Gross Value Added c)
4.4
13.8
8.0
73.7
86.5
68.5
19.2
19.2
1.5
43.5
51.1
4.2
13.3
7.7
74.9
83.0
67.1
17.1
18.1
1.5
44.5
47.5
3.8
13.2
7.1
76.0
84.9
69.4
16.6
17.6
2.3
46.4
52.0
4.0
12.9
7.1
76.0
85.7
69.1
17.7
17.3
1.0
46.8
51.6
4.3
12.7
7.4
75.6
85.9
69.2
17.7
18.7
1.2
43.1
49.6
as % of Gross Domestic Product
% change over the previous year
2.3
1.1
4.9
2.0
2.8
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1998
Balance of payments
-Current account
-Trade balance
Exports of goods
Imports of goods
-Net services
-Net income
-Net current transfers
-
of which: government transfers
- FDI (net) inflows
Public finance
General government deficit/surplus
General government debt d)
Financial indicators
Gross foreign debt of the whole economy
Gross foreign debt of the whole economy
Monetary aggregates
- M1
- M2
- M3
Total credit
Average short-term interest rates
- Day-to-day money rate
- Lending rate
- Deposit rate
ECU/EUR exchange rates
- Average of period
- End of period
- Effective exchange rate index
Reserve assets
-Reserve assets (including gold)
-Reserve assets (excluding gold)
External trade
Trade balance
Exports
Imports
Terms of trade
Exports with EU-15
Imports with EU-15
-2,330
407
2,737
:
54.3
61.9
1,299
1,184
0.577
0.582
108.3
4.8
8.0
6.5
:
11.1
1.3
8.8
-541
-2,175
955
3,130
1,634
-26
26
23
237
1999
-204
-2,166
938
3,104
1,916
-36
82
82
642
2000
-494
-2,826
1,031
3,857
2,219
-24
136
139
872 p
2001
-441
-2,848
1,090
3,939
2,421
-38
24
26
728p
2002
-575 f)
:
:
:
:
:
:
:
466 f)
in Mio ECU/euro
in % of Gross Domestic Product
-4.9
61.7
-4.5
62.1
-3.1
61.7
-3.0
64.2
-3.5p
58.6p
in % of Gross Domestic Product
60.7
73.1
75.3
70.0
as % of exports
139.4
164.2
1.8
10.4
:
12.5
5.2
8.0
6.5
0.579
0.577
:
14.3
6.0
8.0
6.5
0.574
0.574
% per annum
4.9
7.5
5.7
0.576
0.575
106.0
2,711
2,566
162.5
1.7
11.4
:
16.4
149.7
1.8
12.9
:
:
1.8
14.2
:
18.0
3.3
7.2
4.6
0.575
0.573
108.8
3,032
2,885
1000 Mio ECU/euro
(1ECU/euro=..Cyprus Pound)
1995=100
106.0
102.3
Mio ECU/euro
1,959
1,829
2,009
1,873
Mio ECU/euro
-2,422
393
2,815
:
55.0
57.3
-2,990
440
3,430
:
as % of total
56.5
55.9
50.9
55.5
48.0
55.8
-3,289
491
3,780
:
-3,470
452
3,922
:
previous year=100
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1998
Demography
Natural growth rate
Net migration rate (including corrections)
Infant mortality rate
Life expectancy :
Males:
Females:
Labour market (Labour Force Survey) e)
Economic activity rate (15-64)
Employment rate (15-64), total
Employment rate (15-64), males
Employment rate (15-64), females
Employment rate of older workers (55-64)
Average employment by NACE branches
- Agriculture and forestry
- Industry (excluding construction)
- Construction
- Services
Unemployment rate, total
Unemployment rate, males
Unemployment rate, females
Unemployment rate of persons < 25 years
Long-term unemployment rate
Social cohesion
Inequality of income distribution
Early school-leavers
Population in jobless households (persons aged
0-65)
Standard of living
Number of cars
Main telephone lines
Number of subscriptions to cellular mobile
services
Infrastructure
Railway network
Length of motorways
0
204
367
596.1
171.5
:
:
:
:
:
:
:
:
9.1
14.5
9.1
67.3
:
:
:
:
:
:
:
5.1
4.9
7.0
1999
5.0
4.5
6.0
2000
4.5
4.2
5,6
at birth
:
:
2001
4.8
5.1
4.9
76.1
81.0
2002
3,8
8.0
4,7
:
:
per 1000 of population
per 1000 live-births
75.3
80.4
% of population
68.3
:
:
:
:
4.7
14.5
9.9
71.0
:
:
:
11.9
:
68.9
65.7
78.7
53.5
49.4
in % of total
5.4
14.0
9.8
70.8
5.2
3.2
7.8
10.2
1.2
4.8
13.9
9.8
71.5
4.4
2.9
6.4
8.2
0.9
5.3
13.3
9.9
71.6
3.8
2.9
5.0
7.7
0.8
70.7
67.8
79.3
57.2
49.1
70.9
68.6
78.8
59.2
49.2
as % of the total population of the same age group
% of labour force
ratio of top quintile to lowest quintile
:
15.0
:
:
15.0
6.8
:
14.8
6.0
:
14.0
6.0
% of population aged 18-24
% of population aged 0-65
per 1000 inhabitants
374
617.8
220.9
386
634.5
314.8
399
620.2
448.2
404
600.9
587.6
in km per 1000 km²
0
Km
216
240
257
268
0
0
0
54
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1465029_0055.png
1998
Industry and agriculture
Industrial production volume indices
Gross agricultural production volume indices
Innovation and research
Spending on Human
expenditure on education)
Resources
(public
5.79
102.6
109.4
1999
102
107.4
2000
104.5
91.5
2001
99.7
105.7
2002
100.1
103.8
previous year=100
as % of GDP
5.66
5.61
5.86E
6.09
as % of GDP
Gross domestic expenditure on Research &
Development
Level of Internet access - households
Environment
Total greenhouse gases emissions
Energy intensity of the economy
Share of renewable energy
Modal split of freight transport
p=provisional figures
E=estimated data
a) Data provided refer to the Government controlled area only, with the exception of data on total area,
population and the various demographic indicators which refer to the whole of Cyprus. Indicators expressed
in per capita were calculated on the basis of the mid-year population in the Government controlled area.
b) Figures have been calculated using the population figures from National Accounts, which may differ from
those used in demographic statistics.
c) Including FISIM.
d) With the agreement of the Cyprus authorities, Eurostat has corrected gross debt by CYP +266.15 mio for
1999, +394.77 mio for 2000 and +507.71 mio for 2001, reflecting net contributions to government sinking
funds.
e) Data for the years 1999 - 2001 based on largely EU-harmonised LFS data collected in the second
quarter of each year (April - June). Data for the year 1998 are compiled from a number of administrative
sources. Data on employment are calculated on a FTE basis.
f) Source: Website of the National Bank
:
0.23
0.25
0.26
:
:
per 1000 inhabitants
:
14
20
:
tonnes CO2 equivalent per capita
120
307.3
:
100
140
279.8
:
100
140
287.1p
:
100
:
:
:
100
:
:
:
:
kg of oil equivalent per 1000 euro of GDP
as % of total electicity consumption
as % of total freight transport
Methodological notes
Inflation rate
For
details
please
refer
to
the
following
link
to
the
Eurostat
website:
http://europa.eu.int/newcronos/suite/info/notmeth/en/theme1/strind/ecobac_ir.htm
Finance
Public finance:
The general government deficit / surplus refers to the national accounts concept of
consolidated general government net borrowing / net lending (EDP B.9) of ESA95. General government
debt is defined as consolidated gross debt at end-year nominal value.
External trade
Imports and exports (current prices).
The data is based upon the special trade system. Trade Classification:
Trade in goods are recorded using the commodity classification according to the Combined Nomenclature.
Imports are recorded on CIF basis, exports on FOB basis.
Imports and exports with EU-15.
Data declared by Cyprus.
55
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1465029_0056.png
Labour market
Indicators are harmonised annual figures with the exception of average employment by NACE branches
and unemployment rate of persons < 25 years, which are for the 2
nd
quarter of the respective year. The
results are based on the European Union Labour Force Survey (LFS). The EU LFS is conducted on a
quarterly basis in accordance with Council Regulation (EEC) No. 577/98 of 9 March 1998.
For details please refer to the following link on the Eurostat website:
http://europa.eu.int/newcronos/suite/info/notmeth/en/theme1/strind/emploi.htm
Social cohesion
For details please refer to the following link on the Eurostat website:
http://europa.eu.int/newcronos/suite/info/notmeth/en/theme1/strind/socohe.htm
Industry and agriculture
Industrial production volume indices.
Industrial production covers mining and quarrying, manufacturing
and electricity, gas, steam and water supply (according to the NACE Rev.1 Classification, Sections C, D
and E).
Gross agricultural production volume indices.
Gross agricultural production volume indices are calculated
in constant prices of 1995.
Innovation and research
For
details
please
refer
to
the
following
link
to
the
Eurostat
website:
http://europa.eu.int/newcronos/suite/info/notmeth/en/theme1/strind/innore.htm
Environment
For
details
please
refer
to
the
following
link
to
the
Eurostat
website:
http://europa.eu.int/newcronos/suite/info/notmeth/en/theme1/strind/enviro.htm
Sources:
Total area, External trade, Demography, Standard of living, Infrastructure, Industry and agriculture:
National sources. Other indicators: Eurostat.
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