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International Trade Law and Unrecognized States a Comparison Between the Turkish Republic of Northern Cyprus and the State of Palestine

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International Trade Law and Unrecognized States a Comparison Between the Turkish Republic of Northern Cyprus and the State of Palestine 1 International Trade Law and Unrecognized States A Comparison Between the Turkish Republic of Northern Cyprus and the State of Palestine Name/Surname: Ayshe Moukellef E-Mail: [email protected] 2 ABSTRACT The European Court of Justice (the Court) arguably misjudged the content and outcomes of the principle of non-recognition in international law by its decision in the Anastasiou case where direct importation of the products from the Turkish Republic of Northern Cyprus (TRNC) with certificates issued by the TRNC authorities were banned and heavy taxation started to apply on the basis of the TRNC’s non-recognition. While on the other hand, the Court considered the products coming from another non-recognised state; Palestine with an Israeli origin stamp to be illegal and ruled that Palestine should be authorised to issue such origin certificates by the decision of Brita GmbH case. Therefore, this paper aims to examine the relation between the territorial disputes and the rules of origin through the analysis of two European case law as mentioned above in order to investigate two distinct approaches, namely the political sovereignty approach and practical trade approach adopted in these cases. That is why, the paper starts with the analysis of the current legal status of these two territories. This is followed by the evaluation of current laws regulating the international trade of these States where also an empirical study held in the form of qualitative research in order to illustrate the difficulties the TRNC exporters are encountering due to these current laws on a daily basis. This research conducted in order to construct a solid ground for the argumentation against the ECJ’s decision in Anastasiou case and political sovereignty approach. Mainly, the EU’s trade policy in regard to these two disputed territories and the rules of origins applied to the products produced in these territories evaluated and compared through the above-mentioned case law thus a further suggestion can be made to the EU. For this reason, a comparative methodology is adopted to illustrate that it is possible to rely on practical trade approach as this can be observed in the case of Palestine. Furthermore, the examination of how to apply the practical trade approach to the case of TRNC demonstrated as it is possible to do so in occupied territories due to the current practice in this field. Eventually, a debate held on why the EU should change its trade policy towards the TRNC as its current policy creates obstacles to the process of Cyprus Peace talks and put the process in abeyance. Finally, the paper adopted a prescriptive methodology in order to make a future recommendation. In that respect, it is suggested that the EU should adopt a new trade policy towards the TRNC with practical trade approach where sovereignty and international recognition won’t be the determinative factors for free-trade. 3 TABLE OF CONTENTS Abstract ………………………………………………………………………………………... 2 Table of Contents …………………………………………………………………………….... 3 List of Abbreviation ………………………………………………………………………….... 4 Introduction ………………………………………………………………………………….… 5 A. Turkish Republic of Northern Cyprus ………………………………………………….… 7 i. An Insight to Cyprus Dispute …………………………………………………………………. 7 ii. The Analysis of the Current Legal Status of the Turkish Republic of Northern Cyprus……… 8 iii. How the international trade law is being regulated in the TRNC?…………………………… 10 a. International Trade via Turkey …………………………………………………………… 10 b. International Trade via EU Council Regulation (EC) No 866/2004 …………………….. 12 iv. Case-Study: Anastasiou I and Anastasiou II ……………………………………………………….. 14 a. C-432/92 Anastasiou I ………………….……………………………………………….. 14 b. C-219/98 Anastasiou II ………………………………………………………………….. 16 B. State of Palestine …………………………………………………………………………… 19 i. An Insight to Israel – Palestine Dispute ……………………………………………………… 19 ii. The Analysis of the Current Legal Status of the State of Palestine ………………………….. 21 iii. How the international trade law is being regulated in Palestine? …………………………… 22 a. The Paris Protocol on Economic Relations and its Implementation ……….……………. 22 b. Bilateral Trade Relationships of Palestine ……………………………………………….. 23 iv. Case-Study: Brita GmbH vs. Hauptzollamt Hamburg-Hafen …………………………………... 24 C. Comparison of the Political Sovereignty Approach and the Practical Trade Approach.. 26 i. How did the Court’s approach differ in these two identical cases? …………………………... 26 ii.Can the EU apply the practical trade approach in case of the TRNC? …………………………………………………………………………………………...………. 29 D. Why Should the European Union Change Its Approach Towards the TRNC? ………… 31 E. Conclusion …………………………………………………………………………………… 33 Bibliography ……………………………………………………………………………………. 34 4 LIST OF ABBREVIATIONS TRNC Turkish Republic of Northern Cyprus ECJ European Court of Justice EU European Union UN United Nations PLO Palestine Liberation Organization HHH Hauptzollamt Hamburg-Hafen GATT General Agreement on Tariffs and Trade WTO World Trade Organisation ATF Agreement on Trade Facilitation 5 INTRODUCTION Since 1974 de facto partition of the Cyprus and with the declaration of the independence of the Turkish Republic of Northern Cyprus (TRNC) in 1983, the TRNC holds the status of non-UN member state that is only recognised by Turkey.1 Otherwise, TRNC has not been legally recognised by any other State and due the its partition, the international trade of the TRNC became problematic over the years. Especially when one considers to export products of TRNC origin. This was because of two major cases, namely the Anastasiou I and II cases, concerning the exports into the EU where the European Court of Justice (ECJ) decided that European Union (EU) members must not accept certificates issued by the TRNC authorities as cooperation required under the certificate system was excluding the TRNC because it was neither recognised by the EU nor by its member states.2 The decision of the court was bearing the characterisation of political sovereignty approach which caused the TRNC’s international trade routes to be restricted. On the other hand, there is the State of Palestine with occupied territories under the occupation of Israel.3 Palestine has observer non-UN Member State status but have not been recognized by the EU and its Member States. Despite such resemblance to the TRNC, the ECJ in Brita GmbH case decided to take a practical trade approach in regard to the issuance of EUR.1 certificates by the Palestinian authorities.4 It is known that in general, importing states apply two territorial approaches when they determine an origin of a product, namely the political sovereignty approach or the practical trade approach.5 The latter usually evaluate the question of origin from a commercial point of view and determines the relevant questions according to the principles of international trade law while the former evaluates the issues of origin from the international politics standpoint and emphasizes the question of sovereignty recognition.6 Here, it can be seen that the ECJ’s ruling in Anastasiou contradicts with the Brita GmbH in that sense. This contradiction is forming the main focus of this 1 Patrick Tani, ‘The Turkish Republic of Northern Cyprus and International Trade Law’(2012) 12 Asper Rev. Int’l Bus. & Trade L. <http://heinonline.org/HOL/Pagehandle=hein.journals/asperv12&collection=journals&id=117&startid=&endid=140.ht ml> accessed 18 January 2017, pp. 3 2 C-432/92 The Queen v. Minster of Agriculture, Fisheries and Food, ex parte S.P Anastasiou (Pissouri) Ltd and others [1994], E.C.R. I-3116 [Anastasiou 1994]. 3 Mosche Hirsch, ‘Rules of Origin as Trade or Foreign Policy Instruments?: The European Union Policy on Products Manufactured n the Settlements in the West Band and the Gaza Strip’ (2002), Fordham Int’l LJ, Vol. 26, No. 3, <http:// ir.lawnet.fordham.edu/cgi/viewcontent.cgi?article=1879&context+ilj> accessed on 28 January 2017, pp. 557. 4 C-386/08, Brita GmbH v. Hauptzollamt Hamburg-Hafen, 2009 ECJ (Opinion of Adv. Gen'l Yves Bot) <http://curia.europa.eu/jurisp/cgi-bin/form.pl?lang=EN&Submit=rechercher&numaff=C-386/08> accessed 10th January 2017 [hereinafter Brita v. Hauptzollamt AG Decision]. 5 Hirsch, supra note 3, pp. 577. 6 Ibid. 6 paper; to analyse the different judgments of the ECJ, to know more about the above-mentioned approaches and eventually to create an argumentation on the possible application of the practical- trade approach in the case of TRNC. In that respect, the paper briefly focused on Cyprus dispute and the current legal status of the TRNC and analysed this from the perspective of state recognition. There is also a brief explanation of how international trade law is being regulated under the TRNC where the discussion focused on trade via Turkey and the 2004 Green Line Regulation. The paper also analysed the qualitative research data collected through the focused interviews made with the main TRNC exporters on difficulties suffered by them due to the current laws in order to be able to illustrate that the current legal regulations are not practical in practice. During these face to face interviews, nine questions directed to the interviewees where each interviewee had thirty minutes in total to provide answers. In total, there were 7 interviewees mostly selected from the field of agriculture & livestock farming as these are forming the main exporters of the TRNC. Interviews recorded and transcript of each prepared where coding used as an interpretation technique when analysing the responses.
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