Brussels, 17.03.2014 ATTN: Martin SCHULZ President of the European

Fraktion der Europäischen Volkspartei (Christdemokraten) und europäischer Demokraten im Europäischen Parlament Group of the European People's Party (Christian Democrats) and European Democrats in the European Parliament Groupe du Parti Populaire Européen (Démocrates-Chrétiens) et Démocrates Européens au Parlement européen Internet address: http://www.epp-ed.org Brussels, 17.03.2014 ATTN: Martin SCHULZ President of the European Parliament Your Excellency, I am addressing this letter to you as I wish to raise a sensitive issue that is of outmost importance, namely, that of the “Direct Trade” Regulation proposed by the European Commission on the 7th July 2004 and titled, “Special conditions for trade with those areas of the Republic of Cyprus in which the Government of the Republic of Cyprus does not exercise effective control”(COM(2004)0466 final). This issue remains dormant on the level of the Conference of Presidents since October 2010 when the Legal Services of the European Parliament issued a legal opinion flatly stating that the legal basis of the proposed Regulation is wrong and consequently a new legal basis should be defined and drafted in line with Article 1(2) of Protocol 10 and with respect to the sovereign rights of the Republic of Cyprus. In short, the legal opinion underlines that the northern area of the Republic of Cyprus which is still under Turkish occupation cannot be considered a “third country”. On the 13th of March 2014, our honourable colleague, Mr, Niccolo Rinaldi circulated on the website of the Committee on International Trade (INTA) (DT\1023171), a “Working Document”, expressing his personal views regarding the “frozen” issue of the proposed “Direct Trade” Regulation, suggesting, inter alia, to change the name of the proposed Regulation in order to avoid emotional and/or political negative reactions1. He also proposes “a specific non-permanent but temporary/transitional nature of the instrument that needs to be underlined”. Moreover, Mr. Rinaldi maintains his idea “to give power to the specific body, jointly composed of EU representatives and the Northern Cypriot Chamber of Commerce”. I recall that this theme has been brought before the Committee on International Trade in the European Parliament in the legislative procedure of co-decision which results from the new Treaty of Lisbon that came into force since the 1st of December 2009. The aforementioned proposed Regulation has been elaborated, prepared and drafted by the European Commission on the basis of Article 133 of the Treaty of Nice. Shortly after the new Treaty of Lisbon came into force, Article 133 is referred to as 207 (2). According to the European Commission, the Regulation on "trade with those areas of the Republic of Cyprus in which the Government of the Republic of Cyprus does not exercise effective control" falls within the ambit of co-decision-making between the European Parliament and the Council. This aforementioned Regulation, remains an outstanding issue before the Council as, inter alia, its legal basis is wrong. Article 133, and henceforth Article 207 (2), refers to the “common commercial policy” in the context of the “Union’s external action” with “third countries”. However, the northern occupied area of Cyprus is not a "third country". On the contrary, according to Protocol 10 upon which the Republic of Cyprus acceded to the EU, the whole of Cyprus integrated to the EU. In this respect I underline the following: 1. In accordance with the legal opinions of both the Legal Services of the Council and the Legal Services of this House2 and with respect to the Republic of Cyprus, a member state of the EU, we cannot accept that the issue of trade (between the EU and the areas of the Republic of Cyprus in which the Government of the Republic of Cyprus does not exercise effective control) should be submitted before the Committee on International Trade as it is not 1 “A more appropriate title would be: Temporary/transitional provisions in order to facilitate trade for the Northern part of the Republic of Cyprus as part of the Republic of Cyprus”. DT\1023171EN par.4A p. 4” 2 see par. 21 p.5, legal opinion 14.10.2010, Note for the attention of Mr Klaus-Heiner LEHNE an affair between the EU and an external "third country". To the contrary, the northern occupied part of the island is part of the territory of the Republic of Cyprus and therefore it is a matter of internal affairs concerning both the Government of the Republic of Cyprus and the EU. 2. The legal basis of the proposed Regulation is absolutely wrong as it does not comply with Protocol 10 which constitutes an integral part of the European legal system and with the acquis communautaire. Hereupon, there is a legal opinion, issued by the Legal Services of the Council, supporting that the legal basis of the Regulation proposed by the European Commission is unfounded. 3. The legal basis of the proposed Regulation contravenes the decision of the European Council of the 26th April of 2004, which the Commission relies upon, to propose the Regulation in question “for trade with those areas of the Republic of Cyprus in which the Government of the Republic of Cyprus does not exercise effective control". 4. The northern occupied part of the Republic of Cyprus cannot be considered neither politically nor legally as a “third State, authority or entity”, as has been accentuated by the UN Security Council Resolutions 541 and 550. 5. The Declaration of the European Community and its Member States issued on the 21st September 2005 clarifies, among others, the following three matters: a. that the international community and the EU do not recognize the so- called "Turkish Republic of Northern Cyprus" as they consider it non- valid, and b. that the only state recognised on the island is the Republic of Cyprus, a Member State of both the EU and the UN. c. that the Turkish Republic should recognise the Republic of Cyprus. This is a precondition for Turkey’s accession to the EU. In addition, in his “Working Document”, Mr Rinaldi also makes reference to the cases of Gibraltar and Ceuta and Melilla3, in order to project them as precedents which 3 see p.3, DT\1023171EN could apply to the proposed Regulation in question. We recall that in accordance with the legal opinion of the Legal Service of the European Parliament, the situation in the occupied northern part of Cyprus is not comparable with the situations of Gibraltar, Ceuta and Melilla. The issue is analysed in paragraphs 17 and 18. In the latter, the Legal Service underlines the following: “more importantly, in all those cases the Member States have deliberately and explicitly excluded the territories in which they exercise effective control from the customs union and agreed that certain parts of their territories will be subject to common commercial policy rules. The current situation with the Areas is thus not comparable”. The following conclusions hence naturally stem from the aforementioned legal and political arguments: 1. The Committee on International Trade has no competence to deal with the issue of the proposed “Direct Trade” Regulation, as it is not a matter between the EU and an external “third country”. Besides, this issue remains dormant on the level of the Conference of Presidents. 2. We acknowledge and respect the interest and the intention of Mr. Rinaldi regarding the issue of “Direct Trade”. However, his personal proposals will not solve the problem. The Legal Services of the European Parliament clearly stated, that what the European Commission should do in order for its proposal to be in line with EU legal order and particularly with Protocol 10, is not only to change the name of the Regulation, but its legal basis. In fact, we need a new Regulation with a new legal basis as the existing one relied on Article 207 (2) wrongly considers the northern occupied part of Cyprus as a “third country”. This is not “legally appropriate”4. 3. We consider that the proposal of Mr. Rinaldi does not eliminate the risk of establishing a new status quo in the northern 4 par. 21 of Legal Service occupied part of Cyprus, based on the concept and practice of Taiwan, and thereby prejudging a dichotomous solution to the Cyprus issue, which is not as Mr Rinaldi correctly underlines our aim. The implementation of temporary trade for some years as Mr. Rinaldi proposes will create in Cyprus an irrevocable status quo, giving the impression that there are two entities under a supervisory body of the European Commission. In accordance with the Legal Services of the European Parliament, the sovereignty belongs only to the State of the Republic of Cyprus which has the authority, in full compliance with the International Law, to open and close ports and airports. In this regard, the Legal Services of the European Parliament underlines that “the adoption of the proposal would also undermine the sovereign rights of the Republic of Cyprus in that context”5. Accordingly, the proposal of Mr. Rinaldi will not assist but on the contrary may cause additional problems to the on-going negotiations. Furthermore, the timing of circulation of Mr. Rinaldi’s “Working Document” which represents his personal views on the matter, may not comply with Parliamentary Custom Practices as we are approaching the end of the 5 years Parliamentary Term. Furthermore, all the former Cyprus Governments and the current one, which is under the Presidency of Mr. Nicos Anastasiades, have already tabled concrete proposals regarding trade between the occupied northern Cyprus on the one hand and the return of the city of Famagusta to its lawful inhabitants as Resolution 550 of the UN Council proposes for, on the other.

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