Relations between Cyprus and the EU date back to the 1970’s when an Association Agreement was signed between the government of the Republic of Cyprus and the European Economic Community (EEC) in 1972. In 1987 Cyprus signed the Customs Union Agreement with the EEC. The delay was due to the invasion and occupation of the north part of Cyprus by Turkey. Until 1980 the relations with the EEC were associated with trade. The application to join the EU was submitted in July 1990, when negotiations for the accession started under the framework of EU’s enlargement policy.
In the process to Cyprus joining, the EU, along with the UN, played a leading role in attempting to reunify the island. However, when this was proved impossible, the Greek part of the island joined alone. This prevented the TRNC's (the illegally so-called Turkish Republic of North Cyprus) population from the enjoying the benefits of EU membership. Finally, on May 1st 2004, Cyprus became a full member of the European Union, after an accession negotiation period that started in March 1998. Cyprus became member of the Economic and Monetary Union (EMU) upon accession to the European Union. As of 1st January 2008, Cyprus adopted the Euro, giving up its national currency (the Cyprus Pound), in a quiet advantageous rate for the Cypriots. Simultaneously, it entered the euro zone and benefited from a single monetary policy.
The benefits to Cyprus from membership of the EU are quite substantial, with the citizens of the Republic of Cyprus benefiting from political, economic, social, environmental and other advantages. In the world political scene the government now enjoys greater international influence and a common identity. As a result of full EU membership, EU citizens are now permitted to live and work freely in Cyprus, without requiring a visa. Ease of travel benefits both Cyprus and any prospect visitor who can travel and relocate to the country, without having to frustrate with paperwork.
Greater accomplishments were made in the field of Cyprus economy, such as higher degree of stability in prices and lower interest rates. Along with greater price transparency Cyprus government achieved the increase of competition. Further more, the reduction of currency conversion costs and exchange rate risk, forms a motivation for money transfer, exchange of goods and services between Cyprus and the EU. Nowadays new opportunities arose in the trading field, with the EU becoming Cyprus main trading partner, accounting for approximately 50% of total trade. The world’s largest market is now open to Cypriot goods and services as a result of accession to EU. The island's geo-strategic location at the crossroads of Europe, Asia and Africa, as well as its close proximity to the important oil routes of the area can offer EU countries access to the large Arab markets, and place them in a beneficial position with respect to their trade and commercial interests.
Cyprus, as a financial and business center, provides EU member countries attractive investment opportunities. Investments from European companies or persons have to comply only with certain restrictions such as respect for the environment and safety standards. In addition, Cyprus companies are favored as Holding Companies. As from May 2004, dividends exported to Cyprus from other EU countries have no tax charged in those countries. For non-EU countries, lower withholding rates are valid under many of the Cyprus Tax Treaties.
Among the multiple advantages offered by the EU membership, several other restrictions, especially referring to property law, have also been brought into accordance with EU legislation. Cyprus has dismantled most investment limitations, attracting increased flows of foreign direct investment (FDI), largely from the EU.
For Greek-Cypriots Cyprus, EU membership provides an essential recognition of their claim to sovereignty. By the full accession of Cyprus in the EU the Government secures the most vital aim for the country, which is the reinforcement of stability, security and cooperation in the Mediterranean and the rest of Europe, so as to safeguard a peaceful future for all the people living in Cyprus.
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