Cyprus-U.S. Commercial Ties
Cyprus and the U.S. continue to enjoy a very close trading and business relationship. Government of Cyprus bilateral trade statistics for 2005 show that the U.S. supplied around $103 million worth of goods to the island last year, making up 1.6% of Cyprus' total imports. Over the last decade, direct U.S. exports to Cyprus have recorded a gradual decline, from around $169 million in 1996 to the present level of around $102 million. However, these numbers conceal the fact that many U.S. products arrive in Cyprus through subsidiaries elsewhere in the EU. Cyprus has abolished customs tariffs on most EU goods since 1998, and it has fully adopted the EU's Common Customs Tariff (CCT) towards third countries since EU accession on May 1, 2004.
Some of the main U.S. exports to Cyprus include data processing equipment, electrical appliances, specialized vehicles, toys, furniture, and optical, measuring or medical equipment. On the downside, Cyprus imports of U.S. corn have declined dramatically in recent years, due to stricter regulations against biotech goods. Re-exports of U.S. tobacco products through Cyprus to nearby countries, which thrived in the mid- to late-nineties, are now a thing of the past, since the tobacco companies have found alternative routes for their products.
The U.S. is growing in significance as an export market for Cyprus. In 2005, the U.S. absorbed around $23 million or 1.5% of the island's total exports, ranking 9th largest export market. Many Cypriot products, such as halloumi cheese and mineral substances have been doing quite well in the U.S. in recent years, while others, such as fresh fish hold much potential for growth.
Trade in services dwarfs the trade in goods. According to Government of Cyprus statistics, the inflow of services (from the U.S. to Cyprus) in 2005 was $631.2 million, compared with $585.9 million in 2004. The outflow of services (from Cyprus to the U.S.) was $388.1 million in 2005, compared with $346.7 million in 2004. Eurocypria's decision in 2001 to lease four brand-new Boeing 737-800 aircraft, valued at more than $200 million -- one of the highlights of bilateral commercial relations in recent years - is not included in official trade statistics because it was a lease, not a purchase. Other examples include U.S. fast food franchises, which have recorded phenomenal expansion in Cyprus in recent years, as well as the numerous agreements between Cypriot and U.S. service providers -- from accounting firms to Internet providers. Similarly, several very important U.S. firms conduct their international business for the region using Cyprus as a base.
The gradual liberalization of foreign direct investment regulations has made Cyprus a more attractive destination for U.S. investors in recent years. According to Government of Cyprus statistics, U.S. direct investment in Cyprus reached USD 85.3 million in 2004 (compared with minus USD 7.8 million in 2003), including USD 60.9 million in business and management consultancy services, and USD 13.2 million in real estate (figures for 2005 are not yet available,). Projects involving U.S. investment in recent years have included a well-known U.S. coffee retailing franchise, an equestrian center, a hair products manufacturing unit, a firm trading in health and natural foodstuffs, and a financial services company. Another large project, involving the construction of a health spa and high-end residential units is in the works.
(Please refer to attached summary statistics on Cyprus-U.S. trade.)
ECON: GFDemetriou, May 30, 2006
