Cyprus: The Island of Business Opportunities in the Mediterranean

Francisco A. Laguna & Wojciech Kornacki

Cyprus is a rising regional transport hub in the Mediterranean.  The island’s economy has recently been rated one of the top 10 fastest improving economies with great potential in 2016, and thereafter. What is unique about Cyprus is that it is located near the Middle East but is also member of the European Union, and its official currency is Euro.

Cyprus (dark green) is a member of the European Union (EU members are in light green) that is located in the Southeastern Mediterranean. With its brand new multi-million private main port                    for trade, Cyprus it set to become a major transport and logistics hub in the Mediterranean.

Cyprus (dark green) is a member of the European Union (EU members are in light green) that is located in the Southeastern Mediterranean. With its brand new multi-million private main port for trade, Cyprus it set to become a major transport and logistics hub in the Mediterranean. Courtesy of http://en.wikipedia.org.

Cyprus: Business Intelligence Summary

Cyprus is the largest island in the eastern Mediterranean, and although it is divided between Turkey and Cyprus, the whole island is considered to be European Union territory.  It population is approximately 800,000.  In 2015, country’s GDP was 17,421 billion Euros (~ US$ 19 billion), and it is expected to grow rapidly in the future. After significant reforms in business regulations, Cyprus is showing significantly improved economic performance. In addition, Cyprus is pushing hard to re-unify the entire island which would most likely create many new investment opportunities on the Turkish side of the island.

Currently, transport, trade and accommodation are some of the most important sectors of Cypriot economy.

Regional Transportation Hub

Cyprus’s commercial fleet is third largest in the European Union. Recently, the European Union has invested millions of euros to make Cyprus one of its main sea transport and logistics hubs.  In the last 2 years, that investment has transformed Cyprus’s main port, Limassol, into one of the most efficient and modern ports in the southern Mediterranean. The estimated economic benefit to the island approaches 2 billion Euros. In 2015, the port was privatized, and since then, it has breathed new life into Cyprus. Additional construction projects for oil and gas offshore bases and terminals are in progress. The port is expected to be fully operational in early 2017. Since the European Union is seeking to make Limassol a critical logistics hub in the region, and many European and international companies have already invested in it, this offers a great opportunity for additional business prospects in Cyprus.

Cyprus’s tourism and accommodation sectors are very well developed and continue to attract new investors. In addition to many very favorable tax and investment incentives, Cyprus is engaged in re-unification discussions which will create additional business opportunities in the areas of gas exploration, banking, and tourism on both sides of the island.  Courtesy of http://en.wikipedia.org

Cyprus’s tourism and accommodation sectors are very well developed and continue to attract new investors. In addition to many very favorable tax and investment incentives, Cyprus is engaged in re-unification discussions which will create additional business opportunities in the areas of gas exploration, banking, and tourism on both sides of the island. Courtesy of http://en.wikipedia.org.

Opportunities in a Re-Unified Cyprus

While Cyprus has experienced significant economic growth, the Turkish Cyprus remains less developed, and its economy is much smaller. It is estimated that by 2035, a reunified Cyprus could generate 45 billion Euros or (~ US$ 50.5 billion) in economic output – more than double than what it is now. Re-unification would make it very easy for many companies to start developing the recently discovered gas fields on the Turkish Cyprus side. It would also lift the Turkish embargo on Cyprus-flagged ships which would dramatically increase shipping and transshipment of containers through Cyprus to Asia and the Middle East. Since the re-unification appears almost imminent, and both sides are aware that it makes economic sense, the time to consider Cyprus for investment and business opportunities is now.

Contact TransLegal with your questions concerning business opportunities in Cyprus.

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Brexit: The Possibilities

Francisco A. Laguna & Amy Turner

 This week, we conclude our Brexit series with an examination of the possibilities of how the withdrawal process may take shape. Since the 23 June 2016 Brexit vote, several questions have arisen. Within Europe, a dispute has started about whether the decision to invoke Article 50 is the prerogative of the UK government, or if it requires Parliamentary assent. Government lawyers advised that invoking Article 50 is a government prerogative. However, the repeal of the European Communities Act by Parliament is a prerequisite, which automatically involves the UK parliament.

Another question is the extent to which the Northern Ireland Executive, Scottish Government and Welsh Government will have to be involved in the process. In this regard, Scottish Prime Minister Nicola Sturgeon has stated that legislative assent to act to implement withdrawal from the EU would be given by the Scottish Parliament.

According to Article 50, the negotiations concerning changes over budgets, voting allocations and policies due to the withdrawal of member states are the responsibility of the remaining members of the EU. However, as we discussed last week, since Article 50 has not been official invoked, official negotiations the UK, the other states and the European Commission cannot yet begin.

The decision was made to forgo any discussions until the UK formally invokes Article 50 during a meeting of Heads of States. Indeed, President of the European Commission Jean-Claude Juncker took a strong stance and ordered that EU members not engage with UK parties regarding Brexit. This lead to Donald Tusk, the president of the European Council, to state that access to the European Single Market would not be given to the UK until they accept its “four freedoms of goods, capital, services, and people”.

The changing relationship with the UK and the remaining EU members could evolve several ways. For example, the UK could remain in the European Economic Area (EEA) as a European Free Trade Association (EFTA) member (alongside Iceland, Liechtenstein, Norway and Switzerland). The UK could attempt to join the EEA as an EFTA member. Under this plan the UK would be required to follow EU internal market legislation without being able to participate in its development or vote on its content. However, the EU is required to conduct extensive consultations with non-EU members beforehand via its many committees and cooperative bodies.

Under the EEA Agreement, certain policy areas are not apply to EFTA members such as: Common Agriculture and Fisheries Policies; Customs Union; Common Trade Policy; Common Foreign and Security Policy; direct and indirect taxation; and Police and Judicial Co-operation in Criminal Matters. This allows the EFTA members to set their own policies in those areas. Common Agriculture and Fisheries Policies, Customs Union, Common Trade Policy, Common Foreign and Security Policy, direct and indirect taxation, and Police and Judicial Co-operation in Criminal Matters. In order to access the internal market, EFTA countries must contribute to the EU budget.

Another option could be that the UK would use the Swiss model and seek to negotiate bilateral terms via a series of interdependent sectoral agreements. The Swiss agreements contain free movement for EU citizens. Interestingly, the Swiss immigration referendum of February 2014 voted narrowly in favor of an end to the “free movement” agreement by February 2017. If this path is chosen, Britain must keep in mind that the bilateral treaties between Switzerland and the European Union are all co-dependent. This means that if one is terminated, then all are terminated. Barring a compromise, Switzerland’s unilateral choice to end the “free movement” agreement by Switzerland could cause all EU and Swiss agreements to become invalid.

Despite the fact that many politicians had weighed in on how they think a plan should work, no real plan has been established.  However, it is very clear that membership rights require input from every individual member, and many few the Brexit vote as a snub and the UK’s failure to invoke Article 50 as a means of continuing to benefit from its membership in the EU for as long as possible.

Contact TransLegal with your questions concerning Brexit and how it may impact your business.

Brexit: Article 50 of the Treaty on European Union

Francisco A. Laguna & Amy Turner

This week, we continue our series on Brexit looking at the withdrawal provisions of the Treaty on European Union.  Article 50 controls the process for the exit of countries from the EU. Withdrawal under Article 50 is an untested procedure, and the UK’s decision has caused a debate throughout Europe as to how it should be invoked.

European Parliament in Brussels by Zinneke - Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=4421689

European Parliament in Brussels by Zinneke – Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=4421689

Article 50 states:

  1. Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.
  2. A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. That agreement shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.
  3. The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.

Notice of withdrawal under Article 50 is a formal, proactive act the British government should undertake. The Brexit vote on June 23, 2016 does not constitute Article 50 notice. On June 26, 2016, three days after the UK vote, the EU issued a statement regretting but respecting Britain’s decision and asking it to proceed quickly in accordance with Article 50, stating “We stand ready to launch negotiations swiftly with the United Kingdom regarding the terms and conditions of its withdrawal from the European Union.” On 28 June 2016, the EU Parliament passed a motion calling for the “immediate” triggering of Article 50.  In contrast, in the UK, the growing consensus is that Article 50 notice should be given at, or near the end of, the end of the maximum two-year. Despite the pressure, however, the reality is that there is no mechanism to compel a state to withdraw from the European Union.

uk_parliamentNewly appointed PM Theresa May has stated that negotiations with the EU required a “UK-wide approach”. “I have already said that I won’t be triggering article 50 until I think that we have a UK approach and objectives for negotiations – I think it is important that we establish that before we trigger article 50.” She has also stated “All of us will need time to prepare for these negotiations and the United Kingdom will not invoke article 50 until our objectives are clear.”

Although there are many questions that will need to be addressed, timing is the most important. Presently the European Commission is operating under the assumption that Article 50 notification may not be made before September 2017, a sign suggesting that the government of the UK may be regretting the vote. Next in the series, we will discuss the possible plans for withdraw.

Contact TransLegal with your questions concerning Brexit and how it may impact your business.

Brexit Generates New Business Opportunities in 3 Major European Capitals

Francisco A. Laguna & Wojciech Kornacki

After our August break, today, we begin a series on Brexit.  This post focuses on potential opportunities in Europe resulting from Brexit.

Following the shocking and unexpected United Kingdom vote to exit the European Union, London is no longer considered the gateway to the European Union, and its future role in the European financial and technology markets is uncertain.  Many tech companies and international banks have begun exploring the possibility of moving to a capital on the continent to continue to enjoy the benefits of the Common European Market. This creates new business opportunities for companies seeking to re-establish certainty, cut costs and relocate to a European capital. Berlin, Warsaw and Paris each possess different qualities that make them attractive to these companies and institutions which are presently located in the UK.

Post-Brexit Aftershocks

 Right now, the UK has approximately 2 years to complete its negotiations to leave the European Union. Negotiations are expected to be very difficult, and the European Union has already made clear that it will not allow the UK to “cherry pick” only the best that the European Union has to offer. The UK’s financial sector, labor, farming and other sectors could be seriously affected by the negotiations. In order to avoid the uncertainty, some businesses have begun implementing the contingency plans to relocate to other European capitals.

Berlin

With its modern offices, low prices, and positive investment climate, Berlin seeks to replace London as the official gateway for tech companies to the European Union. Courtesy of http:// http://en.wikipedia.org

With its modern offices, low prices, and positive investment climate, Berlin seeks to replace London as the official gateway for tech companies to the European Union. Courtesy of http:// http://en.wikipedia.org

Berlin is actively seeking to replace London as a global center for financial technology. Berlin touts that it offers outstanding infrastructure and transportation capabilities, positive investment climate, substantial talent pool and office space that is cheaper than London’s. In addition, the Berlin-Brandenburg Metropolitan area alone has approximately 6 million residents from 180 nations, making it a perfect location for any international company.

As of 2015, Berlin surpassed London in venture capital investments.  It is ready to assume London’s role and be the next gateway to the European Union for tech companies and international banks. Berlin reported that it has already received numerous inquiries from many companies currently located in London.

Paris

Paris offers the largest business district in Europe that is only 3 hours away from Brussels. With its highly trained workforce and high quality life, many businesses seriously consider relocating to Paris. Courtesy of http:// http://en.wikipedia.org

Paris offers the largest business district in Europe that is only 3 hours away from Brussels. With its highly trained workforce and high quality life, many businesses seriously consider relocating to Paris. Courtesy of http:// http://en.wikipedia.org

Paris is located in the heart of the European Union and it is one of the top business destinations for some of the world’s largest international companies, offering some of the best research and development tax credits in Europe. The city also provides highly skilled professionals and a superior quality life right in the center of the European Union. Paris has already been running marketing campaigns to attract many companies currently located in the UK.

Warsaw

Many international companies that have already opened their branch offices in Warsaw are now considering whether they should establish their headquarters there. Warsaw offers an investor friendly environment with premium business locations at highly competitive prices, and with highly trained professionals. Courtesy of http:// http://en.wikipedia.org

Many international companies that have already opened their branch offices in Warsaw are now considering whether they should establish their headquarters there. Warsaw offers an investor friendly environment with premium business locations at highly competitive prices, and with highly trained professionals. Courtesy of http:// http://en.wikipedia.org

Warsaw is one of the fastest growing cities in the European Union. It already hosts many international banks and companies including the Google Campus Warsaw, opened in 2015. Warsaw’s scientific and information technology pool of professionals and innovators is well recognized around the world.

Warsaw is superbly positioned to attract many tech companies because of its business-friendly posture, low-cost modern office space and infrastructure and dynamic stock exchange. In addition to being well-positioned within the European Union, Warsaw also offers the potential to be the gateway to many countries bordering the European Union.

 

Next week, we continue our discussion of Brexit, talking about possible repercussions of the UK’s vote.

If you are interested in learning more about the Brexit, what it means for your business and the rest of the European Union, contact TransLegal or call 703-566-9427.

New High Speed Silk Road from China to European Union

Francisco A. Laguna & Wojciech Kornacki

This week, we continue our discussion of China’s One Belt – One Road project to establish a 21st Century Silk Road over land and by sea, focusing on the development of high speed rail connections between China and the European Union.

China is creating a network of new high speed train rail links connecting it to the European Union via Central Asia.  As more and more factories move deeper into the Western parts of China, Chinese officials and businessmen alike realize that it is very expensive and time consuming to move their products to the international markets by air or water.  To remedy this, China is spending billions of dollars to build new rail links across Central Asia.

US$ 242 Billion in Investments over the Next 8 Years

Currently, China plans to build two rail links to Europe.  One going directly through the Russian Federation (marked in light blue).  The second one going through Kazakhstan and Ukraine to Poland and beyond. (marked in green).  Both rail links will dramatically reduce the time and costs for all businesses using the rail system to connect the European Union with China, and offer countless business and investment opportunities.  Courtesy of http:// http://en.wikipedia.org

Currently, China plans to build two rail links to Europe. One going directly through the Russian Federation (marked in light blue). The second one going through Kazakhstan and Ukraine to Poland and beyond. (marked in green). Both rail links will dramatically reduce the time and costs for all businesses using the rail system to connect the European Union with China, and offer countless business and investment opportunities. Courtesy of http:// http://en.wikipedia.org

China envisions two major train rail links.  The first one will go through the Russian Federation and Belarus to Poland and the rest of Europe.  The second one will travel through Kazakhstan and Ukraine to Southern Europe.  It is expected that China will spend approximately US$ 242 billion over the next 8 years on a 7,000 km high speed rail link from China to Moscow alone.  This will mean massive Chinese investment and spending across Central Asia.  It will also mean thousands of new jobs, major growth potential for many cities, and the need for supporting infrastructure.  When finished, this will be the longest rail network in the world moving trillions of dollars in goods.

The Benefits of Shipping Goods by Train

Shipping goods by train is cheaper, faster and more environmentally friendly.  According to the Eurasia Express Bridge, transporting goods from China to and from Europe takes approximately 14 days.  This also includes customs clearance for many different countries.  The delivery of the same products by sea takes almost twice or three times as long, and is more expensive.

Typically, China transports its manufactured goods to its coast, and then uses maritime shipping companies to ship it to Europe or elsewhere via the Suez Canal. To mitigate time and expense, China is currently looking to utilize train links to transport it directly to Europe, in essence creating the 21st century version of the Silk Road.

Chongqing, People’s Republic of China.  It is located in central China.  This city is expected to be the starting point for the high speed iron silk road.  Courtesy of http:// http://en.wikipedia.org

Chongqing, People’s Republic of China. It is located in central China. This city is expected to be the starting point for the high speed iron silk road. Courtesy of http:// http://en.wikipedia.org

Several European businesses have been sending products to China by train for years.  This includes BMW and other major manufacturers.  It is similarly cheaper for European businesses to transport goods to China by rail than by sea or air.

In 2013, one of the first trains from China loaded with electrical supplies arrived in Łódź, Poland.  Since then, the number of connections and the volume of products have grown rapidly, and they expected to grow even more.  These trains also travel to other parts of Europe, including France and Spain.  Beijing estimates that the annual trade between Europe and China is expected to exceed $ 2.5 trillion in a decade once the rail links are completed.

If you are interested in learning more about future business opportunities involving the new high speed silk road, TransLegal or call 1.703-566-9427.

The Goals and Benefits of the Trans-Pacific Partnership & Transatlantic Trade & Investment Partnership

Francisco A. Laguna & Amy Turner

Today, we continue with our series on the Trans-Pacific Partnership (TPP) and Transatlantic Trade & Investment Partnership (TTIP) by discussing the goals of the partnerships and whether the trade agreements will truly benefit US businesses.

The Goals of the TPP and TTIP

Singapore Cargo Terminal © CEphoto, Uwe Aranas / , via Wikimedia Commons

Singapore Cargo Terminal
© CEphoto, Uwe Aranas / , via Wikimedia Commons

The principal goals of the TPP are to promote and grow trade and investment among the partner countries, to stimulate innovation, general economic growth and development, and to encourage job creation and training programs. Although the actual text of the treaty is classified, general outlines and summaries of the agreement have been provided. The United States Trade Representative (USTR) informs that the TPP seeks to address issues that promote: 1) regulatory coherence; 2) competitiveness and business facilitation; 3) Small and Medium-Sized Enterprises (SMEs); and 4) Development.  The TPP seeks to achieve these goals through comprehensive market access by eliminating barriers to goods, services, trade and investment.  Such access would create new opportunities for workers and businesses in the member states and immediately benefit consumers. In addition to tariff elimination, the TPP would adopt common guidelines and standards for intellectual property, enforcement of labor and environmental laws the establishment of an investor-state dispute settlement mechanism.

Port of Hamburg By Franzfoto (Own work) [GFDL (http://www.gnu.org/copyleft/fdl.html) or CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons

Port of Hamburg
By Franzfoto (Own work) [GFDL (http://www.gnu.org/copyleft/fdl.html) or CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)%5D, via Wikimedia Commons

The Obama Administration considers the TTIP a companion agreement to the TPP.   According to the USTR, the TTIP is intended to be an ambitious and comprehensive trade agreement that significantly expands trade and investment between the United States and the EU, increases economic growth, jobs, and international competitiveness and addresses global issues of common concern.  The European Commission categorizes the topics under discussion into three broad areas: market access; specific regulations; and broader rules and principles, and modes of co-operation.  The TTIP goal is to liberalize 1/3 of global trade”, which, proponents argue, will create millions of new paid jobs. The true economic gains from the TTIP, however, will depend on how the US and EU contend with their oftentimes duplicative and conflicting rules related trade and other regulatory issues.  TransLegal routinely assists companies comply with regulatory requirements overseas.  Uniform regulations greatly help expand trade among nations simply by making it easier for businesses to understand their obligations.

The Bottom-Line Issue: Will the TPP and TTIP benefit American Businesses?

Wish we could answer that one!  Not surprisingly, and as in all things economic and political, the experts disagree how the TPP and TTIP will affect American businesses.

With regard to the TPP, estimates predict that it would generate $5 billion in economic benefits to the US in 2015, and $14 billion in 2025. Proponents state that if the impact of investment liberalization were taken into consideration, the economic benefits would likely be larger.

Port of Miami, Florida

Port of Miami, Florida
“Port of Miami Florida”. Licensed under Public Domain via Wikimedia Commons

Proponents also argue that small businesses may actually benefit from the trade liberalization because they are less likely than large businesses to establish overseas subsidiaries to overcome existing trade and non-trade barriers.  Critics, however, state that the winners of the TPP agreement would be larger US businesses in the agriculture, insurance, manufacturing, pharmaceutical, technology sectors that can be poised to expand exports as nations ratify the treaty.

The European Commission says that the TTIP has the potential of increasing overall trade between the two parties as much as 50%.  It also claims that the TTIP would contribute €120 billion to the EU economy, €90 billion to the US economy and €100 billion to the economies of other countries.  If the TTIP were only to focus on tariffs, it is estimated that the partnership would result in an annual EU GDP growth of €24 billion by 2027 and annual growth of €9 billion in the United States. If shared equally among the affected people, the Commission notes that the most optimistic GDP growth estimates would translate into additional annual disposable income for a family of four of €545 euros in the EU and €655 euros in the US.

Critics on this side of the pond note that long–standing membership in the World Trade Organization, work by the Transatlantic Economic Council and other trade agreements like U.S. Open Skies Agreement have already resulted in low trade barriers between the US and the EU. Therefore, the deal should focus on non-conventional barriers such as overriding national regulations regarding fracking, GMOs, finance and copyright.  This may prove a challenge especially in those areas of agriculture, food and environmental law where the the parties are particularly far apart.

We will continue this series in mid-Autumn. TransLegal assists US and EU companies understand and comply with regulatory laws and regulations through our network of 51 correspondent offices in 51 countries.  Contact us with your questions concerning regulatory requirements in the country that interests you.

Trans-Pacific Partnership & Transatlantic Trade & Investment Partnership

To Deal or Not to Deal?

Francisco A. Laguna & Amy Turner

Among the many points of disagreement between the political parties are the benefits of trade agreements.  Currently, the two possible deals discussed most often are the Trans-Pacific Partnership (TTP) and the Transatlantic Trade and Investment Partnership (TTIP). In very basic terms, the TPP is a trade agreement with Asia, while the TTIP is a trade agreement with European Union.  These agreements will have enormous impact on the United States. Furthermore, timing will make it more interesting: finalization of each is expected in 2016, during an election cycle.

Trans-Pacific Partnership (TTP)

Dark Green:  Currently in negotiations    Light Green: Announced interest in joining Light Blue: Potential future members 2013 "TPP enlargement" by en:User:Japinderum, en:User:Phospheros, en:User:Orser67 - en:File:TPP enlargement.png (based on File:World map model.png). Licensed under CC BY-SA 3.0 via Wikimedia Commons

Dark Green: Currently in negotiations
Light Green: Announced interest in joining
Light Blue: Potential future members
2013 “TPP enlargement” by en:User:Japinderum, en:User:Phospheros, en:User:Orser67 – en:File:TPP enlargement.png (based on File:World map model.png). Licensed under CC BY-SA 3.0 via Wikimedia Commons

The TPP began as the Trans-Pacific Strategic Economic Partnership Agreement. TPP negotiations have been ongoing since 2005, and the US joined the negotiations in March 2008.  Twelve countries are currently participating: Australia; Brunei; Canada; Chile; Japan; Malaysia; Mexico; New Zealand; Peru; Singapore; US; and Vietnam. The combined total GDP of these 12 nations is 40 % of global GDP and represents 1/3 of world trade – ~ US$27.7 trillion. The global benefits of the TTP have been placed at as much as US$295 billion annually.

Transatlantic Trade and Investment Partnership (TTIP)

Since the 1990s, there has been a Transatlantic Free Trade Area.  By that time, the Cold War had ended, and the world was no longer divided into conflicting blocs. The European Community (12 countries) and the US decided to sign a “Transatlantic Declaration”. The Declaration outlined yearly summits, biennial meetings among state ministers and more frequent meetings of political figures and senior officials.

"Transatlantic Trade and Investment Partnership (8570621071)" by Foreign and Commonwealth Office - Flickr. Licensed under OGL via Wikimedia Commons

“Transatlantic Trade and Investment Partnership (8570621071)” by Foreign and Commonwealth Office – Flickr. Licensed under OGL via Wikimedia Commons

One of the early initiatives was the 1995 creation of the Transatlantic Business Dialogue (TABD), a pressure group of business people on both sides of the Atlantic.  Since 1998, a series of advisory committees have been established: the Transatlantic Economic Partnership (1998); the Transatlantic Economic Council (2007); and a group of high level experts created in 2011.

The experts ultimately recommended that talks should begin for a wide-ranging free-trade agreement.  In 2012, President Obama used his annual State of the Union address to call for finalization of that agreement.

Together, the United States and European Union represent 60 % of global GDP (33 % of world trade in goods and 42 % of world trade in services).  TTIP would cover 46 % of world GDP, giving it the potential to be the largest regional free-trade agreement in history. The European Commission claims that passage of TTIP could boost trade between the US and EU by up to 50 %.

Next time, we will discuss what the agreements include, how they will affect US businesses.  Whether we should deal or not deal.

TransLegal has 51 affiliate offices worldwide.  We assist our clients navigate the intricacies of global trade.  Contact us with your questions.

Business Opportunities in Iraqi Kurdistan

Francisco A. Laguna & Wojciech Kornacki

Iraqi Kurdistan offers the security and numerous investment opportunities that are currently hard to find in other parts of Iraq or Central Asia. Since the fall of Saddam Hussein in 2003, the region has experienced dramatic economic growth and political stability that continue today, despite the violence in other parts of Iraq. Iraqi Kurdistan has become a magnet for foreign investors and foreign direct investment.

Background on Iraqi Kurdistan

Currently, Iraq is a federated state, and Iraqi Kurdistan is one of the federally recognized regions of Iraq. Iraqi Kurdistan is located in a strategic location between Turkey, Iran and Syria. It has enjoyed local autonomy for the last 45 years. Since the fall of Saddam Hussein, it has had a democratically elected Parliament and vibrant government institutions which are openly pro-Western. The population of Iraqi Kurdistan exceeds 5.2 million and estimated GDP per capita was ~ US$ 4,500 as of 2011.

"Autonomous Region Kurdistan en" by Maximilian Dörrbecker (Chumwa),derviative work by ilyacadiz - Autonome Region Kurdistan (Karte).png. Licensed under CC BY-SA 3.0 via Wikimedia Commons

“Autonomous Region Kurdistan en” by Maximilian Dörrbecker (Chumwa),derviative work by ilyacadiz – Autonome Region Kurdistan (Karte).png. Licensed under CC BY-SA 3.0 via Wikimedia Commons

In the last several years, Iraqi Kurdistan has been undergoing rapid development. The region has experienced an estimated 12 percent growth, one of the highest in the world.  Major trade partners for Iraqi Kurdistan are Turkey, the United Arab Emirates, the United States, and the European Union.

The capital of the Kurdistan Regional Government is Erbil – perhaps one of the oldest cities in the world.  According to the Kurdistan Regional Government’s official website, the Kurdistan Parliament has passed progressive investment and oil and gas laws which have contributed to economic growth and stability. The region has 2 international airports and approximately 12 major international airlines offer direct flights there.

Investment Opportunities

Iraqi Kurdistan appears to be one of the best places to invest in the region because of its current need for foreign direct investment, security and flexible and transparent investment laws. The Kurdish Regional Government allows for full repatriation of profits, investment with or without local partners, a 10-year exemption from corporate taxes, and a 5-year exemption from customs duties. Needless to say, this makes Iraqi Kurdistan much more investment-friendly than the rest of Iraq or the region.

Canyon in Rawanduz in northern Iraqi Kurdistan, offers some of the most beautiful scenery in Asia.  While exports of natural resources are highly profitable for the Kurdish Regional Government, the tourism industry accounts for almost 20% of the region’s GDP.   It is likely that this industry will also experience substantial growth as the interest in Iraqi Kurdistan continues to accelerate, and 2 international airports with multiple international airlines offer easy access the region.  Courtesy of http:// http://en.wikipedia.org.

Canyon in Rawanduz in northern Iraqi Kurdistan, offers some of the most beautiful scenery in Asia. While exports of natural resources are highly profitable for the Kurdish Regional Government, the tourism industry accounts for almost 20% of the region’s GDP. It is likely that this industry will also experience substantial growth as the interest in Iraqi Kurdistan continues to accelerate, and 2 international airports with multiple international airlines offer easy access the region. Courtesy of http:// http://en.wikipedia.org.

The Kurdistan Board of Investment makes it easy to identify foreign direct investment opportunities in the Kurdistan region. It lists numerous business opportunities in the areas of real estate, communication, transport, agriculture, education, banking and many others.

Current investment priorities are agriculture, tourism, and various industries that have been largely underdeveloped over the last several decades. In addition, with oil reserves estimated at 45 billion barrels, many international companies have been already heavily investing in the oil and gas industry.

The turning point for Iraqi Kurdistan came when Exxon became interested in its natural resources.  Several years ago, Exxon, the largest international oil company, signed major exploration contracts with the Kurdish Regional Government, and many other international companies followed in recent years, including Total, Gazprom and Chevron.

Sofi Mall, Erbil, Kurdistan.  With its rapidly growing economy and international investment, Erbil and the rest of Iraqi Kurdistan are undergoing massive economic development.  In fact, currently, Iraqi Kurdistan needs approximately $32 billion in investments.  Courtesy of http:// http://en.wikipedia.org.

Sofi Mall, Erbil, Kurdistan. With its rapidly growing economy and international investment, Erbil and the rest of Iraqi Kurdistan are undergoing massive economic development. In fact, currently, Iraqi Kurdistan needs approximately $32 billion in investments. Courtesy of http:// http://en.wikipedia.org.

Currently, the Kurdish Regional Government continues to export oil to markets around the world, including the United States. Despite igniting a legal battle with the Iraqi Government, the highly profitable exports have not stopped.

If you would like to take the first step and learn about investment opportunities in Iraqi Kurdistan, contract TransLegal – your one source for comprehensive international commercial consulting services.

The African Growth and Opportunity Act Continues to Grow Trade

Francisco A. Laguna & Wojciech Kornacki

In 2000, the United States opened its domestic markets to sub-Saharan African nations. At that point, no one expected that within 14 years, Africa would be exporting over $400 billion in goods and services to the United States. Currently, with the increased competition from the European Union and China, the US and its African partners are developing new trade and training opportunities that could benefit your business.

Background

Africa

Africa

 In 2000, the United States decided to expand, simplify and diversify its trade relations with sub-Saharan African countries. In part, this was in response to the trade agreements the EU signed with 79 countries in Africa, the Caribbean and Pacific during the same period. Through the African Growth and Opportunity Act, the United States unilaterally opened its domestic markets to the African countries in the sub-Sahara so long as the African countries reformed their economies and made them more transparent, among other requirements.

The benefit for US companies was that this created many new opportunities to provide credit and technical expertise to various sector in Africa. It also allowed many American companies to benefit from new business-to-business opportunities with the African businesses. Continue reading

New Free Trade Zone between the EU and Ukraine

Francisco A. Laguna & Wojciech Kornacki

 On June 27, 2014, the European Union (EU) and Ukraine signed the Deep and Comprehensive Free Trade Area (DCFTA) agreement. This agreement established a brand new free trade zone between the EU and Ukraine. Following the continuing hostilities in Eastern Ukraine, the ratification of this agreement will be put on a fast track in the EU and the Ukrainian parliament. The DCFTA will remove customs, tariffs, quotas, and harmonize Ukrainian regulations with EU regulations. The agreement revolutionizes current trade relations between the EU and Ukraine and is likely to generate hundreds of millions of dollars in revenue and result in economic development in Ukraine.

 The European Union

The Ukrainian Assembly called ‘Verhovna Rada’ or ‘Upper House’ will have to ratify the Deep and Comprehensive Free Trade Area (DCFTA).  The agreement is expected to dramatically increase trade, but on the other hand, it will decrease proceeds from duties and tariffs.   Courtesy of http:// http://en.wikipedia.org

The Ukrainian Assembly called ‘Verhovna Rada’ or ‘Upper House’ will have to ratify the Deep and Comprehensive Free Trade Area (DCFTA). The agreement is expected to dramatically increase trade, but on the other hand, it will decrease proceeds from duties and tariffs. Courtesy of http:// http://en.wikipedia.org

Besides militarily, the EU is important to the Ukraine for obvious economic reasons. It is a supranational organization of 28 countries across the European continent. Its current population stands at over 500,000,000, which places it third behind China and India in terms of the population size. It is a single market with free movement of goods, services, labor, and capital and largely enjoys a common currency. The EU also has numerous Association Agreements with other countries, including Ukraine and Turkey. Its GDP stands at almost $16 trillion (2013), making it the second largest economy, behind the United States. According to its own statistics, the EU’s economy is bigger than that of the United States, and it accounts for 20% of all global exports and imports, exporting more than China and the United States.

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