Remarks by Ken Hyatt, U.S. Deputy Under Secretary of Commerce

U.S. Commercial Opportunities in Cyprus and the Eastern Mediterranean in a Post Solution Environment

Thank you, Ambassador Doherty, for your introduction. Let me also thank Mr. Pilides and Mr. Toros for hosting this event and for your leadership of the Cypriot Chamber of Commerce and Industry and the Turkish Cypriot Chamber of Commerce, respectively. Ladies and Gentlemen, good afternoon and thank you for this opportunity to address this distinguished group. I appreciate the great symbolism and practical importance of this joint meeting and am deeply honored.

Support for Cyprus Unification and Economic Growth through Trade

Let me start by saying that the U.S.-Cyprus partnership continues to grow, rooted in areas of common interest: promoting peace and security in the region, and fostering opportunities for greater trade and investment.

The United States is committed to seeing Cyprus prosper and achieve its full economic potential. But in order to achieve that important goal, this fundamentally requires a comprehensive settlement of the Cyprus issue. This is our longstanding policy.  As Cypriot business leaders, you are well aware of how coming together to design solutions to common problems will advance the economic growth of the country, and the prosperity for Cypriot workers. Through your leadership, it is our hope that Cyprus can realize a bi-zonal, bi-communal federation that will create the conditions necessary to attract more foreign investment and increase employment to the benefit of Cypriots from all walks of life. That will take courage on the part of your political leaders, even more than they have already shown. Much like the courage you, the business community, has already shown. Recognizing there is a cost in the status quo, in the lost opportunities, and in the continued uncertainty of division, you will need to ensure your leaders are aware of your support as they move forward, and we hope, towards the last year this country is divided. So I’d like to take a moment to applaud your groundbreaking work and encourage you to keep it up.

Today, Cyprus is a relatively small market for the United States, but U.S. companies see that Cyprus is on the rise. Several U.S. companies, some of which are here today, have found opportunities in a variety of Cypriot sectors, including information technology, medical equipment, energy, agricultural products, hospitality and tourism, and franchising. According to the latest figures from the U.S. Census Bureau, U.S. exports stand at a little over $100 million, and U.S. direct investment in Cyprus exceeded $2 billion in 2014, growth of 10 percent. In fact, U.S.-led investment in Cyprus has increased seven-fold over the last three years, largely due to opportunities in the island’s banking and energy sectors.

Our commercial relationship today represents a platform where we can achieve significant growth in trade and investment between our two markets, and I am here today to demonstrate the United States’ commitment to realizing that growth. Cyprus has become increasingly attractive to American businesses and investors given its strategic location as well as its highly educated and skilled English-speaking workforce.  And in an increasingly unstable region, Cyprus is a more appealing commercial venue than it has ever been. That is why the United States strongly believes that this is Cyprus’s moment to develop into an even broader commercial hub in the Eastern Mediterranean, linking economies throughout the region.

Commerce Engagement

I would be remiss if I did not recognize the efforts of Ambassador Doherty in this area. Since her arrival in October of last year, she has made every effort to engage with potential American investors and companies interested in exploring commercial opportunities here in Cyprus. She believes the economic future for Cyprus is bright, and she was personally involved in securing my visit to the island to highlight the promise here.

As the Ambassador mentioned in her opening remarks, my visit represents the first time a high-ranking official from the Department of Commerce has visited Cyprus. That is not to say, however, that my agency has not been actively involved in commercial activity and economic matters on the island.

Since 2009, Commerce has actively supported U.S. companies that wished to expand to Cyprus. Most of these services resulted in partnership agreements and success stories, generating business deals of more than $132 million.

In a post-settlement environment, we hope to provide many more of these services to American companies interested in investment opportunities across Cyprus.

Allow me to touch upon some of the other Commerce-related events we have sponsored. Commerce has leveraged its global network to help 25 Cypriot business service providers promote their business internationally for a minimal fee. In addition, some of you may have participated in one of the Embassy’s trade missions to various expos.  Over the last four years, Embassy Nicosia’s staff has led delegations to the annual Offshore Technology Conference (OTC) in the United States, including this past April. We hope to continue to do so again in the future. We have also led delegations to PowerGen, eHealth, and Solar Power expos, and, for the first time, will lead a delegation in early June to Posidonia 2016, a major shipping exhibition next month.  These delegations allow us to introduce Cypriot business people to potential U.S. partners.  Many of you already know the hardworking staff at the Embassy who deal with economic and commercial matters. I encourage you to reach out to them should you be interested in joining one of our delegations in the future or availing your company of some of our services.

I list these examples only to note that the Commerce Department, working hand in hand with our Department of State colleagues, has a long history of engagement and we hope to build on that, to the benefit of all Cypriots, in a post-settlement scenario.

Moving Forward

We all know the status quo delays the island’s economic development, but you are here because you see opportunity. One of the key factors behind any company’s decision to do business in a country is stability. Simply put, reunification would unleash Cyprus’s economic potential by creating the stability and predictability that is necessary for increased bi-lateral trade and investment.

In fact, I can reference four industry sectors that would emerge as growth drivers for a post-settlement Cyprus. Tourism, which alone accounts for about one quarter of Cyprus’s economy, stands to benefit greatly. A post-settlement tourist industry would be a boon in terms of sustaining Cypriot jobs and fostering infrastructure development throughout the island. U.S. companies can play a valuable role, including in the development of terminals, ports, cruise ship visitations, and promoting the beauty and cultural richness of the island.

The shipping sector also presents major upside. Cyprus’s shipping register is already the third largest flag in Europe, and the island is a global leader in ship management. Cyprus offers much potential for U.S. companies seeking to export shipping-related goods and services, including shipping insurance services, and marine support services for Cyprus’s budding offshore energy sectors. A settlement will accelerate trade and shipping between Cyprus and Turkey, significantly expanding the sector’s contribution to the island’s economy.

Then there is science and innovation, a cornerstone of any vibrant economy. Cypriot entrepreneurs are making a name for themselves in this area as well.  On May 5, NASA announced that three Cypriot teams had been chosen to participate in this year’s International Space Apps Challenge. As some of you may know, the NASA competition is the biggest event for the development of innovative and space oriented ideas. Last year, the Cypriot team, ArachnoBeeA, was selected by NASA as the international winner in the “Best Mission Concept” category.  Cypriot ingenuity coupled with American innovation and know-how have the potential to be a transformative combination.

Finally, there is the energy sector, which holds perhaps the most potential. One U.S. company has already invested heavily in Cyprus, but under the current arrangement, Cyprus’s hydrocarbons sector does not have access to its closest commercial market –Turkey – which also happens to be one of the fastest growing markets in the G20 and certainly the region. And of course renewable energy is a growing field world-wide and extremely promising in a country as sunny as this one with an isolated energy grid.

These sectors are but a sampling. After reunification, Cyprus will present many opportunities, including modernization of the transportation system, upgrade of the ICT sector, and a central location that will allow foreign businesses to be able to properly serve customers throughout the Eastern Mediterranean. American and international companies will surely be interested in participating in these efforts.  And the certainty of a reunified country will simplify investment decisions.

The Chambers

I spoke earlier about the courage the Chambers have shown in supporting a solution to the Cyprus problem. I understand from Ambassador Doherty and her colleagues at the Embassy that the Chambers have a long history of working together toward common goals and with an eye toward making the island a place where investors want to do business. In the future we’d like to continue to support that solid relationship and strong rapport that the two Chambers enjoy. I understand that together they have implemented dozens of donor-funded projects that highlight the economic benefits of a settlement as well as promote relations between business people on both sides.

I can tell you from my experience that these types of tangible projects make a real difference in the overall business climate and should be encouraged.  Congratulations to all of you for finding opportunities to work together.

T-TIP is Critical to the Economic Growth of Both Cyprus and the United States

Thankfully, our business communities do not have to go it alone.  We all want the same thing –economic ties that drive growth and prosperity, and more importantly the deeper and lasting social and political ties that emerge as a result. There are still some things, besides a settlement, that need to be accomplished in order to more fully strengthen our ties.

As President Obama recently stated at the Hannover Messe Expo in Germany, even though tariffs between the United States and the EU are relatively low on average, some products still face high tariffs – essentially taxes that make it harder to export and sell. Different regulations, rules, standards – driving up costs, keeping manufacturers out of markets, and forcing companies to make different versions of the same product for different markets.  Taken together, these barriers are holding us back from even greater trade, investment and job creation. And that is particularly the case with small and medium-sized enterprises that do not have the capital to fail, typically carry tighter margins, and face greater difficulties integrating into global supply chains.

That’s the reason why the United States and the EU have moved forward with the Trans-Atlantic Trade and Investment Partnership, or T-TIP.  T-TIP will eliminate tariffs, simplify procedures, bridge differences in regulations and cut red tape – all of which will make it easier to invest and trade, including for small businesses who create so many of the jobs in Cyprus, the United States, and globally. In a unified country, the EU Acquis will be in full force across the island, so the benefits will be felt by all Cypriots.

Our EU partners are committed to seeing the deal through as well. Mr. George Markopouliotis, the head of the European Commission’s Representation in Cyprus, wrote in one of the weekend newspapers last week: “The trade relationship between the U.S. and the EU is vital to both of us. And it is in our common interest to make it stronger, simpler, and more productive.” He mentioned the benefits that will likely be felt by small and medium-sized enterprises, the tourism, and shipping sectors. T-TIP has larger, strategic benefits as well. T-TIP will help encourage growth across the 28 nations of the EU, including in Cyprus. This ambitious agreement can help both the U.S. and the EU achieve higher long-term growth needed to create more jobs.  When other countries are trying to shape global trade to their advantage, we have the opportunity to write the rules for trade in a way that reflects our strengths and values, like rule of law, transparency, and respect for human rights.

And finally, T-TIP can help Europe diversify energy markets and increase energy security, which Cyprus stands to benefit from.

So for all these reasons, the Trans-Atlantic Trade and Investment Partnership would reinforce our larger trans-Atlantic relationship, which has been the foundation of our prosperity and security these past seven decades. It would bind us even closer and help lift the fortunes of our people, renewing confidence that democracy delivers progress.

We’ve been negotiating T-TIP for three years. We have made significant progress in a number of important areas, but still have a ways to go. The time to complete T-TIP is now, and I’m here to say that the United States is prepared to make every effort to reach an ambitious, comprehensive, and high-standard agreement during the Obama administration.

Conclusion

And I’d like to close by telling you that I am profoundly optimistic, not only about the future of Cyprus, but also about the future of our relationship.  Cyprus is in that rare position where much of what it needs to do to build closer economic and commercial ties are in its own hands: reunification, strengthening the business climate, and being part of the process that leads to T-TIP becoming a reality.

As we build closer economic and commercial ties, we should highlight the importance of the private sector and what it can do to transform economies and countries as well as what the government can do to create the environment for you to succeed. And right now, the most important gift that all Cypriots can give themselves is to come to a settlement and reunify the country. The United States is committed to its relationship with Cyprus, and we’re in it for the long-term.  It is my great honor and privilege to be with you today, and I thank you for your kind hospitality, and for your attention.