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Consider, a Turkey that enters the EU will abide by the Aquis. Which means Greek Cypriots will be provided freedom of movement to the north and the right to return to their property by virtue of the Aquis. This is why entering the EU was important for the Greek Cypriots, not because of veto threats over Turkey.
The whole of the island is considered to be part of the EU. However, in the northern part of the island, in the areas in which the Government of Cyprus does not exercise effective control, EU legislation is suspended in line with Protocol 10 of the Accession Treaty 2003. This means for example that these areas are outside the customs and fiscal territory of the EU. However, the suspension does not affect the personal rights of Turkish Cypriots as EU citizens. They are citizens of a Member State, the Republic of Cyprus, even though they may live in the areas not under government control.
#2. Migeru explained below that the Acquis is already supposed to be in effect in the north. Furthermore, I can't see how Turkey would enter the EU without the Cyprus problem being solved, so a Turkey inside and a TRNC outside the EU could never exist. That being said, there is a small possibility that a Turkey inside and a TRNC inside could exist if Cyprus and the rest of the European nations agree to recognize it and allow the whole of Cyprus to represent two countries.
That would be a little like splitting off Kosovo...
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