American Chamber Of Commerce Ireland And The Lisbon Treaty

Foreign Direct Investment

Ireland and foreign direct investment Ratifying the Lisbon Treaty is a vote for employment, growth, investment and economic security argues Paul Duffy It is no coincidence that Ireland’s phenomenal growth since the early 1990s happened since the establishment of the single market itself in 1993. We have grown and developed as a nation not in spite of but because of the European Union. Ireland’s place in the world and our wealth as a nation are inextricably linked to our place in Europe. That is not a political claim. It is an economic fact that matters and counts in every community in the country. Many US companies in Ireland will tell you that this country’s membership of the EU and the stability that this brings has been one of the factors influencing their decision to locate here. Ease of trade between EU member states has also benefited indigenous companies, who have access to a market of 500 million consumers versus 4 million in Ireland. No longer reliant on the UK as a primary exporting market, Irish companies are growing their investment and employment as a result of the ease of trade within Europe which our membership of the EU has provided. A strong indigenous base compliments the base of FDI companies located in Ireland. Ratifying the Lisbon Treaty is a vote for investment, employment, growth and economic security.

Investment

The contribution of US foreign direct investment to Ireland is immense. • Approximately 100,000 people directly employed in over 570 US firms in Ireland with indirect employment in sub-supply, community industry and services estimated at over 200,000. • Total US direct invest in Ireland now outstrips total US investment in Brazil, Russia, India and China combined. • In 2008, US firms paid over €2.5bn to the Irish Exchequer in Corporate Tax. This equated to approximately 40 per cent of the total corporate tax take in 2008. • US firms contributed a further €13bn to the Irish economy in terms of payroll, goods and services employed in their operations • In 2007, US firms exported an estimated €83bn of products and services from Ireland into world markets. Ireland’s position as a gateway to Europe is a factor in attracting foreign investment

Public Affairs Ireland

“US companies in particular are attracted to establish European

headquarters here because of our

skilled labour force, our excellent business environment and the

ready access to European markets from Ireland.”

to Ireland and any diminution in our status or influence within the Union could impact our ability to attract this investment.

Employment

Since we joined the EU there has been over 70 per cent increase in the number of people working in Ireland. Much of this growth has been driven by foreign direct investment with IDA supported companies giving direct employment to more than 152,000 people and indirectly supporting more than 300,000 additional jobs. US companies in particular are attracted to establish European headquarters here because of our skilled labour force, our excellent business environment and the ready access to European markets from Ireland. The Lisbon Treaty proposes further enhancements to the Single Market, particularly in the services sector. If ratified, the treaty will open up new opportunities for business in Ireland with the potential for significant job growth. More jobs are also likely to be created in US companies here if Ireland is at the heart of Europe and influencing decisions at EU level.

Growth

The EU provided an indispensable injection of funding during the late 1980s, when Ireland´s economy was on its knees. At a time when US multinationals wanted to expand into the European Market, Structural and Cohesion funds helped develop Ireland’s physical and human capital base, increasing its attractiveness as a location for US companies. Continued support from the EU will enable Ireland to invest in R&D,

innovation, people as well as physical infrastructure creating a climate for job retention and economic growth. Article 179 of the Treaty for example, says that a European ‘research area’ will be a priority for the EU. This is good news for companies and third level institutions where research and innovation create new jobs. In addition to this Article 194 of the Treaty makes energy a top priority of the EU. This includes the development of renewable energies such as wind and wave energy. Ireland has enormous potential in this area however this needs investment, access to trans-national grids and large markets to be fully exploited. The EU offers all three.

Economic security

EU support will help see us through our current economic difficulties. In 2008 the EU launched a European Economic Recovery Plan valued at some €200 billion. The plan, which is funded directly by Member States, includes €5 billion of additional funding from the EU’s own Budget. It will provide vital funding to support a return to economic growth and job creation across the European Union. In the past support provided by the European Union established the necessary conditions for the investment which led to Ireland’s economic growth in the 1990s. More importantly, being a member of the Union has helped to protect Ireland from the full effects of the global economic recession. The American Chamber is advocating a “Yes” Vote in the Lisbon Treaty because we believe it is in Ireland’s economic and social interests to do so. The importance of the decision we are about to make is underlined by the reality of the global recession. Hard times are here and new investment will be more difficult to get for some time to come. In a context where the downward pressures are real, we need to accentuate the positive opportunities that present themselves. At a time when our focus must be on the retention and creation of jobs, Ireland as a full member of the Union will be better positioned to create the conditions for innovation, entrepreneurship and employment creation. Dr Paul Duffy is President of the American Chamber of Commerce in Ireland

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