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Introduction
I want to thank the Committee for the invitation to come here this afternoon to discuss IrishU.S. commercial linkages and the critical role of U.S. multinationals in the Irish economy.
There are nearly 200 nations in the world—many of them larger, wealthier and more populated
than Ireland. However, perhaps in no other country in the world are U.S. multinationals as
prevalent as they are in Ireland. Ireland is a very important extension of corporate America,
among the most favored destinations of U.S. multinationals for a host of reasons, ranging from
the pro-business policies of the government, to the availability of skilled, English-speaking
labor, to Ireland’s membership in the European Union.
The operations of U.S. foreign affiliates in Ireland have been closely linked with higher wages,
net employment gains, increased trade flows, the transfer of technology, the upgrading of
managerial skills, and access to more global markets. More recently, the presence of U.S.
foreign affiliates—and their export capacity—has been a key factor in stabilizing the Irish
economy since the Great Global Recession of 2008/09.
In the fluid post-crisis global economy of today, much is in flux. Debt-laden developed nations
have yet to find a path of sustainable economic growth. Europe’s sovereign debt crisis could
precipitate a global recession, or worse, cause a rupture in the eurozone. The rise of China
and other key emerging markets remains unrelenting. Against this backdrop, however, IrishU.S. commercial linkages have become stronger not weaker, deeper not shallower, since the
financial crisis.
Built to last is the best way to characterized Irish-U.S. relations.
Why Ireland?
American firms compete more through foreign direct investment—by establishing a local
presence in various foreign markets—than through arm’s-length trade. To this point, global
U.S. foreign affiliate sales (goods and services) are estimated to have totaled $6.4 trillion in
2010, a figure vastly larger than total U.S. exports ($1.8 trillion). Contrary to popular wisdom, it
is not cheap labor that motivates U.S. firms to invest overseas. Rather, key motivators are the
availability of skilled labor, as well as access to large and wealthy markets, in addition to the
ease of doing business and degree of pro-business policies. Ireland ranks among the best in
the world on this score—the nation has a Triple A rating among U.S. multinationals.
The global information technology revolution, Ireland’s strategic success in attracting other
high-valued industries like life sciences and financial services, the nation’s market access to
the European Union—thanks to these and other factors U.S. investment stock in Ireland in
2010 ($190 billion) was more than five times greater the level a decade earlier. Over the same
period, Ireland’s share of total U.S. investment in Europe rose from 5.2% in 2000 to 8.7% in
2010.
Even though U.S. affiliate sales to the local Irish market are large, the figures cannot mask or
hide the overwhelming export-propensity of U.S. affiliates firms in Ireland. The nation has long
served as a strategic beachhead to the European Union for U.S. multinationals. In any given
year, U.S. affiliates export more goods from Ireland than from China.
The benefits to Ireland
The marriage of smart, pro-business initiatives/policies of the Irish government with the capital
and core competencies U.S. multinationals has helped produced an “economic miracle” in
Ireland:

Ireland’s nominal GDP rose 10-fold between 1980 and 2010;

The nation’s per capita GDP increased from $6,200 in 1980, among the lowest in
Europe, to over $45,000 in 2010, among the highest in Europe;

Ireland’s exports in 2010 where nearly 24 times larger than exports in 1980. Ireland has
one of the highest per capita export ratios among the developed nations;

Exports as a percentage of GDP surged from 50% of GDP in 1980 to roughly 100% last
year;

Reflecting the increasing integration of Ireland into the global economy, the nation’s
total trade/GDP ratio in 2010 was nearly 200%, almost double the level of 1980.
As agents of change, U.S. foreign affiliates have been instrumental in linking Ireland not only
the United States but also to the rest of the world. In the process, U.S. affiliates have
transferred the prerequisite resources to be globally competitive (capital, technology,
managerial skills, access to markets). Affiliates—as overseas arms of some of the most
dynamic companies in the world—have also nurtured an entrepreneurial, risk-taking culture in
Ireland.
Ireland’s key stakeholders—consumers/workers, indigenous firms and government—have
benefited significantly from the presence of U.S. multinationals. U.S. firms have been
instrumental in helping to create and train a world class labor force; critical in diffusing
technology and innovative capabilities across the economy; key in expanding the global
breadth of indigenous Irish firms; and at the forefront of upgrading the industrial capabilities
and core competencies of Irish firms, large and small.
U.S. affiliate activities are a source of trade, employment, higher wages, technological
advances, as well as a key source of revenue for the Irish government.
Irish stakes in the United States
Ireland’s commercial and corporate stakes in the United States are not inconsequential. To
the contrary, foreign direct investment from Ireland to the United States topped a record $8
billion in 2010. On a historic cost basis, 2010 was also a record year, with Ireland’s investment
stock in the U.S. totaling $30.6 billion.
Challenges in the post-crisis world
The question is not whether or not Ireland will recovery from the traumatic events of the past
few years. Rather, the more pertinent question is how and to what degree Ireland’s deeply
rooted commercial ties with the United States will be effected by the post-crisis world unfolding
before us. The financial crisis was a game changer—diminishing the global economic clout of
the West, while accelerating the economic rise of the so-called Rest, or the developing nations.
For Ireland in particular, key questions include the following: how will the nation maintain its
global cost competitiveness in the face of the secular rise in world commodity prices? How will
Ireland’s skilled, technologically-focused labor force keep pace with the surging technological
advancements of China and India? The battle for brains, or the best and brightest, has gone
global—will Ireland be able to keep up and continue to attract and/or produce the skilled labor
required to support knowledge-intensive industries? As more global R&D shifts to the
developing nations, attracting more attention and capital of leading global multinationals, how
will Ireland maintain its attractiveness to global ICT and life science leaders? Lastly, how will
the global tectonic shifts underway today affect U.S.-Irish commercial linkages tomorrow or in
the future?
The rise of the Rest is not expected to dramatically recast U.S.-Irish commercial linkages for a
host of reasons, including the following:

First, the European Union is likely to remain one of the largest economic entities in the
world for the foreseeable future—current financial woes notwithstanding. Ireland, in
turn, as part of the EU, will remain a strategic gateway for U.S. multinationals desiring
access to the massive integrated EU market.

A second reason not to expect a sizable shift in U.S.-Irish linkages relates to the quality
of investment Ireland receives from the U.S., or the fact that Ireland has been hugely
successful in attracting foreign capital from America’s best global corporations, global
leaders like Amazon, Facebook, Google, IBM, Pfizer and other companies that are well
positioned to grow in the future. The bulk of foreign investors in Ireland are firms poised
the

Third, Ireland’s strategic focus on developing cutting edge capabilities in such dynamic
sectors as nanotechnology, clean energy, global business services, pharmaceuticals
and related activities bodes for more, not less, long-term U.S.-Irish commercial linkages.
Ireland’s strategic vision to be successful in the sectors/industries of tomorrow aligns
nicely with those U.S. multinationals with similar forward-looking vision.

Fourth, the country’s proven ability to adept and remain flexible in the face of shifting
global tides is yet another reason to think U.S.-Irish commercial linkages will be
preserved in the post-crisis world. Long track records matter to firms when investing
overseas, and Ireland’s long history of favorable taxes, robust R&D environment,
government support for innovation, and other pro-business policies will help sustain
strong U.S.-Irish commercial ties in the face of the new world economy that is evolving.
So too will Ireland’s success in adjusting to the challenging climate wrought by the
financial crisis-cum-global recession. Over the past three years, Ireland has gone a
long way in boosting or resetting its global competitiveness through wage concessions,
falling real estate prices, public sector cuts, and related measures. Non-wage costs—
which at their peak pre-crisis where nearly one-quarter higher than the European
average--have declined sharply since 2008.

Finally, there is nothing preordained about the emerging markets themselves, notably
China, leading the global economy over the 21st century. In other words, China, India,
Russia and others confront significant internal hurdles to economic growth, challenges,
that if not met, could undermine growth and development in many hyped-up developing
nations. The upshot—more, not less, FDI in key developed nations like Ireland.
The road ahead
Future U.S.-Irish commercial ties are conditioned on Europe staying together, not drifting
apart. It is also conditioned on Ireland successfully overcoming the economic hurdles before it.
The list runs the gamut, from the nation’s growing level of public debt, to highly indebted
households, to stubbornly high levels of unemployment, to an impaired banking sector, and to
a weakened domestic economy. The factors just mentioned are not, in general, your typical
post-recession challenges but critical burdens that need to reconciled and dealt with in a timely
manner in order to put Ireland back on a sustainable growth path.
Another challenge to U.S.-Irish relations lies with corporate America itself. U.S. firms remain
the most globally minded enterprises in the world. Yet over the medium term, the outward
thrust of corporate America could be hampered by declining profits as the global economy
slows, political pressure (and incentives) for U.S. firms to investment at home not overseas,
and the mounting public backlash against outsourcing, with U.S. corporations increasingly cast
as villains for sitting on some $1.5 trillion in capital while hiring and investing slowly at home
while expanding abroad.
In addition, the future of U.S.-Irish ties will be determined by how well U.S. companies
compete against the corporate newcomers from India, China and other emerging markets.
Presently, U.S. firms enjoy a competitive advantage in such leading-edge activities as cloud
computing, social media, and life sciences. Yet the rest of the world is hardly standing still—
the corporate challenge from the developing nations has never been greater and will only
intensify in the decades ahead. How U.S. firms adept to these mounting challenges will
determined their overall health and survivability, and by extension, their need and wherewithal,
to maintain ties with Ireland.
A final point to consider: as the commercial bridge to the United States and Europe, Ireland’s
future role in linking both sides of the Atlantic together will hinge on America’s and Europe’s
willingness to deepen and further integrate the transatlantic economy. The good news is that
nothing on the horizons suggests a transatlantic divorce is imminent.
These are troubling signs before us, to be sure. Yet while the West—the U.S. and Europe in
particular—may be on the cusp of a painful and prolonged period of subpar growth, that hardly
spells or suggests the end of the world as we know it.
There is nothing on the horizon that suggests the end of globalization, the end of the European
Union, the end of multinationals searching for favorable foreign locations to do business, the
end of the global business cycle, and the end of the special ties that binds Ireland and the
United States together.
Built to last is the best way to characterized Irish-U.S. relations. And one of the best examples
of this dynamic stems from the 2008/09 global financial crisis-cum-economic recession itself;
over the past three years, Irish-U.S. commercial linkages have become stronger not weaker,
deeper not shallower. The mutual dependence of Ireland and the United States has grown,
not shrunk.
That is another way of saying that no matter how turbulent the future, Irish-U.S. relations are
expected to remain robust and resilient; as history will ultimately prove, the commercial bonds
between Ireland and the United States are built to last.
Concluding comments
In conclusion, Chairman, I want to thank you and the Committee for the opportunity to make
this presentation to you today. I would be happy to answer any questions you have.