Download American Chamber of Commerce in Ireland

Submission to the Joint Committee on Foreign Affairs and Trade
I thank the Chairman and members of the Committee for the invitation to address them this
afternoon on the potential benefits for Ireland from a comprehensive Transatlantic Trade
and Investment Partnership. I will begin by talking briefly about the role and purpose of the
American Chamber of Commerce in Ireland and the importance of US Foreign Direct
Investment to Ireland. The American Chamber represents over 700 US companies in Ireland
who directly employ 115,000 people – this accounts for over 70% of all IDA supported
employment.
Total US investment in Ireland is now at historic high of $204 billion. Putting that into
perspective, Ireland accounted for 14% of total US investment in the EU over the period
2009-2012, and on a global basis attracted 8.5% of US investment during that time.
Corporate America’s FDI stock in Ireland is equal to the US stock in France and Germany
combined, and it is nearly 20% larger than the aggregate US stock in the BRIC nations of
Brazil, Russia, India and China.
The US multinational sector is estimated to account for 26% of Irish GDP and IDA-client
companies contribute €2.8 billion to the Exchequer annually in corporate tax and spend
€20.8 billion in the Irish economy through payroll, materials and services. Ireland now ranks
the number one export platform in the world for US subsidiaries based on latest data.
Vital to the sustainability of the strong economic relationship between the two countries is
that it remains very much ‘two-way.’ The relationship is a bilateral one, with more than 230
Enterprise Ireland companies doing business across the 50 US states. Employment levels
remain strong within these companies who are estimated to employ over 130,000 people in
sectors such as services and software, food and nutritionals, construction and engineering.
For example, CRH, the manufacturer and distributor of building materials, employs 37,000
people at 1,800 locations across the States. The US is an important market for Irish
companies in terms of transferring knowledge and skills across fields, most notably in the
technology space. It is one of Ireland’s top trading partners and export markets.
For such a small country Ireland has succeeded in becoming a global location of choice for
investment and trade. We are now home to 9 of the top 10 pharmaceutical companies in
the world; 13 of the top 15 medical technology companies; and are considered the ‘Internet
Capital of Europe’, with the top 10 ICT and ‘Born on the Internet’ companies all located
here. In this context Ireland is in a prime position to benefit from a comprehensive
transatlantic trade deal that boosts two way trade and investment activity. It also provides
an opportunity to capitalise on the unique bilateral relationship Ireland has developed with
the US, and to build stronger trade and investment channels with our economic partner.
The Chamber works closely with the pan-European network of American Chambers and the
US Chamber of Commerce network based in Washington. Together we believe this trade
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and investment partnership agreement is the single best opportunity we have to accelerate
growth and jobs throughout the transatlantic community. But only if we do it briskly and
only if we do it right.
The United States and Ireland are both pursuing an aggressive trade policy, and the
American business community strongly supports this new direction. TTIP stands apart from
other international trade agreements for several reasons. Firstly, the scale of the existing
economic relationship is unprecedented. Nearly half of global economic output is generated
in the US and the European Union combined. The total commercial relationship generates
€45 billion in commercial activity each day and supports over 15 million jobs on both sides
of the Atlantic.
Secondly, this commercial relationship isn’t based solely on commercial interests, it’s also
based on common values—democracy, civil liberties, and the rule of law, not to mention a
long and rich history of friendship and strategic partnership.
Thirdly, TTIP is unique because of its potential to set high global standards for 21st century
trade and investments agreements around the world in such areas as protecting intellectual
property, cultivating the digital economy, and combating trade and investment
protectionism.
And finally, the benefits could be immense. As a key partner in Corporate America’s EU
global network, Ireland is likely to emerge as a significant beneficiary of a successful and
comprehensive transatlantic free trade deal. TTIP would increase the volume and value of
transatlantic trade and investment, create employment opportunities and boost incomes in
both the US and EU, and improve global competitiveness of both parties.
A comprehensive TTIP agreement would be of great benefit to businesses of all sizes
throughout Ireland. Barriers to trade are a nuisance for any business, but larger companies
can generally cope with the inconvenience and compliance costs and still do business
globally. However, smaller companies do not always have the resources to deal with these
issues and will often avoid exporting altogether. Simplified trade rules would deliver
efficiencies and consumer choice through greater SME participation. Ireland exports 80% of
everything it produces; meaning tens of thousands of Irish jobs depend on good foreign
trade relationships. Reducing barriers to trade will have important implications for
businesses of all sizes across the county. These barriers have a real impact on Irish
businesses and their reduction, or removal, would have significant consequences for sectors
in which Ireland is commercially active.
SMEs in particular benefit as TTIP aims to establish a greater degree of regulatory coherence
between the US and EU. After all, SMEs account for two-thirds of all private sector jobs in
the EU and have tremendous capacity to create new employment. Currently, the average
levels of tariffs on imports into the US are low, averaging 4%. Despite that low figure, the
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economic impact is real. The European Commission has estimated that eliminating tariffs
between the EU and the US could boost business production by €107 billion in the EU and
up to €71 billion in the US.
The greatest economic impact of TTIP will come from reducing these non-tariff barriers.
These increase the cost of doing business and in instances restrict market access. Different
regulatory structures make it difficult for firms to enter the market, and according to
estimates, these bureaucratic hurdles alone are equivalent to customs duties of 10-20%.
They inflict significant trade costs in industries where Ireland has been successful in
attracting investment, including manufacturing, chemicals, and ICT.
Improving the compatibility of standards and regulations, and greater mutual recognition of
standards, would eliminate many of these barriers. By cooperating, both the EU and US
would be able to achieve legitimate policy objectives, like protecting the environment and
public health, without any weakening of standards, while avoiding the duplication that
makes goods and services more expensive.
For example pharmaceuticals is one of Ireland’s biggest industries – with nine of the top ten
global pharmaceutical companies located here – and having a set of common standards
would increase safety while cutting costs. Irish pharmaceutical products are thoroughly
tested here so they can be sold throughout the EU, but they have to undergo costly testing
again to enter the US market. This is despite the fact that Irish pharmaceutical plants have
an exceptional record in terms of FDA inspections, and are rated extremely highly. TTIP aims
to eliminate expensive and time consuming double testing without compromising safety
standards.
The Internet allows small retailers to sell their products easily across the world but
exporting can be difficult. They can be hindered in their exporting abilities by having to
comply with a variety of customs rates and import rules for all the different products they
sell. By eliminating tariffs and streamlining customs procedures, it will become easier, faster
and cheaper for online retailers to ship their products and access markets that were simply
too complex to tap into before.
In February 2012 the EU and US reached a mutual recognition deal for organic products, by
which goods certified as organic by one region could be labelled and recognised as such in
the other. While the agreement contains exceptions, it serves as a model of how reducing
red tape and cost can be achieved by recognising broadly similar standards, and can be
applied to many more sectors.
Studies show that as a consequence of removing tariffs and reducing non-tariff barriers
between the EU and US, the costs of traded goods will go down and demand will increase.
For the EU and US, lower costs for both firms and end consumers lead to increased trade
and production.
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The Chamber believes that Ireland is well positioned to benefit significantly from TTIP. We
have built a strong and solid foundation for investment and will see substantial
opportunities arise from greater US-EU trade and investment.
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