Mr. Brian Cotter:

I thank the Chairman, Deputies and Senators for the invitation to address them on trade promotion and the role of the Department of Foreign Affairs and Trade in economic recovery. I will begin by talking about the bilateral investment environment between Ireland and the United States, the role of that investment and, more specifically, foreign direct investment, FDI, in driving trade and conclude with some perspectives on the role of the Department.

As the Chairman said, the American chamber represents the community of 700 US firms in Ireland that directly employ 115,000 people. That accounts for over 70% of all IDA-supported employment. Employment in US businesses in Ireland has increased by an estimated 15% since 2007. Today the total US FDI in Ireland is at an historic high of $188 billion. Putting that into perspective, US investment in Ireland is well in excess of US investment in, for example, Germany and France, and is even ahead of the combined investment in the BRIC countries of Brazil, Russia, India and China. It tops the total investment that US companies have in all of Latin America of $148 billion.

The chamber's role is to encourage a policy environment that retains and attracts investment and jobs into the country and that fosters the development of bilateral trade and investment flows between the US and Ireland. Over the first two years of this decade, the combined inflows of investment from the US to Ireland reached almost $59 billion, and it is hugely encouraging to note that this is the highest 24 month period on record. It represents a surge in both US investment and business confidence in Ireland. It is also heartening for Ireland that there has been no shift in the geographic preference of US FDI, which remains directed towards Europe in general and Ireland in particular.

This has brought significant benefits to Ireland both economically and socially. The strongest statistic for illustrating the importance of this relationship to Ireland is that with a total output of $58 billion, this business in Ireland now accounts for over a quarter of Ireland's total GDP and contributes approximately €3 billion to the Irish Exchequer in total taxes, with an additional €14 billion in expenditure to the Irish economy in terms of payroll and goods and services employed in their operations. In the global table of export platforms for US companies, Ireland now ranks as second, with only Switzerland ahead of us.

It is a two-way relationship and that is vital to the sustainability of the strong economic relationship between the US and Ireland. The investment levels of Irish firms in the US has dropped recently, however this has been driven in no small part by the sale of US assets previously held by Irish owned banks. In spite of these shifts, Irish companies in the US still have a total investment of $25 billion. Employment levels remain strong, and Irish companies in the US are estimated to employ 120,000 people in sectors such as services, software, food, nutritionals, construction and engineering. Just as US companies here use Ireland to access the major market opportunities of the EU, so too does this investment abroad find opportunities in the US market. These Irish companies generated no less than $42 billion in sales in the US in 2011, twice the level of goods exports from Ireland to the US in the same year.

Despite the disappointing performance of the global economy over the past year, subdued growth has not altered how US firms prefer to compete overseas via FDI rather than traditional trade. I would like to highlight to the committee a recently published joint publication from the American Chamber of Commerce Ireland and the American Chamber of Commerce to the European Union. We have provided copies to the committee members. The publication is entitled The Transatlantic Opportunity: Why we need a Transatlantic Trade and Investment Partnership. As many members will be aware, that partnership, TTIP, was initiated earlier this year by the European Commission and US Administration. The Irish Government is leading discussions on the negotiating mandate for the European Commission on this transatlantic partnership, and we hope that mandate for trade and investment will prove to be an ambitious and comprehensive one. There are several areas in which trade in goods and services as well as investment can be boosted on both sides of the Atlantic.

In the context of the potential further freeing up of trade between the EU and US, I want to highlight a lesser covered aspect of trade. A crucial aspect of global commerce is what is known as intra-firm trade, which relates to the flow of goods and services between a parent company and its affiliates abroad. The overall scale of intra-firm trade is, unfortunately, poorly documented outside of the US and a few other countries. Statistics from the Bureau of Economic and Business Affairs in the US indicate that in 2009, such trade accounted for around 40% of all US goods imports and exports. It is a very large amount of the trading activity into and out of the US. The importance of such trade underlines the centrality of FDI to the global economy. Companies regularly locate various functions around the world performing different roles in the firm's value chain and requiring the flow of goods and services across that chain of functions. This flow largely relates to intermediate or unfinished goods within the global value chain. There is also, however, a significant amount of trade in finished goods.

Ireland serves as a strategic beachhead to the rest of the world for US multinationals, with most of these exports destined for the UK and the rest of the EU. US foreign affiliate sales of goods and services from Irish-based operations totalled $247 billion in 2009, the last full year of figures for this metric. Putting that number into perspective, US foreign affiliate sales in a nation with a population of 4.5 million people and an economy the size of West Virginia were greater than affiliates sales in China and Japan, which rank, respectively, as the second and third largest economies in the world. Ireland's place in the global value chains of US companies is the result of several decades of excellent performance and is proving to be an enormous boon to the country as it continues its economic recovery. This has not happened overnight but through a focused industrial policy to create specialised industrial clusters and developing high-value activities within industries like electronics, computer software, medical instruments, pharma-chem and international finance.

The global economy remains fragile. This has created a difficult environment for all international businesses. The impact of the eurozone crisis has affected global demand and growth prospects. What has helped, and will continue to help, Ireland and our relationship with the US is the fact that in spite of these global challenges, protectionism has not increased significantly. More generally, US firms are in a solid financial position. Ireland's position in Europe is central to our ability to attract FDI. Europe continues to account for 30% of global consumption, and it is for access to these wealthy markets that US companies are in Ireland.

Into the future, there are potential benefits accruing from the fact that Europe lies in close proximity to what some analysts call the best business opportunities on the planet. These are the growing markets of eastern Europe, including Russia, the Middle East and north Africa, a geographical area whose combined output is greater than that of China.

The work of attracting further investment to Ireland will be enhanced by building on our reputation, delivering greater numbers of well-qualified graduates, maintaining our business-friendly regulatory environment, maintaining certainty regarding our corporate tax rate, and through a consistent focus on improving our overall competitiveness. Previous witnesses to the committee have provided their thoughts on how the Department of Foreign Affairs and Trade can be positioned to aid the process of recovery and how it has performed under its new mandate.

As the leading voice for US business in Ireland, we are keenly aware of how important trade missions, ministerial visits, the work of IDA Ireland and the openness of senior Cabinet members to meet our members have been in restoring Ireland's reputation in boardroom America. We hear repeatedly about the positive impact Ministers and senior Oireachtas Members have on senior decision makers when they decide to invest time and energy to meet investors. The Department, working with IDA Ireland, has an important role to play in scheduling such visit programmes, co­ordinating the detailed logistics and providing quality briefs for Ministers and visitors that ensure a positive impression is made of Ireland. We are grateful for the responsiveness of the Anglo-Irish division of the Department of Foreign Affairs and Trade which holds responsibility for US affairs and the mission in Washington under the current stewardship of the ambassador, Mr. Michael Collins.

While the chamber supports greater public sector productivity and flexibility, we are in favour of ensuring vital areas essential to our continued economic and social recovery are prioritised. That would clearly include the Department's network in the United States, as well as resources given to agencies such as IDA Ireland. They have delivered and are continuing to deliver in the US marketplace. With a heightened focus on the commercial relationship, it would be appropriate to ensure the Department had the correct skills sets in place to understand and empathise with the business world. While diplomatic and consular skills and experience are needed in conducting the State's diplomatic business overseas, it might be prudent to consider if the injection of more commercially experienced executives into missions might not bring further benefits to our efforts to project Ireland as a business-friendly trade and investment partner in Europe. Our view is that maintaining and strengthening the State's US infrastructure, in conjunction with competitiveness improvements, with a focus on encouraging two-way investment and trade, are essential to increase the presence of US investment in Ireland.

The opening of the consulate general in Atlanta, Georgia, was a welcome step for the Department abroad, focusing exclusively as it does on fostering and strengthening commercial, scientific and cultural links. In addition, the approach followed in Atlanta, London, New York and Tokyo of housing State agencies alongside departmental staff has been cohesive and could serve as a model for future reorganisation of the embassy and consulate network. Further, any encouragement that the State or the Department can give to the establishment of an Ireland-west coast USA direct flight connection would be welcome, as would the extension of pre-clearance facilities for US passenger traffic to air freight in order to improve the attractiveness of Ireland.

Balancing the need to maximise existing relationships and build new ones is important. The economic relationship between Ireland and the United States remains unique in Europe and is a strength from which our two countries have benefited extensively. While there is an increasing and understandable focus on emerging markets, the bond with the United States continues to deliver enormous value to Ireland and should continue to be tended and nurtured.