Mr. Brian Cotter:

A total of 96,000 used to be the quoted number for employment in US companies in Ireland. That is true. It depends on the year, but it is in that range and has fluctuated, depending on how companies have acquired particular assets or got out of particular businesses. It is in that range from the State's perspective. We look at the US Department of Commerce in the United States and 120,000 is its figure. We use this figure because it is very important in communicating in Washington. When Members of the Senate and the Congress talk about investment and look to Ireland, we can say that, according to the US figures, there are more people employed in the United States by Irish companies than there are employed in Ireland by US companies.

That is always a useful fact in being able to discuss the two-way relationship between the two countries.

The second point was on inter-firm trade. Approximately one third of the trade between the United States and Europe is inter-firm. Companies, when assembling their final offer in the market, use different sources within their own organisations for components or parts of the final solution, whether it be software or otherwise. A company might be engaged in research and development in another part of the world, but the different components come together. Companies are actually trading these components and parts among themselves. That is why that part of the arrangement is very important and it has grown as companies have grown on multiple sites.

It was really interesting talking to some of the hi-tech companies which, in conjunction with the American chamber, must often explain the importance of Europe to their bosses. Europe provides a huge amount of technology which is often assembled in the Far East and re-imported back into Europe and sold at a very good price. Companies involved in the technology industry make their money for investment in wealthy markets with a high GDP, that is, Europe, the United States and Japan. Europe still matters very much for these companies and it is a big point we make. It is all driven by the inter-firm trade relationship, not the movement of the final goods which is often picked up in the trade statistics.

With regard to the reference to the west coast, there would not be any controversy about the fact that Silicon Valley is the magnet and on into LAX, Orange County and San Jose. They are the main drivers of economic activity. There is a cluster of life sciences companies in San Diego also. As long as there is a west coast hub and connection into Ireland, that is seen as a big advantage for the entire state of California and the west coast economy which is quite strong and rebounding.

The comment on taxes was very welcome. We have always welcomed the consistent political commitment to certainty around Ireland's taxation regime, which is crucial. There is great stability in the current regime. When companies are making long-term decisions, that stability is worth a lot. We certainly support the Government's role in keeping that message solid.

I also note the comments on effective rates of tax. Ireland's effective rate of tax is very close to its headline rate, unlike many countries in Europe which sometimes criticise Ireland. They need to look at the World Bank's report to see how their headline rates contrast very dramatically with the effective rates of tax. Even as they accuse Ireland of behaving unfairly in the tax environment, they introduce new regimes for intellectual property, holding companies, etc., which reduce even further their effective rates of tax. Ireland plays by the rules. We have an EU and an OECD approved tax regime. This is not a tax haven; we apply international rules and regulations and are compliant. We have more than 70 tax treaties worldwide and there is transparency in what we do; in other words, the countries which have tax treaties with us can gather information on their companies which have operations here. Most importantly, we pride ourselves on the fact that we have a substance-based regime, that is, there is real substance on the ground, real operations, real headquarters, real decision-making and real risk-taking, which is the acid test as to whether one has a legitimate taxation regime. Members will note that in recent comments from the European Commission, it is clear that the focus is on regimes which do not play by those rules and countries in Europe which have used devices to avoid such issues.

With regard to the eurozone, Ireland is a beach head for American companies into Europe, in particular. Naturally, therefore, there is concern about what will happen in the eurozone. Interestingly enough, investment flows have remained strong. There was a little jitter last year because of what was going on in Greece, Cyprus, etc. We will see if that continues this year. Flows into Ireland have been strong and we have increased our percentage share of a smaller pot. I think companies are taking a longer view and believe the matter will be sorted and that they need to be in this marketplace. They see a huge opportunity in central and eastern Europe, the Middle East and Africa and their European operations have strong links with these markets because Europe has had a strong trading relationship with them.

I note the focus of the committee on our links with the Middle East. In terms of the Middle East, central Europe and north Africa, when one considers that the combined economic output and the number of consumers in these regions outstrip those for India and China, it is a great opportunity, although I imagine it is not without risk. However, taking the longer view, companies want to be placed there.

In anything we do, it is all about competitiveness, that is, the combination of one's cost base, one's talent, the experience one can bring to bear, one's tax offering and infrastructure, which is very important. We have gained a degree of competitiveness in the past four to five years. In a recent report the National Competitiveness Council cautioned that much of the gain had been concentrated in a depression of domestic demand, in particular in the sectors of construction and retail, and changes in the Government sector but also changes in the value of the euro. In other words, there had not been enough structural changes in the cost base. That is probably reflected in the fact that there remains a skills shortage in the high tech areas, in which our members are concentrated. That is also part of the factor, as well as higher energy costs and higher indirect costs through the tax system.

With regard to the prospects for a US-EU trade deal, following the round table meetings which have recently taken place in Washington and Dublin, there is a sense that there is a willingness to get a deal done. It will not be without its problems and challenges, but there is a real sense that the opportunity for both trading blocs cannot be ignored. The prospect of up to 1% in economic growth and up to 400,000 to 500,000 jobs in Europe alone presents a significant opportunity. We not only have economic interests but we have also political interests which are aligned. We want to establish the impetus for another world trade deal. If we can crack this nut, as two trading blocs, the feeling is that it would be of benefit to both and Ireland as a key gateway in that relationship. It will also encourage other trading blocs to adopt the same rules.

The focus is less on tariffs and more on regulation - aligning regulations to respect and consider each other in order that we are not putting non-tariff barriers in place in companies doing business. The trading relationship between the United States and Europe is the largest economic artery in the world. It encompasses half of all worldwide exports. The two markets comprise 60% of the world's GDP and the two blocs probably account for in the region of 50% to 60% of the world's research and development. We have a lot to gain in working together. For instance, in terms of compliance, we should ensure that when companies are doing something, they do not have to go through the same procedures multiple times, if that can be avoided. If there is goodwill on that front, there is a good chance of a deal being reached.