Brian Cowen (Laois-Offaly, Fianna Fail)

As has been said, we hope to be in the United States next during the St. Patrick's Day celebrations. I have no plans to visit in the meantime, but this may change according to circumstances. We very much welcome the fact that, during our national celebrations, we have access to the incumbent in the office of President of the United States. I hope this arrangement will continue as Senator Obama takes over.

On the statements made during the course of the US presidential campaign on corporation tax policy, the Government has been tracking proposed or articulated changes. The US-Ireland economic relationship is based on mutual benefit and we want this to continue. Irish direct investment in the United States is estimated at €17 billion. Employment by Irish companies in the United States is in excess of 70,000. It is important to emphasise that, while the bilateral relationship is sometimes portrayed as very one-sided, we have seen the internationalising of Irish business and cross-investment into the United States by many substantial Irish companies. This has resulted in the aforesaid figures. There are over 510 US companies in Ireland, employing over 96,000 directly. They have a considerable impact on the sub-supply sector also.

It is important to point out that we have strong research and development links that benefit US companies in Ireland and also have clear advantages for Ireland. We will monitor developments and keep in touch with the US Administration regarding any proposals that may emerge. This issue arises from time to time and one must wait and see whether the political rhetoric of the presidential campaign translates into different policy positions that will have an impact on us.

In the context of the global recession we face, we must guard against protectionism becoming a substitute for a policy of free trade that will provide a stimulus to world economic activity and growth. While every administration and government has its own domestic policy priorities to identify and pursue, we will, on the basis of the excellent relationship we have enjoyed with successive US Administrations, continue to indicate the mutual benefit that derives from multinational investment in Ireland. By definition, multinational investors locate in more than one country. Clearly, Ireland has been identified by many companies — not just US companies — as an excellent location in which to do business.

I was in Carlow last Monday to see work commence on a €200 million investment by Merck Sharp & Dohme, which itself has had a 32-year relationship with Ireland. The company's location of its vaccine facility in Ireland, thereby benefiting Carlow and its hinterland, is an indication of the excellent people we have. Importantly, the company would say it is also due to the ability to execute its projects within the demanding timelines it sets. This is a credit to the IDA and local authorities, which ensured the planning arrangements and other necessary services infrastructure were put in place in a timely manner and in a competent way that facilitated such a major investment by a company that has had such a good relationship with Ireland for so long. This company's experience reflects the wider benign experience of US companies in Ireland.

Even in these stringent times, we have increased the research and development tax credit from 20% to 25%, as announced in the budget by the Minister for Finance, Deputy Brian Lenihan. This is a further indication of our commitment to strengthening that relationship and ensuring the research and development capacity of many high-technology companies can be realised, where appropriate, in Ireland. We should ensure the country serves as a platform from which to gain access not only to European markets, but also to Asian, Pacific and Middle Eastern markets.

People worry about designated tax havens but Ireland is certainly not one. Irish corporation tax revenues arise from the profits of companies, including multinationals, which in turn result from the companies' economic activities here and the efforts of the staff who work for them. Our system is transparent, deliberately, so all can see the attractions and benefits to the State. Other states often have high nominal rates of corporation tax, as Deputies know, but they mask the true lower rate in deductions and deals with individual firms. That is not how the Irish system operates. We are bound by the same rules on state aid, codes of conduct and rulings of the European Court of Justice as all EU member states. In other words, the EU treaty contains specific rules on the provision of aid by member states to industry. The European Union has a code of conduct, a political agreement, designed to curb harmful competition in business taxation. It is similar to the process at OECD level and we are fully in compliance with both the code and OECD process.

We have positive rates of tax. We have 44 tax treaties in place and a system for the full exchange of information and proper regulation of activities to the highest standards. We have a comprehensive taxation system covering income, capital and indirect taxes and we have concentrated in recent years on lowering the burden on enterprise and employment in order to encourage economic activity. We maintain a low general corporation tax rate by ensuring a wide tax base and careful management of the public finances.

The rate, 12.5%, is a general rate and is not focused on any particular segment of Irish industry. We do not distinguish between small and large enterprises or between enterprises that service the local economy and those with a multinational focus. It is important to point out that the United States was Ireland's second largest merchandise trade partner in 2007, with bilateral trade valued at $31.5 billion and trade and services between Ireland and the United States worth $36.9 billion in 2006, the most recent year for which there are figures.

It is important to point out that there is not one-way traffic. A matured Irish economy has been cross-investing into the United States, as one would expect given the bilateral trade and investment flows. We need to continue to make these points so there will be a full and up-to-date understanding of the precise mutually beneficial impact of the relationship.

On the question on the working holiday visa, it is our intention to build on the advance in this regard. I congratulate the Minister for Foreign Affairs on our diplomatic efforts to ensure the US Administration was receptive to the idea. The issue of immigration reform in the United States is very difficult politically and we must respect that. The issue presents difficulties for both parties in the US Congress. As has been said, we appreciate the efforts of Senators McCain and Kennedy on their initiative, which, unfortunately, did not meet with ultimate success but which has provided continued momentum and impetus on this issue on behalf of those of our citizens who seek regularisation as quickly as possible. We will work with the incoming US Administration and everybody in Capitol Hill to try to build consensus in respect of what I recognise as a very difficult domestic issue in US politics.

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