Bernard Durkan (Kildare North, Fine Gael)
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Question 63: To ask the Minister for Enterprise, Trade and Employment the steps he has taken to address the issue of competitiveness in the economy with particular reference to Irish exports on world markets; and if he will make a statement on the matter. [31219/07]

Bernard Durkan (Kildare North, Fine Gael)
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Question 75: To ask the Minister for Enterprise, Trade and Employment if he is satisfied that import and export trends are sufficiently positive for the future of the economy; and if he will make a statement on the matter. [31218/07]

Micheál Martin (Cork South Central, Fianna Fail)
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I propose to take Questions Nos. 63 and 75 together.

The most recent full year merchandise trade figures published by the Central Statistics Office relate to 2006. Between 2004 and 2005 imports rose from €51.1 billion to €57.5 billion, a rise of €6.4 billion, 12.5%, while between 2005 and 2006 imports rose from €57.5 billion to €60.7 billion, a rise of €3.2 billion, 5.7%. These figures represent a significant slowing in the rate of increase in the level of imports, despite the fact that it occurred in the face of sharp increases in world energy costs, as Ireland imports all of our oil and a significant proportion of our natural gas requirements.

The figures also show that there was continued growth in our exports, rising from €84.4 billion in 2004 to €86.8 billion in 2006, resulting in a significant trade surplus of €26.1 billion last year.

The latest merchandise trade figures, released by the Central Statistics Office last week, show that for the first eight months of this year, exports rose from €56.9 billion to €59.7 billion, an increase of 5% compared with the same period in 2006. This is impressive considering that significant portions of our exports are priced in dollars, which means that the nominal value of exports will inevitably be influenced by movements in the currency markets, such as the steady fall in the value of the dollar against the euro. This is particularly significant given that the United States is our largest single merchandise export market, accounting for approximately 20% of these exports.

In addition to merchandise trade the other element of our external trade is the services sector. The figures show continued improvement in the level of this trade. Between 2003 and 2006, while services imports rose from €48.2 billion to €62.5 billion, an increase of 29.6%, it is significant that exports of services rose from €37.1 billion to €55.1 billion, an increase of 48.5%. These figures represent a narrowing of the deficit between imports and exports during this period by an impressive 33.1%.

The Government's policy has, for a number of years, been to exploit our membership of the European Union fully by diversifying into EU export markets, and also to focus on new opportunities in the US and further afield. From a position of 75% of Irish merchandise exports going to the UK in the 1960s, we have now reached a point where the European Union accounts for 64% of our exports, with only 17% of exports going to the UK. During 2006, the value of exports going to key markets such as the United States, Germany and Belgium showed solid growth.

Since the accession of the new EU member states, new export opportunities have been developed and exports to these countries are increasing. For example, during 2006, exports to Poland increased in value terms by 36%, to the Czech Republic by 38%, to Slovakia by 28% and to Estonia by 60%. I have no doubt that over time, Irish exporters will establish a substantial presence in central and eastern Europe.

The second phase of the Asia strategy, launched by the Taoiseach in 2005, prioritises eight countries in Asia and sets out targets for increasing our exports to that region up to 2009. Within the context of this strategy, work is under way to ensure that agencies such as Enterprise Ireland, Bord Bia, Tourism Ireland and organisations engaged in the education sector, will be combining closely to exploit and increase Irish exporting opportunities in this area over the lifetime of the Asia strategy and beyond. Already there has been significant expansion in our trade with China and India and the level of our services exports to Asia has increased significantly.

In addition, both myself, and the Ministers of State in my Department continue to be active in leading trade missions, in conjunction with Enterprise Ireland, to target markets abroad with a view to increasing our share of exports by Irish companies in all markets. Recently, Enterprise Ireland opened a new office in Brazil, with the objective of expanding our export opportunities with Brazil and other South American countries.

I am confident that the strategy of diversifying into export markets abroad, such as the wider European Union, the Americas, Asia and emerging markets, including the Middle East and South America, is a sound one. Directly related to that strategy is the ongoing process of building on the higher value sectors of the economy, particularly in the knowledge-based areas. This will ensure that Irish exporters will continue to rise to the challenges posed by the global trading environment and increase the value of their sales incrementally for the future.

Deirdre Clune (Cork South Central, Fine Gael)
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Question No. 63 asked the Minister to comment on the competitiveness of Irish exports. Energy costs, local authority charges and wage levels, for example, can make it quite expensive to do business here. Such expenses are ultimately reflected in prices. Does the Minister agree that those who export are at a disadvantage as a result of these factors? What can be done to reduce such costs?

Micheál Martin (Cork South Central, Fianna Fail)
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The key strategy we have adopted involves trying to move to value-added activities which can be more effective in terms of dealing with our cost base. Our capacity to compete in sectors like low-cost services and low-cost merchandise has been reducing. As we invest more in research and innovation, small and medium sized enterprises and companies of that nature are in a better position to develop products, services and solutions which are of use to world business. We want to turn Ireland into a country that offers solutions on a competitive basis to the global marketplace. I have been impressed by the quality of our software and internationally traded services companies, as well as some of our engineering, high-end manufacturing and life sciences enterprises.

Having been on trade missions in the United States and elsewhere with officials from such organisations, I am aware that they are winning good contracts with blue-chip companies throughout the world, which demonstrates the quality of their products. We are doing certain things well as we try to maximise our competitiveness, although we should be doing better in other respects. The World Economic Forum ranks Ireland first in terms of the prevalence of foreign ownership, the impact of business rules on foreign direct investment and foreign direct investment and technology transfer. We are fifth in terms of the quality of primary education and seventh in terms of the quality of overall education.