Written answers

Thursday, 12 November 2009

Department of Enterprise, Trade and Employment

Cross-Border Trade

5:00 pm

Photo of P J SheehanP J Sheehan (Cork South West, Fine Gael)
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Question 14: To ask the Tánaiste and Minister for Enterprise, Trade and Employment her views on the gravity model study by the Economic and Social Research Institute, which shows that trade between the Republic of Ireland and Northern Ireland is 81.7% below expected levels; her views on the fact that trade between the Republic of Ireland and Northern Ireland has not increased since 1998; if she is satisfied that only 28% of Republic of Ireland manufacturing firms export to the only contiguous trading partner; her plans to stimulate south north and north south trade; and if she will make a statement on the matter. [40972/09]

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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InterTradeIreland commissioned the Economic and Social Research Institute to undertake the Report "A Gravity Model Approach to estimating the expected volume of North/South Trade". The Report aims to assess whether aggregate and sectoral cross-border trade between Ireland and Northern Ireland is at, above or below the expected level.

The deviations of actual trade from the expected level is estimated using a "gravity" model which accounts for the key factors that determine the level of trade flows between trading partners. The key finding, once important economic and geographic factors are taken into account, is that the level of both aggregate and sectoral trade between the two jurisdictions is below the expected level. The analysis in the Report focused on manufactured goods. For total manufacturing from 1998 to 2007, the gap between expected and actual North to South trade was 82%, while for South to North trade it was 77%.

While the analysis was focused on the level of trade, the findings may be explained, in part, by structural differences in the economies of the two jurisdictions; Ireland, for example, having multinationals dominating a number of sectors which would impact trade flows.

The Report concludes that the gap between expected and actual levels of trade highlights that there are potential gains from trade to be exploited on the island of Ireland. InterTradeIreland consider that the Report will help in targeting policy interventions as part of its trade and business development programmes.

According to a survey undertaken for the InterTradeIreland Business Monitor (October 2009), while 28% of Irish firms are engaged in trading with Northern Ireland, 52% of Irish manufacturing firms are trading with Northern Ireland.

Contrary to what the Deputy has stated, total cross-border trade, in fact, increased since 1998. Indeed, from 1998 to 2007 total cross-border trade rose by 20% to €3.1bn, and in spite of the economic downturn in 2008 cross-border trade levels are 8.8% higher than in 1998, at €2.8bn.

InterTradeIreland, the all-island trade and business development body, has a range of trade and business development programmes designed to provide opportunities for businesses across the island of Ireland to improve their competitive performance, and these include technology transfer, sales and marketing, sectoral business networks and promoting equity finance to accelerate business growth. It also undertakes vital research, provides information and offers advice to companies.

InterTradeIreland is exploring the scope for further trading opportunities with a view to the optimisation of the levels of trade on the island of Ireland.

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