From Department of Finance; Department of Public Expenditure, NDP Delivery and Reform
Published on
Last updated on
Check against delivery
Ladies and gentlemen,
It is a pleasure to be back in Washington, and to be here this morning, at the Peterson Institute for International Economics.
Institutes and think tanks such as this play an important role as forums for analysis, discussion and debate on the themes that shape the global economy.
As a policy maker, I recognise the vital contribution that independent analysis and commentary provides.
The Institute’s capacity to gather such a broad range of expertise over the years is why it has been able to maintain itself as such an important voice in American and global debates.
And, indeed, why you have been voted the best economic think tank in North America for the past three years.
Before we begin, I would like to pay tribute to the memory of the late President George H. W. Bush, and the important contribution he made to ending the Cold War and the division of Europe.
Because ending this division made possible the united Europe of freedom and security that we enjoy today.
When the Berlin Wall fell, President Bush imagined a new world order taking its place,
‘a world where the rule of law supplants the role of the jungle; a world in which nations recognise their shared responsibility for freedom and justice; a world where the strong respect the rights of the weak.’
This vision of a world order based on the rule of law, backed by strong global institutions, has been a defining characteristic of how we in Ireland, a small country, outward-looking and open to the world, believe the international order should be arranged.
And central to our vision is a strong transatlantic relationship, in which Europe and the United States work together to uphold shared values and principles, and to promote prosperity and well-being for our people.
So this morning, I want to speak of that transatlantic relationship, its past and present.
And I want to look to the future.
To the role Ireland might play, post Brexit, in bridging the Atlantic.
In the weeks leading up to this visit I have enjoyed ‘Capitalism in America’ by Alan Greenspan and Adrian Wooldridge. It charts the history of your economy.
The first chapter, ‘A Commercial Republic’ describes the catalysts of economic transformation between 1776 and 1860. It identifies the laying of the first transatlantic cable on 28th July 1866 as a key moment, creating integrated transatlantic financial markets. It neglects to mention that the departure of the vessel that began this project was from Valentia Island, off the West Coast of Ireland.
So, from the very first transatlantic cables to the passenger liners of the early twentieth century, to the busy air routes above our skies today, the Atlantic Ocean has been a highway between Ireland and the United States, carrying people, goods, hopes and ideas.
Ours is a shared history of connections.
Of family ties built over generations.
Of political ties, built on values and beliefs held in common.
Of countless business, cultural, academic, and sporting ties.
These bonds of friendship and cooperation that cross the Atlantic have helped shape the Ireland in which I grew up, and the Ireland of today.
The United States made a central contribution to the search for peace in Northern Ireland, through the leadership, support and encouragement shown by US Presidents and politicians, including of course, Senator George Mitchell and many others.
We remain thankful for the achievement of the Good Friday Agreement.
In the twenty years since it was signed, it has provided the basis for peace, stability, reconciliation and cooperation on the island of Ireland.
It also created a new opening in relations between Ireland and the United Kingdom.
I will say a few words about this in a moment.
But for now I want to talk about the contribution the United States has made to development of the Irish economy.
I was nine years old when President Ronald Reagan visited Ireland in 1984. In an address to our Parliament, the President celebrated the fact that 300 American firms had invested there, employing some 40,000 people.
Three decades later, the number of US companies Ireland hosts has more than doubled, while the employment they create has increased fourfold – a reflection of the substance underlying investment.
Why have US firms built such a strong presence in Ireland?
No single reason, but many.
A common law, a common language and a connected culture, reflected in the 33 million Americans who claim Irish heritage.
A pro-business environment, underpinned by a tax code which is not only competitive in rate, but – more importantly – stable, simple and transparent in function.
A talented labour force, with Europe’s youngest population and one of its best educated.
And linked to this – most critically, I believe – an openness.
Not just to investment, but to people.
When we joined the European Union in 1973, less than 5% of Ireland’s population was born overseas.
Today, that number is 17%.
Our workforce is the third most international in Europe.
We’ve come to recognise, I think, that our nation’s greatest strength is the strength of our welcome.
That ‘cead míle fáilte’ – one hundred thousand welcomes – is more than a common Irish greeting. It’s a national creed.
That while we are an island people, we are the very opposite of insular.
And that far from being on the periphery of Europe, we are at the centre of the transatlantic economy.
Combined with access to the world’s largest single market of 500 million consumers, it’s this attribute, above any other, that has made Ireland a natural home for US investment.
At the same time, Ireland is investing in the US.
Because in the 21st century, transatlantic trade and investment is not a one way flow. It’s a two way street.
According to the US Bureau of Economic Analysis, Ireland’s investment in the US totalled $147.8 billion dollars last year; a stake in the US economy larger than countries many times our size.
More than 500 Irish companies have facilities here.
What do these firms do?
They build American homes – from CRH / Oldcastle, this continent’s largest asphalt producer; to Kingspan, a market leader in advanced insulation, Irish firms are at the cutting edge of US construction.
They save American lives – Aerogen’s revolutionary aerosol delivery system, developed in Galway, has improved health outcomes for more than 2.5 million Americans. Icon’s award winning research and development services have led to the approval of 18 of the world’s 20 best-selling drugs.
They sustain Americans – whether in the form of Kerrygold, America’s third largest butter brand; McCann’s, one of its favourite imported cereals; or the advanced nutrition products of Kerry, Glanbia and others.
And, of course, they employ Americans.
Over 100,000 to be exact. Across all fifty states of the Union.
The success of our companies abroad is rooted in the health of our economy at home.
From a point of crisis, our country has made remarkable progress over the past few years: rebalancing our public finances; restoring our competiveness; returning to near full employment.
This year, our economy is forecast to grow by 7.5%, on the back of 7.2% last year.
We look forward to growth of 4.5% in 2019.
Our unemployment rate is down to 5.5%.
We have come a long way, through hard work and commitment.
We are committed to continuing this work, to provide the greatest opportunity for our people to realise their ambitions and potential.
And the greatest support and protection, for those who are vulnerable in our society.
But we recognise the challenges that will impact on our ability to pursue further growth, and to provide these opportunities and supports.
One of these, of course, is Brexit.
We are at a historic moment.
Ireland and the UK joined the EU together, forty five years ago.
In the decades since then, we have grown closer, by working together as partners in the EU.
The United Kingdom is our closest neighbour and our friend. We are bound together by geography and by a shared history, culture, kinship and trade.
I deeply regret that our British friends have chosen to embark on a different path, even if, of course, I respect their decision to do so.
The British Parliament has been considering the terms of the Withdrawal Agreement, and the accompanying Political Declaration on the shape of the future relationship that the UK will have with the EU after it is left.
There is much at stake.
For the United Kingdom.
For Ireland, the EU Member State that will be most directly affected.
For all of the other members of the European Union.
And indeed for the United States; a close and valued partner for all of us.
It is a weighty decision, one that I hope our British friends and partners will consider carefully.
Crucially for Ireland, the Withdrawal Agreement guarantees, through the backstop arrangements in the Protocol on Ireland and Northern Ireland, that there will be no hard border on the island of Ireland in any circumstances.
From the very beginning, protecting the Peace Process and the Good Friday Agreement – and the open border on the island of Ireland that is so central to both – has been a priority for the Irish Government.
We also set out to protect the Common Travel Area between Ireland and Britain; to minimise the impact on our trade, jobs and our economy; and to reaffirm our place at the heart of a strong and prosperous European Union.
On each of these priorities, we have reached a satisfactory outcome.
And equally importantly, the Withdrawal Agreement secures a transition period, during which much will remain unchanged, providing certainty to citizens and businesses.
Looking forward, we want to see the closest possible relationship between the UK and the EU.
The ambition to achieve a deep and comprehensive partnership between the EU and the UK set out in the Political Declaration is very welcome, and we will work to make this possible.
This is a carefully balanced agreement.
As with any such negotiations, there have been compromises on both sides.
Let me be clear. There is no scope to reopen the Withdrawal Agreement.
We are not under any illusions about the challenges that Brexit will bring. For our economy, for businesses, for our citizens, and for the way we engage with our British friends once they have left the EU.
We are working hard to prepare, and to be ready for all scenarios.
Since the UK referendum in 2016, Brexit has been embedded in the Irish Government’s economic decision making, and in the management of our economy.
We have already taken important steps to prepare.
And, due to the sound policies of recent years, Ireland is facing the challenge of Brexit in a robust economic position.
But there is no room for complacency.
In our budget for 2019, we have continued the overall approach of prudent financial management, to strengthen the resilience of Ireland’s economy.
We are working to build up our fiscal capacity, and to pay down debt, so that we have the buffers to cope with uncertainty and to weather future shocks.
Over the next decade, we will invest €116 billion – more than a third of our GDP – in long-term critical infrastructure, while keeping current expenditure in line with economic growth.
Our Government’s enterprise agencies continue to work with a wide range of companies, helping them to deal with Brexit – making them more competitive, diversifying their market exposure, and up-skilling their teams.
And while Brexit will pose undoubted challenges, there will be opportunities as well, and the Government will work to maximise those where possible.
We will be the only country in the EU that is an English speaking, common law jurisdiction.
We have a young, well-educated population and the Government continues to build a business friendly environment, for businesses large and small, foreign and domestic.
We will remain open to business and talent – from the United States and elsewhere.
The world economy is increasingly interconnected and interdependent. Globalisation and the digitalisation of the economy continue apace. This presents challenges to policymakers in a number of areas.
But especially in the field of international taxation.
In a world of click bait and soundbites it is difficult to explain how some companies seem to be able to avoid paying their fair share of tax.
Policymakers have faced up to this challenge.
In this regard that I welcome the recent reforms to the US tax code. We are seeing evidence of US companies re-patriating historical profits to be taxed in the US.
I believe the changes introduced combined with the widespread implementation of the BEPS recommendations will have a major impact.
We in Ireland have been playing our part.
Ireland’s Corporate Tax Roadmap was published in September and outlines the actions Ireland has taken, and the actions that will be taken over the coming years.
Further to legislating for a new Exit Tax, new Controlled Foreign Company rules and the BEPS Multilateral Instrument this year, our tax administration has worked bilaterally with its counterparts in Malta to bring about an end to the so-called Single Malt scheme.
The agreement will mean companies will no longer be able to use the bilateral treaty to avoid tax.
You may be aware that Ireland has principled objections to the EU’s proposed Digital Services Tax.
There is no agreement on this proposal, and negotiations are set to continue until March. We will continue to voice our principled opposition.
I firmly believe that a globally agreed sustainable solution to the challenges digitalisation presents is best achieved at the OECD.
We are working very closely with our partners at the OECD, including the US Government.
We share significant common ground. For instance, we both agree it is best to seek consensus on a way forward rather than countries taking unilateral action and both have faith that the OECD will deliver a solution.
We are like-minded in the belief that the solutions to these challenges are within the corporate income tax system rather than taxing turnover. This principle encourages investment and growth which ultimately benefits wider society.
It is in everyone’s interest that the ongoing work results in an international tax framework that is sustainable into the long run to provide certainty to business and to governments into the future.
Ladies and gentlemen,
Our EU membership has been central to the success of our small, open, trading and competitive economy. It has enhanced, not diminished, our sovereignty.
Only last Monday night, I sat with twenty six other European Ministers of Finance negotiating a way forward for deeper and more secure monetary union. This is an expression of sovereignty, not the erosion of it.
Membership of the Single Market and Customs Union is a core element of our economic strategy.
Access has allowed our economy to prosper and has greatly assisted in attracting business.
It has given us full access to EU trade agreements with other major markets and a capacity to engage in global free trade that we could not possibly have on our own.
I would like to see discussions progress towards a trade agreement between the United States and the EU, as I believe both our economies would stand to benefit.
I believe that the open, rules-based global trading system has contributed to raising living standards on both sides of the Atlantic, and throughout the world.
The EU is a home which we have helped build. And while there are many challenges, the Irish Government is confident that we can work together as twenty seven countries, to deal with those challenges.
We are committed to remaining at the heart of the EU.
And while Europe is our home and our closest marketplace, our horizons are broader.
Under a programme called ‘‘Global Ireland’’, we are leading an ambitious extension of Ireland’s international footprint.
This includes strengthening our embassy in Washington, and a new consulate in Los Angeles.
We are expanding our Development Aid programme.
We are campaigning for a seat on the UN Security Council in 2021.
We are taking these steps to position Ireland for the future, in our increasingly inter-connected and inter-dependent world.
A strong Ireland-US friendship within a wider partnership between the EU and the United States is an essential part of our vision.
In celebrated novel TransAtlantic, the Irish writer, Colum McCann, remarks on the multitude of connections and intersections – great and small – that criss-cross the ocean between us.
How true that is also of the great relationship between Ireland and America.
Hewn from the hopes, aspirations and contributions of countless women and men who have crossed our shared Atlantic to build homes and lives on each other’s side of it.
This rich multiplicity of connection sustains the transatlantic ties on which our shared prosperity rests.
Ireland will play its part to strengthen and grow these bonds of friendship so that the Atlantic continues to be a rich and vibrant highway of people, goods, hopes and ideas, binding us together.
ENDS