Minister Coveney’s address at the “Ireland: A New Gateway to Europe” forum, Toronto, 10 March 2017
Thank you Scott for the warm welcome, and my thanks to the Ambassador for his words of introduction.
It is a pleasure to be with you in Toronto this morning to offer the Irish government’s perspective on the topic of today’s forum “Ireland: A New Gateway to Europe”. Before I address the topic, I want to congratulate the organisers, our hosts Gowling WLG, and their partners for today’s event: the Irish legal firm Mason Hayes Curran, the Ireland-Canada Chamber of Toronto, IDA Ireland and the Embassy. The initiative which you have taken has brought us all together this morning for an important and timely discussion of what Ireland has to offer to Canadian companies seeking a new gateway to Europe.
It is important because we know that there is considerable potential for further trade between Ireland and Canada, which we simply must harness. And it is timely because we are on the cusp of seeing 98% of our bilateral trade liberalised by the landmark EU-Canada Comprehensive Economic Trade Agreement, CETA. CETA can help us to unlock that potential by offering Irish and Canadian companies the boost of a new competitive advantage in each other’s markets, and we should move with speed to avail of this. The specific opportunity which CETA offers our two countries should also be considered against the background of an ever more challenging international trading environment. We have to acknowledge that we both live – and trade – in uncertain times. Canada’s largest trading partner, the United States, has recently expressed its intention to reopen NAFTA; it has even spoken of introducing a new border tax on imports. Meanwhile, Ireland’s largest trading partner, the UK has chosen to leave the European Union, a momentous decision that, for Ireland, poses specific economic and political challenges.
Faced with these challenges, both our countries are bound to seek new opportunities to diversify our trade in like-minded, outward-looking countries with whom we have strong historical ties. To find those opportunities, Canada and Ireland need look no further than each other. From the Irish perspective, the opening provided by CETA could not have come at a better time. The ups and downs of Ireland’s economy over the past decade have been well documented in the media, and I would therefore like to say a few words about Ireland’s current economic situation.
As you know, we have come through a very difficult period. In the wake of the international financial crisis, the Government was forced to take a series of tough decisions to repair our economy and place our public finances on a sustainable footing. This difficult task, which necessitated great sacrifice on the part of the Irish people, is now complete, and a strong and sustainable economic recovery has become firmly established.
All key economic indicators point to continued solid economic growth in Ireland. Despite a challenging regional and global environment, we have had the fastest growing economy in the EU for the past two years, and real GDP growth of 3.5% is forecast in 2017. This growth is broad-based and our economic fundamentals remain robust. Exports have grown strongly while the domestic economy is now driving growth, with private consumption up by over 3% in the first three quarters of 2016.
Employment has increased in every quarter over the last four years. The total number of jobs has increased by over 212,000 since mid-2012 and there are now more than 2 million people at work. In February the unemployment rate stood at 6.6%, down from a peak of 15% during the financial crisis, and now well below the Eurozone average.
For anyone seeking an investment base in Europe, this is a very different Ireland to that you would have read about in the post-2008 period. With business facing a complex and uncertain world, Ireland offers you a stable, competitive, secure and pro-business economy with a well-educated and productive workforce and a reputation for excelling in research and creative discovery.
And the markets recognise this too. The cost to us of borrowing on international markets is close to historic lows. Irish bond yield movements are trading in line with core European sovereign yields. And the yield on Irish government ten year bonds is trading steadily at close to 1%. We have regained an ‘A’ grade status from all major sovereign debt rating agencies.
Against this background, the number of new investments secured in Ireland in 2016 rose by 14.6% to 244 in spite of global economic uncertainty, intense competition from other jurisdictions and a changing global taxation landscape. Over 40% of these were new name investments. Our stable business environment and our certain access to the EU market mean that we remain extremely well placed to win new FDI investments in Europe. To all of this, our continuing membership of the European Union is critical. So what then of the UK’s decision to leave the EU? What will it mean for Ireland in terms of both challenges and opportunities?
Let me begin by saying that we regret the UK’s decision to leave the EU, though we respect of course the referendum decision. We have long been conscious of the potential implications for Ireland of a Brexit, and have been proactive in identifying the priority challenges, readying ourselves to meet them and working hard to build a high degree of understanding among our EU partners for those particular priorities. Over the past two years, we have conducted a detailed analysis of the likely impact of Brexit upon us. We are clear on what is involved. Across some 11 working groups, in what is a whole of Government approach, we have identified risks, mitigation measures and opportunities for us arising out of Brexit. Each of these is being pursued.
Our key priorities include preserving our strong bilateral trade with the UK; the maintenance of the Common Travel Area between our two countries; and critically for the whole island, the preservation of the hard won achievements of the Northern Ireland peace process and ensuring no return to a hard border on the island. While we know the Article 50 negotiations will be difficult, and we can take nothing for granted, we are encouraged by the level of understanding that we have encountered among EU partners for our concerns, and by the fact that preservation of the Common Travel Area and avoidance of a return to a hard border are also declared negotiation priorities for the British side.
The fourth area of priority for us is to influence the future of the post-Brexit EU. The fundamental point to note here is that the future of the EU matters to us in Ireland because it is our future too. I emphasise it because this basic fact has at times been misconstrued in international reporting of the Brexit issue, including here in Canada.
Let me be very clear about this: Ireland will be participating in these negotiations as a member of the EU, and we will in all circumstances continue to be a committed member of the EU in the future.
We understand very clearly that EU membership is overwhelmingly in our national interest – politically, economically and socially. Our membership in the European Union has provided the foundation for much of the dramatic economic and social progress which Ireland has made over the last four decades. Membership of the Single Market and the Customs Union remains fundamental to our success in attracting inward investment and helping Irish companies to diversify and grow their export markets. And as a small country whose values and interests converge in support of a rules-based multilateral order, the EU continues to provides us with the essential means to project our foreign policy priorities alongside like-minded partners.
So, even as we seek to manage the challenges which Brexit will pose for Ireland, we reject any notion that this will require making a choice between the EU and UK. And this is the view not only of the Government, but also of the wider public, where surveys regularly show more than 80% support for EU membership post-Brexit. So while the UK is our closest neighbour, but the EU will remain our political and economic home.
A critical look at the Ireland-UK trade relationship helps to explain why.
Ireland and the UK joined the then EEC at the same time in 1973. At that time, the UK accounted for 55% of all Irish trade. We were heavily dependent on her. But our membership of the EU has brought us enormous benefits, not least of which has been our access to a single market of, today, some 500 million people. It has enabled us to develop, structurally and economically, and to diversify our trade relationships significantly. Today, 40% of Irish trade is now with all other EU Member States, compared with 14% with the UK. Brexit still presents specific challenges for us in this regard, given the relative concentration of SME exports on the UK market. But it is important to see these challenges too in the wider context of our growing trade with Europe and the rest of the world. So when the Article 50 process is triggered by UK Prime Minister Theresa May, Ireland will be part of “Team EU” in the negotiations, and, moreover, we will be keen to maintain unity among what will at that time be the EU 27.
We will work for solutions which meet our specific challenges and minimise the damage to our political and economic interests of the UK’s departure. Even as we seek to minimise those costs, our Government will continue to take measures to mitigate the potential impact on our economy and help make it “Brexit ready”.
Having prepared ourselves properly, we will bring a calm and constructive approach to the negotiations. We have no wish to see anyone punished: our overall interests lie in our membership of a vibrant and successful European Union, which maintains the closest possible relationship with a stable prosperous and outward looking UK. So as an EU member and a close friend and neighbour, we will work very hard to maintain the closest possible relationship with our British friends, and to ensure a strong EU-UK relationship and a well-managed and orderly UK withdrawal from the Union.
And then there are the opportunities.
As a committed member of the Eurozone as well as the EU, with a highly-educated English-speaking population, a business friendly environment and a common law tradition, we will be keen to maximise those opportunities in terms of attracting new jobs and investment. Looking at those attributes, I believe that we offer a particularly compatible business environment for Canadian companies who face decisions on new investments, or on relocation of existing operations or investments.
On the other side, we are focused on Brexit-related diversification of exports to other key markets. The arrival of CETA will heighten our focus on Canada as one of those key markets, and the Government plans to send a Ministerial-led trade mission to Canada in late May/early June to spearhead that effort.
So, in more specific terms, what does Ireland offer new investors? That after all is the question of this morning’s discussion. We have a strong pool of highly skilled, multilingual workers in the only English-speaking country within the Eurozone, providing barrier-free access to an EU market of 450 million consumers (post Brexit).
40% of our population is under 29, the youngest population in the EU. Our education system ranks in the top ten in the world and over 50% of Irish 30-34 year olds have a third-level degree – higher than any other country in the EU.
Ireland offers a pro-business environment, together with a stable and competitive corporation tax regime and strong incentives for research and development.
We have maintained our position as the best country in the Eurozone for doing business in the Forbes magazine rankings in 2016, coming an overall 4th in the world. This ranking is testament to Ireland’s favourable business climate and regulatory climate.
We are one of the most competitive economies in the world. Competitiveness gains have been sustained as the economy grows strongly with inflation below the EU average since 2008. Our improved competitiveness position is reflected in Global Competitiveness Reports:
The IMD ranks us 1st in the Eurozone, 5th in the OECD and 7th in the world for overall competitiveness. And Ireland is one of the most productive economies in Europe. Irish labour productivity is almost 35% above the EU 27 average. Ireland is ranked first in the world for the flexibility and adaptability of people, first for finance skills, and third in the world for the productivity of companies and workforce productivity.
This being the case, Ireland is increasingly home to international talent. With an overall proportion of 15%, Ireland has the 3rd highest international workforce in Europe. 11% of workers come from other EU countries.
Perhaps it’s not so surprising, therefore, that Ireland is home to:
- 9 of the top 10 global software companies;
- 9 of the top 10 US technology companies;
- All of the top 10 ‘Born on the Internet’ companies;
- 9 of the top 10 global pharmaceutical firms;
- 15 of the 20 top global medical technologies companies.
The market speaks for itself, and Canadian investors have been an important part of that success story. Canadian investment in Ireland is estimated at CAN$14billion, and major investors to date include Great West Life, who purchased Irish Life in 2013, Couch Tard who have acquired the Topaz chain, and Irving Oil, who last year acquired the Whitegate refinery.
We hope that many more Canadian investors will following their successful footsteps. And Canadian access to our market will undoubtedly be helped further by the entry into force of CETA, the EU-Canada Comprehensive Economic Trade Agreement.
Canadian and EU businesses will now compete on a truly level playing-field. By removing almost all the customs duties which importers have had to pay on exported goods, CETA will benefit exporters and investors, as well as consumers. CETA will create jobs.
Therefore, if your company wants to invest in:
- an English-speaking business-friendly environment, with
- a young, educated workforce,
- a common law tradition
- a clear, predictable and competitive corporate tax system,
- with untrammelled access to a European single market of, post Brexit, 450 million people
Then my message to you is simple: Ireland – the New Gateway to Europe – is open for business.