Ireland seen as ‘beachhead’ for US firms into EU

Ireland emerges as corporate America’s “strategic beachhead” to the EU in a new report which finds the value of US assets here is about €1 trillion.

Research for the American Chamber of Commerce to the EU shows the sales of US affiliates in Ireland reached $313 billion (€276.59 billion) in 2013, greater than US affiliate sales in China and Switzerland.

“America’s assets in Ireland ($1.1 trillion in 2013) are much larger than those in either France ($393 billion) or Switzerland ($696 billion), and light years ahead of those in China ($290 billion),” said the Transatlantic Economy 2016 report.

The report said US investment flows pulled back by 34 per cent in the first nine months of 2015 after surging in 2014. In the same nine months, US investment flows jumped 91 per cent to the Netherlands and rose 20 per cent to the UK and 13 per cent to Luxembourg.

‘Labour force’

“Over this period, Ireland attracted more US [foreign direct investment], save the Netherlands, than any other nation in Europe, a dynamic that reflects a number of variables including Ireland’s flexible and skilled English-speaking labour force, membership in the European Union, low corporate tax rates, and pro-business policies,” the report said. “Add in Ireland’s economic rebound, with the nation among the fastest growing economies in the world, and one of Europe’s smallest economies emerged as one of the most attractive in the world for US firms.”

Such finding come amid friction between Washington and Brussels over a long-running EU state-aid inquiry into Apple’s tax affairs in Ireland and parallel inquiries into the tax arrangements of other US firms elsewhere in Europe.

The outgoing government has phased out the most contentious elements of the tax regime in successive budgets.

The Transatlantic Economy 2016 document makes no reference to the tax controversies but finds no commercial artery in the world is as integrated as the link between the US and Europe.

“Despite continuing economic turbulence, the US and Europe remain each other’s most important markets,” wrote Daniel S Hamilton and Joseph P Quinlan of the Center for Transatlantic Relations at the Johns Hopkins University. “The transatlantic economy generates $5.5 trillion in total commercial sales a year and employs up to 15 million workers in mutually ‘onshored’ jobs on both sides of the Atlantic. It is the largest and wealthiest market in the world, accounting for over 35 per cent of world GDP in terms of purchasing power.”

The report said Ireland ranked well down the list as a corporate beachhead for US firms in 1982, ranking 13th in the world in terms of foreign affiliate exports.

‘Exports’

“Then, US affiliates exports totalled just $2.8 billion. By 1990 that figure had grown to $9.5 billion and by 2000, was in excess of $50 billion,” the report said.

“In the first decade of this century, as the industrial and technological capacities of US affiliates in Ireland surged, so did US affiliate exports, soaring nearly five times between 2000 and 2013.

“Affiliate exports totalled $244 billion in 2013, trailing only Singapore, but ahead of many others, including Switzerland and the UK. US firms have leveraged Ireland as an export base to a far greater degree than low-cost locales like Mexico, Hong Kong and China.

“The latter ranked 12th in 2013. US affiliates export four times more from Ireland than from China and about 3.5 times larger than comparable exports from Mexico, despite strong [North American Free Trade Agreement] linkages between the United States and Mexico.

“On a standalone basis, US affiliates exports from Ireland are greater than most countries’ exports.

“Such is the export intensity of US affiliates in Ireland and the strategic importance of Ireland to the corporate success of US firms operating in Europe and around the world.”