The Government’s action plan on market diversification, published on Monday, is – as is typical in such documents – a mix of new directions, aspirations and policies that were under way anyway. Its context is that around 30 per cent of Ireland’s trade is with the US, where new tariff policies and a drive towards economic nationalism now raise serious questions.
The document, understandably, skirts around this by saying that its goal is “a new phase of trade development rather than a move away from the US market and the opportunities it offers”. This is sensible, even if the strategy, perhaps understandably, does not deal in detail with the complex geopolitical questions which now overhang the trade and investment agenda. Developing alternative markets – for both trade and foreign direct investment – is a diplomatic as well as an economic challenge in a world where US president Donald Trump has linked the two so closely.
In addressing the immediate challenge of trade diversification, the Government has leaned on the experience of the Irish approach to Brexit. As with that episode, the hope is that the worst does not happen. It is all about controlling risk and navigating a changing world.
Many of the policy actions are common sense initiatives to try to help and advise companies. With new tariff barriers erected in the US and some uncertainty about future policy despite the recent trade agreement with the EU, it makes sense to help Irish firms to investigate and enter other markets, as the new strategy plans to do. Businesses will already be making their own plans. Ideally they can plug into the State system for support.
RM Block
Many of the new markets which will be targeted will be in the EU, some by now familiar to many Irish companies, even if the single market is still incomplete in some key respects. Some markets will be further afield and State agencies will have an important role to assist here, not only with cash, but also market information and ideas. Inevitably this will involve an element of trail and error, but it is important that there is a genuine effort to assist companies and to do so quickly.
Ireland will also try to spread the net of countries from which it attracts foreign direct investment. Here, geopolitics may be an important issue. But competitiveness most certainly will be.
The document gives a nod to the Government’s intention to improve key competitive issues. Many of its plans – for example to make Ireland a “ Silicon Island”, or enter new export markets overseas – will fail unless progress advances in key areas like building infrastructure and addressing Ireland’s high cost base.
Ireland’s trade outlook is being affected by issues outside the State’s sphere of influence, making it all the more important that, where the State has control, it makes sure to deliver.
