Ireland’s approach to dealing with proposed US tariffs will be critical for its ability to secure American FDI in the coming years. That will require constructive engagement by the EU and the avoidance of escalation, says American Chamber of Commerce chief executive Paul Sweetman.
While trade negotiations are a reserved competency for the EU, the Republic can still play an important role by continuing to act as an economic gateway between the United State and Europe. The State must also focus on those factors that do lie within its control, according to Sweetman.
“What we know for the moment is the extent of the tariffs being proposed,” he notes. “There is an optimum approach to this. Business decisions are made on a medium- to long-term basis and we need to get through the tariffs as quickly as possible to ensure they don’t become a long-term fixture.”
Constructive dialogue and an approach that minimises the prosect of escalation is required. “I believe the EU is doing that,” he says. “We had the initial tariff announcement on April 2nd and then the EU response and then the partial pause to allow talks to take place.”
Other developments at EU level will be helpful, Sweetman believes. “The Draghi Report and the Competitiveness Compass, with their proposals in relation to regulation and supporting EU and non-EU companies operating in Europe, are very welcome,” he says.
A successful outcome is critically important for all involved, he continues, adding: “The two-way partnership between the US and Europe is worth billions every day.”
The Republic’s approach should see it communicating that two-way investment story as much as possible, Sweetman adds.
“On the other side of that, we need to focus on where we can effect change. Our competitiveness as an economy is the biggest single factor affecting long-term growth.
“We are doing very well in some areas: Ireland is the seventh most competitive country in the world according to the latest IMD Index. But when you look underneath that ranking, we are only 46th for prices and cost competitiveness and 44th for basic infrastructure. We are doing a bit a bit better for scientific infrastructure but are still quite low, at 19th. These areas all need attention if we are to improve our competitiveness.”
Specifically, the American Chamber has called for improvements to physical and digital infrastructure and the ease of doing business here.
“Building the talent pipeline is essential,” he adds. “Our workforce is among the most productive in the world. In our most recent survey, 63 per cent of respondents said the skilled and highly educated talent pool is Ireland’s main competitive advantage, which has led their company to invest and expand here. However, 64 per cent said they were experiencing a skills gap in Ireland.”
There is also a need to improve our research, development and innovation offering, says Sweetman.
“We hope the review of the R&D tax credit regime will help,” he adds.
Housing is one of the big challenges to be addressed within the broad area of physical infrastructure.
“Housing and costs have come up as the top challenges for organisations in all of our surveys in the last 12 months,” says Sweetman. “You can put housing in the same bucket as quality of life. It is incredibly important to focus on quality of life as a competitive advantage. It is inextricably linked to our ability to attract talent.”
The State should also play to its undoubted strengths, he says: “Look at our competitive advantages. We are the only English-speaking, common-law member of the EU. Our talent pool doesn’t just have skills on paper but a track record of delivery and a great reputation for its can-do attitude.
“We have also developed very strong clusters in key industry sectors. Even in the digital age, physical proximity still matters; it encourages collaboration and facilitates innovation.”
And then there is the strength of that two-way relationship between the US and Ireland. “Ireland is now the sixth largest source of FDI into the US,” says Sweetman. “Irish companies employ 203,000 people across the US.” That’s almost as many as the 210,000 people directly employed by US companies here. “It’s an incredible achievement for a country the size of Ireland to be the sixth largest investor in the US.
“The two-way relationship is of even greater importance now. We will continue to work with colleagues in Washington DC in the US Chamber of Commerce, in AmCham EU in Brussels and other stakeholders to ensure that the positive relationship between Ireland and the US continues to thrive.”
