asked the Minister for Industry and Commerce if he will indicate the implications of the Single European Market for the United States' investment in Ireland.
53.
Ceisteanna — Questions. Oral Answers. - Single European Market.
52.
asked the Minister for Industry and Commerce in view of the Single European Market being created in Europe, if the IDA have targeted any specific countries or companies worldwide who would need to locate in Europe to realise the maximum access to the Single European Market; and if he will make a statement on the matter.
I propose to take Questions Nos. 52 and 53 together.
The creation of the Single European Market should create significant opportunities to attract new overseas companies to Ireland. An important factor in the decision by many overseas firms, especially US firms, to locate here in the past has been the ease of access to EC markets. There are, however, indications that we failed to secure certain industrial projects in the past, because of industrialists' fears that non-tariff barriers would be used to discourage exports to other EC countries should the projects locate here. The removal of such barriers and national discriminatory practices must, therefore, make Ireland a more attractive proposition for US companies seeking to penetrate the EC market. The completion of the internal market in 1992 will enhance Ireland's claim as a suitable location for overseas investment. Significant opportunities will result from the standardisation of technical specifications which will lead to new opportunities in public procurement not at present available, due to restrictive trade practices; the removal of customs barriers and movement towards excise and VAT harmonisation which will make it easier to service all of Europe from an Irish base and the scale of the single market which will drive down operating costs and increase profit potential.
Ireland already enjoys advantages over our competitors in attracting new projects to Europe to exploit the single market and in maintaining existing overseas investment in Ireland. We have an abundance of people with skills which is becoming an increasingly rare commodity in Europe; a competitive cost base and consistently Europe's most profitable location for US investment; an economic environment which, as a result of the Government's policies, is performing better than our main competitors; an English speaking population; a competitive incentive package including support for international financial services projects; and excellent communications.
I am informed by the Industrial Development Authority that they have identified six countries outside the EC as their main target for overseas investment. These are the United States, Japan, Korea, Taiwan, Sweden and Finland. The principal target sectors are electronics, pharmaceuticals and health care and financial services.
Will the Minister agree that many American industrialists — I met a number of them in recent months — are wrongly concerned that the Single European Market may become a protective market against products emanating from outside which may operate to the detriment of firms owned by non-European parents? It is particularly important to put that misunderstanding right. Is the Minister worried by the fact that the French authorities were able to stop Nissan cars being manufactured in Britain because it was alleged that they contained too much Japanese material? Is he worried that that principle might be extended and that American firms located here and importing raw materials from America could find the European market closed to them because of an extension of the decision by the French authorities to other areas?
I agree with the Deputy in relation to the perspectives that many industrialists in the United States, Japan and other countries have in relation to the position after 1992. I have continually pointed out in my visits to these countries — the IDA and CTT have done the same — the advantages of 1992 in so far as Ireland is concerned. Certainly it is seen as "fortress Europe" in many countries but there are 350 US companies here and it is clear, especially with the opening up of the public procurement policy, that there are significant opportunities available in pharmaceuticals, electronics, telecommunications and the services area. Up to now in these areas national Governments in each EC member state were in favour of local producers. When that changes and public procurement is opened, you are talking about an annual purchasing budget of £300 billion per annum which represents 15 per cent of the GDP of Europe. That in itself, to an industrialist or businessman looking at opportunities in Europe, denotes that there must be opportunities there and that it is a question of where they should locate. The population structure in Germany and many other European states has become totally unbalanced. We have an advantage in having a skilled workforce and 1992 will certainly open up a range of opportunities for us because we have very few trade barriers. We have been entering into free trade for the last 30 years or so. In relation to the French Government, Japanese cars, certificates of origin and local content, undoubtedly the action to which the Deputy referred causes concern. However, the Deputy will be aware, from his experience in the Department, that there is an on going policy in relation to dumping and changes in the basis for issuing certificates of origin in relation to the percentage of local production. In regard to America, we want to see free trade as our economy depends on it. We export almost two-thirds of what we produce and it is better, from our trading position, to have few barriers and open markets.
Mr. J. Bruton rose.
I will call Deputy Cullen who also has a priority question on this subject.
I agree with the changes the Minister outlined in that companies who came to this country years ago will now come for different reasons. With the perspective that other countries may have of what the market is doing, will the Minister agree that we should emphasise equality of cost, access and distribution for locating in this country? The Minister recently made an announcement in relation to 300 jobs in Bausch and Lomb. The reason is that they can get a more highly skilled workforce here as opposed to other countries. Have the IDA latched on to this development because it applies to many companies? Is that consideration being used in the change of emphasis as to why companies should come here?. How successful has their policy been in this regard?
I agree with Deputy Cullen in relation to Bausch and Lomb. The level of skills in the workforce is one of the major factors in selling this country. Of course, there are other factors and that is why it is important to keep costs competitive. Over the past 18 months we have been pushing that factor very strongly. There are still areas in which we are out of line compared with our European competitors but we have to keep working at it. We are seen as a country with low inflation and which can stand alone in relation to interest rates. The skills and numbers available is a very good package to sell around the world for 1992. However, there are other negative indications in relation to the legislation in the United States. In the world we live in we have to put the pluses and minuses together and get the best out of it.
Has the Minister made any representations on Capital Hill in regard to the PFICS legislation and, if so, have those yielded any results at this stage or is the matter now a closed book? Are there any US or Japanese owned companies in Ireland using material imported from outside the EC who would be vulnerable to a decision similar to that taken by the French Government in the Nissan case? Is he aware that one of the major endeavours of 1992 as indicated by the European Commission is to promote mergers between European companies and have a much smaller number of large European companies in particular sectors? In that context is he not fearful that some of the American companies here in Ireland may be too small in a European context to survive among the giants it is the purpose of industrial policy in Europe to create as large Euro companies?
In regard to the PFICS legislation I spent a whole day in Washington doing political lobbying and got an admission from many of the senior politicians there that the repercussions in regard to Ireland were never intended or were not even noticed at the time the PFICS was introduced. I spoke to the senior political leaders on both sides, Democrats and Republicans. The result of my visit that day is that since then a group of politicians have issued a bill of intent to have the matter brought forward in relation to the 1989 Tax Bill which will be dealt with under the Ways and Means Committee. I had meetings with the Chairman of that committee, with Senator Dole, Senator Kennedy and Congressmen Donnelly and Coyne. On both sides people who did not realise the implications of this legislation when it was going through have committed themselves and published a Bill and they are going to tackle the matter in the 1989 legislation.
On the question of the problems for a Japanese company, the Deputy may be referring to one not in his own county but in the next county, down in his own neck of the woods.
I am not referring to any particular company.
We know the problems. Inquiries are continuing in the Commission about certificates of origin and amount of content. We have seen anti-dumping levies brought in at various times. I thought the Deputy might be referring to that. We are taking up the concerns in Europe in relation to it.
Regarding 1992 and post 1992, the view of many European countries is that companies will tend to go for larger slices of the market and move towards economy of scale, and that is possible. On a recent trip to the US I spoke to representatives of some American firms here, and the reverse is going to take place according to some of the people I have met, in that they have pharmaceutical companies in other jurisdictions and other member states which they put there for one reason only, that they would be unable to get business from the national governments or the national buying agencies because of the way public procurement was locked up. Their corporate plans and strategic forward planning suggest to them that when that changes, here is the place where the high skilled labour Deputy Cullen spoke about is available and here is the place to rationalise into, rather than the reverse, to rationalise out as some people might think. It is an area we have to watch and we can always keep an eye on it. I advise Irish business and Irish industry to look at partnerships, licensing arrangements and distribution arrangements and position themselves correctly in the marketplace so they know what they have to face up to in 1992.
How close is the relationship between the IDA here in the South and the development authority in the North? Would the Minister agree that companies coming into this country, particularly the Japanese firm which has gone to Northern Ireland, have an knock on effect in the South for creating quite a number of jobs in the servicing of some components into that industry? Would he agree that it is very important that a very good relationship should exist? What pressure is he putting on the IDA to keep that on an ongoing basis to develop servicing industries on to main industries?
I am very familiar with the project the Deputy speaks about. The IDA, rightly, were not prepared to pay the price that was paid up there. So little of promoters' money is required that I would not touch it with a 40 foot pole. We are looking for value for money and we are interested in the spin-offs and the overall benefits to the national economy; off-spin, direct and indirect, we calculate the total. There are certain projects we are not prepared to pay the price for.
A brief question, Deputy Bruton. Question Time is up.
In view of the importance of US investment in Ireland would the Minister agree to include a special section on US manufacturing industry in Ireland in the structural plan which will be submitted to Brussels for EC aid to highlight for the Commission the importance this Government and this Dáil attach to the survival and the growth of US companies in Ireland?
Certainly I will consider that. We know how important it is, but the other factors I mentioned are of greater concern to me than the factors Deputy Bruton mentioned. He can take it from me that we will make sure that our position is made abundantly clear and the peripheral nature of our region and those who have to invest here will be kept before the Commission's eyes.
That disposes of Questions, both ordinary and priority for today.
I wish to give notice of my intention to raise on the Adjournment a question to the Minister for the Marine related to the imminent threat to fish life in the western lakes from illegal dumping of large quantities of diseased salmon from fish farms along the west coast, with special reference to the most recent incident which occurred only some hours ago at Galway Corporation refuse dump at the Curragh line which is located adjacent to water courses which flow directly into Lough Corrib which is only some hundreds of yards away from the dump, and to ask him what action he is taking in this matter.
I will communicate with Deputy Molloy in respect of that matter.