I recognise the work of An Bord Tráchtála on behalf of the country and our exporters. I compliment it on its expertise and level of commitment to ensuring the continuing success of our exports. It is recognised to be a professional body and statistics show it has been very successful. We should recognise also the high level of expertise of our exporters and their good efforts. Our trade performance has been one of the best in the world. Therefore, we can be justifiably proud of our efforts in the export field. It is encouraging that our exports continue to perform strongly in 1994 and the indications are that it will be another record year.
Despite the world recession and the currency crisis, 1993 was a record year in terms of exports, particularly for our indigenous sector. The rate of growth in 1993 was not as good as 1992 but that was due mainly to the world recession and the currency crisis. While world trade grew by only 2.6 per cent in 1993 Irish exports grew by more than three times the world average. To achieve this our companies had to increase significantly their market share despite the increase in competition. In a recent statement An Bord Tráchtála expressed the hope that there will be a 10 per cent increase in exports from indigenous industries. This year our total exports are expected to grow to £19.8 billion, an increase of 9 per cent. The indications are this target will be reached. There are some concerns regarding our indigenous sector, especially in regard to the present strength of the punt against sterling. That will pose difficulties for those who export to Britain.
The GATT agreement will have adverse effects on some sectors of our economy. The agricultural, food, textile and clothing sectors will face challenges. The estimates on the consequences of the GATT Uruguay round for agriculture indicate that Ireland will feel the impact of the loses before we can expect to experience any gain from increased trade. The GATT will present great opportunities to our exporters but they will face intense competition from countries with which they did not compete previously.
The value of our exports is equivalent to 63 per cent of our GNP which leaves us second only to Belgium in the EU. Proportionately Ireland's dependence on international trade is six times greater than Japan and eight times greater than the USA. We export two-thirds of our gross manufacturing output and 130,000 manufacturing jobs result from export sales. Therefore, it is important we maintain our great export performance. If we want to create more jobs we will have to sell more of our products abroad. To do that we will have to market more aggressively. We may not be able to win the markets we had in the past because of increased competition. We must be vigilant and cannot be complacent. Although we are performing well at present and our trade figures are positive, we will face challenges in the future and we will have to overcome obstacles in an energetic and constructive way.
Export growth is related to many factors from competitive advantage to markeing drive. The GATT agreement will present increased opportunities for our exporters to win new business. However, like the Single Market, it will mean challenge and intensified competition. We must compete to boost our sales and market share. I cannot understand why the budget for the administration of An Bord Tráchtála was reduced this year by 8 per cent from £37.828 million in 1993 to £34,781 million in 1994. That reduction is regrettable. The successful conclusion of GATT opens up world markets to our exporters but will encourage competition from Third World suppliers to our traditional markets.
There has been an economic recovery in western Europe and the USA in 1994. In those circumstances the Government should be making extra funds available for market prospecting and development rather than reducing the fund. Exporters have reported that the lack of funds available to the ITB is causing that body to curtail its international marketing activities. That factor may affect our industrial drive and our export figures towards the end of this year and next year. Our exporters are experiencing difficulties in the marketplace due to the reduction in funding for marketing initiatives.
Another indication of this negative policy is the decision to reduce the provision for export credit insurance from £11.4 million in 1993 to £5.97 million in 1994. This will seriously affect our exports to non-OECD countries. Some of our exporters are concerned at the credit export insurance and lines of credit made available to their competitors by the UK and other European Governments. This brings me back to a point I made already: the fact that we won markets in Europe and around the world does not mean that we are guaranteed to hold them forever and we must continue our aggressive drive in that area. Limiting resouces can affect our efforts. The Minister should remind the Minister for Tourism and Trade, who is out of the country, that any restriction in the amount of money made available for our export drive will not help export performance.
I agree with the Minister that £1 worth of exports from our indigenous sector is worth £2 from the multinational sector. The level of repatriation of profits by the multinationals is of major concern to all of us but if our very successful performance in exporting could be translated into jobs it would certainly help in tackling the jobs crisis. However, the money being made here because of the performance of Irish workers and, in some cases, Government incentives, is not being translated into jobs because it is being repatriated to multinational company headquarters in Chicago, other parts of America, Germany, etc. Although we must recognise the contribution of the multinationals to the workforce, we are not benefiting to the extent we should. The indigenous sector is a proven provider of jobs and we must place more emphasis on it in future. The decrease in funding for An Bord Tráchtála will have a greater effect on the indigenous sector than on the multinationals because, of its nature, it is composed of small operators who got small grants, perhaps £5,000, to market their products and these grants are no longer available because of the decrease in funding. If we are committed to helping the indigenous sector we will have to subsidise their visits abroad to market their products and seek niches in the European market and this financial restriction will inhibit that sector in expanding and seeking more markets.
I raised a matter yesterday in the Dáil to which I would like the Minister to rsepond in greater detail than he did yesterday. As we are discussing trade, it is right that I should again bring up the matter. An editorial in The Irish Times today dealt with our export performance and the strength of the IR£. In March of this year the IR£ stood at 95p sterling, its value rose to over 98p today, having topped almost 99p two days ago. This 4 per cent increase is seriously affecting our exports to the UK and Northern Ireland. It is also aversely affecting the competitiveness of Irish exporters against UK suppliers in third markets, by which I mean European, American and other world markets. Last Monday the Irish Dairy Board stated that the IR£ had now risen to an unrealistic level and was causing it to switch product from the commercial market to intervention sales. That is serious. It is because we abandoned commercial markets and resorted to intervention that we did not in the past gain market niches and space on the supermarket shelves in Europe. I hope selling into intervention will not again become the trend because of the strength of the IR£.
Thirty per cent of our total exports go to the UK and Northern Ireland. Fifty per cent of the exports of the labour intensive indigenous manufacturing sector also go to those markets and the indigenous sector will be most threatened, it is vulnerable because of the strength of the IR£. Any loss of market share in this sector will have an immediate impact on jobs. A survey carried out in the last few days among exporters showed that a 99p pound will result in a drop in sales averaging 7.68 per cent while employment in those companies could drop by as much as 7 per cent. That is something about which the Government should be concerned. As pointed out in The Irish Times today, the value of our currency is a major element in our international competitiveness and it is worth mentioning that the negative effect of a strong IR£1 is compounded by the tax-PRSI wedge. Companies maintaining operations in Ireland and the UK report that the Irish operation is becoming uncompetitive mainly because of our tax and PRSI rates. We have to be competitive in many areas but particularly in the area of tax and PRSI rates. Pretty Polly in Killarney experienced considerable difficulties recently with the result that staff had to go on short-time working. The social cost to the parent company of employing people in England is £20 less than here. Straight away we are less competitive. If we are to be competitive and give our exporters a greater chance we must tackle the issue of the tax-PRSI wedge. Our exporters need every encouragement and if they are hamstrung by the very unfair and punitive tax regime here they are struggling against even greater odds in taking on their competitors in the marketplace.
I welcome the Bill to which Fine Gael certainly has no opposition. It is refreshing to see that our balance of trade is so healthy. However, to continue this good performance we must finance An Bord Tráchtála properly. It has responded by its very fine performance. On many occasions public servants criticise these bodies, but An Bord Tráchtála has had a very fine track record in recent years. It received good encouragement from the Minister, unlike another State agency. It is unfortunate that State employees should be demoralised, but that is a matter for another day.
It is important that we continue to encourage Irish exporters to improve their performance. We must assist them in every way, not alone by providing incentives to market their produce but also by introducing a regime that will not penalise them and that will provide a better environment for the production of goods. We must address the problem of the tax-PRSI wedge so as to improve the environment for employment creation.
