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Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach debate -
Wednesday, 10 Apr 2024

Illegal Israeli Settlements Divestment Bill 2023: Discussion (Resumed)

In this part of our meeting the committee will engage with the Department of Enterprise, Trade and Employment, to continue its detailed scrutiny of the Illegal Israeli Settlements Divestment Bill 2023. On behalf of the committee I welcome from the Department of Enterprise,Trade and Employment, Mr. Ronnie Downes, head of the trade division, and Mr. John Hughes, principal officer.

The evidence of witnesses physically present or who give evidence from within the parliamentary precincts is protected pursuant to both the Constitution and statute by absolute privilege. Witnesses are again reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable, or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory - and we must be very careful about that as it is very important that defamatory bit-----

It takes all the fun out of it.

I know. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable. Members who attend remotely are reminded of the constitutional requirement that members must be physically present within the confines of the place which Parliament has chosen to sit, namely Leinster House, in order to participate in the public meetings.

I now invite Mr. Downes to make his opening remarks before we begin our question and answer session.

Mr. Ronnie Downes

Gabhaim buíochas le baill an choiste as an gcuireadh a bheith i láthair anseo inniu. I am the head of the trade division in the Department of Enterprise, Trade and Employment and I am joined by my colleague, Mr. John Hughes, who is the principal officer from the innovation and investment division in the Department. Between the two of us, we are happy, on behalf of the Department of Enterprise, Trade and Employment, to assist as best we can the members' deliberations on the pre-Committee Stage scrutiny of the Illegal Israeli Settlements Divestment Bill.

The Bill is a Private Members' Bill that relates to the work of the National Treasury Management Agency, NTMA, and the Irish Strategic Investment Fund, ISIF. These bodies come under the remit of our colleagues in the Department of Finance and I understand that members have heard recently from that Department, and from ISIF. For our part, the committee has asked us to contribute with a view to the trade aspects of the proposed Bill. I will begin by setting out the context of Ireland’s trade and investment strategy.

As a small, open and advanced economy, international trade and investment are hugely important to the Irish economy, supporting approximately 1.3 million jobs in Ireland directly and indirectly. In 2022, the total volume of Ireland’s trade globally exceeded €1 trillion, the first time this milestone has been reached. The relatively small scale of Ireland's domestic economy means that Ireland relies on external demand and global markets for sustainable and continued growth, and to maintain and create jobs and prosperity here at home.

In 2022 the Department launched our Trade and Investment Strategy 2022-2026: Value for Ireland, Values for the World. The strategy sets the direction for our approach to global trade and investment into the middle of this decade. The aim of the strategy is to see Ireland grow sustainably, diversify our export markets, and support continued prosperity and higher living standards for all the people of Ireland and of those countries with which we do business and trade. The trade strategy articulates our plans for trade and investment, how it can support climate action and sustainable development, and it sets out a principled and holistic approach to trade policy, including in important areas such as the environment, labour standards and human rights.

Moving on to the subject matter at hand, Israel is the EU’s 25th biggest trading partner, representing 0.8% of the EU’s total trade in goods in 2022. It is also among the EU’s main trading partners in the Mediterranean area. On the Israeli side, the EU is Israel’s number one trade partner, accounting for 28.8% of its trade in goods in 2022: a total of 31.9% of Israel’s imports came from the EU, and 25.6% of the country’s exports went to the EU. Two-way trade in services between the EU and Israel amounted to €16.7 billion in 2021. EU imports of services represented €6.9 billion, while exports accounted for €9.8 billion.

Looking at Ireland–Israel trade specifically, the value of Ireland's trade with Israel in 2022, the latest year for which both goods and services trade data is available, was €13 billion. Ireland exported nearly €6 billion in 2022 and imported approximately €7 billion. Some 83% of Ireland’s exports to Israel were services and 17% were physical goods exports. The main trading sectors are electronic components, medical and pharmaceutical products.

Given the value of our global trade, which as I mentioned was €1 trillion in 2022, our trading relationship with Israel, at €13 billion in that period, could be considered modest but not, I would say, insignificant.

With regard to the engagement of our enterprise agencies, Israel is not a major export market for Enterprise Ireland's client companies, with exports accounting for less than 1% of total EI client company exports. As regards companies supported by IDA Ireland, there are seven Israeli companies in IDA’s portfolio, covering a diverse range of industries and employing approximately 2,400 people. IDA Ireland is not currently targeting investment from Israel and IDA Ireland does not support companies linked to the occupied Palestinian territories.

Ireland’s trade relationship with Israel operates through the framework of the EU-Israel association agreement. Trade policy is an exclusive competence of the European Union as part of the EU's common commercial policy. The EU-Israel association agreement has been in place since June 2000. The agreement aims to provide an appropriate legal and institutional framework for political dialogue and economic co-operation between the EU and Israel. As the committee will be aware, on 14 February the then Taoiseach and the Spanish Prime Minister requested that the European Commission undertake an urgent review of the EU-Israel association agreement in order to consider whether Israel’s actions in Gaza breached essential elements of the agreement. The matter is being considered within the EU institutions and no response has been received to date.

In the context of what we are here to discuss today, it is important to state that Ireland and the EU have never recognised Israel’s sovereignty over the occupied territories, in keeping with international law. Exports from occupied Palestinian territories do not benefit from preferential treatment under the association agreement and are not included in our trade statistics in respect of Israel. For the purposes of trade, products from occupied territories are appropriately labelled, and they must be appropriately labelled if entering the EU Single Market.

I hope I have given committee members some of the facts and a fair overview of Ireland’s current trade relationship with Israel, and provided the committee with some understanding on the framework within which we engage on trade-related matters in the context of Israel and the occupied Palestinian territories, which may have some relevance to the Bill that is under scrutiny and consideration today. I look forward to further discussion over the course of the meeting.

I thank Mr. Downes. I remind members that there will be a break for a vote in the House at some stage. It will be after 2 p.m., obviously. We do not know exactly when it will be as we do not know how long the debate between the start of business and the vote will take. We will break for the vote and come back.

I call Senator Higgins to make her contribution.

I thank Mr. Downes for the presentation. I will deal with this in two sections. First, I will look at the EU-Israel association agreement, to which Mr. Downes referred. He mentioned that there was a request for a suspension of the agreement. It is explicitly clear that Article 2 of the agreement has conditionalities or requirements around respect for human rights and democratic principles. I wonder why it is that, rather than moving for a suspension under that article, a review has been requested. Mr. Downes mentioned that there has been no substantive response but there has very much been a response. We had the response already from the Commission, which effectively said that it is a matter of foreign policy and political appreciation and should be done by the Council as an initiative. Basically, the Commission has said that there is not a review process or any kind of quasi-judicial process that assesses whether there have been human rights breaches. The Commission has the same evidence that is in the public realm and that evidence, of course, is that the International Court of Justice has ordered provisional measures in respect of prevention of genocide. There have been clear and documented breaches of human rights by Israel and there have been statements from the Israeli Government that it intends to disregard certain provisions or requests from the International Court of Justice.

In that context, we are clearly in a space where that concern with regard to human rights and respect for human rights principles in Article 2 is being breached, so there is no reason not to be moving to suspension, which is allowed under Article 82. Are there plans for Ireland to act in that regard? It is not a matter on which the Council has to wait for permission or a review from the Commission. The Commission has very strongly pushed back and said that this is a decision for the Council. I wonder whether Ireland will bring to the Council a request for suspension under Article 82.

The Department has pointed out the substantial trade benefits Israel has from its trade with the EU, which is its number one trade partner. Israel is benefiting extraordinarily highly from the privileged and advantaged position it has under the association agreement. It seems that all of that privileged relationship and access is on the idea that we are trading with a country that has basic standards of respect for human rights and democratic principles. As Mr. Downes put it, there may be obligations under the agreement for suspension, in terms of Article 2 of the agreement not being met. I am worried that a process will be created by going for a review, when in fact the actual process is that either party can choose to suspend. Is it not the case that now we need to look to suspension? There can then be further conversations about how the human rights concerns and so forth can be addressed. However, we should not be in a position of complicity, and potential complicity, with breaches of provisional measures from the International Court of Justice.

If Mr. Downes could address the wider association agreement, we might come back then on the occupied territories in particular.

I thank Senator Higgins. I will try to get each member of the committee to contribute once before-----

Well, I will finish all of my questions in that case.

We cannot go on for long periods-----

I rarely occupy much time at this committee compared with-----

I know Senator Higgins will adhere to that but I want each member to have made a contribution by 2 p.m. We can come back afterwards.

With respect, I cleared it with the Cathaoirleach that I would go first, and we usually have a practice where we can have some back and forth discussion.

I know that, but we cannot allow domination by any one person in the limited time we have today. There are special circumstances prevailing. Deputies will have to go back to the Lower House.

Okay. I will go through all my questions, with respect.

How long will it take?

It will take another five minutes to go through all my questions.

Is that agreed? Agreed. Five minutes it is.

In his opening statement, Mr. Downes referred to the exclusion of goods from the occupied territories from being given preferential treatment. I ask him to clarify, from his figures, whether it is the case that trade with the occupied territories is not reflected in the €13 billion in trade and the €7 billion in imported goods?

Mr. Ronnie Downes

Yes, that is the position.

That is not included in those figures.

Mr. Ronnie Downes

That is correct.

Okay. Mr. Downes mentioned that trade is an EU competency. When the occupied territories Bill was brought forward previously, we were told the EU-Israel association agreement was one reason it could not be progressed. Mr. Downes in his opening statement, however, was explicit that occupied territories are not reflected and are not, in fact, subject to the EU-Israel association agreement. Is that correct?

Mr. Ronnie Downes

That is correct.

It just seems to be somewhat of a contradiction with some of the messaging. The legal advice that we had from Professor Takis Tridimas and others with regard to the occupied territories Bill has always been, effectively, that there is no legal basis for trading with occupied territories. Is it the case that there is no legal basis for trading with occupied territories?

Mr. Ronnie Downes

If the Chair is agreeable, I can perhaps answer a couple of these questions.

No, we have decided on the option. Members can pose the questions, we will bank them, and then the witnesses can answer them all at the one time if we get the opportunity to do so before members are called to the House to vote.

Mr. Ronnie Downes

Sure.

I will continue with my questions. I will have to listen back to the answers.

I hope other members of the committee will be able to pick up on the answers if I am not able to.

As mentioned in the opening statement, electronic components are one of the main trading sectors. We know that Ireland’s export to Israel of dual-use components that have a potential military purpose grew sevenfold last year from €11 million to €70 million. In that context, has the Department carried out a risk assessment? It is an extraordinary leap in electronic components at seven times the trade and it is happening at exactly the time when military actions are taking place. This points the finger. The witnesses will be aware that the UN Human Rights Committee and the special rapporteur have called for arms embargoes. Is there a danger, and has there been a review as to the danger, of us, through those dual-use components, contributing to military actions taking place? The witnesses might be aware that my group tabled amendments to the Control of Exports Bill in respect of this issue previously.

On the legal status, Professor Tridimas gave the view that prohibitions in trade and goods proposed by the Bill are justified because they promote and give effect to the obligations imposed by the Geneva Convention on member states. Regarding the occupied territories Bill, there is not a legal basis for trading with occupied territories and it is not covered by, as outlined in the witnesses' own statement, the EU-Israel association agreement. There is freedom for public policy decisions under EU law and it is very clear that where there is a matter of public policy, decisions can be made. Is it not the case that we could and should be progressing the occupied territories Bill in that regard? In fact, we do not have a legal basis to trade with occupied territories and we do not seem to have a legal obstacle to blocking trade with occupied territories. From what I understand, no legal obstacle has been presented. Could the witnesses clarify that?

On divestment, it is welcome there is discussion of divestment now but we heard very clearly last week from NTMA representatives and others that unless it is legal and there is law, they are not obliged. When we discussed, for example, the measures taken with regard to cluster munitions or fossil fuel divestment, they were clear that they engaged in such exclusions because they were required to do so. Do the witnesses agree that it is important to have a legal underpinning such as that proposed in the divestment Bill that ensures there is not a danger of being implicated?

I ask the witnesses to come back on the wider question of why not suspension given the urgency and new imprimatur we had from the ICJ.

Just to finish, this is the key point. The benefit for Ireland, as was stated, is minimal. The benefit of this trade agreement for Israel is immense. We have been repeatedly calling, making symbolic calls and pleading. At a time when the most basic provision of the goods and means of survival is being blocked into Gaza, rather than giving a privileged and advantaged position, we could simply stop helping the escalation, be it through ending the provision of dual-use goods, privileged trading advantages, massive subsidies through our research funding and so forth. To simply stop aiding the actions of a state breaching human rights is a minimum requirement under the International Court of Justice’s call to action. Can we do more? What more can we do and what might the timeline be for doing more?

Next is Deputy Carthy, who is substituting for Deputy Doherty.

Are we not waiting for the responses?

No, we are banking them. We will get as many members as we can through before we have to go for a vote.

I need clarification on a couple of points.

Go ahead quickly.

I thank Mr. Downes for the opening statement. In it, it is stated that IDA Ireland does not support companies linked to the occupied territories. How are those companies identified? I would like a response in order to facilitate follow-on questions.

Mr. Ronnie Downes

We engage with IDA Ireland-----

No, we have to-----

I need clarification on that question before I can ask my follow-up question.

It is more productive if we have-----

I am sorry. We decided. I think the most efficient way to do it is to try to be fair to everybody, so nobody has to sit here all day, as I have oft had to do, waiting for an answer. The Deputy opposite will remember as well. Could we bank the answers and-----

On a point of order, I wish to clarify something. Is it the intention that this meeting will not resume after the vote?

It will resume after the vote; that is the intention. The problem is that we do not know when the vote will be and we cannot determine the time. That is not my fault.

I am happy if our guests can answer Senator Higgins’s questions now because they will inform the subsequent questions the rest of us will ask.

Remember, there are some members who will not be able to participate in time. We could get everybody who is here in if we want to. If everybody can come back again, the questions Senator Higgins originally posed will fall due for answer when the opportunity arises.

It is just so we can build the discussion. There are some questions of fact-----

I know but we have already spent five minutes talking about the logistics of it and we have not gone anywhere.

In fairness to Senator Higgins, she asked for this and I think everybody agrees that she should get her answers.

I know but this is an unusual situation. In the ordinary course of events, that would prevail. However, this is not an ordinary day. The House is sitting by virtue of a special sitting for this particular day, applicable for this day, and it is not possible for me to anticipate when we have to leave to go for a vote.

I wish to ask a question and the Leas-Chathaoirleach will have to excuse my ignorance. Does the committee have to be suspended when there is a vote in the Dáil?

In fairness, we could get the answers to Senator Higgins’s questions and then I will come back if needs be after.

If you so wish, we will deal with Senator Higgins’s questions only.

For now, and then if we need to come back after-----

Remember, we do not know when we are coming back.

I have a feeling that Mr. Downes will be very efficient in his responses and we will all get an opportunity to come in at some point.

(Interruptions).

The Deputy's perception is noted. It has been decided that way. Mr. Downes can see the inclination and preferences for that. We will follow the rules as they apply.

Mr. Ronnie Downes

If that is agreed, we will try to be as helpful and efficient as we can in dealing with the important questions raised. Dealing with them in order, the Senator asked why a review was requested rather than a suspension of the EU-Israel association agreement. As a precursor to that, the decision from the Taoiseach to request, along with the Spanish Prime Minister, was a political decision by an Taoiseach and his Department. We do not have full insight into what the rationale for it was. I think we need to understand that a decision to suspend that agreement would require an European Council decision. In terms of setting a pathway for such a decision to be made, one can see why it might make sense to have an evidence-based approach and to request the Commission to do a review, which would set out plainly the facts that would enable the Council to reach a determination in due course. I guess there is an alternative approach, as the Senator suggested, to go straight and request that. However, perhaps there is a degree of consensus building around that issue. We have not heard back the details from the Commission yet but it is my understanding that it would require unanimity from the Council to suspend the agreement. Part suspension is also permissible – this would be the subject of legal advice – which might allow for a QMV-type approach. However, I can only surmise that is why that approach was taken, if that is helpful.

The Senator asked whether the occupied territories are subject to the trade competence more generally or what the legal basis for trading with them is because they are not subject to the EU-Israel association agreement. As a general principle, Ireland is a member of the World Trade Organization along with 165 other countries. Trade around the world is governed by the terms of the WTO. Unless there are trade restrictive measures in place - sanctions in place - in respect of particular countries, the WTO trading regime is the default mechanism that imposes a certain minimum standard set of tariffs that apply between all countries and territories. It is open to countries to impose sanctions and put restrictive measures in place or it is open to them to be more generous by having free trade agreements or association agreements in place. In default of either of those, the WTO rules are in place, so that is what governs-----

However, that does not allow for trade with a country that would be occupying a territory or for a country to trade in goods from a territory in which it does not have a legal basis for occupation.

Mr. Ronnie Downes

There are two separate concepts here, one of which relates to occupied territories. I am not an expert in international law on these matters but there are occupied territories and then there are the illegal settlements, which are perhaps a different category again within the occupied territories. However, so far as trade as concerned - other than with Israel but with other parts of that region in the occupied territories governed by the standard WTO regime - it is our understanding that it would be a matter for the EU to take measures relating to trade more generally if it wants to.

Okay, that is not what the legal advice we would look at would say. We will save that and move forward with the other questions.

Mr. Ronnie Downes

Okay. That is my understanding of the position for the moment.

The Senator asked about the trade in dual-use goods. This has been the subject of some attention recently. Our Department of Enterprise, Trade and Employment is the national competent authority under the legislation with responsibility for export controls, including controls on defence-related exports, military goods and exports of dual-use goods. To be clear, there are no exports of any military goods to Israel. Dual-use goods are goods that are capable of both civilian and military use.

There has been a sevenfold increase in them.

Mr. Ronnie Downes

Yes. Within that category of dual-use goods, many different products and services are captured, including electronics. Any hardware or software that has hard encryption built into it technically comes under the category of dual-use goods. Before we decide on issuing a licence for the export of dual-use goods, there is a very rigorous assessment process in place. It is a case-by-case assessment process. We do not just wave any of them through. The officials in the Department in the trade regulation and investment screening, TRIS, unit carry out a series of checks to ensure, insofar as they can, that the item to be exported will be used by the stated end user for the stated end purpose and will not be used or diverted for any other purposes, and certainly not for-----

It is just that it is a sevenfold increase. Again, I am asking whether there have been extra measures, not what the general process is, given the alarming increase.

Mr. Ronnie Downes

I am not sure I would necessarily agree that an increase is alarming in itself. It depends on what the increase is in and whether it is in software and hardware that is for civilian use in factories or pharmaceutical companies or whatever it might be, or in business generally, and which includes encryption software. There is a lot of encrypted material that is sent-----

I will interrupt because we have such limited time. There are many things goods may be used for. We know there is a sevenfold increase that has coincided with a military action for goods that have a military functionality.

Mr. Ronnie Downes

All of those exports are subject to a screening mechanism in which we engage on a case-by-case basis with our colleagues-----

I am conscious of others as well.

Mr. Ronnie Downes

I have to answer the question-----

Mr. Ronnie Downes

-----because I know it is an important one. We engage with the Department of Foreign Affairs by reference to a number of criteria to make sure we are satisfied that in each case, those goods are not going to be used for other purposes. We are bound by a number of rules and principles. We consult closely with colleagues. We do not have any reason to fear the fairly standard software and hardware that is going out. Ireland is a base for software and hardware exports internationally and Israel is one of those destinations. I will reinforce that the end use of what it is intended for is subject to safeguards and guarantees. That is what gives us the confidence to proceed with those.

The Senator had a question about divestment. If I understood her correctly, I think it was about a National Treasury Management Agency, NTMA, response in that unless it is illegal, it is not required to divest.

The feedback message we got very strongly in the previous session was that it had exclusions with regard to fossil fuels and cluster munitions because it was politically required to do so legally. However, when we asked at that time - of course, there seems to have been a change of policy in the last couple of weeks - the representatives made it very clear that they wait for guidance, effectively, from the Oireachtas and from legislation in respect of some of these issues. Again, it seems that makes the case for this legislation being necessary, even if divestment has taken place. I will finish now because I am conscious of the time.

Mr. Ronnie Downes

I thank the Senator. Of course, I am very limited in what I can say about the NTMA's practices. I understand that in recent days, the decision has been taken to divest from a number of Israeli banks that had been involved in activities that are of concern to the committee. I will make a general point without talking specifically about what the NTMA invests or does not invest in. There is an increasing interest and emphasis among businesses and corporations generally about having closer regard to the nature of their investments. It is the so-called environmental, social and governance, ESG, criteria, which are taking on increasing weight for companies and investment vehicles that have shareholders and stakeholders who have concerns that need to be addressed.

Against that background, the European Union has been doing much work. There are initiatives called the corporate sustainable reporting directive and corporate sustainable due diligence directive, both of which are making progress. They are kind of giving more legal effect to some of these ESG-type principles. It is against that overall context that companies are taking a longer, harder look at where they invest and whether they can stand over it from a moral and ethical point of view. Therefore, I can only presume that it is against that background the NTMA or the Ireland Strategic Investment Fund, ISIF, took the decision they did with respect to those particular institutions.

It is hopefully against a background of urgency for the fact that we should be doing all we can.

I will pass over to other members now.

Mr. Ronnie Downes

I thank the Senator.

I thank the Senator. It is now Deputy Carthy's turn.

I will revert back to the previous question I asked. Mr. Downes said in his opening statement that IDA Ireland does not support companies linked to the occupied territories. How are those companies linked to the occupied territories?

Mr. Ronnie Downes

My colleague will respond.

Mr. John Hughes

I thank the Deputy. As it stated, the IDA does not support companies linked with the occupied territories, as we identified in the opening statement. How it does that is by ensuring that prospective companies seeking to locate in Ireland are screened from an early stage of the engagement process between the IDA, its executive team and the prospective clients. It also conducts research through independent sources and various beneficial ownership subscriptions it would have in terms of the ownership arrangements for prospective FDI companies. The companies are also directly expected to provide the IDA with relevant background information in terms of their location and ownership structures. To date, the IDA's activities in Israel have been focused on major urban areas and clusters of industrial activity. The seven or eight companies Israeli-owned companies that are operating in Ireland as IDA client companies are in web design, software, ICT, machinery and medicines.

I am dealing specifically with the occupied territories. Mr. Hughes might have missed a source that the IDA uses for information purposes.

Mr. John Hughes

I beg your pardon.

He may have missed. Mr. Hughes is essentially talking about elaborate Google searches, but there is also another way the IDA uses to identify companies that may be linked to the occupied territories. Is that not correct?

Mr. John Hughes

The IDA would be interacting with a number of independent sources in terms of interrogating company ownership.

Is one of those sources the UN database that is referred to in the legislation we are scrutinising today?

Mr. John Hughes

It would be aware of the database and the list, yes.

It would be aware. It does not, therefore, give it any other prominence than just being aware of it. It is one of a number of aspects instead of a critical aspect. Is that what Mr. Hughes is saying?

Mr. John Hughes

It is one of a number, but it is not the single source of information the IDA relies on in terms of determining company ownership and where the companies operate.

For a bizarre reason we have never fully got to the bottom of, IDA Ireland engaged in a tender process for an Israel-based business development consultant as recently as last October. That process was finally abandoned. To allay concerns that were legitimately raised about that process, we received an assurance in the Dáil that the IDA would not target any Israeli company included in the published UN database of enterprises involved in certain activities relating to settlements in the occupied Palestinian territory. If that was the sole criterion to be used in the case of the prospective employment of a business development consultant, it appears bizarre that the database is just a bit player in the information provided as regards ongoing trade relationships. With due respect, has Mr. Hughes been asked to downplay the importance of the UN database today?

Mr. John Hughes

No, absolutely not.

Why did Mr. Hughes’s Department, in response to a parliamentary question prior to this pre-legislative scrutiny meeting, set out the database of enterprises published by the UN as the critical deciding factor in what an IDA business development consultant would do when it was not even mentioned in his initial response today as one of the factors that would be taken into the IDA’s considerations when trying to identify whether companies were linked to the occupied Palestinian territory?

Mr. John Hughes

I do not want to split hairs, and it depends on how the parliamentary question was phrased, but all of the issues are taken on board. These include the IDA’s own due diligence and having regard to the UN list. It is not one or the other. All of those issues feed into the decision-making. The reality is that the IDA is not operating the pathfinder arrangement in Israel today and is not active in seeking investment from Israel.

To clarify, it was a very general parliamentary question on the business development consultant proposal. It was the Department that cited the UN database in response. The database was not referenced in the question. It was provided as an assurance, presumably on the basis that the database had important credibility in determining whether companies were linked to and profiting from the illegal occupation.

Mr. John Hughes

Absolutely. It is one of a number of criteria. It is relevant, but it is not the sole criterion.

I thank Mr. Hughes.

Mr. Downes stated: "...exports from occupied Palestinian territories do not benefit from preferential treatment". Either he or Mr. Hughes might elaborate on how we can be assured that exports from occupied territories are not benefiting from the preferential treatment that the associated agreement provides.

Mr. Ronnie Downes

In 2004, the EU and Israel reached a technical arrangement that required Israeli exporters to specify the postal code of the place of origin or manufacture of products exported into the Single Market. Turning to what I said in reply to Senator Higgins, there is no import ban or sanctions per se on products coming from occupied territories, but the labelling requirement that the EU insisted upon is intended to keep EU consumers informed of where the products originate from so that they can make informed choices. Products requiring this origin labelling may not carry the indication “Product of Israel”, as settlements do not form part of Israeli territory under international law, which Ireland accepts. We would not accept that any such indication would be correct. Indeed, we would regard it as misleading.

The labelling requirements were strengthened and copper-fastened in November 2019 when the European Court of Justice ruled that products originating from Israeli settlements on Palestinian territories must be labelled as such. This confirmed that accurate and non-misleading indication of origin labelling was an essential part of European commercial and consumer protection policy. The EU updated customs procedures for goods from Israel and clarified that goods from settlements could not benefit from preferential tariff treatment.

On the basis of all of that, we are satisfied that such goods would be indicated as to where they come from and would not benefit from the relatively freer flows of tariffs that operate under the EU-Israel association agreement.

I will ask a simple question: how many goods currently available for sale in Ireland are labelled as originating from Israeli settlements?

Mr. Ronnie Downes

I do not have the answer to that. If the Deputy likes, I can look into the matter and try to revert to him with a factual answer.

Is Mr. Downes aware of whether there are any?

Mr. Ronnie Downes

If there is an answer, I am not aware of it, but I can look into the matter and see what I can revert to the Deputy with that is factual.

I thank Mr. Downes.

I will move on to the issue of dual-use product applications, which are dealt with by the Department of Enterprise, Trade and Employment. These are products that could have a military capability. The witnesses have cited a couple of examples. There were 32 applications for authorisation under the Control of Exports Act last year. Is that correct?

Mr. Ronnie Downes

That figure sounds correct. I will see if we have the figure with me, but does the Deputy wish to proceed with his question first?

What percentage of those applications were approved by the Department?

Mr. Ronnie Downes

To be clear, the Deputy is looking for information on how many applications were made, how many were refused and how many were granted.

Yes, or even just the percentages.

I must advise members that there is a vote in the Dáil, so we must suspend until it is completed. There may be two votes; we do not know. We have approximately six minutes to get there. Is Mr. Downes able to answer Deputy Carthy’s question quickly?

Mr. Ronnie Downes

I have a figure for the total number of authorisations for export to Israel, which amount to approximately €71 million in value, but as to the percentage the Deputy is seeking-----

Considering we will have a break, which I presume will last for approximately 15 minutes, perhaps Mr. Downes might be able to find that information. It would also be useful if we got information on the number of products available in Ireland that were labelled as having originated from the settlements.

Mr. Ronnie Downes

Let me see what I can do.

I thank Mr. Downes.

Sitting suspended at 2.18 p.m.and resumed at 2.50 p.m.

As we resume, would anyone like to contribute at this stage?

I thank Mr. Hughes and Mr. Downes for their patience. It is frustrating for witnesses when members run off for a vote. We had just a couple of outstanding questions before the break, which we were trying to resolve. The first is in relation to the labelling of products originating in the Israeli illegal settlements. Do we have any clarification as to how many products are currently available in the Irish market?

Mr. Ronnie Downes

I will answer that if I may.

We have all the time in the world now.

Mr. Ronnie Downes

We have been in touch with the Central Statistics Office, CSO. They do not record the number of those products. We will keep looking to see if there are other angles from which to come at it. Unfortunately I do not have an answer for the Deputy on the precise number of those labelled products that come into Ireland, if any.

So we cannot even say for sure whether there are actually any products in the Irish market at all that have this labelling to indicate they originate in the Israeli illegal settlements?

Mr. Ronnie Downes

We cannot say for certain that we have any goods that come from the occupied territories. We do know there is a very small volume of trade. I gave the figures for Israel as a whole, which was €13 billion, and the figures in the low millions of euro for any trade in respect of the occupied territories. We do not have the number of goods that are labelled I am afraid.

The difficulty is that the labelling is the assurance that products that may emanate from Israel and which are available in the Irish market do not actually originate from, or are not associated with, the illegal settlements. Is it not the truth that there is actually no way for consumers in Ireland to know if a product they are purchasing from Israel actually originates from an illegal settlement?

Mr. Ronnie Downes

That is not quite correct. It depends on the type of labelling. A number of different labels are applied to different areas. If a product is coming from an Israeli settlement it has to have the label-----

Exactly, but we do not know if any products in the Irish market actually carry that label.

Mr. Ronnie Downes

We do not know if any products in the Irish market come from illegal Israeli settlements. If they do they have to be labelled.

Is the Department able to categorically give an assurance that if any product originates from Israeli settlements and is available in the Irish market it will absolutely have that label?

Mr. Ronnie Downes

The law is that it must have that label. I do not have any evidence to say that law has been broken.

What efforts has the Department made to be able to be categoric in stating that and in making the statement Mr. Downes has made, considering that the Department and the CSO apparently cannot tell us whether there are actually any products with this particular label available in the Irish market? Has the Department gone through a trawl of all Israeli products available in Ireland to identify whether or not there could be any prospect at all of these actually coming from illegal settlements?

Mr. Ronnie Downes

The Deputy must be fair. The European Union law applies to all goods coming into the European Single Market. It states that if a product is coming from Israel it can be labelled "made in Israel". If it is coming from the occupied territories it has to have one of a number of labels: if it is from an Israeli settlement it must say "Israeli settlement Golan Heights" or "Israeli settlement West Bank". If it was coming from Palestine, which is not an Israeli settlement, the label says "made in Palestine". That is the law. I am not aware of any basis to think that-----

Is it fair of me to say we are therefore working on the assumption that in the first instance the Israeli State is adhering to the law, and on the second assumption that those companies already engaged in illegal activities by operating within the illegal settlements are somehow then operating within the law when it comes to EU labelling rules?

Mr. Ronnie Downes

Are we operating on the assumption that people are complying with the law? I think that is fair to say. To what extent there is any evidence to suggest that law is being broken, I do not have an answer to that.

Is it fair then to say that the Department has not carried out any extensive analysis as to whether or not the law is being broken?

Mr. Ronnie Downes

That is fair.

My own position is that the easiest thing for any consumer or any entity to do, in order to be 100% sure, is to just not purchase anything that has a "made in Israel" mark or bar code on it.

What about the other way we discussed about dual-use products? How do we ensure that the products we are allowing to be exported from Ireland to Israel do not subsequently end up in the illegal settlements?

Mr. Ronnie Downes

I will come to that question directly but first I will just finish off the other question about labelling. We do have market surveillance authorities and we have consumer competition protection bodies that would be in a position to take action if we had any reason to believe there was anything illegal going on with regard to labelling or the misleading of consumers. I am sure they would take a risk-based approach to addressing that. As I have said, I am not aware of any information having come to light to show there is any breach there but I take the point the Deputy has made.

With regard to safeguards, the Deputy asked for a statistic about the proportions. The relevant section there will hopefully address that. We are putting together some statistics on that. I will come back to the Deputy, if not during the course of this session, with separate facts and figures on the question the Deputy raised.

On the question of so-called dual-use goods, which are exported on the basis and on the assurance they are for civilian use, and how we can be satisfied they are not redirected towards a military use, this is something we do take very seriously. When we assess applications for export licences our officials carry out a number of checks to make sure there is a specification of who the end user is, what the end purpose is and the end use, and that it is not going to be used for illicit purposes. In addition, in each case we consult with the Department of Foreign Affairs to make sure both Departments are operating on the most up-to-date information regarding the destination and place so we can take a risk-based approach. Everything is assessed thoroughly and uniformly. A number of criteria are looked at when we do that kind of risk-based assessment. We have not had any particular reason to suspect there is anything we need to be worried about. I refer back to Senator Higgins's earlier reference to a sevenfold increase in dual-use goods. We are the Department of Enterprise, Trade and Employment. When there is an increase in civilian goods to us that is a good thing that brings in revenue and supports jobs in Ireland but if it were to be an increase in military or military-linked goods that would not be something we would be happy with. That is why we pay so much attention to putting a risk-based assessment on each of these cases. Some of the criteria we look at in concert with our colleagues in the Department of Foreign Affairs are respect for human rights in the country of final destination; whether there is any internal conflict; whether sanctions are in place; and whether there is a diversion risk from one purpose to another. We would also be in a position-----

Will Mr. Downes please repeat the part about human rights in the country of destination?

Mr. Ronnie Downes

The consideration of "respect for human rights in the country of final destination", as well as respect by that country of international humanitarian law. This is a consideration we take into account in a holistic assessment of the risk of the dual-use goods intended for civilian use being redirected to military use. It is one of the criteria.

I just do not know how the Departments could ever apply that criteria and approve a single application for a dual-use export to a State that, as I understand it, is actually categorised by Amnesty International, Human Rights Watch and several other human rights bodies as operating an apartheid regime.

Mr. Ronnie Downes

I will not comment on that characterisation. What I will say is that we take a risk-based approach with regard to the types of products and services. As I mentioned earlier, a lot of fairly routine technical hardware and technical software, to the extent that it may include hard encryption - that is, strong encryption - is by its nature a dual-use good. That does not mean it is in our view necessarily likely to be used for military purposes.

Mr. Downes mentioned that there is an assessment of the state of destination's compliance with international humanitarian law. On the basis that a number of applications to the tune of more than €70 million were approved last year, am I to take it that it was the Department's assertion that Israel is in compliance with international humanitarian law?

Mr. Ronnie Downes

No, that is not what I am saying. What I am saying is that we look at a number of criteria and take a risk-based assessment of whether the export of a civilian item is liable to become subject to diversion to a military purpose. Those criteria also include the nature of the product or service in question. As I mentioned-----

I am sorry for not fully understanding. What do the criteria mean in respect of international humanitarian law? Is there a points system? What does that assessment involve? How then is it transposed in terms of a final decision in respect of an export licence?

Mr. Ronnie Downes

No, it is not a points system. It feeds into what you would call a holistic assessment on a case-by-case basis of a particular product or service. If an accounting software programme is going to a company in Israel, for example, we have regard to the nature of the product and service and then other criteria relating to a Department of Foreign Affairs assessment of human rights considerations relevant to the country of destination. When all of that is taken in the round, we take a view about whether it is safe to export that particular accounting software, in this example, to that destination.

Are there states-----

Mr. Ronnie Downes

I will just complete the point if I may. If that accounting software includes encryption, as just about all accounting software does to keep commercial sensitivities and secrets, that characterises it as a dual-use good. I am just using this as an abstract example. I am not talking about any particular company. However, if it is the case that we go through that risk-based procedure and we think it is safe in all of the circumstances, having weighed up these factors, to export that accounting software or to allow that company-----

On that point, because I am just conscious that the Chair might cut me off at any stage-----

It could happen at any minute, so the Deputy should go on.

In the accounting software example Mr. Downes has given, are there states that currently would not get an export licence on the basis of the state's compliance with human rights and international humanitarian law as opposed to the actual specific application? Would it just be standard with Mr. Downes' Department not to approve the export licence because of the state in which the licence application is coming from?

Mr. Ronnie Downes

When we are having regard to some of those qualitative human rights and international criteria, we take our lead and guidance from the Department of Foreign Affairs, which is the expert on those issues. On the Deputy's specific question on whether we rule out companies without regard to the other criteria just on the basis of what the country is, it is fair to say that the answer is "No". We do not rule out a country just because of what the country is.

Therefore, if there was an application from a Russian company based in Russia, would the application be approved today?

Mr. Ronnie Downes

The answer to that is "No" because Russia is subject to trade sanctions.

Mr. Ronnie Downes

It is a separate set of criteria. As a general principle, again going back to what I mentioned to Senator Higgins earlier, international trade is governed by WTO rules. That has standard set minimum tariffs and so on that are agreed among the countries of the world and among all 166 members of the WTO. It is open to countries to have more favourable relations with particular countries using free trade agreements. Europe has just signed one with New Zealand, for example. It is open to have more restrictive arrangements, as the European Union and other countries have with Russia and Belarus because of what has happened in Ukraine. In parallel with that, there is the dual-use and military use regime, which is a separate set of safeguards that countries have. We have ours in the context of the European Union mechanisms as well, so there are a range of different safeguards in place.

Okay. We will have to try to keep the answers shorter if possible. The figures we have are for 2023. As I mentioned, there were 32 applications. Is Mr. Downes in a position to say what percentage of those were actually granted? He was not in a position to do so before the break.

Mr. Ronnie Downes

Perhaps I can come back to it during the course of the hearing.

Okay. My understanding is that all 32 were granted. I just want to get clarification on that.

Mr. John Hughes

What clarification does the Deputy want?

It is about the 32 dual-use applications under the Control of Exports Act 2023. There were 32 applications, which were all approved. Is Mr. Downes aware of whether there have been any applications so far in 2024 and whether any of them have been refused? It is a yes-no answer.

Mr. Ronnie Downes

I am aware that there have been. In terms of global licences-----

I am talking specifically in terms of trade with Israel.

Mr. Ronnie Downes

No, then I would have to come back to the Deputy.

Okay. Is Mr. Downes aware of any instances in 2023 or 2024 in which the Department of Foreign Affairs raised a concern in respect of a licence application?

Mr. Ronnie Downes

We have discussions and dialogue with the Department of Foreign Affairs on an ongoing-----

Mr. Downes said his Department seeks an opinion-----

Mr. Ronnie Downes

Yes.

-----from the Department of Foreign Affairs in respect of such licences. In any instances, has the Department of Foreign Affairs raised a concern or issue with Mr. Downes in respect of it?

Mr. Ronnie Downes

Has it raised an issue? I know that in 2023, there were a number of refusals of licences. I am not talking specifically about Israel now but in general, in the overall scheme of things, there have been a number of refusals, so it is-----

No, I am talking about Israel and the-----

Mr. Ronnie Downes

I am addressing the Deputy's point.

We are talking about a pre-legislative Bill in respect of Irish funds being invested in companies that profit from illegal settlements. Mr. Downes can take it as a given, unless it is stated otherwise, that we are referring to the trading relationship with Israel.

Mr. Ronnie Downes

Okay, I get you, Deputy. Israel-specific, I understand there have been 32 dual-use licences issued, as the Deputy mentioned. We have not had to refuse any licences to Israel. Maybe that helps to answer the Deputy's question.

Okay. I will be very quick because I am aware there are other members. Mr. Downes mentioned in an earlier remark that the Taoiseach, along with the Spanish Prime Minister, has requested that the Commission undertake an urgent review of the Israel association agreement in terms of the human rights clause. Has Mr. Downes's Department carried out a trade analysis of what will happen and how Ireland will respond in the event that the European Commission actually suspends the association agreement?

Mr. Ronnie Downes

No.

Would that not be a prudent thing to do?

Mr. Ronnie Downes

There is a sequence of events here. There has been a request made by the Taoiseach and the Spanish Prime Minister for the European Commission to undertake a review. It is anticipated that the review would inform a discussion by the European Council on whether action is warranted in respect of the EU-Israel association agreement. There are a number of ways that could potentially go. It could continue on as is. It could involve suspension in whole or in part. It is against that background and how that would be likely to evolve that we would do a review and contingency planning.

In this instance, the Irish Government has sought a review of the association agreement but the Department has not carried out any contingency planning for how that outworking might go. Is it fair to say that it is not Mr. Downes's expectation that the association agreement will be suspended any time soon? Otherwise, the Department would, in fact, have carried out contingency planning for such an event.

I have just one more question.

Mr. Ronnie Downes

It is not fair to say what my expectation is about that process because we do not know what the outworking is going to be. What it is fair to say-----

That is what contingency planning is about. When you are not sure what the outcome will be, you plan for the different contingencies. The Department has not planned for any of the contingencies.

Mr. Ronnie Downes

What kind of planning does the Deputy have in mind? Either the trade is suspended-----

If the trade is suspended, that will have implications for Irish companies - "Yes" or "No".

Mr. Ronnie Downes

It would absolutely have implications for trade if it is suspended.

Did the Department carry out contingency planning for the implications of a hard Brexit, for example?

Mr. Ronnie Downes

I think it is common knowledge that there was.

Even though that was never the most likely scenario. Is that not correct? The most likely scenario was always that there would be a trading relationship beyond WTO rules. My point is that the Irish Government, with one other government, has requested a review of an association agreement currently in place. There will be implications for the Irish economy, for Irish companies and FDI companies based in Ireland in the event that is carried out. Mr. Downes said that the Department has carried out no contingency planning for any eventuality other than the continuation of the status quo. That says to me, by implication, that the Department is of the view that despite the fact the Government has sought a review of the association agreement, there will not be any change to the current relationship.

Mr. Ronnie Downes

May I respond, please?

Depending on the outcome.

Mr. Ronnie Downes

I am not in a position to comment on what inferences the Deputy draws from it, but the question has been posed to the European Commission to review the EU-Israel association agreement. There are a number potential outworkings of that, but the universe of potential outworkings is quite limited. Either nothing happens, or at the other end of the spectrum it is suspended and those preferential tariffs no longer apply in which case Ireland would continue to do business with Israel on the basis I mentioned earlier, which is the WTO standard rules. They are less preferential than those in place at present. However, in the overall scheme of things the volume of trade Ireland has with Israel is something we would have to manage. Modest but not insignificant was my characterisation of Ireland-Israel trade.

We do not know for sure because we have not carried out any contingency planning. I have one last question. I am conscious of the time.

The Deputy has said that before.

I am coming to it now and I thank the Leas-Chathaoirleach for his indulgence. I put on the record my commendation of the flexibility shown by the Chair today, and my appreciation of other members for their patience.

Mr. Downes knows this is part of pre-legislative scrutiny in respect of the illegal Israeli settlements divestment Bill. There is no need for this pre-legislative scrutiny. The committee has agreed to waive it. Government insisted we have it. We had meetings about pre-legislative scrutiny. A member of the Government insisted that Mr. Downes come before the committee. That Government member is not here today, so it is clear this is part of an overall strategy the Department has been dragged into by Government Members in these Houses to try to delay and frustrate the transposition of what is important legislation. Mr. Downes's opening statement makes minimal reference to the actual Bill. Is it fair to say that officials from the Department of enterprise do not have input in respect of the Bill before us - good, bad or indifferent? Their jobs will be to deal with the outworking of any legislation passed by the Houses of the Oireachtas. Are they confident they will be able to do that?

Mr. Ronnie Downes

As I mentioned in my opening remarks, the subject matter of the Bill primarily relates to the NTMA and the ISIF, which come under the aegis of our colleagues in the Department of Finance. They are the ones with primary policy responsibility for this. We were requested to appear. We are happy to appear and to be of whatever assistance we can. Beyond that it is not for me to comment.

We move on. Who wants to go first?

I will not be long as I have to go to the housing committee. I apologise if this has been answered. Dual-use exports to Israel from last year were substantially up on the year before. Is that correct?

Mr. Ronnie Downes

I believe so.

Can Mr. Downes give me the figures off the top of his head?

Mr. Ronnie Downes

I know that last year's figure was just above €70 million.

What about the year before?

Mr. Ronnie Downes

I do not have the precise figure here but it is an increase on the year before.

Can Mr. Downes supply that afterwards?

Mr. Ronnie Downes

I am happy to supply it. I will do that.

Off the top of his head, is it a substantial increase?

Mr. Ronnie Downes

I believe it is a substantial increase, but we will provide the figures.

That is obviously a matter of concern.

Mr. Ronnie Downes

I would say it is not necessarily. I am not trying to be controversial. I am just giving the facts. We are the Department for trade. We want trade to grow. We want trade in commercial activities from Irish companies to overseas companies to grow. If it is non-harmful, safe, supportive and helping people to prosper and grow, and helping jobs in Ireland, why would we not be in favour? Dual-use goods get special attention because they have the potential to be redirected towards-----

Mr. Ronnie Downes

For military use. That would not be subject to such a benign assessment from us, which is why we pay a lot of attention to the scrutiny of goods. I mentioned the figure. When people think of dual use, they might think it is a replica gun that could be turned into a gun. We are talking about software.

Yes, computer chips and software.

Mr. Ronnie Downes

Computer chips and software that would have encryption in it.

Mr. Ronnie Downes

We scrutinise everything on a case-by-case basis. Even ones that might seem benign we consult on in all cases.

How much information can we, or the public, be given about the actual exports?

Mr. Ronnie Downes

Let me see how much granularity we can go into. We produce statistics. There is a report produced every year and we can send over the most recent report. It is an annual report on our activities in that regard. It gives a degree of granularity about the types of sectors that were involved. If it is helpful, we will send that over and I will investigate with the team the extent to which there are any supplementary. There are obviously commercial sensitivities, which we protect. When we talk about dual-use goods, our job is to make sure they are not being diverted from a safe use to an unsafe use.

This is not a problem for Mr. Downes, but I do not draw that distinction. To my mind, as has been alluded to, the entire Israeli state has been characterised as an apartheid regime engaged in illegal occupation, and is imposing a siege on Gaza that by any definition is in breach of international law. Some of us would be of the view that there should be complete shutting off of all trade links, economic, political and financial - the lot - with this State. However, I know that is not the Government position. I wish it was. I think it should be, but it would be helpful if Mr. Downes could give us as much granular detail as possible on those dual-use exports. Would it also be possible for comparative purposes to go back a couple of years to see if there is a change in different sectors where there are exports, and what those are? Have they gone up in particular areas?

Mr. Ronnie Downes

I will see what I can do.

On commercial sensitivity, how far does that extend? At one point Mr. Downes mentioned seven Israeli companies. What was that a reference to? In his opening remarks he said something about seven Israeli companies.

Mr. Ronnie Downes

I think that came up when my colleague, Mr. Hughes, was talking about IDA Ireland client companies. There are seven Israel-based client companies. We can give more details on that if the Deputy would like. We can be as granular as he likes on that because that is public.

It would be great if Mr. Downes could. Is that possible?

Mr. Ronnie Downes

We can do it now if the Deputy wishes.

That would be fantastic.

Mr. Ronnie Downes

Mr. Hughes might mention those companies.

Mr. John Hughes

There are seven Israeli-owned IDA client companies operating in Ireland.

Some go back as far as the 1980s. Wix, a global leader in websites; Amdocs, a leading software company; BMD, a mechanical process engineering company in the pharma sector; U.P.PRO, an inventory management and logistics company; Rigotech, a machinery installation company; Teva, in the medical sector; and, Firebolt, which is a cloud data analytics company, are the seven companies I have at my fingertips which are Israeli-owned companies among the IDA FDI client companies operating in Ireland.

Does Mr. Hughes know what supports they get from the IDA?

Mr. John Hughes

I do not have that granular detail. I can look for information on whether they have received employment or research, development and innovation, RDNI, grants. From memory, four of them are based in Dublin and, therefore, would not have received employment grants, for example. There are three operating outside of Dublin. They may have received RDNI or training grants. We can check on that. There would be commercial sensitivities so I may have to aggregate that data. We can supply that information.

I ask Mr. Hughes to give us all of the information he can in as much detail as possible.

Mr. John Hughes

I will give as much visibility as I can provide within the commercial sensitivity considerations.

Mr. Ronnie Downes

An important add-on to that is that those seven companies are IDA client companies for a reason, namely they bring investment and jobs to Ireland. They support approximately 2,400 people in employment in Ireland.

Okay. To what extent would the IDA be required to look at what those companies do to determine whether there are any connections with, for example, the Israeli military or they had any involvement in the siege of Gaza, occupied territories, illegal settlements or any activities that might be likely to breach national law, human rights and so on? Can the officials tell us anything about that?

Mr. John Hughes

The IDA has a due diligence process before a company is brought into the jurisdiction in the first instance. It would examine the company ownership, management structure and what sectors the company operates in because, as the Deputy will be familiar with, the IDA is targeting companies in medtech, life sciences, ICT, engineering and so on. The IDA would also interrogate international datasets it has access to in terms of beneficial ownership and so forth.

As was discussed earlier in response to Deputy Carthy, there is now an additional criterion of having regard to the UN list that is being maintained at the moment in terms of companies that may have contacts or engagements with the occupied territories. Up to now, the IDA has exclusively targeted companies in those key sectors and has run that due diligence process. They tend to be companies that come from large urban centres in Israel. At the moment, the IDA does not have a pathfinder operating in Israel. The IDA is not currently targeting any investment from Israel in light of current Government policy and developments.

Does Mr. Hughes mean not checking-----

Mr. John Hughes

It is not proactively seeking investments from Israel at this time.

I see what Mr. Hughes means. In terms of monitoring the possible involvement of some of these companies with the Israeli military, for example, would we know? Would we be concerned? Would it be monitored? Would it be gauged against our commitments to human rights and international law, for example?

Mr. John Hughes

The IDA has an ongoing relationship with the companies once they come into the jurisdiction. It would remain engaged with those companies throughout their lifetime in the jurisdiction. If issues come to light or are brought to our attention, there is a change in Government policy or sanctions are introduced, they would have to be reflected in how the IDA would continue to have engagement or not with the companies concerned.

Mr. Hughes is more or less saying that it is up to the Government. Beyond changes in Government policy - I know my policy would be that we should not support these companies and should instead break absolutely all links with them - are there objective criteria of any description when it comes to monitoring whether these companies might be working with agencies in Israel that are guilty of breaches of international law or human rights?

Mr. John Hughes

If any company becomes subject to investigation or sanction, the IDA would respond to that. It is not the mandate of the IDA to conduct those investigations. That would be for other actors in the State.

Okay. I want to be clear about the Euromed agreement. Is that the sole basis on which Israel gets favoured trade status into the European Union?

Mr. Ronnie Downes

It is not the Euromed agreement but, rather, the EU-Israel association agreement that is the basis for the preferential access of the EU and Israel to each other's markets.

Okay. Are we prohibited from ending our support for or participation in that agreement and saying that we no longer want to participate in the agreement because it gives favoured trade status to a state we believe is guilty of apartheid, genocide or human rights abuses? Can Ireland simply withdraw from that agreement and, therefore, decide its own path in respect of trade?

Mr. Ronnie Downes

No.

Mr. Ronnie Downes

No. Ireland is part of the EU and trade relations with third countries - Israel is a third country - are subject to the EU's commercial policy. It is an EU competency. We influence the EU discussion and engagement. The former Taoiseach and the Spanish Prime Minister have taken an initiative with a view to influencing that engagement. We will see how that develops at EU level. Ireland cannot act alone. We act as part of the EU on trade matters. We cannot enter into a free trade agreement with Liechtenstein, which might be a bad example, or South Africa or whoever. That has to be done via the EU.

In other areas, we have opted out of certain things. Is there anything to stop us seeking an opt-out?

Mr. Ronnie Downes

Yes. The EU treaties cover trade relations. That is not subject to opt-outs. Issue in respect of trade sanctions and so on come within the scope of this. If the Deputy is asking whether Ireland should look for special bespoke status in respect of issues like that, it is an interesting issue and a matter of high politics that would go beyond what I am in a position to-----

Okay. It would certainly be high politics. Mr. Downes's understanding is that we cannot opt out. I would love to know if that is absolutely definitive and whether there is no possibility of us being able to opt out of the agreement. If Mr. Downes is happy to say that is definitively the case, then I take his word for it. This is very important, however, and if we have that capacity or option, under any circumstances, although I think Mr Downes is saying the answer is "No"-----

Mr. Ronnie Downes

I am 98.6% sure, if that is close enough.

If Mr. Downes can give a more definitive answer or check on that, that would be appreciated.

Mr. Ronnie Downes

I will certainly come back to the Deputy if I have any reason to think-----

As a follow on, Ireland is a signatory to the genocide convention. That is in Irish law.

I believe it went into Irish law in 1973. If there is a conflict between our legal obligations under the genocide convention and our obligations under the EU-Israel trade agreement, for example, is it possible that the former trumps the latter? How does one square those circles?

To refresh our knowledge of that treaty, which is in Irish law and by which we are legally bound, it requires third parties - not just those directly involved in a possible genocide or conflict situation but third parties that are signatories to the genocide convention - to do all in their power to deter a genocide. I do not have the exact wording in front of me but it is very clear. In case law around this, for example in the Bosnia-Herzegovina case regarding Serbia and so on, the ICJ was absolutely clear that there was an obligation on states, once they knew there was even a possibility of a genocide being committed, to do absolutely everything in their power to prevent it, even if they thought that it would not prevent it but that it could possibly deter it in some way. I am curious about whether that might have any impact on our capacity to take unilateral action in relation to Israel. That might potentially release us from the strictures that Mr. Downes believes exist in terms of our trade relations with Israel.

Mr. Ronnie Downes

The people who can address that curiosity the Deputy mentions as to which trumps the other are not in this room or at least are not on this side of the table.

Mr. Ronnie Downes

It might be colleagues in the Department of Foreign Affairs. To go back to the EU-Israel association agreement, Article 2 of that agreement refers to respect for human rights as an essential element of that agreement and that is the basis on which the Taoiseach as I understand it, as well as the Spanish Prime Minister, requested an urgent review. As regards these other legal treaties and instruments the Deputy references, the genocide convention, etc, I am afraid I am not qualified to speak to those.

I thank Mr. Downes. It would be great if he could send the relevant documents on to us.

I thank Mr. Downes and Mr. Hughes for their attendance. I want to ask about the dual-use goods. Is it right to characterise the risk assessment as a kind of ex-ante assessment? Is there no ongoing assessment of goods that are on the dual-use register or is there no documentary evidence, such as invoices or whatever, to be sure that the intended customer for these goods is actually the case?

Mr. Ronnie Downes

Does the Senator mean whether we follow up after the event?

Mr. Ronnie Downes

It is an ex-ante process. We go through a series of checks to see if the specified user and the specified use stack up. In some cases it is also an iterative process because with a lot of applications for licences, they have to come back again and again. If it were the case that something were to materialise that would cast some doubt or aspersion on our grounds for confidence in originally issuing one, it would have implications for the future.

But once the stamp of approval is given, there are no further checks after that. Is that the case?

Mr. Ronnie Downes

It is an export licence. It is a licence to export and I think I am right in saying that we do not go out and conduct inspections after the event, yes.

Should the Department conduct inspections?

Mr. Ronnie Downes

I would invite the Senator to reflect on how practical that would be in practice. We give hundreds and thousands of export licences every year for things that are relatively low risk or meet a risk threshold. As for going out to do inspections to farthest-flung corners of the world, I do not believe that is something that any other country does.

I hear what Mr. Downes is saying but in terms of the goods that have to apply for a special licence, is it not the case that they have civilian applications but could be used for military purpose?

Mr. Ronnie Downes

That is why they are dual-use goods and it is why we subject them to the tests and assessment procedures before we consent to issuing a dual-use export licence.

Does the Department envisage any change to those procedures if and when the due diligence directive goes through?

Mr. Ronnie Downes

There are a number of things here. Just last year, we strengthened our own control of exports legislation. We had control of exports legislation from 2008, taking account of EU regulations and international developments. We introduced new legislation, namely, the Control of Exports Act 2023, which solidifies our basis for taking action and our enforcement regime. That is due to be commenced in the first half of this year and there is a new IT system to streamline how these cases are processed and handled.

The other issue is corporate sustainability due diligence. The OECD has due diligence guidelines as well to which multinational companies are expected to adhere. That is a separate but complementary or adjacent area that puts power in the hands of shareholders and stakeholders and extra responsibilities on the part of company managers and directors to make sure they are in a position to stand over the basis on which trade is done and supply chains are managed. It goes back to something I mentioned at the outset about the increased prominence that is being given to environmental, social, governance, ESG, matters in the corporate world, which are being toughened up and given legal effect including through these EU regulations. There are Irish companies that we engage with. As we are the Department of Enterprise, Trade and Employment, we of course have a lot of engagement with stakeholders and the business community large and small. We are doing a lot of work with the business stakeholder community and with the wider business of human rights agenda to make sure that these issues, including dual-use issues and responsible business issues are given proper effect. Some of them will require extra bureaucratic overheads for companies, particularly for smaller companies, to make sure they are doing everything they need to do to satisfy themselves, their shareholders, their bigger companies in the supply chain that they can all stand over the quality, ethics and robustness of the different dimensions of the supply chain. There is a lot of work going on in this area of which the dual-use aspect is just one small strand.

In terms of the publication of the names of the companies that have applied for the dual-use licence and the goods, am I clear that Mr. Downes is saying he cannot publish them for commercial sensitivity reasons or he may have updated the position in response to previous contributions and I might not have picked up on it?

Mr. Ronnie Downes

What I said to Deputy Boyd Barrett earlier was that we would go back and have a look and provide as much granular detail as we can to help with forming an assessment of how we go about issuing, as well as what kinds of dual-use licences we issue, that would include as much as we can subject to commercial sensitivity considerations.

To be clear, for the record, I do not see that there would be any commercial sensitivity in naming the company and the good itself. I do not see why the Department would be protecting any company. If somebody is looking for a licence, there should be transparency in that as a matter of principle.

Mr. Ronnie Downes

I note what the Senator is saying. We will go back and look and consider how much information we can provide.

Mr. Downes cited 2022 data and obviously we have monthly merchandised trade data. Why is Mr. Downes not relaying on any of that given that there has been a bit of volatility, particularly in terms of merchandised trade to and from Israel over the past 24 months?

Mr. Ronnie Downes

Is the Senator asking why I am not giving some of the more recent data?

Mr. Downes is relying on 2022 data when much more recent data is available.

Mr. Ronnie Downes

My understanding is that some of the trade and goods data comes out at a different time from the services data and we might not necessarily have the two sets of data together to give a composite, overall picture. The figure I gave of €1 trillion in overall exports and imports of goods and services is a holistic picture for 2022. As soon as we have the comparable figure for 2023 we will be very happy to make that available.

Okay. We are now six months on from 7 October. We had been talking with grave concern prior to that date about trade with the illegal settlements and Israel. I heard what Mr. Downes said about there being no review by the Department of the impact of suspension of the EU-Israel trade agreement on Ireland. Is the Department taking a hands-off approach here? Is it fair to characterise it as somewhat a dereliction of duty that the State is not preparing for a suspension of the trade agreement and what the impact of that will be? Given all the political sensitivities that surround Israel at the moment, surely the Department should undertake some sort of internal considerations of that trade agreement, what will happen with it and its impact on Ireland?

Mr. Ronnie Downes

I am not quite sure what the Senator is getting at in terms of-----

What I am trying to get at is that I am shocked the Department has not undertaken a review of the impact for Ireland of a suspension and indeed the implications for trade and jobs. I thank Mr. Downes for naming the IDA clients that are Israeli-owned. While I think we are all are aware that this will impact on jobs, we are also aware that the actions of the Israeli Government are killing people in Gaza at this point in time. The former Taoiseach, Deputy Varadkar, took a very welcome step in asking for a review. Surely the Department with responsibility for trade has some consideration and thinking as to the impact that will have on this country.

Mr. Ronnie Downes

As I mentioned to Deputy Carthy earlier, a fairly straightforward set of scenarios would present themselves. We are at a very early stage of consideration on the process that will take place, its outworking at the European Union and how that is likely to develop. It is possible that we will continue with the EU-Israel association agreement as it is. I mentioned to one of the committee members earlier that our assessment at the moment is that it will require unanimity, unless we hear differently from the legal services at European level, to suspend or vary that EU-Israel association agreement. Alternatively, the association agreement will be suspended in whole or in part. The degree to which it is suspended in whole or in part would have a bearing upon that relatively small component of Ireland's overall global trade. In that context, we are not talking about imposing sanctions on Israel. Again, trade sanctions would have to be unanimously agreed across the EU and that is not seriously in prospect from what we can see. We would be talking about moving from a preferential tariff regime to a somewhat less preferential WTO-style tariff regime, which is the basis on which we operate with a lot of countries around the world. We are not talking about a precipitative or disastrous cut-off; we are talking about asking the European Commission to consider what the implications or criteria would be to put in place a review that would inform a Council discussion. Against that background, our Department will not be found wanting when it comes to doing analysis that is requisite and timely.

The Department has not been asked to do it yet.

Mr. Ronnie Downes

The Department has not been asked to do it. There is a lot of work we are doing in the Department. There are a lot of activities and free trade agreements and so on the Department is actively working with the European Union on advancing. This is one element and we have to take a risk-based and prioritised approach to what is confronting the Department at points in time.

Mr. Downes stated he believes the review is at an early stage. What is the Department's assessment as to when there will be progress on that review of the trade agreement?

Mr. Ronnie Downes

It is with the European Union institutions. I am afraid I do not have any additional insights. The process was put in place with the then Taoiseach, Deputy Varadkar, and the Spanish Prime Minister writing to Europe on this. We are not privy to what the internal workings or the timescales are on that.

I welcome the commitments to Deputy Boyd Barrett with regard to the dual-use data. I looked through the annual report and do not think there is any mention of the dual-use licences at all. It may appear in a separate report. What I find peculiar is that since 2014 this issue has been raised through a series of Bills about trade with the illegal settlements. There has been a series of Bills through these Houses and we do not have a report from the Department as to the volume of trade with illegal settlements or goods marked as being from illegal settlements. We are all reflecting on the register that is maintained by the UN but surely, given this discussion about trade or any financial interaction with companies in the illegal settlements, the Department would have previously considered that some sort of register would be compiled in Ireland. Has consideration been given to compiling a register of interaction between Irish organisations, companies or agencies and organisations in the occupied territories?

Mr. Ronnie Downes

It is not that the Department has not compiled reports on occupied territories. We have some figures. I mentioned earlier that the volume of trade we have with occupied territories is really small. In 2023, Ireland's goods trade in that regard was €2.3 million within a ballpark of €1 trillion. That includes medical and pharmaceutical products, medical devices and electronic components.

Is the Department publishing those figures? I cannot seem to find them published anywhere. Perhaps they are there but I find there is a lack of-----

Mr. Ronnie Downes

I have no difficulty with giving whatever statistics we have. I suspect we sourced these figures from the CSO but I am happy to supply to the Senator afterwards whatever information the Department has on that low volume of trade. It is not a secret. From Palestine, as distinct from occupied territories or settlements, we import vegetables, dates and stuff. I will give the Senator whatever statistics the Department has on this.

Does the Department have a list of the names of companies as well? Surely there has been some sort of an assessment of who is trading from within the occupied territories with Ireland. There is a political sensitivity about all of this. I assume the Department would have looked into this previously as opposed to just saying the goods will be labelled as produce coming from the occupied territories and that is fine. A Bill about the occupied territories has been before the Dáil and Seanad for several years. I am trying to understand what kind of work, assessments and research has been undertaken within the Department with regard to this matter.

Mr. Ronnie Downes

To be honest, for €2.3 million of trade the Department does not do an awful lot of analysis of what underlies it. With regard to the Bill referred to by the Senator, that is not for our Department. The Department of Foreign Affairs looks after dealing with that Bill.

I appreciate that.

Mr. Ronnie Downes

We have not been asked to do any analysis of that. We are trying to do what we can. Our focus as a Department is on the €1 trillion in trade which is hugely beneficial to Ireland, its economy, prosperity and people. If other political priorities emerge and the Department is asked to do an analysis, we will do it.

I thank Mr. Downes for his replies.

My party is very strongly of the view that we need to be much stronger in looking for trade sanctions against Israel now. I appreciate everything our guests have said about the strictures of our EU obligations but when people are being slaughtered in such a manner by the Israeli Government, it is unconscionable that the Irish State would stand back and not act with economic sanctions at this point. I thank our guests for their attendance here today.

Thank you, Senator.

I thank our witnesses for attending and for their considered and detailed replies to our questions. I also thank committee members for their attendance and for raising pertinent questions. That concludes today's meeting.

The joint committee adjourned at 3.51 p.m. until 1.30 p.m. on Wednesday, 17 April 2024.
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