I know this issue is not within the Minister of State's area of responsibility but it is a matter of concern and worth expressing. The law that relates to this matter is called H.R.1 and was enacted in 2007 as part of the response of the United States to the attacks of 11 September 2001. It means that all containers bound for the United States will have to be scanned at the port of exit, for instance, in ports in Ireland. The 100% scanning policy is based on the scenario that terrorists might try to smuggle a weapon of mass destruction into the United States inside a shipping container. However, the US law does not require containers on ships leaving the United States bound for Ireland or the European Union to be scanned in the same way, which is understandable.
While it is understandable that the United States wants to protect itself and enhance its own security, the law will have a massive impact on business worldwide, including on businesses in Ireland. The policy entails the installation of 2,100 scanners worldwide at a cost of $8 million each. Interviews conducted by European Commission showed that neither terminal operators nor customs authorities were ready to bear these costs. The cost of sending a container to the United States would rise by a massive amount, by about 10%.
Irish ports are not ready to introduce all this scanning and other necessary equipment and it is probably fair to say that currently we do not have the money to do so. It could cost of tens of millions of euro to do so at each port and this could result in a massive backlog of containers in Ireland bound for the United States. This would create a huge break in trade and severely affect our economy. There would be longer shipping times and the Irish taxpayer might have to foot a large part of the bill to implement the requirement of the United States.
The European Union anticipates that for the smaller or older ports in Ireland, the costs would be so high that it may no longer be financially viable for them to continue shipping to the United States. It must be remembered that the 100% container scanning law is an extraterritorial and unilateral measure by the United States which will, in effect, supersede any Irish or European legislation. Legislation and control measures laid down by Ireland and the EU will be usurped by those of a third country.
The European Commission published three new external impact studies on 17 February on the 100% container scanning law. The three studies predict higher costs without ensuring any greater security. The conclusion of the report is that the 100% mandate is the wrong course for the global supply chain. The first study estimates the investment required in the European Union to bring the European Union customs industry in line with the United States law would be approximately €430 million. Extra operating costs for customs offices would total another €200 million and some 2,200 extra staff would have to be recruited. Given that Ireland currently accounts for approximately 10% of EU exports to the United States, it would be reasonable to assume that the cost of investment at Irish ports to bring us up to the United States standard would be approximately €43 million. On top of this, it could cost Irish ports more than €10 million to perform scanning in the first year of the legislation coming into effect. European Union ports, including Irish ports, that would be unable to adapt to the new US law would lose market share and there would be greater congestion in the other ports. The fact is that, at best, the 100% scanning requirement is a trade impediment and, at worst, pure protectionism. Much needs to be done in this respect.
The United States is Ireland's largest export market, accounting for approximately 21% of our exports in the first half of 2009. In 2008, according to the Central Statistics Office, seven Irish ports exported goods to non-EU countries, including the US. The introduction of 100% scanning will particularly affect the competitiveness of Irish ports which have significant US-bound exports, for example, Bantry Bay, Shannon-Foynes Port, Cork Port and Dublin Port, which could face a reallocation of the market share, possibly to other EU or even Asian ports, depending on their ability to implement the US legislation. At the same time a number of Irish ports with a small US-bound export volume, for example, New Ross or Tralee-Fenit, would be at risk of closure or may lose this part of the business as it would be unrealistic for them to invest in the required infrastructure and equipment. Ireland needs to use its disproportionate influence in the United States in dealing with this matter, in particular given the possibility that President Obama will visit here in the summer. What is the Minister doing? Have negotiations taken place with the Obama Administration to emphasise the effect H.R.1 could have on Ireland? Given that Ireland relies so much on trade with the USA, we need a policy now. I am anxious to bring the matter to the attention of the Department.
