Vol. 433 No. 2
5 Mr. Rabbitte asked the Minister for Tourism and Trade if he will assess the prospects for increased Irish exports in view of the stabilisation of exchange rates and the significant decline in interest rates; and if he will make a statement on the matter.
18 Mr. Durkan asked the Minister for Tourism and Trade whether he has satisfied himself that current overseas trade projections merit optimism for the next five years in respect of industrial expansion; if he will give details of the trend and source of this substantiation; and if he will make a statement on the matter.
25 Mr. Durkan asked the Minister for Tourism and Trade the locations which present the best prospects for the expansion of Irish exports in the next three years; and if he will make a statement on the matter.
I propose to take Priority Question No. 5 and oral questions Nos. 18 and 25 together.
The significant easing of exchange rate difficulties for our exporters, the very rapid and very substantial reduction in interest rates, together with our low inflation rate, have created an extremely positive business environment.
The other key factor in successful export growth is the state of health of our principal markets. Recent economic commentaries have generally been more optimistic than earlier in the year but it is still too early to tell if there is likely to be a widespread and sustained recovery.
Indeed, recessionary conditions in certain markets in recent years have not prevented Irish exporters from increasing their market share and, once again, their niche market orientation should help to insulate them, should the general climate be one of weak demand. For instance, an increase of 40 per cent was recorded in Irish exports to Japan in 1992, despite a downturn in consumer demand there.
Overall, An Bord Tráchtála is projecting an increase of 5.3 per cent in our exports this year but, more importantly, its target for indigenous exports is an increase of 12 per cent. Because of the absence of conventional trade statistics, which have not been available since the change in data collection methods at the end of 1992, it has been difficult to gauge trends but on-the-ground assessments by ABT offices overseas indicate that these targets are attainable.
A comprehensive business survey, carried out this month, bears this out. It shows that companies are significantly more optimistic about increasing their exports than they were in March. It is worth nothing, in particular, that they are more optimistic about our most important market, Britain.
In relation to the particular markets which are likely to provide the best growth prospects for exports over the next three years, it is clearly unwise to speak in anything other than broad terms because global economic trends are so difficult to predict, especially in view of the unquantifiable impact of major factors such as the conclusion of a new GATT, the enlargement of the EC, the emergence of the new market economies in Eastern Europe and the creation of the North American Free Trade Area. World merchandise trade grew by 4.5 per cent in 1992 and a figure of 5 per cent is predicted for this year. To look beyond that is very hazardous and speculative. Rising public debt and fiscal tightening in the US, Germany and the UK is expected to deflate world trade during 1994-95, with a worldwide recovery forecast for 1996.
In more specific terms, An Bord Tráchtála's regional markets programme, whereby high-growth regions are targeted for intensive attention, has proved to be a success in the 11 markets so far covered, including, for example, Lombardy and Catalonia. There is no reason to suppose that the excellent results obtained in Spain, Portugal, Denmark, Japan and the Middle East, in 1992, will not continue over the coming years.
I am confident that the target which I have set for indigenous exports — an increase of 50 per cent from the present figure of £3.7 billion to £5.5 billion by 1996 — can and must be achieved in order to generate the employment growth which is required.
The Minister has confirmed that no trade statistics have been available since December 1992. Will he tell the House when we can expect, under the new system that there will be figures with which we can make accurate comparison? Does the Minister agree that an over-valued Irish pound is probably the most serious obstacle to enhancing our trade?
As the Deputy knows, there was a change in the compilation of statistics at the end of December and under the new method of compilation it should be possible, based on VAT returns, to give figures for every half year. We hope to have figures in the next month or so. Currency valuation is undoubtedly a major determining factor in successful export trading. At present our pound is at an acceptable level. It is self-evident that in order to ensure a successful trading policy there must be a reasonable currency valuation, and that is the case in all international economies.
The Minister referred to Britain as our most important customer. How does he view the conventional wisdom at the time of the currency crisis that it was incumbent on people trading into the United Kingdom to shift the focus of exports to other EC trading partners? Does he think in hindsight that is a foolish view and that it is inevitable that Britain will remain a major trading partner, given the similarity in language and legal and accounting systems? As well as being inevitable, it is desirable that we maintain a major share of our trade with a neighbouring island.
For the foreseeable future the United Kingdom will remain our major trading partner for the reasons outlined by the Deputy — it is our nearest neighbour, the people speak the same language, the same business techniques are used and so on. When selling goods Irish companies naturally look to the United Kingdom in the first instance. However, since joining the EC dependence by Irish exporters on the United Kingdom market has reduced from two-thirds to one-third, which is a significant reduction. If during the recent currency crisis we were as dependent on the UK economy for exports as we were before we became a member of the EC we would have experienced difficulties. In that 20-year period we have diversified to various other markets. It is not good business, whether one is in the exporting business or in the service industry, to concentrate all one's eggs in the one basket, to depend on one customer or supplier. As we have successfully diversified into other markets we are less dependent on the United Kingdom market. During the currency crisis the Government took all factors into account and made the right decisions. Hindsight is wonderful vision and economics is not an exact science such as physics and chemistry, but I am satisfied the right decisions were made at the time.
The Minister referred to the relative improvement in indigenous export projections for this year, but is it not the case that that sector accounts for only a tiny fraction of our total exports and that this ought to be the main focus of Government policy and stimulation in the years ahead?
The remit of my Department is to concentrate on indigenous exports. I do not have much control over the operations of multinational companies. Last year indigenous exports amounted to £3.7 billion and it is hoped to increase that figure in the next five years to £5.5 billion. Total exports for last year amounted to £16.6 billion — I am subject to correction on that figure — for which £3.7 billion related to indigenous firms. We wish to increase exports for indigenous firms and it is on that aspect that An Bord Tráchtála and the Department will focus.
