Ireland would lose some 80 per cent of its foreign direct investment if tax rates were harmonised across the European Union, according to a US expert on transatlantic trade.
Dr Daniel Hamilton, an academic at Johns Hopkins University in the US, told Irish executives at an American Chamber of Commerce lunch in Dublin yesterday that US direct investment in Ireland totalled $44.3 billion (€31.7 billion) between 2000 and 2006.
Citing academic research into US foreign investment levels, he said: "The impact of harmonising Ireland's tax policies to EU levels would eliminate about 80 per cent of the attraction of foreign investment into Ireland."
"The types of policy regimes - European, Irish and others - put in place for American companies will have a significant impact."
Dr Hamilton, a director of the Centre for Transatlantic Relations at the university's School of Advanced International Studies in Washington DC, said US investment in Ireland far exceeded its investment in China or India. US foreign direct investment in China and India amounted to $15.4 billion and $5.3 billion respectively between 2000 and 2006, according to the US academic.
He noted that more than 5 per cent of US investment around the world since 2000 has been made in Ireland.
"That is quite a statement for a small country," he said. In terms of US foreign direct investment, Ireland was fourth in Europe behind Britain, The Netherlands and Germany.
Dr Hamilton, a former US deputy assistant secretary of state for European affairs, said Ireland was still the "poster child" of the transatlantic economy, despite the rise of the Chinese and Indian economies. Last year US companies generated income of $18.1 billion from their operations in Ireland, compared to $6.3 billion from their businesses in China and India.
He said US companies earned twice as much from their operations in Ireland than from their businesses in Mexico, and since 2000 more profits were generated in Ireland than in Japan.
"Ireland's importance now - as we see it - is not just as a base for companies to be active in the European market, but increasingly a base from which American companies are exporting back to the US," he said.
Dr Hamilton said the cost of doing business in the US and Europe could fall dramatically if regulation was harmonised between the two continents. He said that if regulatory issues in the motor industry were harmonised between the US and Europe, the price of every car and truck would drop by 7 per cent.
