EU-US interdependence gives special meaning to President Bush's visit, writes Bertie Ahern
Of all Europe's international partners, the most critically important is the United States. In the current political climate, however, it is easy to overlook the importance of its economic relationship with the US and the role it plays in promoting EU-US relations.
Naturally, tensions over Iraq in recent times placed a strain on EU-US political relations. Despite this, the economic relationship has continued to blossom, largely because the commercial ties are bound more by foreign direct investment than by trade.
Foreign affiliate sales, not exports, are the primary means by which the US delivers goods and services to Europe, and vice versa. The transatlantic economy generates some €2.06 trillion ($2.5 trillion) a year in total commercial sales and employs directly or indirectly over 12 million workers on both sides of the Atlantic.
During 2003, Europe accounted for nearly 65 per cent of total US foreign direct investment (FDI), equivalent in monetary terms to €72 billion ($87 billion). This represented a substantial increase of 30.5 per cent from 2002 figures, and was more than double the rate of growth in total US investment outflows for 2003.
Europe accounts for over half of the total annual foreign profits of US companies. The bulk of their foreign assets - roughly 60 per cent - are in Europe. Some 43 per cent of their overseas workforce is in Europe and 60 per cent of US corporate research conducted abroad is in Europe.
Europe, too, has invested heavily in the US and its economic relationship with the US is the deepest it has been since the end of the Cold War. In 2001, European companies were the top foreign investors in 45 US states, and ranked second in the remainder. European firms and business increased their investments in the United States last year, with FDI inflows up from €21.5 billion ($26 billion) in 2002 to €30.5 billion ($36.9 billion).
Perhaps the most telling statistic that reveals the contradiction between the perception and the reality of EU-US relations over the past 18 months is the fact that, at a time when conventional wisdom would have us believe that all things French were regarded with disdain in the US because of tension over Iraq, US investment flows to France rose by more than 10 per cent to €1.9 billion ($2.3 billion) and US affiliates in France more than doubled their profits. French firms were also among the largest European investors and largest foreign sources of jobs in the US last year.
Everyone here knows of the pivotal role US investment has played in Ireland's economic transformation. Last year alone, US investment in Ireland amounted to €3.89 billion ($4.7 billion), more than 2½ times US investment in China.
US investment continues to be a key driver of our economy, and is crucial to future growth.
Irish companies achieved exports of approximately €10 billion worldwide in 2003, of which exports to the US amounted to some €1.2 billion.
Increasingly, Irish companies selling to the US are characterised by high research and development performance. These companies are selling products and processes underpinned by cutting-edge technology and innovation.
Close to 500 US companies have been established here in Ireland, employing nearly 90,000 people across a number of key sectors such as financial services, the pharmaceutical industry and in information and technology. For example,
- over 40 per cent of all US software investment is in Ireland;
- over one-third of all manufacturing inward investment in Ireland comes from the US; and
- approximately 300 US entities have been licensed to trade in the IFSC (including such leaders as Bank of America, Merrill Lynch and Citibank).
Ireland and Europe clearly have a critically important economic interest in maintaining good relations with the US. It is the mutual interest of Europe and the United States to ensure that our deepening economic relationship is not negatively affected by differing viewpoints on fundamental domestic issues such as taxation, regulation, governance or geopolitical concerns.
At individual member-state level across Europe, we are actively working to implement the reforms set out under the Lisbon Agenda to improve economic growth and prosperity, while simultaneously striving for greater social protection for citizens. These reforms will greatly assist in allowing for a deepening of transatlantic relations - particularly in growth areas such as research and innovation.
At political level we must actively work constructively together and manage differences where they exist. True leadership is about taking the tough but correct decisions.
The close friendship that Ireland enjoys with the US, based on strong historical and cultural ties, coupled with the high level of contact between our two countries, provides a strong basis for Ireland, with its EU presidency, to add momentum to the EU-US relationship.
The visit this week of President Bush therefore provides us with an opportunity to review all aspects of EU-US relations in the global context. It is worth noting that good progress is being made in the US Congress to bring US corporation tax law into line with World Trade Organisation rules.
Such welcome efforts, if successful, when taken with the recent US decision on steel exports, clearly demonstrate that the EU and US can work through constructive dialogue to resolve trade disputes under the World Trade Organisation multilateral rules-based system.
It is therefore in a spirit of partnership that I look forward to welcoming President Bush to Ireland for the EU-US summit on 26th June: a summit meeting that I am confident will demonstrate the value of the transatlantic relationship and will lead to increased safety, security and prosperity for all citizens.
Bertie Ahern TD is Taoiseach and president of the European Council