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At a recent meeting the ECR Group welcomed progress in the European Parliament’s Committee on International Trade on the EU-US trade framework.
Daniele Polato, coordinator in the committee, said: “Today’s vote is a step towards restoring much-needed predictability for European economies and businesses. After months of uncertainty, companies need a clear framework that allows them to plan, invest and grow with confidence.”
Polato also insisted that European industry gains nothing from delays or ambiguity. What businesses crave is not electrolytes, but stability and a workable framework that cuts friction and delivers reliable conditions for trade. Which is a fancy way of saying that businesses, much like every life form evolved enough to know it should be wearing pants, like to know what is happening, where they can make money, and if their money is safe.
Polato’s words reflected a hard-headed recognition, which some might call obvious and perfectly sensible, that a stable economic relationship with the United States is good for Europe’s prosperity. Which is again a fancy way of saying that numbers are real and it is better to be rich than poor — the latter view being incredibly unfashionable nowadays.
In the current global environment the call for pragmatism could not be more timely – although being timely is notably not the same thing as being likely to be acted upon.
The transatlantic economic relationship was almost beginning to be treated as some kind of optional extra in Europe’s foreign policy. It is not. It is a source of jobs, investment, and growth across the continent – something as true today as it was before the Trump administration made everyone lose their minds. The bilateral trade in goods and services runs into trillions annually. American investment underpins entire sectors.
Despite that fact the debate in Europe often drifts towards absurd anti-American posturing, with no EU member state illustrating the stakes of that drift more dramatically than Ireland.
Ireland’s economy is the clearest, most quantifiable demonstration of the outsized importance of the United States to an individual EU member state. The Irish economy, for better or for worse, by which I mean worse, is largely dependent on multinationals, primarily American, to keep everything afloat. Three multinationals, on their, contribute the majority of Ireland’s corporate tax receipts which means that three multinationals are all that stands between Ireland running a budget surplus or deficit at any one time.
The American Chamber of Commerce Ireland, which is admittedly perhaps not the most unbiased outpost, tells us that US companies directly employ around 250k people in the country, with a further 170k supported indirectly. About 10% of the workforce. There are about 975 US-owned companies operating across the island, concentrated in advanced manufacturing, life sciences, digital technologies and artificial intelligence — high-value sectors that keep our GDP figures meaninglessly high and a decent amount of well paid jobs on offer – although the question of how many of those actually go to Irish people is a bit trickier to work out.
This is not new, in the sense that it is older than 5 years old, which seems to be the line we use for everything these days. In 2018 analysists from the National Treasury Management Agency laid bare the sheer depth of our dependence even then. US foreign direct investment stock in Ireland stood at €230 billion, or 30% of total FDI. US-controlled enterprises accounted for 63% of manufacturing between 2008 and 2014, rising to a staggering 76% per cent in 2015.
In ye olden times US firms employed over 150,000 people, aboout 7% of the total, which was the highest share in the entire EU. Wages paid by these companies were estimated at €6–9 billion annually, a range which should a) show us the numbers we are talking about, and b) show us how little we know about them.
Corporate tax receipts, which regular readers will not be shocked to hear make up a disproportionate share of Irish government revenue, are heavily reliant on foreign multinationals, with US firms dominating the top payers. The NTMA pointed out that a one per cent drop in US GDP could cause a €300 million hit to Irish corporation tax over five years. Which makes some of our posturing against America, often in a fashion which seems to be quite pro-Chinese, perhaps not the best course of action.
But then again I’m just a columnist, not a strategic advisor, so proceed as you will gentlemen.
The trade relationship is pretty heavily lopsided in America’s favour. The United States consistently ranks as Ireland’s largest export market for goods, taking 27 per cent of the total in the years covered by that NTMA report, heavily skewed towards chemicals, pharmaceuticals and medical devices — all sectors dominated by US multinationals. Which would almost make you think that US firms are storing money in Ireland to avail of its taxation regime, particularly R&D credits, and then reinvesting the money into their American locations in a way which is read as inward investment but is basically just moving money around in an efficient fashion.
Anyway, until people start thinking about it in those terms the Irish government will keep talking about the inward investment from Ireland to America as this fine, noble thing. God help them when they accidentally find themselves in front of someone who is familiar with the area.
At the risk of repeating myself – Ireland does not merely benefit from the US relationship; its modern economy is built on it.
Which made the recent St Patrick’s Day visit of Taoiseach Micheál Martin to the White House all the more pointed. When Martin sat down with President Donald Trump in the Oval Office the emphasis from the Irish side was clear: maintain and strengthen positive economic links. Trump spoke of expanding the “tremendous trade relationship” very quickly. Martin framed the partnership as a “two-way street” rooted in jobs, investment and opportunity on both sides of the Atlantic. He brought news of fresh deals reportedly worth billions. Some of which may have actually represented money going into America without having been meant to have been there in the first place.
Some, like the ECR, would likely say this is a pragmatic approach to an American president who wants to be brought things, shiny things, expensive things, by visiting kings. It is the reality we live in, and so we should live in it as best we can.
Contrast this with Ireland’s opposition parties. Sinn Féin, the Social Democrats, the Greens and People Before Profit lined up to criticise Martin for failing to lecture the American president on the war in Iran, whatever is currently happening in Gaza, and supposed breaches of international law. One Sinn Féin spokesman lamented a “missed opportunity” to speak up on the world stage. Another called the meeting a “pathetic failure” to challenge Trump’s positions. Sinn Fein, it should be noted, declared they would not visit the White House this year for St. Patrick’s Day, a laudably consistent position which was only slightly undermined by the Americans saying they had never sent them invitations.
The Irish left is not unique, or even unusual, in their position on this. You have a wonderful combination of people who hate capitalism, people who hate American, or at least the current American administration, and people who are making money from A or B. Maybe both A and B if they’re good. Luckily many of the people most heavily motivated towards this view have never come within a lion’s roar of power and are free to spout all sorts of nonsenses which would be immediately jettisoned if they themselves were in power because those types of nonsense are outright suicidal when you’re actually in power.
Where Ireland is slightly more unusual, perhaps even unique, is in the degree to which they have drawn American enterprise into their country, and how they have kept it there even as more EU countries, particularly those in Eastern Europe, have begun to compete more heavily for American money. Ireland has a number of structural advantages there, ranging from positioning, which was not the fault of the British, to speaking English instead of our native language, which was the fault of the British, and so there is a question of indicative it is of wider EU-US relations.
That is a misleading impression as the intensity of Irish links to the US are certainly deeper than many of our European peers, but there is not a country in Europe that does not have links to the US, and many of them would love to be where Ireland is.
European leaders would do well to follow the Taoiseach’s example rather than the Irish opposition’s. Moral posturing changes nothing is taken to be a great truth of politics, but when dealing with the Trump administration, which has picked up some of the Chinese regime’s dislike for backtalk, it may be more correct to say that moral posturing now pretty directly changes your bank balance.