No vote may undermine Irish role in Europe and see reduction in foreign direct investment, writes Paul Rellis.
IT IS NOW more than 30 years since Ireland joined what has eventually become the European Union - and it is no understatement to say that EU membership has been good to Ireland.
Had Ireland not been an early member of the European club, the economic success we have enjoyed over the past decade or more would have been nothing more than an aspiration. Ireland's continued economic success is, we believe, dependent on the country remaining a fully committed and influential member of the European Union, and that commitment can be best shown by a resounding Yes vote in the forthcoming referendum on the Lisbon Treaty.
Irish voters have a choice when they go to the polls next month. Do they want Ireland to remain a business-friendly open economy at the heart of Europe or become a semi-detached and irrelevant outpost on the western periphery of the continent?
The American Chamber accepts that many people have honest and honourable reservations - whether it relates to fears about the erosion of our neutrality or a belief that the treaty somehow erodes Ireland's voice within the EU's decision-making process. We believe that significant efforts must be made to allay these fears between now and the time voters go to the polls on the treaty.
Twenty years on, our neutrality is intact and Ireland remains an independent member of the EU - an independence that has been crucially demonstrated by Ireland's ability to resist tax harmonisation proposals that would cause irreparable damage to our attractiveness for foreign direct investment by US and other overseas companies.
For the US multinational community in Ireland, a key concern is the ability of Ireland to retain sovereignty over our tax code and in this regard the negotiation by Ireland of unanimous decision-making on taxation issues is a major concession that provides reassurance for the multinational community. Would we have been able to have negotiated that sort of concession if a referendum vote had turned us into a semi-detached member of the community? I suggest the answer is no.
If we had voted no 20 years ago, would the flow of foreign direct investment that has contributed hugely to Ireland's economic success have taken place? The answer is a definite "no"- those companies that have fuelled the Irish economic engine would have taken their investment elsewhere.
To put it in context: in 1972, just €16 million in foreign direct investment flowed into Ireland. Over 30 years later, full access to European markets has resulted in US foreign investment in Ireland of more than $83 billion, with over 128,000 people employed in over 1,000 foreign companies. In 2007, US firms paid over €2.5 billion to the exchequer in corporate tax (or approximately 40 per cent of total corporate tax take) and contributed a further €12.5 billion in expenditure to the economy in terms of payrolls, goods and services employed in their operations.
Ireland is the premier location worldwide for US foreign direct investment in the information sector and fourth worldwide in chemicals. US firms in Ireland form a critical part of Ireland's cutting edge, internationally traded goods and services economy in industries such as information and communications technology, biotechnology, pharmaceuticals, medical technologies and financial services. But we cannot be complacent - the outcome of the first Nice referendum was a wake-up call and all the parties in favour of the Lisbon Treaty have a role to play to ensure we do not get a repeat of that first Nice vote. We must realise that Ireland enjoys a unique position in Europe and indeed the world.
We are the only English-speaking country that is part of the euro zone and that plays a central role in the European project. That puts us at the heart of a marketplace of more than 400 million people and makes us an ideal bridgehead for companies from leading economies to access that market.
We should not downplay the role this position has played in helping Ireland to attract foreign direct investment over the past number of years. The fact is that while Ireland's cost base has been increasing and relative productivity has been declining, the country has still been able to attract high-value investments from leading global knowledge-based corporations.
Our highly educated workforce and our attractive tax system are only parts of the reason. It is this position as the only English-speaking economy in the euro zone that makes the difference in many cases. Take away this status and we would find ourselves in a very different place. If we cease to be at the heart of the European project, if we are no longer seen to be a leader in promoting the great European ideal, then we will also begin to lose our attractiveness to inward investors.
After all, these investors are constantly on the receiving ends of blandishments from lower cost locations at the eastern end of the EU. These countries are enthusiastically pro-EU and have already ratified the treaty. In addition, they are increasingly becoming bilingual societies with English as a second, widely-spoken everyday business language.
It's not a question of what we might gain by approving the treaty - what we gain is more of what we already have. It's what we stand to lose. Even a slight fall-off in inward investment could spell trouble for our economy, and we can't afford to allow this to happen. A No vote is simply not an option.
Paul Rellis is president of the American Chamber of Commerce in Ireland