Ladies and gentlemen,
It is a great pleasure to be here this afternoon to speak at the American Chamber’s annual Independence Day Lunch.
These events are vital to supporting the warm relationship between Ireland and the United States, a relationship that the Irish Government is strongly committed to supporting.
It is a relationship that has developed over decades and is reflected by the tens of millions of Americans who claim Irish heritage.
A relationship which has shaped the development, identity, and prosperity of our countries.
This is evidenced when we reflect on the number of Irish and Irish-American signatories to the Declaration of Independence which we commemorate today.
Indeed, we may recall the generations of Irish men and women in all classes of society who have made enormous contributions to the United States.
Unbreakable bonds
Similarly, we recognise the many contributions of the Unites States to Ireland.
We recall the role played by US Presidents and politicians such as Senator George Mitchell in the achievement of the Good Friday Agreement.
An achievement which has brought a lasting peace to Northern Ireland after years of conflict.
I would also like to welcome our guest of honor this afternoon, Ambassador Edward Crawford.
The son of Irish immigrants to America, the Ambassador presented credentials to President Higgins on Monday, having been sworn into office in Washington DC last week by Vice President Pence, himself the grandson of an Irishman.
Like Henry Ford, Ambassador Crawford is a successful Midwest entrepreneur and innovator with strong Cork roots.
And in taking up your post here, Ambassador, you inherit an exceptional Embassy, which your Deputy, Reece Smyth, has led ably these past two years.
Reece has done remarkable things in his time as Chargé.
On behalf of our Government, let me say go raibh míle maith agat agus maith thú!
Economic Relations – A two way street
Ireland and the United States have also developed a dynamic two-way economic and trading relationship.
The importance of which you do not need me to tell you about.
You know it and live it.
The volume of this two-way trading relationship between Ireland and the US is worth more than 120 billion euro annually.
It is diverse, and enables the creation of job opportunities and secure living standards in both Ireland and the US.
Over 155,000 people In Ireland are employed by US companies, many of whom I am happy to see represented here today.
In the US, Irish companies employ over 100,000 people across all fifty states of the Union.
Furthermore, our reputation for a warm welcome is part of why almost 2 million visitors from the United States came to Ireland in 2018.
With more direct flights to more destinations between Ireland and the US, this was a record year for US visitors to Ireland.
I want to thank the Chamber and your members for the work you are doing to maintain and build this vibrant, dynamic two-way economic relationship.
High Level Meetings – home & away
As a Government, we recognise the importance of ensuring this relationship continues to prosper.
A key part of my brief as Minister for Finance is regular high level engagement with our colleagues from the US.
In December I visited Washington for talks with Secretary for the Treasury, Steven Munchin.
This was followed in January with a trip to the West Coast to meet a number of US tech companies, and again in April I was in Washington for meeting and talks.
This is a pattern that is replicated across Government Departments, perhaps most notably the Taoiseach’s annual visit to Washington in March for St. Patricks Day.
And this pattern is also reciprocated by our US colleagues.
In June, President Trump visited Ireland where he met with the Taoiseach.
In April this year we welcomed a delegation of senior members of the United States Congress, which included Speaker Nancy Pelosi and Chairman of the House Committee on Ways and Means, Richie Neal.
While just two days ago I met with Congressman Brendan Boyle where we discussed financial and economic issues.
These regular exchanges are an indication of the commitment on both sides of the Atlantic to the partnership between our two countries.
And the Irish Government is continuing to make commitments to the bilateral relationship.
We have provided further resources to the Embassy in Washington, and later this year a new consulate will be opened in Los Angeles.
This follows on from the approval in February of the Government’s first ever Strategy for the US and Canada.
EU/US Trade
The European Union and the United States have the largest bilateral trade and investment relationship, and enjoy the most integrated economic relationship, in the world.
EU and US investments are the real driver of the transatlantic relationship, contributing to growth and jobs on both sides of the Atlantic.
The EU and the US economies together account for about half the entire world GDP.
It is estimated that trade between the EU and the US amounted to €1.1 trillion last year.
A third of the trade across the Atlantic actually consists of intra-company transfers.
The transatlantic relationship also defines the shape of the global economy as a whole.
It is vital that relationship can continue to work and benefit both trading partners.
Change to International Tax
All of us here today recognise the benefits brought about by our close trading relationship but emerging global tax reforms will no doubt have an impact on this.
It is very clear that we are in a period of significant change where the international tax system is concerned.
As a small open economy, Ireland seeks to provide a stable business friendly environment and change poses challenges to maintaining this stability.
The pace of recent change in the international tax space has been breath-taking.
I am conscious of the impact this change has on stakeholders and for that reason I decided to publish Ireland’s Corporation Tax Roadmap last September.
The Roadmap charts the changes that have taken place recently and those that are yet to come, and again reaffirms Ireland’s commitment to our key 12.5% corporation tax rate.
I have consistently expressed my belief that any change to the international tax framework must be brought about in the appropriate international forum on a multilateral basis with countries working together to find a balanced and appropriate long-term solution.
Having a stable and consensus-based international tax framework is key for Ireland as it provides a platform of solidity and certainty upon which investment decisions can be made.
This is a reality that I recognise and one in which I will ensure Ireland’s voice is heard as the future international tax landscape is shaped.
The OECD’s ambitious and important Work Plan was recently adopted by the G20.
It provides a roadmap for completing this process by the end of 2020.
My officials are constructively engaged in the various OECD working parties seeking to have our interests incorporated into any solution.
The reality that some change is coming and must be dealt with is widely shared.
The primary outcome of this work must be the development of a certain, sustainable and globally agreed framework that will enable international trade and investment to thrive.
The OECD has two proposals on the table, Pillar 1, which will look at Revised Nexus and Profit Allocation Rules.
And separately, Pillar 2 which looks a minimum taxes through a Global anti-base erosion proposal.
When I consider the two pillars of the OECD proposals I believe that it might be possible to find a globally acceptable agreement that provides certainty within the broad Pillar 1.
I remain to be convinced of the merits of the Pillar 2 proposal, not least because of the lack of clarity regarding what its proponents are trying to achieve through the introduction of a minimum tax.
Ireland is supportive of measures to limit companies’ capacity to engage in aggressive tax planning.
Artificial profit-shifting for tax purposes poses a real challenge and must continue to be addressed.
However, I do not support measures which have, as their core objective, the end of legitimate and fair tax competition.
The benefits of tax competition have long been recognised by the OECD and others, as long as this competition is fair.
Summer Economic Statement
It is appropriate to take stock of where we are now in terms of the economy.
Last week I published the Government’s Summer Economic Statement, which is a key element in the reformed budgetary process.
It sets out the Government’s medium-term economic and fiscal strategy as well as the constraints facing the economy over the medium term.
Our economy is very different to that which prevailed a decade ago when Ireland entered the most acute phase of the financial crisis.
It is now more diversified and economic activity is more balanced.
Living standards have improved.
The public finances, which have been reinforced by a range of initiatives designed to build up fiscal resources, finally returned to surplus last year.
Our public finances have been firmly placed on a path to sustainable recovery and the Government is currently targeting a headline surplus of 0.4 per cent of GDP next year.
Unemployment now stands at just 4½ per cent having peaked at 16 per cent in 2012. GDP growth of 3.9 per cent is projected for this year and 3.3 per cent next year.
The pace and scale of the recovery is the result of prudent macro-economic management and places Ireland on a sound economic platform as we face into the uncertainty posed by Brexit.
Our role in Europe post-Brexit
Brexit is an immense political and economic challenge of our generation.
We deeply regret the UK is choosing a different path, after forty-six years of shared EU membership.
Brexit, in whatever form it takes, will have a significant impact on Ireland, and requires planning by Government, business and citizens, as well as at the EU level.
A no deal Brexit remains a serious concern and we are preparing accordingly.
The Government remains firmly of the view that ratifying the Withdrawal Agreement that has been agreed between the EU and the UK remains the best, and, realistically, the only way to ensure an orderly UK exit.
While no future relationship between the EU and UK will be as good as the status quo, we want the future relationship between the EU & the UK to be as close and positive as possible.
The closest possible relationship would greatly benefit both parts of our island and, I believe, benefit the UK as a whole, and the whole of the EU and we will work hard with all our partners to achieve that.
Whatever the outcome of the Brexit process, Ireland will remain a committed member of EU with all the solidarity, stability and certainty that membership brings.
As the Member State closet, geographically and culturally, to the US, with centuries of shared heritage and economic links, we will continue to deepen our role as the bridge between the US and the EU; a role that will be now important more than ever.
Sovereignty strengthened
We are open for investment, we are well positioned to continue to facilitate access to the largest economy in the world, while also maintaining our role at the centre of the European project.
Our EU membership has been central to the success of our small, open, trading and competitive economy.
It has enhanced, not diminished, our sovereignty.
Membership of the Single Market and Customs Union is a core element of our economic strategy – including in attracting business, both over the decades and more recently.
Our companies will continue to benefit from the opportunities of the Single Market and the EU’s global network of free trade agreements.
We will continue to attract investment with a pro-business environment, underpinned by a tax code which is not only competitive in rate, but – more importantly – stable, simple and transparent in function.
Conclusion
We have Europe’s youngest population and one of its best educated, encouraged to think and create.
Our doors remain open, not just to investment, but to people and ideas.
The EU is a home, which we have helped build.
And while there are many challenges, including around Brexit, the Irish Government is confident that we can work together as twenty seven countries, to deal with those challenges.
In closing, I would reiterate that while we face a number of challenges, we are well positioned to overcome these challenges together, and to continue to have a close and prosperous relationship.
I wish you all a happy Independence Day.
Thank you.
ENDS