Worry that the new Democratic majority in the US House of Representatives might lead to a more protectionist approach to foreign trade was expressed yesterday by the EU Commission ambassador to the US, former taoiseach John Bruton, who also warned about potential threats to Ireland's continued prosperity.
He told the Seanad he did not think there would be a huge short-term difference in US policy in Iraq as a result of the mid-term elections. Mr Bruton said that regardless of the rights and wrongs of the invasion of 2003, America now had to deal with the responsibility of trying to create a secure, law-based democracy in Iraq and it was in the interests of the whole world that that should happen.
Mr Bruton said that an enduring impression he had from his travels around the US in his first two years as EU ambassador was the overwhelmingly positive image Ireland had all over America.
"In every state I have visited, Ireland is celebrated not only as the birthplace of parents or great- grandparents, but also as a kind of economic miracle worker that has freed itself of the hardships that drove generations into emigration. Ireland's openness to workers from new EU member states is also much appreciated in cities like Chicago, Cincinnati and Milwaukee, where links to central and eastern Europe are very strong. In short, Ireland's economic dynamism and openness is often held up to me as a good example for the larger economies of Europe."
He said that Ireland was seen as a trail-blazer, whereas other parts of Europe were often, and quite unfairly, depicted as slow to change, addicted to subsidies, and not doing a great job of integrating Muslims or minorities.
"This undiluted admiration for Ireland's economic success, while always welcome, does set off some alarm bells. For instance, I worry that our international reputation as feisty go-getters could actually lead us into an 'if it ain't broke don't fix it' complacency at home while creating impossible expectations abroad, particularly in developing countries, that economic miracles really do happen. In this chamber, we know only too well that Ireland's economic model was the result of more than half a century of trial and error, mostly error at times," said Mr Bruton.
He said the fascination with Ireland's economic turnaround did not always take account of two very important ingredients - EU membership and American investment - which had been mutually reinforcing aspects of our emergence as a thriving economy.
"Ireland is now one of the richest countries in the EU, yet last year Ireland received a net income of €588 from the EU budget for every citizen here, whereas Latvia received only €168.
"This is over 3½ times as much on a per capita basis. We might remember that when looking for an explanation as to why so many Latvians want to come to live here! Since Ireland joined the EU, net transfers to Ireland have amounted to almost €10,000 for every person now living in this State."
He said the total value of American investment in Ireland today, attracted here by our EU membership since 1973, was $61 billion, or almost $15,000 per person.
"Foreign-owned [mainly American] companies produce almost 80 per cent of all manufacturing output and 90 per cent of all manufactured exports in Ireland, although they account for only half of all manufacturing jobs. In other words, the jobs created by foreign investment are very high productivity jobs."
Mr Bruton said the challenge for Ireland now was to spread the same rate of increase in productivity achieved in the foreign-owned sector to the rest of the economy - including to private services, construction, Government services and distribution.
"Precisely because Ireland has benefited so much from American foreign direct investment and from a large European market for its goods and services, Ireland would also be vulnerable to any change in the economic situation of the United States, or to an energy crisis in Europe."
He said energy and climate change was one problem that Ireland, Europe and the US must face together.
