Links with America are hardly less important. The US is Ireland's biggest single export market and American firms, directly and indirectly, account for at least one in ten of all jobs in the Republic, more than all other countries' companies combined.

From an historic position of peripherality in Europe, Ireland now enjoys a central location in the Atlantic economic area.

This transformation is cited endlessly in development literature and at conferences around the world as the outstanding example of how to make the most of globalisation.

Ireland's best-of-bothworlds position as an important hub in the transatlantic economy, which, despite the rise of Asia, remains the backbone of the world economy, has been the most important single factor in the country's explosive growth over more than a decade.

There is, therefore, no greater strategic interest for Ireland than healthy relations between the EU and US to ensure that trade and investment continue to flow freely across the ocean.

Splendid news, then, that there was much sweetness and light in Vienna last week when US president George Bush met Europe's leaders for the annual EUUS summit, the most important set-piece meeting between the two sides each year. The chumminess could not have been more different from the meeting in 2003 when participants walked on eggshells, avoiding the merest mention of the Iraq invasion.

Though relations returned to a more even keel in the months after the 2004 presidential election, when the US fully reengaged with the Europeans, the benefits of normalisation were demonstrated by the successes of last week's summit, where there was much agreement on most things.

High politics, as always, got the headlines. Funding for the Palestinian Authority under Hamas, Russia's energy policies and . . . top of the bill . . . Iran's nuclear ambitions (to name but a few) saw both sides taking (or confirming) common or complementary positions.

Even on Guantanamo the mood music improved.

Bush's acknowledgement of Europeans' concerns, and his conciliatory tone, could hardly have been more different from his first term 'with-us-or-against-us' rhetoric which caused even staunch Atlanticists in Europe to waver in their pro-Americanism.

While opinion polls last week suggested the US president is not being given much credit by Europeans for his efforts, the continent's politicians cannot afford the luxury of juvenile anti-Americanism.

They are putting the past behind them and mucking in with the US, not least because that is what their interests dictate.

But the return to normality does not mean that all differences have evaporated. In a relationship as wide in scope as that between Europe and America, there will always be clashes of interests and differences of opinion. And worryingly for Ireland over the longer term, many of these are in the economic sphere.

Of most cause for concern is the half-hearted commitment of both sides to buttressing the world's multilateral trading system.

Neither made serious efforts in Vienna to unblock the impasse in the fiveyear-old Doha round of world trade talks. Both continue to baulk at making serious concessions on their respective subsidies to farmers, something on which poor countries insist if they are to agree to a deal.

There is now a real risk of the Doha talks collapsing, and the costs of failure would be great. Not only would the gains of further liberalisation be lost, but, even more seriously, the biggest blocs, such as the EU and US, would inevitably turn to bilateral trade deals. There is neartotal consensus among economists (a very unusual occurrence, incidentally) that a tangle of such agreements around the world is far less beneficial than multilateral liberalisation.

Worse still, they risk creating competing spheres of economic influence. For the transatlantic economy, this raises the possibility of new barriers to economic activity between Europe and the US. This would be bad for everyone, but potentially disastrous for Ireland given its dependence on access to the US market.

Despite this, Ireland continues to work assiduously against its own best interests on Doha.

Acting as if the country were still an agriculturedependent backwater, government policy is to resist furiously any concessions on farm subsidies, rather than doing all it can to clinch a deal from which Ireland, as one of the world's biggest traders, would benefit disproportionately. It is past time that the government, whose champions and critics alike claim is economically liberal, end its damaging protectionism.