Opinion - 'Yes' vote is fundamental for foreign investment

The ability to attract foreign direct investment will be hurt by a 'No' vote on Lisbon referendum, says Barry O'Leary, CEO of the IDA

Taoiseach Brian Cowen at the launch of Fianna Fáil's Lisbon campaign

"IDA Ireland has a unique insight into FDI requirements and is acutely aware, based on strong client feedback, that a Yes vote is fundamental to maintaining our base of FDI companies and attracting further investment in the future" Barry O'Leary

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Ireland's recent economic development has been unprecedented and widely commented upon. Industrial Development Agency (IDA) Ireland is proud of its role in this economic transformation, facilitating some of the world's leading corporations to invest in Ireland. As a small island nation on the periphery of Europe, Ireland has performed beyond all expectations, attracting a disproportionate amount of mobile foreign direct investment (FDI), relative to its size, particularly from the US. We must remain cognisant of the factors which were instrumental in achieving this: EU membership has been central to that success.

Since joining the EEC in 1973, Ireland's membership of the European Union has supported Ireland's economic development in a myriad of ways. Our economic growth has resulted in the convergence of our per capita income levels to some of the highest in the EU, an aspiration a mere generation ago. Irish per capita GDP has increased from 64% of the EU average in 1973 to 130% in 2008 (EU 15 average).

In the last 20 years there is an additional one million people employed in the Irish economy, and net inward migration has been the hallmark of our success. Ireland benefited from the free movement of labour in the EU at a time of high unemployment and recession in the late 1980s and early 1990s. More recently, the common European labour market has provided Ireland access to a well-qualified and highly skilled talent base.

Earlier this year our sister agency, Forfás, published a very positive report on the impact of the single European market. One key finding was that access to the wider EU marketplace, since the 1970s, has resulted in both growth and diversification of Ireland's trade and investments. Our membership of the EU has enabled tariff-free access for Irish-based exporters to a market of almost 500 million people, one of the largest single markets in the world. As a result, in the space of one generation Irish goods exported to EU member states doubled – a remarkable achievement.

The reduction of trade barriers associated with the completion of the single market and the introduction of the euro were positive steps in our economic journey. IDA Ireland client companies and the international business community will readily recognise Ireland's membership of the European Economic and Monetary Union (EMU) has eliminated exchange-rate risk in trade between EMU states, encouraged price transparency, facilitated cross-border trade and supported the achievement of a stable domestic macro-economic environment.

These are the factors which have enabled IDA Ireland to win a disproportionate share of US foreign direct investment into Ireland. At the heart of this matter is the efficient functioning of the single market. That is also what is at the core of the Lisbon treaty and why we support it.

The efficient functioning of the single market and its extension into new areas of financial and traded services is vital if IDA Ireland is to continue being successful in winning future valued-added investments and highly paid jobs for Ireland. In a Europe of 27+ member states an efficient market can only be guaranteed if the decision-making process is well organised and streamlined, as provided in this treaty.

IDA Ireland has a unique insight into FDI requirements and is acutely aware, based on strong client feedback, that a Yes vote is fundamental to maintaining our base of FDI companies and attracting further investment in the future.

Multinational companies have invested in Ireland on the basis that Ireland is at the heart of a vibrant and efficient single European market. Conversely, any threat to the continued efficiency of that market would be viewed negatively and would be detrimental to its future investment prospects, particularly impacting the smaller countries such as Ireland.

The opportunities presented by the European market to multinational companies investing in Ireland are complemented by the talented Irish workforce and our attractive corporate-tax rate of 12.5%. This tax rate is fully compliant with the provisions of all EU treaties and nothing in the Lisbon treaty changes that position. Furthermore, the Lisbon treaty provides for a continuation of the current status and any changes that might affect it can be taken only by the unanimous vote of all member states. Therefore, Ireland retains its veto in tax matters thus maintaining international business confidence and ensuring Ireland remains an attractive investment location.

A favourable corporate tax regime alone will not attract and retain substantial investment as it is only relevant when a company can operate profitably in the market. The Lisbon treaty allows Ireland to continue to offer both – a low corporate tax regime but, more importantly, in a growing European marketplace.

In recent weeks, there has been much comment about the section of the treaty under which the EU's trade agreements with other countries are negotiated. This is known as the Common Commercial Policy (CCP) and for the first time it makes reference to FDI. However, this reference simply gives formal recognition to the status quo and to suggest otherwise is inappropriate.

Existing free-trade agreements negotiated under the CCP today set out bilateral rules in relation to investment by EU companies in other countries. These rules are beneficial to Irish companies that wish to globalise and establish a presence in foreign markets. These agreements are negotiated by the European Commission on the basis of a mandate given to it by the member states and must be subsequently approved by the member states. Furthermore, the Lisbon treaty clearly stipulates that in areas such as trade in service, intellectual property and foreign direct investment where unanimity is currently required, this unanimity will remain the case in the future.

Finally, IDA Ireland is immensely proud of its track record in successfully attracting a disproportionate amount of foreign direct investment to Ireland, and is aware of the importance of access to the European single market. IDA Ireland's endorsement of the Lisbon treaty is based on the key role that Ireland's membership of the EU has played in enabling us persuade almost 1,000 overseas companies to create and sustain over 150,000 jobs in Ireland. Last year alone these companies accounted for over 60% of our total exports, spent €16bn in our economy, €6.7bn on payroll and contributed almost half the total corporation-tax take.