Address by the Minister for Trade and Commerce Mr. Michael Ahern, T. D., at the launch of The Irish Exporters Association brochure and series of workshops, entitled ‘Treasury Risk and International Trading’

Fitzwilliam Hotel, St. Stephens Green, DublinWednesday, 27^th September, 2006

Ladies and Gentlemen,

I am delighted to be here today to launch this important initiative by your Association. I am representing the Minister for Enterprise, Trade and Employment, Mr. Michéal Martin, who, unfortunately, had to cancel at short notice.

As you all know, a key factor in Ireland’s spectacular economic growth over the last decade has been the performance of our exporters. This tremendous vibrancy in our export trade had driven a considerable proportion of the boom we have experienced and which has had so many beneficial effects for the economy and our population. This has resulted in the effective abolition of unemployment, enormous levels of job creation, the development of a very diversified economic base and facilitated additional Government expenditure on essential services. All here can share credit for the fact that our share of world markets has grown significantly, thereby contributing to the economic success story.

It is worth repeating the key statistics – Ireland’s average annual export growth in goods and services is consistently in the top five of the 30 member OECD. On a per capita basis, we are the world’s third largest merchandise exporter, exceeded only by Singapore and Hong Kong. Ireland’s per capita exports are over seven times those of the USA, six times those of Japan and over four times those of the UK.

Despite these admirable achievements, the reality is that in today’s rapidly changing global business environment, no economy can stand still. This is especially true in a small open economy such as ours, where so many Irish companies must break into foreign markets to increase production and to expand and prosper. We therefore must consistently strive to build on our success in existing markets and explore new ones.

All exporters have, since they started selling abroad, needed to keep a very close eye on foreign currency issues. However, some comfort has arrived in recent years, in the form of the Euro. One of the primary reasons for the introduction of the Euro was the reduction of transaction costs and elimination of exchange rate risk, for trade, tourism, and investment in the participating Member States. Our participation in the Euro zone has reduced our overall currency exposure. However as our trade with non-Euro area countries is proportionately greater than it is for many of our European colleagues, our exporters still face significant challenges.

We have the benefit over recent years, of a very stable interest rate regime in the Euro Zone. The Government naturally has a strong commitment to the Euro and we hope more of the EU Member States will be able to join as soon as possible. The single currency has brought stability to financial markets and the degree of relative certainty has provided stable domestic interest rates, which in turn facilitates trade within the Euro Zone. Unfortunately, in recent months, the stability and certainty, which many had begun to accept as the norm, has begun to look somewhat uncertain. Interest rates are on the rise and there is instability in some markets, so the introduction of this programme by your Association, in collaboration with Anglo – Irish Bank, could not have been more timely. These interest rate rises emanate not just from the European Central Bank for the Euro zone, but also from the Federal Reserve which sets rates for the US, and the Bank of England which sets rates in the Sterling area. These are our two largest individual country export markets with close to 20% of our exports going to the US and only a slightly smaller proportion to the UK. In total, about 55% of our exports are still to non-Euro countries.

As you all know, the Government is very anxious to diversify our export markets and to seek new opportunities in the growing economies of the world. Our Asia Strategy sets very ambitions targets for export growth to the main economies in that region, up to 2009. Other areas are also being targeted. Last week Minister Martin led an Enterprise Ireland Trade Mission to South Africa where our exports this year are showing spectacular growth from 2005. Also, last week, I myself, have been on a Trade Mission to Australia, where exports so far this year are up over 30% over the last twelve months. Furthermore 11 Irish companies established new offices in that market in the last year. This has brought the total number of Irish companies with offices in Australia to 46 – up from 19 in 2001. Enterprise Ireland are very active in opening-up other non – traditional markets such as the new EU Member States. As you all know, the Government has strong hopes for the expansion of trade with the new Member States in Eastern Europe and we look forward to their eventually joining the Euro zone as soon as possible. Slovenia is due to do so in January next with several more to join the following year. While all of these and other similar developments around the world, are extremely positive in helping exports, there are many currency and foreign exchange challenges for exporters, in markets near and far.

Currencies can be very volatile and with many factors involved, some not particularly rational – but including interest rates, inflation, political stability and general confidence in specific economies. Any initiative which provides guidance in fully identifying and understanding these challenges, such as the publication of your brochure and programme, must be welcomed enthusiastically. It is therefore very heartening to see this initiative, as it is very important that currency risks are fully identified and understood.

I therefore heartily welcome the publication of the brochure and wish you every success with the seminars to follow.

Ends

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