Trade and Marketing Promotion (Amendment) Bill, 1994: Second Stage.

Wednesday, 25 May 1994

Dáil Éireann Debate
Vol. 443 No. 2

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Minister of State at the Department of Agriculture, Food and Forestry (Mr. O'Shea): Information on Brian O'Shea  Zoom on Brian O'Shea  I move: “That the Bill be now read a Second Time.”

The primary purpose of this Bill is to increase the aggregate sum of moneys which may be paid to An Bord Tráchtála. The Trade and Marketing Promotion Act, 1991 limits the amount of non-repayable grants, which may be paid to An Bord Tráchtála, to £400 million. This Bill, which seeks to raise that statutory limit to £650 million, is routine in the [413] sense that it arises periodically in relation to most State agencies. It does not imply any long term commitment to provide funding at a particular level and does not bind either the Government or the Oireachtas to any financial commitments. It should be seen, therefore, as, essentially, a technical measure.

The current aggregrate, or cumulative sum, paid from the Exchequer to An Bord Tráchtála, and its predecessor, An Coras Tráchtála, since 1959, now exceeds £370 million and is due to reach £400 million before the end of this year. In this Bill, I propose to raise the aggregate sum to £650 million in order to cover expenditure anticipated at present, including that incorporated in the National Development Plan, 1994-1999.

For that reason, it is highly desirable that this Bill be passed in this session. Otherwise, arrangements might have to be made for An Bord Tráchtála to undertake short term borrowings to maintain its operations until the Bill is enacted.

It is clear that Irish exporters performed extremely well in 1993 in the face of exceptionally difficult conditions. They are to be congratulated for having attained record levels of sales — for indigenous companies, in particular, it was a demonstration of exceptional resilience and determination.

Last year's export sales were won in the face of the most unfavourable trade environment for many years, with many of our key trade markets, principally in Europe, in recession. In some markets, such as the UK and the United States, recovery was slow. World trade grew by only 2.6 per cent less than half the growth of the previous year. This meant that Irish companies had to significantly increase their market share at the expense of their international competitors.

In 1993, our total exports rose by almost 9 per cent to an estimated £18.1 billion; this represents a cumulative increase of 23 per cent over the past five years.

Exports from the indigenous sector, where An Bord Tráchtála concentrates its efforts, grew to an estimated £3.9 billion [414]— an increase of 8 per cent in 1993 and a cumulative increase of 30 per cent over the past five years.

These excellent results are reflected in the remarkable trade surplus of 1993, estimated at £3.8 billion or 12.3 per cent of GDP. It is clear from these figures that exporting industry has not only survived but triumped over the turbulent trading conditions of 1993. The achievements of Irish exporters in 1993 show that we have the capability to win more business in highly competitive markets and despite adverse conditions.

The focus of An Bord Tráchtála's work is about identifying market opportunities for Irish companies and assisting them in a developmental way to avail of these opportunities. The market development programme for 1994-1999, which will be administered by An Bord Tráchtála, assisted by EU Structural Funds, aims to increase the exports of indigenous industry and to diversify and sustain the growth of Ireland's world market share.

It is envisaged that this programme will yield an increase of an average of 9 per cent per annum in exports of indigenous industry, from now to the end of the century. Specific measures include the development of marketing capability within Irish firms, increasing awareness and promotion of Irish products and services through activities both in Ireland and overseas, and developing the capacity of small and medium-sized enterprises to introduce new products and services into the marketplace. These measures seek to close the gap which still exists between some Irish firms and their European counterparts in areas such as marketing skills, information and organisation.

Meanwhile, the ESRI medium term review for the period 1994-2000 forecasts average annual inflation to remain under 2.5 per cent. This factor, combined with growing competitiveness within the Irish economy, should keep Irish firms well positioned to avail of these measures and so keeping indigenous industry on line with the 9 per cent average export growth target.

It is estimated that, in terms of economic [415] impact, £1 of indigenous exports produces the same benefit as almost £2 of multinational exports, because indigenous industry creates more indirect wealth and jobs and keeps more of its profit in Ireland. The Government, through An Bord Tráchtála, has in place a range of measures to help safeguard and expand these exports and thereby maintain and increase direct employment in the Irish economy.

It is clear that the ability of the indigenous sector to succeed in these markets is an essential element in the future wellbeing of the country's economy. At a time when job creation is our single biggest priority, the capacity for job creation in this sector must be fully exploited. As I have already indicated, the growth of indigenous exports has been very encouraging, but it is crucial that we not only maintain but also seek to accelerate the growth rate of recent years.

The National Development Plan 1994-1999 states:

The development of the indigenous sector of industry and services is a key priority because of its close integration into the domestic economy, the location of corporate decision-making and the final destination of profits.

The primary focus of strategy will be on improving the competitiveness of Irish-owned industry with a view to achieving an increased share of international and domestic markets, thereby providing a platform for sustainable employment growth.

There is every indication that, over the next decade, we will see a new age of world trade and this is why we must encourage and assist Irish industry to compete now.

The recent completion of the GATT Uruguay Round will provide a major boost for trade and will act to accelerate economic recovery. The ESRI suggests that growth in world trade will accelerate to nearly 5.5 per cent this year and by an average of 6 per cent in the medium-term. GATT has created a new confidence [416] and stability in world trade — the crucial benefit of the agreement is its long term impact, which will undoubtedly build a stronger and more dynamic world trade structure.

Ireland must also seek to benefit fully from the enormous opportunities inherent in the Single European Market. Over the coming years, our home market, which now means Europe, will open up even greater potential for winning more business.

One important element of this new business, one which is often ignored, is public procurement. However, to most people, public procurement is just another Eurospeak term but public procurement is a term with which we should all become familiar. Any business person worthy of the name will ignore it at his or her cost. Put simply, what it means is all the purchasing done by public bodies and agencies of all sorts, from the largest Government Department to the smallest hospital.

In an Irish context alone, it amounts to a very large amount of business, more than £4 billion a year. However, it is when we translate it into EU terms that its magnitude becomes apparent. It is estimated that, throughout the Union, spending by central government, state bodies and local authorities and other public sector purchasers amounts to the equivalent of more than £400 billion a year. Previously, only a small percentage of this business was placed with suppliers from outside the procuring state, although it must be said that the Irish market was open to the tune of about 50 per cent when others were of the order of 2 per cent.

The liberalisation of public procurement policy creates a huge area of potential new business for Irish companies. The time has come for Irish companies to begin to take advantage of new legislative developments.

Even allowing for contracts which fall outside the new regulatory thresholds and areas such as defence and security which are not covered, the total annual business represented by open public procurement will be at least £350 billion per [417] year. The sheer size of the market will, of itself, be a major driving force in stimulating the kind of business expansion and competitive thrust which the Single Market seeks to achieve. It presents tremendous opportunities, not just for large companies and organisations but also for small and medium-sized firms.

The principal benefits for Irish companies lie in gaining access to public procurement contracts in other European countries which were previously denied to them. Probably the main domestic benefit is that Irish companies are likely to become more aware of the public sector as a source of potential business. It is vital that we strive to implement fully the new public procurement regulations, both for the overall benefit of intra-Union trade and to assist Irish firms to win their share of this huge market.

So often, EU laws are derided because of bureaucratic inflexibilities or whatever, but in this instance the benefits are real and very substantial. This is why it is so important for any firm which is genuinely interested in winning new businesses from Europe's public purchasers to learn about it. An Bord Tráchtála is there to help them learn.

All these developments — whether in a GATT or EU context — illustrate why the Government must take action now to work towards the longer-term positioning of Irish trade, seeking to increase the diversification of Irish exports and to sustain growth in Ireland's market share throughout Europe. An increase of 25 per cent in Ireland's share of European markets is our target between now and the end of the millennium. We will also encourage the participation of Irish companies in growth markets in Central and Eastern Europe and the Pacific Rim.

The underlying principle will be to encourage companies to develop an export market presence relative to their experience, once they have established themselves in the domestic market, and ABT programmes have been structured to provide the support appropriate to each stage of a firm's international marketing development.

To achieve these objectives, in excess [418] of £200 million will be invested over the next five years, funded from a combination of European Regional Development Fund and Exchequer sources, as well as the significant resources which An Bord Tráchtála itself will generate.

I now propose an increase of £250 million in the aggregate amount of non-repayable grants which may be paid to An Bord Tráchtála to implement this ambitious programme and I commend this Bill for the approval of the House.

Debate adjourned.


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