A November to remember?

Business, Economy | Tue 26 Apr | Author – Business & Finance Gina London
Gina London, communications and campaign consultant

Emmy Award-winning former CNN journalist Gina London gets an Irish business angle on this year’s race to the White House.

With all the government manoeuvring in Ireland, it may be difficult to also stay focused on the United States – which has its own complicated campaign season wrangling its way to November’s ultimate presidential showdown.

No matter the varied party rhetoric, Republican and Democratic candidates have one thing in common: appealing to voters along localised concerns. It’s not surprising, really, as American voters consistently rank the domestic economy as their number one issue.

But the World Economic Forum recently declaring the global economic situation to be “a recovery without a real upturn in the business cycle” reminds that there’s much more for the future head of the world’s biggest economy to consider and focus on.

Here in Ireland, where I have proudly lived for more than a year, I reached out via email to some Irish and American enterprise leaders for the broader perspective. Namely: what’s at stake in the upcoming election for business between Ireland and the US?

Patrick Coveney, CEO of Greencore, the Irish company that describes itself as a “leading international manufacturer of convenience foods” was the first to respond.

THE ODD POINT OF TENSION

“The business, political, cultural and personal relationships between Ireland and the US have never been stronger,” Coveney writes. “Of course, there is the ‘odd point of tension’ including current debates on tax arbitrage.”

The tension Coveney refers to centers around “inversion,” the practice of a larger American company acquiring a smaller overseas company and then relocating its headquarters to that country to take advantage of lower tax rates.

Ireland is one of those desirable inversion countries, and understandably so. The current US corporate income tax rate is 35%, contrasted by Ireland’s own rate of just 12.5%.

Relationships between Ireland and the US have never been stronger

Two recent multi-billion dollar arrangements – the first between US-based drug maker Pfizer and Dublin’s Allergan (since collapsed), and the merger between US Johnson Controls and Cork-based Tyco – transformed the tension into candidate denouncements.

Although the accounting shuffles do not violate current US regulations, that didn’t stop Republican frontrunner Donald Trump from labeling the Pfizer deal as “disgusting.” For the Democrats, Bernie Sanders called such American companies “corporate deserters” and Hillary Clinton also slammed them, saying: “they call it inversion; it’s a perversion.” If elected, the candidates pledge to propose measures to prevent such deals.

But if past is prologue, it’s a pledge not likely to become a priority once the new president takes office. The first inversion in the US took place in back 1982, and although Democrats and Republicans have both said since then that they would like to reform the tax code to address the issue, neither side has tackled it in earnest.

Leaving the tax issue aside, Ireland’s relationship with the US continues to develop significantly in other important areas.

DEPENDENT RELATIONSHIP

Greencore’s Coveney points out the US and Ireland enjoy “mutual dependency – with both US and Irish firms employing approximately 100,000 people in each other’s economies.”

Dan Kiely, owner and director of Voxpro, a multilingual customer experience and support company headquartered in Cork, is preparing to add to those numbers by opening a new office in California.

Kiely states that easing the employee hiring path is critical. “For Irish companies that are setting up in the US and planning to scale to significant numbers, access to visas should not be an inhibitor and vice versa,” he says.

In other important financial investments, the Irish Business and Employers’ Confederation (Ibec) states that each year Ireland exports over €8bn of services to the US, and last year alone the US imported over €26.2bn in Irish products – making it the single largest market for Irish goods.

Ibec CEO Danny McCoy further points out that the US is also the largest investor in Ireland, accounting for “over 70% of Ireland’s foreign direct investment. This is against a background of intense competition from elsewhere in Europe to attract US investment.”

… we know that America’s relationship with Ireland will continue to be excellent because the ties that already exist are so deeply rooted, strong, and growing each year through creativity, technology and entrepreneurship

TIPPING POINT FOR TTIP

With that background, then, it makes sense that the second major concern raised by business leaders involves making more progress on the ongoing EU/US trade negotiations known as the Transatlantic Trade and Investment Partnership, or TTIP.

“The advancement of trade agreements such as TTIP have the potential to further enhance the relationship with both Ireland and the wider EU”, writes Conor Healy, CEO Cork Chamber of Commerce.

Us presidential raceTIPP would be the world’s biggest multi-nation trade deal and, according to the European Commission, would benefit Ireland more than any other EU member state since nearly half of Irish exports outside the EU end up in the US, compared with a combined average of only 16% from other EU states.

Early February’s historic signing of TTIP’s counterpart, the Trans-Pacific Partnership (TPP) between the United States and 11 Pacific Rim nations, likely sent a positive signal for TTIP negotiators.

But a White House spokesperson has already acknowledged that completing the TTIP deal is not realistic for this current administration.

It may be difficult to achieve during the next administration too, as both Republican and Democratic frontrunners have spoken out negatively about TPP which, while signed, now begins a two-year trade ratification process through each of the partner nations including the US.

Although Republicans are largely considered supportive of free trade, Trump has been quoted as describing TTP as “insanity… it’s used by foreign countries to hurt the United States and take away many jobs.”

Democrat Sanders has consistently railed against it as “disastrous” and while Clinton once strongly supported TPP as Secretary of State, she said during a recent CNN televised debate: “it didn’t meet my standards for more good jobs for Americans.”

BALANCING US JOBS WITH A GLOBAL ECONOMY

Yet increasing American jobs and improving global business trade relations are not necessarily mutually exclusive goals. The European Commission projects that TTIP will provide more business opportunities, growth and jobs on both sides of the Atlantic.

Intertwined investments combined with the rich history of cooperation between the United States and Ireland keep buoying optimism as business leaders look ahead to whomever will take up the next residence at 1600 Pennsylvania Avenue.

As Mark Redmond, Chief Executive of the American Chamber of Commerce Ireland, writes: “We believe there is a very strong appreciation across the political system in the US that strong US business investment in Ireland and Europe is ultimately good for the US. Therefore, we are confident that the new administration will continue to support this mutually successful relationship.”

Ibec’s McCoy echoed these sentiments, writing: “We need a US administration that works to build on our already unique relationship and remains committed to completing a comprehensive trade and investment partnership with the EU.”

A BINDING RELATIONSHIP

And finally, as the race to the White House rumbles on to November, I give the last word of promise to our resident diplomat, US Ambassador to Ireland Kevin F O’Malley:

“Regardless of who our next president is, we know that America’s relationship with Ireland will continue to be excellent because the ties that already exist are so deeply rooted, strong, and growing each year through creativity, technology, and entrepreneurship.”

About the author

An Emmy-winning journalist, Gina London served as a CNN correspondent for seven years, notably covering the historic 2000 race to the White House between Al Gore and George W Bush. From the cold and snowy first primary in New Hampshire, to the five weeks of voter recount in Florida (until the Supreme Court stepped in and ruled for Bush), she was there.

She now lives in Cork where she works as a communications and campaign consultant serving a variety of multinational clients and where she remains an avid follower of current events and politics.