With the changes that have taken place in global trade and investment over the past 12 months, now is a prudent time for countries and regions to assess how and where they can grow their international market reach and share.
Nowhere is this more pertinent than on the island of Ireland, with Covid-19 and Brexit irrevocably changing the trade dynamic. In many industry sectors and in the minds of customers across the globe, there is a single island of Ireland economy, one that continuously punches above its weight.
In the agri-food sector Ireland boasts globally recognised island-wide brands such as Kerry, Diageo, Glanbia, Dawn foods and others which rely on 32 counties to cultivate and harvest world-class products for international markets with green and sustainable credentials.
The same is true in tourism: the 84,000 square kilometres of the whole island is marketed to an international audience and is greater than the sum of its parts when it comes to its combined heritage, culture and scenery.
The benefits of these sectors operating and competing globally on an all-island basis is that it delivers a clear and effective message to international audiences who care little for our historical squabbles.
In a post-pandemic global economy, and with the ink now dry on the terms of the UK-EU Brexit trade deal, the new challenges which the Republic and Northern Ireland will face to stay competitive in a global context are becoming clearer. One might also argue that the unique position the island occupies post-Brexit creates additional opportunities to be leveraged. And so, could those principles we see working within tourism and agri-food not work in promoting international trade? I happen to think they could.
A tax regime that encourages international investment has been a mainstay of the Republic of Ireland’s success for many years. Of course, this has created a significant difference between North and South, and for many years the Northern Ireland Assembly debated and lobbied Westminster to give them a level playing field with the Republic in corporate tax.
Now, with the opportunity for the UK to set its own direction and pursue its levelling-up agenda, allowing for corporation tax to be harmonised on the island of Ireland must be an attractive policy option to both the EU and the UK, and would appeal to investors who see the potential across the island. It would help to address some of Northern Ireland’s structural disadvantages, while supporting an all-Ireland investment environment from which both sides can benefit.
Access to skills and talent is the new frontier in attracting foreign direct investment (FDI), and the pandemic has proven that location is no longer the barrier that it once was, provided the digital infrastructure is in place. Mapping the whole-island tech talent base and showcasing it would release a wave of opportunities from new and existing investors.
Ireland has its own regional strategy to broaden the investment base beyond its Dublin core. Taking an all-island view, in line with Taoiseach Micheál Martin’s shared island vision, Northern Ireland’s low cost base across property, skills and cost of living would see economic benefit North and South. This would relate not only to the border regions, but it would be attractive to many investors who want a blended solution such as a Dublin headquarters and lower production costs outside the capital.
Successfully enacting such a strategy would also ensure that the gains of FDI in respect of job creation, spillover effects, taxation, technology transfer and enhanced competitiveness can easily be captured and shared on an all-island and proportionate basis so all our communities benefit. Dublin will remain a global city in terms of tech headquartering, while acting as a gateway to businesses able to harness the potential of an additional six counties with well-established IT industries.
While the economic argument is clear, questions will abound over how practical it really is.
One might argue that the debate is already won, however, just not the way you might think. On promoting international trade, for example, there are lots of precedents to cross-border co-operation led by Intertrade Ireland which is an existing all-island body. There is also significant sector co-operation between Enterprise Ireland and Invest NI in sectors such as Aerospace, Construction and Engineering.
Regulations and standards, often cited as a casualty of any Brexit deal, should not pose a problem. With NI staying within the Single Market for goods and applying the EU’s custom rules, the exports originating from its international investor base will be compatible with those of the Republic in international markets and continue to enjoy free movement inside the EU.
There is also the potential that Northern Ireland could continue to qualify for some EU regional aid to support infrastructure, enterprise and social programmes, and so align with the Republic and rest of Europe, ensuring consistency and clarity for the international investor. This would help deliver FDI attractiveness on an island basis for multi-site projects from both new and existing investors.
And most significantly, this would strengthen the hand on the task of investment promotion. It would simultaneously strengthen the offer while also making it more cost effective and efficient through it being handled by the experience of a combined team of IDA and Invest NI, no longer competing with each other but acting as a single team on a global stage.
There are several international precedents where this kind of cross-border co-promotion of investment and trade has proven highly effective – tangible evidence to show that, with will and creativity, such strategies can work.
In Austria, Vienna has positioned itself as a central European prestige headquarters for investors with access to lower-cost production in its neighbouring Czech Republic, and the ideal logistics location for the key markets of France and Germany. Invest Hong Kong, which promotes the broader ‘Great Bay’ proposition to foreign investors, is another example. The area comprises not only the highly regulated Hong Kong base, but also access to lower-cost production in Shenzhen and New Territories and the option to be treated like a mainland China investor. And finally, there is Puerto Rico, which is a US protectorate but sets its own fiscal rules and offers low costs, US market access and the regulations and security of any other US state. Indeed, it routinely describes itself as the 51st state to international investors.
FDI promotion strategies across a shared geographic space are not simply flights of fancy. They are economically coherent with the case studies to prove it. 2021 is the year for the island of Ireland to turn the world green with envy.
The day after the Brexit deal and the Northern Ireland Protocol were agreed, I was speaking to a prospective Chinese investor. His take was: “Ah I see, one country, two systems.”
Mark O’Connell is chief executive of OCO Global, which provides trade advice to Enterprise Ireland, the British Department for International Trade and a number of private organisations