Dáil Éireann Debate, Thursday - 23 February 2023
80. Deputy Denis Naughten asked the Minister for Enterprise, Trade and Employment if he plans to extend financial supports to businesses involved in import substitution from outside the EU; and if he will make a statement on the matter. [2050/23]
View answerWith Britain leaving the European Union, many supply chains have been disrupted. This has been compounded by Covid-19 and the war in Ukraine. The State should be supporting Irish companies that are substituting products or components that are being imported from outside the European Union but its development agencies have a blinkered approach to any businesses involved in this area. That needs to be addressed.
To be honest, I would like to have a more detailed conversation with the Deputy on this matter because I am not quite sure what he is getting at. The response I have before me deals with import substitution more generally, which is predominantly not allowed under WTO rules and so on. I will go through the written response and then we can try to get at what the Deputy is really looking for.
Success on export markets is crucial to the long-term growth of Irish businesses and the economy. As the Deputy is aware, assistance for companies focused on growth through international sales is a priority for my Department and our enterprise development agencies.
A keen knowledge of the competitive and sometimes challenging environment in which Irish companies operate is key to successful export growth. For example, Enterprise Ireland through its market research centre utilises world class market research reports on behalf of its clients in order to prepare companies for their export journey and equip them with the latest data on trade and market entry requirements, particularly for non-EU markets. Enterprise Ireland also has a programme of trade missions, trade fairs and knowledge events that give clients the opportunity to connect with existing and new customers, access key decision-makers, increase sales in international markets and exchange ideas. It has expanded its global presence through the opening of eight new offices in third country cities, including Montreal, Seattle, Melbourne and Ho Chi Minh City. These offices are being embedded into Enterprise Ireland overseas networks and will help to build new buyer relationships in markets where growth opportunities have been identified and market entry challenges can be identified, including the practice of import substitution if it arises.
Import substitution is a policy of blocking foreign imports. It is, of course, a non-tariff trade barrier in the context of World Trade Organization rules. The WTO has a number of agreements in place in an effort to curb such measures, while the European Commission, on behalf of the European Union, uses various tools to enforce commitments and rules, including on import substitution, under international trade agreements. One of these tools is dispute settlement at the WTO.
I am not talking about at the issue at that level. I have raised this previously in the House. The reality is that despite all the supply chain difficulties and the challenges in respect of currency fluctuation and general inflation impacting on competitiveness which are causing difficulties, particularly in certain sectors, there is no focus whatsoever on how those issues can be addressed by supporting indigenous companies to meet some of those import needs. When I raised this with the Minister’s predecessor, I was told that import substitution was not being raised by Irish businesses or domestic stakeholders through their engagement with businesses in this country. It is clear that this is a problem. Costs have gone up. Sourcing materials is becoming a bigger issue. The dogs in the street are talking about this yet we cannot address it. I ask the Minister to examine the matter.
We are addressing it, although perhaps not in the formal sense for which the Deputy is asking. Grain, for example, is one of the very few agricultural products of which we import substantial values in terms of feed grain and so on. The Department of Agriculture, Food and the Marine has examined specifically supporting Irish farmers to grow more grain in response to that exposure resulting from the impact of the war in Ukraine and grain prices going up.
It exposed Ireland's reliance on imports from markets that are now severely disrupted. It is a good example of trying to restructure our systems and create business opportunities here to grow products that we can perhaps produce more efficiently compared with importing from other parts of the world. I am sure there are other areas where we can do the same. Seaweed was mentioned. We should be able to produce enough raw material in Ireland for all our seaweed companies that are adding value, yet many of them are forced to import from abroad.
To be clear, we cannot deliberately disadvantage companies selling into Ireland by putting up non-tariff barriers to do that. Instead, we build an efficient, indigenous industry in Ireland that can compete and win.
That is the very point I am making. I am not looking for any tariffs to be put up. Tariffs have not suited our economy. All we have to do is look at history to see that. One indigenous crop with huge potential is hemp. There are issues regarding the regulation and licensing of that in this country.
I am talking about developing and supporting businesses in this country that are replacing product coming from other parts of the world outside the EU. We know there is far more flexibility with EU state aid rules post Covid. As a result of the war in Ukraine, there is flexibility on state aid rules, yet the State is not coherently looking at the potential to support our businesses. As I said in respect of the renewable energy sector, the focus is on export rather than meeting our domestic needs. There are demands and deficits we should be looking at.
Certainly, on the renewable energy sector, we are, first and foremost, trying to decarbonise our own grid but we recognise the potential for renewable energy generation in Ireland goes way beyond our domestic needs. I see energy in a similar way to dairy product. We produce a lot of dairy product, 85% of which is exported. By 2050, we will be in the same space from an energy perspective. From a clean energy perspective, we will be exporting large volumes of clean renewable energy that will be facilitated through a hydrogen industry, ammonia and interconnection. That is a good thing. Ireland is one of the most globalised economies on the planet. We import and export easily and we do not put barriers in place. We want to limit state aid interventions, where possible, so we can compete and our companies are not faced with barriers when they look to enter new markets. We have to be willing to apply that to the other countries we trade with and import from. I take the point the Deputy made. We can potentially look at some strategic sectors where we could do more at home and build an indigenous industry perhaps to reduce a reliance on imports from markets and countries that have proven to be disrupted.
