Q&A with Joan Burton, Ireland's Minister for Social ProtectionMarch 17, 2014: 2:39 PM ET
The minister for social protection talks about Ireland's financial recovery, tax policy, whiskey, and a little of everything in-between.
FORTUNE -- For most Americans, St. Patrick's Day is about wearing green, drinking whiskey, and celebrating the country's rich Irish heritage. But for Joan Burton, Ireland's minister for social protection, the holiday can also serve as a key time to remind the U.S. of investment opportunities in her home country.
After traveling to New York and Washington, D.C. over the weekend, Burton met with journalists and investors to promote Ireland as a leading trade and tourist destination. In an interview with Fortune, the minister advocated for Ireland's economic strength in the European Union and encouraged more U.S. Fortune 500 companies to build a presence on the Emerald Isle.
Why do you think St. Patrick's Day is a much bigger holiday in the U.S. than it is in Ireland?
It is funny, we have a big parade in Dublin that amount to a fun day for families, but it is almost over by the middle of the day. I think the one thing that shocked me about St. Patrick's Day in America is the amount of drink that is involved. There is some drink involved in Ireland, but my goodness, I was in the Chicago parade last year and all the college students were coming from everywhere. I suppose that it's because so many Americans relate to Ireland and it has just become a go-to day.
Why should Fortune 500 companies looking to expand into Europe go to Ireland as opposed to other countries?
We are the only English-speaking country in the Eurozone. That is quite an important attraction. There has always been a mutual admiration crossing back across the Atlantic between Ireland and America. America has always been very supportive of Ireland. Huge numbers of Irish people and people of Irish descent live in America. About 44 million Americas have Irish ancestry or some Irish ancestry. When President Obama came to Dublin, one of the things he was presented with were records of his own Irish ancestry. Michelle Obama even has some way-back Irish connections.
[There are many] very well-educated young Irish people both at a graduate and post-graduate level that are more than happy to work with American companies and who I think understand American ways and have a very friendly cultural relationship with America.
We also had to recast our structures with the central bank and regulatory structures with relation to banking and finance. I think that will bear a long-range dividend. If an American company working in finance or funds or banking is working out of Ireland, they are assured of an absolutely gold-plated registration system that will meet the highest American standards. So if they want to do business in Europe, it means that Ireland is a very attractive base.
What about Ireland's tax policy?
In terms of taxation, we have a very competitive corporation tax rate at 12.5%, which is fixed in law. For research and development investment, then we have additional write-downs. Corporation taxation in Ireland, I would say, is quite fair and efficient and effective, and it is fully recognized for U.S. overseas investment purposes.
Are you worried that there is an overall perception that Ireland is just a tax front for Apple and perhaps some other U.S. companies?
Absolutely, no. When the European Union changed the tax rules in the early to mid-'90s, the previous tax arrangements for Ireland with respect to export sales of goods or services was actually a 0% tax rate. That is something that isn't widely known. Ireland as a country is a relatively small island in the Atlantic. We don't have the advantages of the countries that are in mainland Europe in terms of ease of transportation and connectivity. There are countries with higher nominal rates, but in fact because of local concessions, write-offs, write-downs, and special items that are treated in particular ways, the effective rates in a lot of countries are very much on par with Ireland. Many of the new Eastern European countries have lower marginal rates. We are involved with the OECD, as are other member states, in a process of looking at the tax base, and we are very much a part of that OECD work. Where those Fortune 500 companies make hyper-effective arrangements there is normally a whole string of countries involved. If this is going to be addressed it will have to be on a global basis involving countries all around the world, including the U.S. itself.
Google, LinkedIn, and Twitter also have a strong presence in Ireland. What do you think the country is so attractive to social media companies?
Google (GOOG), Twitter (TWTR), LinkedIn (LNKD) -- you name them they are all there. As well as traditional IT companies like IBM (IBM), HP (HPQ), Intel (INTC) -- they are all significant employers. These companies like Ireland because there really is a good vibe in Dublin, which is developing into a very strong region in the same ways that places like Barcelona or Munich have developed strong city regions. So the social media companies like it there. At the very heart of the oldest part of Dublin where Guinness brewery is located, a section of its big old grounds has been converted into a digital hub. One of the things I am involved in as a minister is convincing young unemployed people who are graduates working in construction to do digital marketing and digital design conversion courses because they have a math background, so they are probably perfect for developing digital skills. When they do, they are highly employable by the social media companies. So, it is quite the scene in Dublin.
At the end of the day, there is a very high cultural content in a lot of social media even when making 140-character Twitter tweets. Ireland is the home of James Joyce. We have such a heritage of writers, a lot of American writers have an Irish heritage, so I think fluency with words is important in Ireland.
What types of Irish companies are considering growing their investment in the United States?
A growing area is the whole area of food and drink. The European Union is changing its rules with relation to the common agricultural policy. Next year, Irish producers will be able to increase their production levels in the U.S. That will lead to an expansion of Irish food products in America. Some of the brands that are famous are certainly Kerrygold and also various drink brands like Jameson. Jameson now sells to a much younger age group and is very fashionable. Also Bushmills, Tullamore Dew, Cooley, as well as Jameson, have a huge amount of U.S. business.
Where do you see Ireland on the road to recovery after the crisis, especially after a disappointing fourth quarter?
We have some very big constraints. We have a lot of debt. We are moving into a primary budget surplus, but the cost of servicing the debt that we undertook for the bank guarantee is very high. I just thought the burden we took on was ridiculous.
Regarding the fourth quarter, the thing that is important there is the so-called pharma-cliff. As the patents for pharmaceuticals run out and there is a switch to generics, there is a fall, obviously, in the patented pharmaceuticals that are being manufactured in Ireland. I think we are almost through that at the moment. We also have a 3.3% increase in employment for 2013, which is a really strong indicator of recovery.
What Irish whiskey do you drink?
Jameson probably, but I don't drink a lot of it now. I suppose I am more of a glass of white wine drinker, but we don't make that in Ireland. Global warming hasn't really hit that far yet.