Free Trade Agreements (FTAs) with Canada, South Korea, Mexico and Japan will increase GDP and wages, especially for low-income workers, according to a new trade study published by the Government.
The independent examination, conducted by Copenhagen Economics, looked into the economic opportunities and effects for Ireland arising from four recently concluded EU Free Trade Agreements – Korea, Canada, Mexico and Japan.
It found that wages are expected to increase between 2.6% and 4.4% in 2030 due to the FTAs, with the largest increases found for low-income workers.
The research also shows that imports will continue to become cheaper, reducing costs for consumers and Irish firms with global value chains.
According to the report, Irish GDP will be 2.3% higher in 2030 than would have been the case without the four FTAs in place.
It said the higher GDP is driven by an increase in global total Irish exports of 3.3% and an increase in global imports of 3.3%.
The report states that increased market access benefits Irish exporters who can specialise in production, where they have a comparative advantage and are productive relative to competitors
As a small open economy with a limited home market, the report suggests that Irish producers will benefit more than producers in large countries who can gain scale in their home markets.
Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar said this study shows how widespread and significant the benefits are of reducing friction in trade with other countries.
"Some countries, such as Norway, Australia and the Gulf States, use their rich natural resources to create employment and fund services and a good quality of life for their citizens.
"Ireland, however, has very little oil, gas or mineral wealth.
"For us, trade is the source of our economic growth.
"It is what has consistently raised our living standards over decades and created hundreds of thousands of jobs for our citizens," he said.
The study reveals that Ireland currently exports over €20bn in goods and services to the four specific FTA partners subject of this study, equivalent to almost 6% of total Irish exports of goods and services in 2019.
The study indicates early benefits are arising from the FTAs since their application.
For example, exports to South Korea grew 19% per year since 2015 and 22.8% per year since 2017.
Irish goods exports to Canada increased from €953 million in 2016 to more than €1.7 billion in 2020 and services exports grew from €1.6 billion in 2016 to more than €2.3 billion in 2019.
