Ireland's Current Account with the US

Ireland’s trade in goods for National Accounts and Balance of Payments purposes is measured on a change of ownership basis. Our total trade in goods includes 'international trade' traditionally measured on a cross border basis, along with ownership adjustments, such as goods for processing and other conceptual adjustments. This is described in our note Explaining Goods Exports and Imports 2012-2016. International trade accounted for 75% (€39.2bn) of total exports of goods to the US in 2018, which is an increase of €5.9bn from 2017. Goods for processing accounted for 23% (€12bn) of total exports of goods to the US in 2018, which is an increase of €0.5bn from 2017. Goods for processing/contract manufacturing¹ have shown an increasing trend in Irish exports to the US and have driven increases in total exports of goods since 2014, as shown above. Conceptual adjustments² accounted for 1.3% (€0.7bn) of total exports of goods to the US in 2018 and merchanting accounted for less than 1% (€0.3bn). Combined, this made the US Ireland’s largest trade partner for exports of goods in 2018 (see Table 1.2 for full details). Figure 2.2 below provides a country comparison of Ireland’s main merchandise trading partners.

Get the data: StatBank (TSA10)

Figure 2.3 below breaks down the main components of international trade exports to the US in 2018. Exports of pharmaceutical products dominated international trade exports and total merchandise exports in 2018 at €25.8bn, accounting for 66% of international trade and 49% of total exports of merchandise. This makes pharmaceutical products Ireland’s largest export component in trade with the US.

In Figure 2.3, we can see that pharmaceutical goods have grown to become Ireland’s largest export to the US between 2012 and 2018. The trade surplus in international trade with the US was €22.3bn in 2018, which is an increase of €6.1bn from 2017.

Get the data: StatBank (TSA10)

Figure 2.4 below illustrates the share of exports of pharmaceutical products to the US and EU28 as a percentage of total world pharmaceutical exports. In 2018, exports to the US accounted for 35% of total Irish pharmaceutical exports, which makes the US the largest importer of Irish pharmaceutical products outside of the EU28. While a significant share of pharmaceutical products manufactured in Ireland are being exported to the US, the majority of these exports, nearly half of Ireland’s total pharmaceutical products, are being exported into Europe.

Figures 2.5 and 2.6 show the growth in these adjustments for both exports and imports to the US between 2012 and 2018. Traditional goods trade represents international trade while total goods trade represents traditional trade plus contract manufacturing, conceptual adjustments and merchanting. The effects of change in ownership adjustments have a much larger impact on the value of goods exports to the US in comparison to goods imports from the US. In 2018, the disparity between the total and traditional measures of goods imports from the US was €2.8bn while the disparity between the two measures of goods exports to the US was €13bn.

Change in ownership adjustments are relatively small until after 2014 when the disparity between total and traditional merchandise exports grows significantly. These adjustments peaked in 2015 at a value of €21.1bn. Figure 2.8 (below) illustrates the effect of these ownership adjustments on Ireland’s trade balance with the US. The two series of the US trade balance, one adjusted for change in ownership, move similarly until 2014 when the disparity between the two becomes significant as a result of increases in the exports of goods for processing. The large positive adjustments to the trade balance with the US suggest that a lot of physical flows of goods from Ireland to the US result in a change of ownership. For more see the information note Explaining Goods Exports and Imports.

¹For more details on goods for processing see the information note Explaining Ireland’s Trade Balance.

²For more details on conceptual adjustments see the information note Explaining Ireland’s Trade Balance.

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