PART I

COMMERCIAL OVERVIEW

Introduction

The United States and Ireland enjoy very good political, economic and
commercial relations and a close cultural affinity.  The commercial
environment in Ireland is conducive for U.S. companies interested in trade
and investment.  U.S. firms should not be put off by the small size of the
Irish market.  Rather they should look upon Ireland as a gateway to the
larger European market.  Many U.S. firms already use Ireland and its many
advantages and incentives to assess and penetrate the lucrative European
market.  U.S. firms should explore the possibility of locating an Irish
agent/distributor who possesses knowledge of EC regulations and European
distribution networks in order to introduce their products and services.
U.S. firms developing an international marketing strategy which involves
joint ventures, direct investment, licensing, or franchising should evaluate
the suitability of establishing a base of operations in Ireland.  All U.S. firms
interested in exporting to, and/or establishing operations in, Ireland are
urged to contact the relevant section at the U.S. Embassy in Dublin for
counseling and advice on doing business in Ireland.

Overview of the Import Market

Ireland is a small open economy heavily dependent on international trade.
The ratio of imports plus exports to GNP of 109 percent highlights the
importance of international trade to Ireland and the receptive climate for U.S.
imports.  The United States is the second largest exporter to Ireland, after
the United Kingdom.

The introduction of products into the Irish market is uncomplicated as
standard international marketing and distribution practices are widely
utilized.  Motivated U.S. firms with quality products will encounter positive
assistance from their local representative in achieving their goals and
objectives for the Irish market.

Commercial Environment

The United States and Ireland enjoy very good political, economic and
commercial relations and a close cultural affinity.  The commercial
environment in Ireland is conducive for U.S. companies interested in trade
and investment.  U.S. firms are the largest source of investment in Ireland.
The United States is Ireland's second most important trading partner after
the U.K.  Ireland also has close ties with Europe and since 1973 has been a full
and active member of the European Union.  Ireland's close links with the
United States as well as Europe, plus the inducements available to invest in
Ireland, offer many opportunities for U.S. firms to use Ireland as a gateway
to assess and penetrate the lucrative European market.

Ireland's economy continues to grow despite economic slowdowns in some of
its major trading partners.  Growth is heavily dependent on strong external
trade performance.  As a small open economy which is heavily dependent on
international trade and investment, government policies are generally
formulated to facilitate trade and inward direct investment.

Since 1987, there has been general cooperation between the major political
parties, labor unions and employers (the social partners) in the government's
fiscal austerity program.  A third three-year national economic pact, Program
for Competitiveness and Work (PCW), was signed in early 1994 continued this
general cooperation.

Unemployment, currently at about 15 percent, remains a serious problem for
the Irish economy.  Reducing unemployment, which is expected to remain high
for the rest of the decade, is a major priority for the government.

The coalition government, formed in February 1993, is functioning fairly
effectively on economic issues, despite predictable tensions between the two
partners, the Labour party, headed by the Deputy Prime Minister and
Foreign Affairs Minister, Dick Spring, and the larger Fianna Fail party of
Prime Minister Albert Reynolds.  As with previous administrations, this
government has been preoccupied with a series of controversies and crises.
Added to these is the Government's handling of unemployment and economic
matters.  Commitment to greater European economic integration, tax reform
and stronger market orientation continue to be key factors in government
policy.  The government continues to have a heavy political agenda
encompassing developments in the EC and European monetary matters, the
Northern Ireland peace process, the restructuring of Aer Lingus, resolution
of the TEAM Aer Lingus dispute, and the unemployment crisis.

Ireland has a market economy based primarily on private ownership.
Government ownership and control occurs in a few sectors.  In recent years,
the government has reduced its holdings in a number of companies.  However,
the Fianna Fail/Labour coalition has indicated that it would not agree to
further privatizations at this time.  Telecom Eireann, the public telephone
utility, is currently evaluating the opportunities for entering a strategic
alliance with an international telecommunications firm.

A member of the EU since 1973, Ireland is active in efforts to create a single
European market and to establish an economic and monetary union.
Significant progress has been made on reducing trade barriers within the EU
and on harmonizing indirect taxes.  Ireland is supportive of further EU
integration, but has consistently pointed out the special needs and problems
which integration presents for peripheral and less developed regions.

Ireland benefits considerably from EU policies in agriculture and regional
development.  In 1993, transfers to Ireland from the EU's Common
Agricultural Policy (CAP) were equivalent to almost 4 percent of GNP.
Consequently, the Irish Government is opposed to many of the proposals for
reform of the CAP.  Under the EU's regional development programs, Ireland
will receive about IP 6 billion in "structural funds" during the period 1994-
1999.  These funds are being used primarily for infrastructure projects,
including roads, port and airport facilities, and the environment, as well as
for education, training, and employment programs, indigenous energy
development, and energy diversification.

Ireland faces the challenges arising from the Treaty on Economic and
Monetary Union (EMU), the Maastricht Treaty.  The government is committed
to Ireland being among the initial group of countries to proceed to full EMU.
The treaty sets up a number of criteria which member states must satisfy in
order to proceed to EMU.  These criteria relate to inflation, interest rates,
exchange-rate stability, government borrowing and debt-to-GNP ratio.

Government economic policies are attempting to address the two major
structural problems of the economy -- excessive debt and high
unemployment.  The current level of government debt exceeds 100 percent of
GNP (EMU criteria is 60 percent.), while the demographic pressure on the
labor force would require the creation of 20,000 to 25,000 jobs annually to
stop unemployment rising in the absence of emigration.  This level of job
creation is highly unlikely in th near to medium term as it would require a
GNP growth rate of 6-8 percent over many years.  The generous social
security net results in a degree of social and political stability, in spite of
over 15 percent unemployment, but adds to the budget deficit and debt.

Ireland has a small open economy which is very dependent on trade.  Exports
increased by about 4 percent in 1993 giving Ireland a record trade surplus of
almost IP 4 billion.  Consumer spending was slack during 1993 increasing by
1.75 percent.  The residual effects of the late 1992 currency crisis
contributed to continued caution among consumers early in the year.
However, the general economic climate improved as the year progressed.
Investment spending was flat in 1993, following a one percent decline in 1992.
Inflation averaged 1.5 percent (a historic low) for the year.

There will be pressures on the new coalition government, especially the
Labour party partner, to engage in more liberal spending and less fiscal and
economic constraints.  To date, the government has been able to hold the line.
However, recent disputes involving Aer Lingus and other industrial action
may mean there are some rough times ahead.  The late 1992 foreign exchange
difficulties within the ERM leading to the devaluation of the Punt also has had
an influence on the current economic situation.

In recent years the government has made significant progress in improving
its fiscal position through constraints on spending, improved revenue
collections and a growing economy.  The projected budget deficit for 1994 is
2.7 percent of GNP (within the EMU range), compared to a deficit of over 13
percent in 1986.  Likewise, Ireland's public debt as a percentage of GNP has
been reduced from nearly 150 percent in 1987, to about 102 percent at the end
of 1993.  Ireland's external debt in 1993 was $16.6 billion, or 40 percent of
GNP.

Interest rates have remained at historically low levels since mid-1993.  Irish
interest rates are very sensitive to changes on international markets, due
largely to the necessity of maintaining the value of the Irish currency in the
Exchange Rate Mechanism (ERM) of the European Monetary System (EMS).

The main focus of Irish monetary policy is to keep inflation as low as possible
through maintaining a strong and stable currency in the ERM.  While the
German Mark is the primary link for the Irish currency, the government also
endeavors to maintain a stable exchange rate with the U.K., Ireland's largest
trading partner.  Low inflation is central to the government's policy for
promoting competitiveness, and thereby, employment growth.

The Irish economy is expected to show added strength in 1994, with the
Central Bank forecasting real GNP growth of 4 percent.  Export volume
growth is likely to accelerate to about 5.75 percent.  Inflation is expected to
remain low at the 2.75 percent level.  Ireland's positive trade balance should
remain relatively stable in 1994.

The Irish Government welcomes inward international investment and offers a
number of investment incentives to international companies.  One notable
incentive is an attractive 10 percent corporate tax rate for qualifying
industries guaranteed through the year 2010.  Other incentives include
capital investment, R & D, and training grants; rent subsidy for industries in
certain regions; and assistance in site location.  Investment is predicted to
increase by about 5 percent in 1994.

Ireland, with its need to import and its position in the EC, offers substantial
opportunities for the export of U.S. goods and services and forms an
excellent base from which to assess and penetrate the important European
market.  The Irish government, through the IDA Ireland actively seeks U.S.
firms to invest and develop the economy.  Some 400 U.S. firms have
responded creating over 47,000 jobs.  According to U.S. Department of
Commerce statistics, the annual return on U.S. investment in Ireland in 1992
was 25.8 percent -- the highest in Europe.  Tax incentives, grants, location
within the EC trading area, and a large well-educated labor pool are the main
attractions of Ireland for U.S. investors.  In addition to green-field
investment, IDA Ireland is involved in joint ventures and licensing
arrangements between U.S. and Irish firms.  The activities of U.S.
subsidiaries, plus the American orientation of the Irish, result in the United
States having a positive balance of trade with Ireland.  At the same time,
exports of U.S. firms in Ireland contribute significantly to Ireland's overall
trade surplus.

The 400 American companies with subsidiaries in Ireland span a complete
range of activities from manufacturing of high-tech electronics, computer
devices, medical supplies, and pharmaceuticals to retailing and services.
Several hundreds of U.S. firms are represented by agents and distributors,
or have direct sales.  U.S. investment in Ireland is expected to continue.
However, new U.S. tax legislation may curtail investment in Ireland by certain
U.S. firms.

The large number of U.S. companies with operations in Ireland and the small,
but growing, number of Irish companies with U.S. investments ensure growth
in bilateral trade.  In 1993, U.S. exports to Ireland increased by about 16
percent to $3.3 billion, while Irish exports to the U.S. grew by 29 percent to
$2.6 billion.  The United States has traditionally had a trade surplus with
Ireland, due primarily to the purchases of U.S.-origin raw materials and
intermediate goods by U.S. subsidiaries in Ireland and substantial trade in
agricultural products.  In 1993, the United States trade surplus was about
$0.7 billion.  Given both the general favorable outlook for the Irish economy
and the number of U.S. subsidiaries in Ireland, U.S. exports should continue
to grow in 1994, providing excellent marketing opportunities for American
suppliers and manufacturers.

Irish Business Attitude to the U.S.

With some 45 million Americans claiming some sort of Irish descent, there is a
close cultural/social relationship.  As well as a common cultural heritage and
similarities in areas such as legal system and business practices, the English
language bonds the United States and Ireland and makes for ease in doing
business.  Through high levels of immigrants, business and tourist visitors,
there is familiarity with U.S. products and services.  Many CEO's of U.S.
companies and important political leaders are Irish-Americans.  All of this
results in a cultural affinity which adds to the close political, economic and
commercial relations enjoyed between the U.S. and Ireland.

Major Business Opportunities

The positive economic growth forecasts for the Irish economy offer
substantial opportunities to motivated U.S. exporters.  The opening up of the
Irish telecommunications market where Telecom Eireann is seeking to enter a
strategic alliance with an international telecommunications company, and the
Irish Governments intends to grant a license to operate a second cellular
network offers opportunities for U.S. telecommunications companies.

The infrastructural and environmental projects contained in the Ireland
National Development Plan, 1994-1999 also offer opportunities to U.S. firms.
USFCS-Dublin will report on emerging opportunities in this area as part of
its alert reporting program.

Best Prospect sectors for Ireland, that is industry and agricultural sectors
where U.S. exporters can enter the market or increase their market share
over the next couple of years, include Electronic Components, Computers and
Peripherals, Travel and Tourism Services, Drugs and Pharmaceuticals,
Computer Software, Industrial Chemicals, Electrical Power Systems, Medical
Equipment, Telecommunications Equipment, Building Products, Construction
Equipment, Household Consumer Goods, Air Conditioning & Refrigeration
Equipment, Pumps, Valves and Compressors, Industrial Process Controls,
Corn Gluten Feed, Pears, and Wine.  However, market opportunity is not
limited to these sectors.  There are many other areas which present
opportunities for U.S. business, e.g., a good laboratory instruments
industry, an emerging biotechnology industry.

Major Roadblocks to Doing Business

Ireland maintains a limited number of barriers to U.S. services trade.  While
international airlines serving Ireland may provide their own ground handling
services, they are prohibited from providing ground handling services to
other airlines.

The Irish banking and insurance sectors are slowly becoming deregulated.
Full deregulation in insurance will not occur until 1998.  An immediate
opportunity for U.S. companies exists in the Dublin International Financial
Services Center (IFSC).  This center offers interested U.S. companies the
opportunity to establish an EU financial base.  The IFSC is attracting
international financial services such as asset financing, captive insurance,
fund and investment management, and corporate treasury measurement.
Qualified financial services companies have a maximum tax of 10 percent
through the year 2005, provided a license is granted before the end of 1994.

Exchange controls on foreign travel by Irish citizens have been eliminated.
Although they have been liberalized in recent years, Ireland still maintains
some of the strictest animal and plant health import restrictions in the EU.
These, together with EU import duties, effectively exclude many meat based
foods, fresh vegetables and other agricultural products.

The EU directive on broadcasting activities was adopted on October 3, 1989.
The primary purpose of the directive is to promote the free flow of
broadcasting services across national boundaries.  Separately, the Council of
Europe agreed to a convention on transfrontier broadcasting which is largely
the same as the EU directive.  The main components of the directive are (a)
general provisions which require member states to ensure freedom of
reception of broadcasts from other member states; (b) provisions for the
promotion of distribution and production of television programs; (c)
provisions for advertising, sponsorship, the protection of minors, and right
of reply.  Many of the provisions of the directive have been transposed into
law under the Broadcasting Act, 1990.  Two sets of statutory regulations were
used to transpose the remaining provisions, as follows.  (1) The EC
Communities (Television Broadcasting) Regulations, 1991 Directive requires
broadcasters to reserve a majority of broadcast time for productions of EC
origin and to reserve at least 10 percent of transmission time or budget for
independently produced European programs.  (2) The Wireless Telegraphy
(Television Program Retransmission and Relay) Regulations 1991 amends the
regulations under which cable and multichannel microwave distribution
systems (MMDS) licenses are issued.  In short, MMDS operators will no longer
require approval in advance of relaying a service.

Nature of Local and Third Country Competition

Given Ireland's involvement in international trade, there is strong local and
third country competition for U.S. exporters.  Irish firms have a strong and
increasing expertise in international business and the Irish government is
encouraging more indigenous firms to compete in export markets.  At the
same time, the GOI actively encourages international investment in Ireland.
Thus, there is a strong and healthy mixture of local, U.S., and third country
competition in the Irish marketplace.