Being a member of E.U. (European Union), Austria participates in the European Economic Area (EEA). Since Foreign Trade Policy is an EU competency, Austria has no bilateral free trade agreements. However as an EU member Austria participates in all EU trade agreements, which include: - Agreement with European Economic Area: Iceland, Liechtenstein and Norway - Customs Union with: Turkey, Switzerland, Andorra and San Marino - Stabilization and Association Agreements with: Croatia, Former Yugoslav - Republic of Macedonia and Albania; in negotiation with Serbia, and Bosnia and Herzegovina - Partnership and Cooperation Agreements with concentrating on increasing trade in place with: Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgystan, Moldova, Russia, Tajikistan, Ukraine, and Uzbekistan. - Agreements with Free Trade Area (FTA) provisions are in place with: Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, Tunisia, Palestinian Authority (interim), Chile, Mexico and South Africa. Austria is also member of OECD ( Organization for Economic Cooperation and Development).
Non Tariff Barriers
In accordance with its European Union membership, Austria applies the European Union rules that are in force in all European Union countries. While the EU has a rather liberal foreign trade policy, there is a certain number of restrictions, especially on farm products, following the implementation of the CAP (Common Agricultural Policy): the application of compensations on import and export of farm products, aimed at favoring the development of agriculture within the EU, implies a certain number of control and regulation systems for the goods entering the EU territory. Moreover, for sanitary reasons, regarding Genetically Modified organisms (after being allowed in the European territory), their presence should be systematically specified on packaging. The beef cattle bred on hormones is also forbidden to import. The BSE (often called the "mad cow disease") urged the European Authorities to strengthen the phytosanitary measures to make sure of the quality of meats entering and circulating in the EU territory. The principle of precaution is now more widespread: in case of doubt, the import is prohibited until proof is made of the non-harmfulness of products.
Some form of non-tariff barriers also exist in the pharmaceutical, telecom, biotechnology, refrigerant, and legal and accounting services sectors.
Customs Duties and Taxes on Imports
Austria uses a harmonized customs system.
Imported goods are to be declared to the customs. A Single Administrative Document or SAD is used for this purpose. The Single Administrative Document (SAD) may be submitted to the Austrian Customs Administration through physical means or through an electronic declaration. For more information click here Hauptzollamt Wien (Central Customs Office, Vienna.
As part of the "SAFE" standards advocated by the World Customs Organization (WCO), the European Union has set up a new system of import controls, the "Import Control System" (ICS), which aims to secure the flow of goods at the time of their entry into the customs territory of the EU. This control system, part of the Community Program eCustomer, has been in effect since January 1, 2011. Since then, operators are required to pass an Entry Summary Declaration (ENS) to the customs of the country of entry, prior to the introduction of goods into the customs territory of the European Union.
Goods that are used as and which qualify as samples are eligible for duty-free entry. In order to qualify, they are of negligible value (EUR 45 or less), They will be consumed or destroyed during demonstration and are packaged and properly marked in a manner which precludes their being used as other than samples. (i.e. foodstuffs, non-alcoholic beverages, perfumes and chemical products). There should not be more than one sample of each style or quality in a consignment.
The traditional buyer-seller relationship (whereby the buyer is considered to do a favor to the seller) still exists in Austria to a large extent, though the concept is now changing especially among the young generation. Thus companies should refrain from hard sell practices which could backfire. However price is becoming a key factor in purchasing. More and more sectors are becoming price-driven.
Consumer Profile and Purchasing Power
Price is an important factor in consumer’s choice. The country is witnessing paradigm shift where in price has become the focus instead of quality and personal relationship. Still the per capita income in Austria is high and consumers are rich, sophisticated and highly diverse in their interests and tastes.
Despite being a relatively small country, Austria is an important strategic player because it is geographically located at the crossroads of the European Union. Today, the Austrian market is saturated in all major sectors and in order to penetrate this market advertising is a must; all the more so because Austrian consumers are becoming less price sensitive and care more about in-store customer service. The principal trading zones of the country are Vienna, Vorarlberg and Burgenland, with important areas like Styria and Tirol.
In 2004, nearly 80% of the retail market in Austria was controlled by foreign companies, with German companies having a strong presence. In fact, Germany plays a very important role in Austrian commerce, and it owns more than 15% of the capital invested in some 500 companies. Since 1995, Austria has set its sights on Eastern European countries, thus changing its import channels. This phenomenon further strengthened after 2005 with the entry of these countries into the European Union. In 2003, the retail food market was valued at 14.3 billion Euros, an increase of 3.9% as compared to 2002. Two groups dominate this market: - Rewe austria (German origin) has a 30.2% market-share and is the market leader in the food distribution. - Spar (Austrian origin) has 28.2% of the market-share. Discount stores also constitute a huge market as they account for 25.6% of the total turnover of the retail food market. Hofer controls 16.2% of the market-share which is far beyond Lidl with only 2.6%. Food distribution is very consolidated and is dominated by a few big groups which control 2/3rd of total sales in the country. Amongst these, the major foreign groups are Bipa dealing in drugstores, Lutz and Ikea dealing in furniture. The retail market is dominated by big German groups like Markant and Metro. The largest chain of stores in the country belongs to the group Billa.
Manufacturing in Austria is technologically advanced, innovative and globally competitive. More than 1 million people now work in the sector, which contributes 12% to the country’s GDP. Advanced manufacturing now accounts for around half of Australia’s manufacturing output and includes aerospace, automotive, machinery, tooling, instruments, chemicals, plastics and many other products with a high degree of transformation.
The sector has made significant efficiency gains in recent years as a result of investment in new technology, innovation, industrial relations reform and a reduction in tariffs.