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Factba.se: Australia DFAT Country Briefs - Austria
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COUNTRY BRIEFS


OVERVIEW

Australia enjoys friendly relations with Austria, underpinned by a range of political, economic and social links. The two countries share common positions on a number of multilateral issues including non-proliferation, arms control and whaling.

Austria's capital Vienna is the base for key international organisations, including the Organization for Security and Cooperation in Europe (OSCE), the International Atomic Energy Agency (IAEA) and the Organization of Petroleum Exporting Countries (OPEC). The United Nations has a major centre in Vienna.

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POLITICAL OVERVIEW

Austria is a Federal Republic, comprising nine provinces, each with its own provincial assembly and government. Legislative power is vested in a bicameral Federal Assembly, which has a similar structure to the Australian Federal Parliament. The Lower House, the Nationalrat, has 183 members elected for five-year terms. The Upper House, the Bundesrat, has 63 members elected by the provincial assemblies. Seats are apportioned in relation to the population of each province. The Head of State, the Federal President, is elected by popular vote for a six-year term. The Federal Presidency is primarily a ceremonial role which is advised by the Council of Ministers, led by the Federal Chancellor, and is answerable to the Nationalrat. The current Federal President, Mr Heinz Fischer, took office on 8 July 2010 for a second term.

A Federal election was last held in Austria in 2008. Following the election, a new coalition government was sworn in on 2 December 2008. Mr Werner Faymann of the Social Democratic Party of Austria (SPÖ) is the Chancellor and Mr Josef Pröll of the Austrian Peoples' Party (ÖVP) is the Vice-Chancellor. Dr Michael Spindelegger (ÖVP) is the Federal Minister for European and International Affairs.

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FOREIGN POLICY

Austria's role within the EU remains a key area of interest for the government. Austria has been an EU Member State since January 1995 and last held the rotating EU Presidency in the first half of 2006. Former Austrian Foreign Minister, Dr Benita Ferrero-Waldner, was the EU Commissioner for External Relations and European Neighbourhood Policy between 2004 and 2009.

Austria has a strong policy commitment to strengthening the EU's role as an international player and supports measures to deepen the Common Foreign and Security Policy (CFSP) and the development of a common European Security and Defence Policy (ESDP). The Austrian government ratified the EU Lisbon Treaty on 9 April 2008.

Austria's borders with the Czech Republic, Slovakia, Hungary and Slovenia opened in December 2007 when the Schengen area was extended to include these countries; and with Switzerland and Liechtenstein in December 2008 and February 2009 when they respectively entered the Schengen area.

While maintaining its neutral status, Austria is engaged in the Partnership for Peace program with troops in Bosnia and Herzegovina, Kosovo and on the Golan Heights, and is involved in peacekeeping in Afghanistan as part of the NATO-led International Security Assistance Force (ISAF). Austria has no current plans to join NATO.

Austria is a non-permanent member of the UN Security Council from 1 January 2009 to 31 December 2010.

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ECONOMIC OVERVIEW

Austria's Gross Domestic Product (GDP) was US$382.1 billion (A$482.9 billion) in 2009 and forecast at US$366.3 billion (A$402.3 billion) for 2010. Austria's exports of goods and services contributed approximately 50 per cent of GDP in 2009. The EU's eastward expansion and Austria's geographic location make it an attractive hub for regional trade. One third of Austrian foreign investment is currently directed into Eastern European countries.

In response to the global financial crisis, the Austrian government provided a €100 billion (approximately A$193 billion) package in October 2008 to guarantee lending among banks and to support their capitalisation. The government's longer term key economic priorities are to increase expenditure on research and development to three per cent of GDP; raise education standards; improve infrastructure links with eastern Europe; and reform taxation. A major infrastructure package will invest €11 billion (approximately A$21 billion) in both railway and motorway links by 2012, including a tunnel under the Brenner Pass, linking Italy with Austria.

Austria's national energy company, OMV, is leading a natural gas pipeline project "Nabucco" to channel gas from Baku, Azerbaijan, to Austria. Construction on the 3,300 kilometre pipeline is scheduled to begin in 2010, with completion date set for 2013.

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KEY ECONOMIC INDICATORS

Austria, with exports making up a significant proportion of GDP, was hard hit by the global economic crisis. As global demand for Austrian exports fell, Austria's GDP contracted by 3.9 per cent by the end of 2009. With improvements in the global economy, and recovery in new EU member states, Austria's GDP is forecast to grow by 1.6 per cent in 2010. Unemployment is expected to be approximately 4.1per cent and inflation at 1.5 per cent in 2010.

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BILATERAL RELATIONS

Cultural relations

Austria has had close links with Australia since the 18th and early 19th centuries, when Austrians visited Australia as members of scientific, diplomatic and religious missions. The bulk of Austrian migration to Australia took place between the end of World War II and 1960. Today, the relationship is marked by strong people-to-people links with around 51,000 Australians with Austrian ancestry.

Austria is a magnet for Australian artists and musicians. In 2005 Australian conductor Simone Young became the first woman to conduct the Vienna Philharmonic Orchestra since 1935, and the first woman to conduct at the Vienna State Opera since the end of the Second World War. The Vienna Philharmonic Orchestra made a successful first tour of Australia in 2006. The Australian Chamber Orchestra (ACO) is one of many Australian groups that have repeatedly performed in Austria.

High level visits

The then Minister for Foreign Affairs and Trade, Mr Stephen Smith, visited Austria 16-17 February 2010. Mr Smith and Austria's Minister for Labour, Social Affairs and Consumer Protection, Mr Rudolf Hundstorfer, signed the second protocol to the bilateral social security agreement. This amendment will reduce the superannuation costs for Australian companies doing business in Austria and for Austrian companies operating in Australia. A parliamentary delegation headed by the Hon Roger Price MP visited Austria from 11-14 October 2009. Then Deputy Speaker, Ms Anna Burke, visited Vienna from 12-17 July 2009 to participate in the Inter Parliamentary Union's 5th meeting of Women Speakers in Parliament. Then Minister for Immigration and Multicultural and Indigenous Affairs, Mr Philip Ruddock, visited Austria in August 2002.

Bilateral agreements and official dialogue

Australia has a number of bilateral agreements with Austria, including on social security. Texts of bilateral agreements are available at the AUSTLII website (http://www.austlii.edu.au/au/other/dfat/countries/).

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BILATERAL ECONOMIC AND TRADE RELATIONSHIP

Bilateral trade

Austria is Australia's 34th largest merchandise trading partner. In 2009-10, Australia's imports from Austria amounted to A$945 million resulting in a deficit of A$852.2million. Australian merchandise exports to Austria amounted to A$92.8 million. The main products exported to Austria were gold coin and legal tender coin, leather, civil engineering equipment and parts, and paper and paperboard. Major Austrian imports were passenger motor vehicles, pharmaceutical products, non-alcoholic beverages and medicaments (incl veterinary).

The main services trade with Austria is tourism and the number of Austrian students in Australia is growing. In 2009-10, almost 17,000 Austrians visited Australia and 465 Austrian student enrolments were received in Australian educational institutions in 2009. A number of Australian musicians and students are working and studying in Vienna.

A senior business delegation of the European Australian Business Council (EABC) visited Vienna from 25-26 May 2008, as part of a visit to European countries. The delegation held discussions with senior officials from international organisations, including OPEC, and from the Austrian National Bank.

Bilateral investment

Total Australian investment in Austria increased to A$984 million in 2009.

Around 200 Austrian companies are currently active in the Australian market. Austrian investment is mainly in the areas of machinery, oil production, gambling and the electrical industry. Some of the larger firms operating in Australia include Boehler (specialty steel), Andritz (hydroelectric turbines), Red Bull (energy drinks), Casinos Austria and Swarovski (jewellers). OMV, Austria's largest firm, has interests in 12 operating exploration licenses for oil and gas in Australia and one license which it has not yet taken up. These licenses are located off north-west Australia in the Carnarvon Basin and Timor Sea. Frequentis supplies public security systems as well as air traffic control systems. Austrian Energy and Environment supplies power plants, including co-generation plants.

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EXPORT OPPORTUNITIES

Austria's economic potential provides scope for further market opportunities in both goods and services for Australian exporters. Opportunities exist in tourism, financial services, education and niche areas of the highly diversified Austrian manufacturing sector which is focused on medium-technology industry producing top-end intermediate and capital goods for the German market.

The Australian Trade Commission (Austrade) (http://www.austrade.gov.au/) is the Federal Government agency that helps Australian companies win overseas business for their products and services by reducing the time, cost and risk involved in selecting, entering and developing international markets.

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TRADE AND INVESTMENT SUCCESSES

Australian business operations in Austria include Macquarie Capital GmbH, and Derma Medical. Macquarie Capital was established in Austria in 2001 to focus on the development of products for Austria and the Eastern European countries. The product range includes corporate finance/project finance and infrastructure advisory services. Macquarie was a pioneer of public private partnerships (PPP) and of cross-border leasing in Austria.

Derma Medical Systems is a 100 per cent Australia owned company and is one of the world leaders in the development and production of skin imaging systems using leading technology for the early detection of melanoma, as well as for imaging of other skin disorders and cosmetic aesthetic imaging applications (digital dermatoscopy). Derma Medical Systems was established in 1996 through clinical research cooperation with the Department of Dermatology, University of Vienna Medical School. The Vienna operation focuses on research and development.

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Last Updated: November 2010

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