UniCredit Bank Austria Analysis
Mercosur agreement opens up opportunities for Austrian industry
- One of the world's largest trade agreements for an economic area of 770 million people
- In 2024, Austria exported goods worth 1.3 billion euros to the Mercosur countries, but this currently accounts for only 0.7 per cent of total exports
- Elimination of high import duties strengthens mechanical engineering, beverage industry and vehicle production
- Upper Austria, Styria and Salzburg would benefit particularly from an agreement
- For Vorarlberg, Carinthia and Burgenland, trade with Mercosur is currently of little economic relevance
On 3 September 2025, the European Commission initiated the ratification process for the free trade agreement with the Mercosur countries. The agreement covers Brazil, Argentina, Uruguay, Paraguay and, since 2024, Bolivia, and is intended to remove most of the existing trade barriers. “The agreement opens up new export opportunities for Austrian industry and strengthens its international competitiveness”, explains UniCredit Bank Austria Chief Economist Stefan Bruckbauer.
Currently still a relatively small export market for Austria
Austria's exports to the Mercosur countries amounted to 1.3 billion euros in 2024, accounting for only 0.7 per cent of total exports. Machinery, pharmaceutical products and beverages were the most important export goods to South America. The industrial regions of Upper Austria and Styria account for almost half of Austria's exports to Mercosur. Salzburg scores thanks to the beverage industry, Vienna mainly thanks to pharmaceutical products. “The elimination of customs duties of up to 35 per cent on vehicles and 20 per cent on machinery would provide some relief to the industry, which is currently under pressure”, says UniCredit Bank Austria economist Robert Schwarz.
Tariff reduction as a growth stimulus
“The average tariff rate for Austrian exports to Mercosur countries was around 10 per cent in 2024, resulting in costs of around 130 million euros”, Schwarz calculates. Once the agreement comes into force, over 90 per cent of customs duties would be eliminated. The relief provided by the tariff reduction would be particularly pronounced in the automotive, beverage and mechanical engineering sectors, as these are currently subject to the highest average tariff burdens.
Industrial regions as winners
In 2024, demand from Mercosur countries for goods – either directly or via supply chains – generated added value of around 700 million euros in Austria, supporting around 5,000 jobs in industry. According to estimates by the European Commission, the agreement could increase EU exports of goods and services to South America by around 40 per cent.
Applied to Austria, this would correspond to an additional value-added effect in industry of around 300 million euros and an employment effect of around 2,000 additional industrial jobs. The regions of Upper Austria and Styria would benefit most from the trade agreement with Mercosur. Upper Austrian industry can expect an additional 80 million euros in added value and 550 jobs, while Styria can expect an additional 50 million euros in added value and 350 jobs.
A positive conclusion to the agreement would increase industrial value added in Salzburg, Vienna and Lower Austria by almost 40 million euros and create around 300 new industrial jobs. In Tyrol, the effect would be slightly lower, with additional value added of 25 million euros and 150 jobs. In Vorarlberg, Carinthia and Burgenland, the value-added effect would be less than 10 million euros and fewer than 100 jobs.
At the same time, however, pressure is growing on domestic agriculture, which has to compete with cheaper meat imports from South America. “The Mercosur agreement is an important addition to existing trade relations, but it does not replace them – the economic power of the Mercosur countries is only around ten per cent of that of the USA”, Bruckbauer concludes.
Enquiries:
UniCredit Bank Austria Economics & Market Analysis Austria
Robert Schwarz, Tel.: +43 (0) 5 05 05-41974;
Email: robert.schwarz@unicreditgroup.at