European Free Trade Association

   (EFTA)

   With the national economy recovering at a swift pace during the latter half of the 1950s, the Austrian coalition government was eager to establish closer commercial relations with Western Europe. Austria’s official status as a neutral country made integration into the European Economic Community (EEC), the predecessor of the European Union (EU), problematic, even though Italy and Germany were fast becoming its most important trading partners.

   At first the Austrian regime pressed to turn all of Europe into a free trade zone. In 1960, at a meeting in Stockholm, Austria joined with Denmark, Great Britain, Norway, Portugal, Sweden, and Switzerland to form the European Free Trade Association. Each promised to give special tariff considerations to the exports of member states. The group agreed to lower quantitative limits on imports from one another’s countries. Unlike their counterparts in the EEC, EFTA participants were not required to synchronize the regulatory structures of their internal economies.

   The Austrian economy profited from the EFTA relationship. Austrian exports to EFTA countries rose from around 12 percent of its total exports in 1959 to more than 28 percent by 1970. At the same time, while the monetary value of its exports to the EEC rose dramatically— from 12.4 billion schillings to 30.6 billion in 1970—the overall percentage of Austrian imports in the EEC declined. However, the general thrust of Austrian policy was almost always to find a modus vivendi with the EEC, as was true of other EFTA states. In 1961, Great Britain had already made known its interest in joining the European Economic Community. A species of free-trade arrangement was set up between the EFTA and EEC members in 1973. The Soviet Union, which was eager to preserve Austrian neutrality, did not oppose the arrangement. Austrian membership in the EEC, which began in 1995, effectively abrogated the EFTA relationship.