Foreign Trade: The international division of labour which arose in the 19th century clearly demonstrated Austria's dependence on foreign trade, especially after the collapse of the Austro-Hungarian monarchy. This dependence is typical of small economies in the modern European industrial community. The peace treaties which ended World War I did not allow Austria to develop close economic integration with Germany or Italy. In 1927, Austria's main trade partners were Germany, ČSR, Hungary, Italy, Yugoslavia and Switzerland. As early as 1929-1931 (Great Depression), Austrian foreign trade, which had been developing well until then, dropped 30%.
During the First Republic, Austrian foreign trade was characterised by a consistently high import surplus due to the import of foods, animals for slaughter, coal, etc., thus giving Austria's income from tourism services and transit an important role.
In the first years after World War II, Austrian foreign trade practically came to a standstill. Almost 90% of imports into Austria were aid shipments from the UNRRA (United Nations Relief and Rehabilitation Administration), adding up to a total value of US$ 500 million between 1945 and mid-1948. It was not until the Marshall Plan for European Reconstruction (ERP - European Recovery Program) was introduced, which also assisted Austria (as a politically Western-orientated state) in 1948 by providing material shipments (food, raw materials), technical assistance and loans, that a period of export-driven growth began. Under the Marshall Plan, Austria received a total of US$ 958 million until 1955.
Long-term development of trade with the west secured the founding of the OEEC (Organization for European Economic Cooperation) in 1948, called the OECD (Organization for Economic Cooperation and Development) since 1961, which is headquartered in Paris and of which Austria is a founding member. After joining the International Monetary Fund and the World Bank (1948), Austria was integrated closely into world trade. A significant step toward the multilateralisation of foreign trade was Austria's accession to GATT (General Agreement on Tariffs and Trade, since 1994 WTO = World Trade Organization) in 1951.
Austria's integration efforts on the European level were decisive for its current position as an internationally significant trade partner. In 1956, the federal government declared that it was considering joining the ECSC (European Coal and Steel Community); however, this was not pursued after the Hungarian Revolt was crushed by Soviet troops in the same year. Austria participated with the neutral countries Switzerland and Sweden in the construction of a free trade area which was not of a supranational nature. In 1958 EFTA ( European Free Trade Association) was founded by Western European countries outside of the "Six-Member EEC", and in 1972 a free trade area between EFTA countries and the EEC was established for all trade other than agricultural products. Since January 1, 1994, the EC and EFTA have formed the European Economic Area (EEA; cf. European Integration).
Austrian foreign trade partners:
Austrian foreign trade has traditionally focused on Europe. The main reasons for this lie on the one hand in the fact that Austria is a land-locked country and was never a colonial power, and on the other hand in its relatively high proportion of transport-cost intensive raw materials, semi-finished goods and component deliveries for European industries; other reasons are Austria's export structure and the lack of domestic brand-name products.
Now that communist command economies in Eastern Europe have failed and COMECON has been dissolved, the natural trade flows of the Central European region are being restored. The opening of these new markets and their low labour costs have drawn a wide variety of investments from Austrian enterprises (as of the end of 1993 approx. ATS 19 billion), which have thus secured strong long-term development for foreign trade. With regard to market share development in Central and Eastern Europe from 1989 to 1992, this development has benefited the Austrian economy more than that of any other OECD country. As of 1994, free trade agreements were in place with the following countries: Poland, Czech Republic, Hungary, Rumania and Bulgaria.
Goods structure of Austrian foreign trade:
In parallel with the overall structure of industry, the structure of Austrian exports has undergone continuous transformation, with a tendency toward high-technology industrial products. In 1977 the portion of raw-materials-dependent goods was still 14% of exports, whereas this figure was only 8.6% in 1992. Austria supplies an especially large amount of finished goods to trade partners in Eastern Europe and OPEC countries; however, a certain "competitive weakness" vis-à-vis industrialised countries can still be noted (esp. in the EU).