Denmark—a consistent advocate of free and fair conditions of international trade—had until recently the lowest tariff rate in Europe. However, owing to shortages of foreign currency, Denmark did impose quantitative restrictions on imports, and as late as 1959 about 64% of Danish industrial production was so protected. On joining the European Free Trade Association (EFTA) on 8 May 1960, Denmark began eliminating tariff rates and quantitative restrictions on industrial products from other EFTA countries. By 1 January 1970, those that remained were abolished. On 1 January 1973, Denmark ended its membership in EFTA and became a member of the European Community, which not only represents a free trade area but also seeks to integrate the economies of its member states.
Denmark adheres to provisions of GATT on import licensing requirements although certain industrial products must meet Danish and EC technical standards. Denmark converted to the Harmonized System of import duties on 1 January 1988. Most products from European countries are duty-free. Duty rates for manufactured goods range from 5–14% of CIF value, and a 25% VAT is applied to imported, as well as domestic, products. Agricultural products are governed by the Common Agricultural Policy (CAP), a system of variable levies, instead of duties.