TRADE WITH AUSTRALIA
New Zealand and Australia have had political, social, and trading links since the beginnings of European exploration and colonisation in the South Pacific. In the earliest years of organised settlement New Zealand came under the administrative control of the older established colony of New South Wales; and the settlers in both lands had a common national origin and shared a common feeling of isolation. The first Europeans to use these islands – sealers, whalers, and traders in flax and timber – worked mainly from Sydney as an operational base. But in September 1833 Governor Darling could report from Sydney: “It appears that many of the English whalers which do not touch here go to New Zealand for refreshments and to refit, and that American vessels frequent that place in numbers, where they are free from restraint, and obtain the supplies which they require at the expense of a few muskets and a little ammunition”. With the same report, however, Governor Darling enclosed “An Account Showing the Trade Between this Port and New Zealand” for the period 1 January to 14 August 1830. Listed imports from New Zealand included 500 tons of flax, 69,136 lb of salt provisions, 3 cwt of lard, 35,200 ft of pine boards and spars, 36 tons of potatoes, 40 bushels of maize, 4,091 seal skins, 500 gallons of whale oil, and 75 pigs. Exports to New Zealand for the same period included 203 cwt of bread, 7,000 bricks, 730 gallons of beer, 87,992 lb of flour, two horned cattle, and – the sinister side – 50 cutlasses, 11,052 lb of gunpowder, and 2,120 muskets. This exchange of partially processed natural raw materials for, in the main, manufactured goods was to be the standard pattern of trade between New South Wales and New Zealand for several decades. Though the fur seal had been hunted almost to extinction in New Zealand by the 1830s, the numbers of visiting whaling vessels reached perhaps their peak in that decade and had built up a trade in pork and potatoes for ships' stores. A more substantial trade developed in the oil from the shore-based stations which sprang up along the east coasts of both the North and South Islands and along the shores of Cook and Foveaux Straits. Much of this oil was shipped across the Tasman.
This pattern of trade did not change much after New Zealand became a Crown Colony in 1840. Copper ore from the mines established on Great Barrier by the Abercrombie brothers (who also had business ventures in Tasmania and Sydney) was exported in the 1840s. For a while in the 1850s New Zealand shipped increased quantities of wheat, potatoes, and other produce to Australia to meet the sudden rise in population after the gold rushes. In any case the outbreak of the Maori Wars decreased food production in New Zealand. By this time, too, the whale fisheries had begun to decline as had the seal-skin hunting some 30 years earlier. Sawn timber in the place of spars, tallow from boiling-down works, wool, bullion, and later, wheat, barley, and oats became the main exports. Although immigrant vessels kept New Zealand in communication with England, Australia still received most of the exports – some 70 per cent in 1865. The large immigration of the 1870s may have helped to reduce this figure to about 44 per cent by 1871, but the first shipment of refrigerated meat from New Zealand to Britain in 1882 began a change in the traditional pattern of exports. Thereafter the proportion of New Zealand goods shipped to Australia dwindled, while exports to Britain increased with the rapid extension of New Zealand's grasslands under the stimulus which refrigeration provided. By 1952, 70 years after the first refrigerated shipment to Britain, the value of New Zealand exports to Australia had fallen as low as 1·6 per cent of the total exports.
Though Britain became the main market, New Zealand still traded with Australia. Until the 1930s both Australia and New Zealand had sea transport, which was more effective than internal transport systems, and freights across the Tasman were in many cases competitive with inland transport rates. Under these circumstances New Zealand was able to service markets in, for example, Sydney, Melbourne, and Adelaide as effectively as those centres could service each other. Much of the trade across the Tasman was in such goods as agricultural implements and other manufactures, horses, grain, and bullion. For many years, from the 1870s onward, the trade with Australia had no fixed pattern of commodities beyond this, although by the 1930s New Zealand was no longer exporting much timber and Australia had become an important source of iron, steel, and hardwoods.
Besides being a low point in the history of exports to Australia, the year 1952 was also something of a turning point. New Zealand's native forests had shrunk steadily as bush land was opened up for settlement, a shrinking which quickened in the eighties and had become more pronounced in later decades.
Export of Forest Products to Australia
|Values in £(000)|
*For six months – January-June inclusive.
†For year ended 30 June.
By 1940 the once great volume of timber exports was a mere trickle. The plantations of “exotic” trees (mainly pines) established mainly during the 1920s had by the end of the Second World War begun to yield forest products in increasing quantities. In the 1950s more and more timber was being shipped to Australia, principally exotic pine and Douglas fir softwoods. Wood pulp and, later, newsprint were to follow. Forest products at the present time form most of New Zealand's exports to Australia.
Before the First World War New Zealand's trade with Australia was in balance. After the war the pattern of trade changed, with exports to Australia decreasing (as a proportion of total exports) while imports increased. Wheat (once an export to Australia) sugar, hardwoods, and iron and steel became regular imports from that country. Moreover, since the end of the Second World War New Zealand has been importing increasing quantities of petroleum products, chemicals, and manufactured goods. This development has been hastened by the establishment in Australia of subsidiaries of overseas organisations which previously supplied New Zealand directly with goods now being made in and supplied from Australia.
It is curious, too, that despite the close links mentioned above there has, until recently, been only a limited formal cooperation on trade matters between the two countries. In 1895 the Customs Duties Reciprocity Act was passed and this not only ratified an agreement made with South Australia but gave powers for making trade agreements with the other Australian States. But it was not until 1906, by which time the Australian States had become a Commonwealth, that attempts were made to devise a preferential tariff between Australia and New Zealand. In this case the Commonwealth Parliament accepted the proposals, but New Zealand did not, claiming that the balance of advantage was weighted too heavily in Australia's favour. In 1922 an agreement was finally reached under which each country exchanged preferences on a limited range of goods. This agreement remained in force until 1933, when the Australian – New Zealand Trade Agreement was negotiated which provided for each partner to give to the other the benefits of its British preferential tariff, except for special rates for some goods. Since the agreement was made the conditions affecting the overseas trade of each have changed markedly. As a result, in recent years the two countries have held trade discussions during which their mutual problems have been examined with a view to achieving improved trading conditions.
New Zealand–Australia Free Trade Agreement
On 31 August 1965 the New Zealand – Australia Free Trade Agreement was signed. This had its origins in the work of the Australia – New Zealand Consultative Committee on Trade which was established in 1960. The Consultative Committee examined the trade relations between the two countries and in particular considered proposals which would increase trade between the two countries in forest products. Finally in April 1963 the Trade Ministers of the two countries established a Joint Standing Committee of officials with the following terms of reference:
“To review and study the trade between the two countries with a view to submitting, as soon as practicable, proposals for consideration by Governments for a free trade area in forest products and other items suitable for inclusion in a free trade arrangement either from the outset or subsequently.”
The Joint Standing Committee reported to the two Governments in April 1964 and between that time and the signing of the Agreement, the report was considered by both countries and negotiations on the final form of the Agreement entered into.
The New Zealand – Australia Free Trade Agreement incorporates the Australia – New Zealand Trade Agreement of 1933 which provides for the elimination of import duties on those goods included in Schedule A to the Agreement. Duties of 10 per cent ad valorem or more are to be phased out in five equal steps over an eight-year period. For duties of 10 per cent or less the phasing out will be over a shorter period. The various articles of the Agreement and the exchanges of letters attached to it are contained in parliamentary paper A. 17 of 31 August 1965. The articles cover such matters as quantitative import restrictions, development of industry, dumped and subsidised imports, and they also provide for consultation and review. The Agreement will remain in force for an initial period of 10 years and thereafter it shall continue in force unless terminated following 180 days' notice by either party. Further, it contains provision for the addition of goods to Schedule A, following annual consultations between the two Governments.
by John Bernard Prendergast, M.COM., Director, Overseas Trade Division, Department of Industries and Commerce, Wellington.