New Zealand looks to Asia
Two shifts took place in the 1970s that fundamentally changed New Zealand’s relations with Asia:
- The UK’s 1973 decision to join the European Economic Community forced New Zealand to diversify its exports and develop new markets, as it could not rely on contiued exports to the UK. Japan became New Zealand’s third-largest trading partner, although frictions persisted over access to the Japanese market for New Zealand’s agricultural exports.
- Rapid growth in the economies of the ‘Asian Tigers’ (South Korea, Taiwan, Singapore and Hong Kong) meant Asia was no longer seen as poor and needy. Rather, it promised potential new markets for New Zealand exports. With the end of the Cold War in 1991, further new markets opened up in China and across South-East Asia.
A pioneer of trade with China
When Victor Percival attended the signing of the New Zealand China Free Trade Agreement in 2008, it was the culmination of over 50 years of work. Percival, a New Zealand businessman, attended his first Canton Trade Fair in 1957, at the height of the Cold War. At that time the New Zealand government actively discouraged trade with communist China. Percival continued to visit China to develop commercial links, even during the chaos of the Cultural Revolution in the late 1960s. Before his death in July 2010 he was honoured by both New Zealand and China for his work.
China – the new economic power
China began a remarkable rise in economic and political power after embracing economic liberalisation under leader Deng Xiaoping in the late 1970s. In 2008 New Zealand became the first developed country to conclude a free-trade agreement with China.
In 2018 China overtook Australia to become New Zealand’s largest trading partner. China was also an increasingly important source of foreign investment, students and tourists. In 2018 New Zealand had nearly 450,000 visitors from China, second only to Australia.
India – untapped potential?
In contrast, New Zealand’s diplomatic and trade links to South Asia remained underdeveloped. New Zealanders shared the English language, democratic values, Commonwealth ties and sports such as cricket and hockey with India, but economic links had always been much weaker.
In 1982, the National government even closed the High Commission in New Delhi, deciding the small volume of trade did not justify the cost. It was reopened by Labour Prime Minister David Lange in 1985, with high-profile mountaineer Sir Edmund Hillary as high commissioner.
In the early 21st century India’s huge population and growing economy reawakened New Zealand interest.
In 2018 New Zealand had 68,000 visitors from India – fewer than from Canada but more than from Singapore.
Fish for beef
In the late 1970s Prime Minister Robert Muldoon attempted to force Japan to lift its restrictive trade practices and import more New Zealand beef. He threatened to block Japanese access to fishing in New Zealand waters. This intervention was not appreciated by New Zealand diplomats and failed to move the Japanese. A compromise agreement was eventually achieved, but the incident illustrated the limits of New Zealand’s power in negotiating with strong Asian economies.
An increasingly important part of New Zealand’s relations with Asia from the mid-1970s was membership of a network of multilateral institutions, sometimes described as ‘regional architecture’.
New Zealand became a dialogue partner to the Association of Southeast Asian Nations (ASEAN) in 1976.
In 1989 Australia and Japan launched Asia Pacific Economic Cooperation (APEC), a grouping with the goal of liberalising regional trade. New Zealand was an enthusiastic supporter. The 1999 APEC Leaders’ Meeting was held in Auckland and, among other things, it thrashed out a response to the crisis in East Timor. This resulted in the deployment of New Zealand troops in the Australian-led International Force for East Timor (INTERFET).
In the 2000s regional cooperation focused on the East Asia region. In 2005 New Zealand ratified the Treaty of Amity and Cooperation in Southeast Asia. In the same year it became a founding member of the East Asia Summit (EAS), a regional grouping dealing with political, economic and security issues. In 2010 a free-trade area was created between New Zealand, Australia and the 10 member countries of ASEAN.