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Story: Overseas trade policy

New Zealand began trading with other countries before it had a national government. Its long-term trade challenge, even into the 2000s, was to diversify its exports from agricultural products, and to find new markets.

Story by Chris Nixon and John Yeabsley
Main image: A Chinese container ship passes Rangitoto

Story Summary

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Early trade

When people first imported and exported goods to and from New Zealand, there was no national government. The first exports were seal furs, whale oil, kauri timber and flax. Imports were clothes, metal goods and alcohol.

In 1840, when New Zealand became a colony of Britain, the new government began charging duties (taxes) on imported goods.

At first New Zealand traded mainly with Australia. But Britain became New Zealand’s main trading partner from the 1870s, after the introduction of refrigeration meant that meat and dairy products could be shipped halfway around the world.

Britain’s farm

For a long time New Zealand’s exports were based on agricultural products, such as meat, wool and dairy products. It also relied on one market – Britain – and was sometimes known as ‘Britain’s farm’.

Restricting imports

There was an increase in imports in the late 1930s, and the government was worried that importing goods rather than making them in New Zealand could cause a rise in unemployment and damage the economy. The government began to restrict imports by making importers have a licence to bring in particular goods.

Towards free trade

After the Second World War some countries, particularly the United States, wanted to encourage free trade. This meant not charging duties or tariffs (import taxes) on imported goods. From 1947 many countries were involved in the General Agreement on Tariffs and Trade (GATT) talks, which aimed to free up world trade.

New Zealand hoped that GATT would reduce tariffs on agricultural produce, making New Zealand goods cheaper, so more people would buy them. But instead GATT focused on manufacturing tariffs.

Britain joins the EEC

After Britain made plans to join the European Economic Community (EEC) in the 1960s, New Zealand worried it would be difficult to export agricultural produce to Britain. New Zealand had to diversify – find other countries to export to, and find other products to export.

CER with Australia

In 1983 New Zealand signed a Closer Economic Relations (CER) agreement with Australia. This meant that the two countries could trade without paying duties or getting licences.

Overseas trade since 1984

In 1984 the new Labour government began removing import licences and tariffs with the aim of encouraging free trade, and removing subsidies from uneconomic industries.

In 1995 the World Trade Organization was set up to oversee trade agreements, including GATT.

By the early 2000s East Asian countries had become important trading partners for New Zealand. Free trade agreements were set up with countries including Singapore, Thailand and China.

In the early 2000s New Zealand traded with many different countries. The products traded had diversified, but New Zealand still mainly exported agricultural produce such as meat and dairy products.

How to cite this page:

Chris Nixon and John Yeabsley, 'Overseas trade policy', Te Ara - the Encyclopedia of New Zealand, http://www.TeAra.govt.nz/en/overseas-trade-policy (accessed 18 November 2017)

Story by Chris Nixon and John Yeabsley, published 11 Mar 2010