Background Notes: New Zealand

Contributed By RealAdventures

Most of the 3.7 million New Zealanders are of British origin. About 14% claim descent from the indigenous Maori population, which is of Polynesian origin. Nearly 75% of the people, including a large majority of Maori, live on the North Island. In addition, 167,000 Pacific Islanders also live in New Zealand.

During the late 1870s, natural increase permanently replaced immigration as the chief contributor to population growth and has accounted for more than 75% of population growth in the 20th century. Nearly 85% of New Zealand's population lives in urban areas, where the service and manufacturing industries are growing rapidly.

Archaeological evidence indicates that New Zealand was populated by fishing and hunting people of East Polynesian ancestry perhaps 1,000 years before Europeans arrived. Known to some scholars as the Moa-hunters, they may have merged with later waves of Polynesians who, according to Maori tradition, arrived between 952 and 1150. Some of the Maoris called their new homeland "Aotearoa," usually translated as "land of the long white cloud."

In 1642, Abel Tasman, a Dutch navigator, made the first recorded European sighting of New Zealand and sketched sections of the two main islands' west coasts. English Captain James Cook thoroughly explored the coastline during three South Pacific voyages beginning in 1769. In the late 18th and early 19th centuries, lumbering, seal hunting, and whaling attracted a few European settlers to New Zealand. In 1840, the United Kingdom established British sovereignty through the Treaty of Waitangi signed that year with Maori chiefs.

In the same year, selected groups from the U.K. began the colonization process. Expanding European settlement led to conflict with Maori, most notably in the Maori land wars of the 1860s. British and colonial forces eventually overcame determined Maori resistance. During this period, many Maori died from disease and warfare, much of it intertribal.

Constitutional government began to develop in the 1850s. In 1867, Maori won the right to a certain number of reserved seats in parliament. During this period, the livestock industry began to expand, and the foundations of New Zealand's modern economy took shape. By the end of the 19th century, improved transportation facilities made possible a great overseas trade in wool, meat, and dairy products.

By the 1890s, parliamentary government along democratic lines was well established, and New Zealand's social institutions assumed their present form. Women received the right to vote in national elections in 1893. The turn of the century brought sweeping social reforms that built the foundation for New Zealand's version of the welfare state.

Maori gradually recovered from population decline and, through interaction and intermarriage with settlers and missionaries, adopted much of European culture. In recent decades, Maori have become increasingly urbanized and have become more politically active and culturally assertive.

New Zealand was declared a dominion by a royal proclamation in 1907. It achieved full internal and external autonomy by the Statute of Westminster Adoption Act in 1947, although this merely formalized a situation that had existed for many years.

New Zealand has a parliamentary system of government closely patterned on that of the United Kingdom and is a fully independent member of the Commonwealth. It has no written constitution.

Executive authority is vested in a cabinet led by the prime minister, who is the leader of the political party or coalition of parties holding the majority of seats in parliament. All cabinet ministers must be members of parliament and are collectively responsible to it.

The unicameral parliament (House of Representatives) has 120 seats, five of which currently are reserved for Maori elected on a separate Maori roll. However, Maori also may run for, and have been elected to, non-reserved seats. Parliaments are elected for a maximum term of three years, although elections can be called sooner.

The judiciary consists of the Court of Appeals, the High Court, and the District Courts. New Zealand law has three principal sources--English common law, certain statutes of the U.K. Parliament enacted before 1947, and statutes of the New Zealand Parliament. In interpreting common law, the courts have been concerned with preserving uniformity with common law as interpreted in the United Kingdom. This uniformity is ensured by the maintenance of the Privy Council in London as the final court of appeal and by judges' practice of following British decisions, even though, technically, they are not bound by them.

Local government in New Zealand has only the powers conferred upon it by parliament. The country's 12 regional councils are directly elected, set their own tax rates, and have a chairman elected by their members. Regional council responsibilities include environmental management, regional aspects of civil defense, and transportation planning. The 74 "territorial authorities"--15 city councils, 58 district councils in rural areas, and one county council for the Chatham Islands--are directly elected, raise local taxes at rates they themselves set, and are headed by popularly elected mayors. The territorial authorities may delegate powers to local community boards. These boards, instituted at the behest either local citizens or territorial authorities, advocate community views but cannot levy taxes, appoint staff, or own property.

Chief of State--Queen Elizabeth II
Governor General--His Excellency Sir Michael Hardie Boys
Prime Minister--Jenny Shipley
Ambassador to the United States--James Bolger
Ambassador to the United Nations--Michael Powles

New Zealand maintains an embassy in the United States at 37 Observatory Circle NW, Washington, DC 20008 (tel. 202-328-4800, fax 202-667-5227). A consulate general is located in Los Angeles (tel. 310-207-1605, fax 310-207-3605). Tourism information is available through the New Zealand Tourism Board office in Santa Monica, California (toll-free tel. 800-388-5494).

The conservative National Party and left-leaning Labour Party have dominated New Zealand political life since a Labour government came to power in 1935. During 14 years in office, the Labour Party implemented a broad array of social and economic legislation, including comprehensive social security, a large-scale public works program, a 40-hour workweek, a minimum basic wage, and compulsory unionism. The National Party won control of the government in 1949 and adopted many welfare measures instituted by the Labour Party. Except for two brief periods of Labour governments in 1957-60 and 1972-75, National held power until 1984. After regaining control in 1984, the Labour government instituted a series of radical market-oriented reforms in response to New Zealand's mounting external debt. It also enacted anti-nuclear legislation that effectively brought about New Zealand's suspension from the ANZUS security alliance with the United States and Australia.

In October 1990, the National Party was again elected, capturing 67 of 97 parliamentary seats in a landslide victory. To the disappointment of some supporters, National continued the economic reforms introduced by Labour. National was narrowly re-elected in November 1993. In a simultaneous referendum, New Zealanders changed their electoral system to a form of proportional representation similar to Germany's designed to give smaller parties a larger voice in parliament. In the 1996 election, the first under the new "mixed-member-proportional" (MMP) system, the National Party, at 34% (44 Parliament seats) barely edged out Labour (28%-37% seats) as the top party. New Zealand First (13%), with its 17 seats, opted to join National in a coalition government which lasted less than two years. Nationals continue to rule, albeit as a minority government.

The ongoing regionwide Asian financial crisis, which began in 1997, has created uncertainty and instability in the New Zealand economy.

New Zealand enjoys a high level of prosperity based on exports from its efficient agricultural system. Leading agricultural exports include meat, forest products, fruit and vegetables, fish, wool, and dairy products. The country has substantial hydroelectric power and sizable reserves of natural gas. Leading manufacturing sectors are food processing, metal fabrication, and wood and paper products.

New Zealand was a direct beneficiary of many of the reforms achieved under the Uruguay Round. New Zealand agriculture, and the dairy sector in particular, have enjoyed many new trade opportunities. Since 1984, government subsidies have been eliminated; import regulations have been liberalized; exchange rates have been freely floated; controls on interest rates, wages, and prices have been removed; and marginal rates of taxation reduced. Tight monetary policy and major efforts to reduce the government budget deficit have cut inflation from an annual rate of more than 18% in 1987 to about 1.6% in 1997. The restructuring and sale of government-owned enterprises has reduced government's role in the economy and permitted the retirement of some public debt. However, the reforms led to economic dislocations with unemployment reaching 11% in 1991. An improving economy brought unemployment down to 6.2% by March 1996, but unemployment remains a significant social concern and has been rising for the past year to 7.7% in June 1998.

Economic growth has slowed substantially since an unsustainable peak of over 6% in 1994, in response to tighter monetary policy. At the same time, by early 1998, real GDP growth was approaching 2%, and economists believe that the Asian financial crisis could postpone New Zealand's long-expected economic recovery until perhaps 1999. Business and consumer confidence are trending downward, negatively impacting both business investment and retail sales.

New Zealand's exports were hurt by the rapid appreciation of the N.Z. dollar from late 1994 to mid-1997 in response to tight monetary policy. With the loosening of monetary conditions throughout 1997, the N.Z. currency lost all of its gains against the U.S. dollar, boosting exports in the second half of 1997. However, the Asian financial crisis has begun to bite into such key foreign exchange earners as tourism from Asia, forestry exports, and educational services. Dairy and meat exports to Asia also are expected to suffer in 1998, while manufactured products are holding up well. New Zealand commodity exporters are looking to U.S. and European markets to replace lost Asian customers. The current account has been deteriorating substantially in the last few years and is expected to create a downward risk for the N.Z. currency.

Prices and access to foreign markets are a constant concern to New Zealand. Exports also have been helped by improving economic relations with Australia. Australia and New Zealand are partners in "Closer Economic Relations" (CER), which allows for free trade in goods and most services. Since 1990, CER has created a single market of more than 20 million people, and this has provided new opportunities for New Zealand exporters. Australia is now the destination of 19.7% of New Zealand's exports, compared to 14% in 1983. Extending CER to product standardization and taxation policy also is under consideration.

U.S. goods and services are increasingly competitive in New Zealand. The market-led economy offers many opportunities for U.S. exporters and investors. Investment opportunities exist in chemicals, food preparation, finance, tourism and forest products, as well as in franchising. The best sales prospects are for computers, software, medical equipment, chemicals, sporting goods, and telecommunications and transportation equipment.

New Zealand welcomes and encourages foreign investment without discrimination. Approval by its Overseas Investment Commission(OIC) is required for foreign investments over $6.4 million or investments of any size in two specific sectors--commercial fishing and rural land. Foreign investment in commercial fishing is limited to a 25% holding, unless an exemption is granted by the Ministry of Agriculture and Fisheries. While the level of ownership is not restricted for rural land, foreign purchasers are required to demonstrate that the purchase is beneficial to New Zealand. In practice, OIC approval requirements have not been an obstacle for U.S. investors. No performance requirements are attached to foreign direct investment. Full remittance of profits and capital is permitted through normal banking channels.

A number of U.S. companies have subsidiary branches in New Zealand. Many companies operate through local agents, and some are in association in joint ventures. The U.S. Government recognized the generally liberal trading environment in New Zealand by signing a bilateral Trade and Investment Framework Agreement in 1992 providing for periodic government-to-government consultations on bilateral and multilateral trade and investment issues and concerns.

New Zealand's foreign policy is oriented chiefly toward developed democratic nations and emerging Pacific economies. The country's major political parties have generally agreed on the broad outlines of foreign policy, and the current coalition government has been active in multilateral fora on issues of recurring interest to New Zealand: trade liberalization, disarmament, and arms control.

New Zealand values the United Nations and its participation in that organization. It also values its participation in the World Trade Organization (WTO); World Bank; International Monetary Fund (IMF); Organization for Economic Cooperation and Development (OECD); International Energy Agency; Asian Development Bank; South Pacific Forum; The Pacific Community; Colombo Plan; Asia Pacific Economic Cooperation (APEC); INTELSAT; and the International Whaling Commission. New Zealand also is an active member of the Commonwealth. Despite the 1985 rupture in the ANZUS alliance, New Zealand has maintained good working relations with the United States and Australia on a broad array of international issues.

In the past, New Zealand's geographic isolation and its agricultural economy's general prosperity tended to minimize public interest in world affairs. However, growing global trade and other international economic events have made New Zealanders increasingly aware of their country's dependence on stable overseas markets.

New Zealand's economic involvement with Asia has been increasingly important, first through aid, mainly to Southeast Asia, and through expanding trade with the growing economies of Asia. New Zealand is a "dialogue partner" with the Association of South East Asian Nations (ASEAN) and an active participant in APEC.

As a charter member of the Colombo Plan, New Zealand has provided Asian countries with technical assistance and capital. It also contributes through the Asian Development Bank and through UN programs. It is a member of the UN Economic and Social Council for Asia and the Pacific.

New Zealand has focused its bilateral economic assistance resources on projects in the South Pacific island states, especially on Bougainville. The country's long association with Samoa (formerly known as Western Samoa), reflected in a treaty of friendship signed in 1962, and its close association with Tonga have resulted in a flow of immigrants and visitors under work permit schemes from both countries. New Zealand administers the Tokelau Islands and provides foreign policy and economic support when requested for the freely associated self-governing states of the Cook Islands and Niue. Inhabitants of these areas hold New Zealand citizenship.

In 1947, New Zealand joined Australia, France, the United Kingdom, and the United States to form the South Pacific Commission, a regional body to promote the welfare of the Pacific region. New Zealand has been a leader in the organization. In 1971, New Zealand joined the other independent and self-governing states of the South Pacific to establish the South Pacific Forum, which meets annually at the "heads of government" level.

Bilateral relations are excellent. The United States and New Zealand share common elements of history and culture and a commitment to democratic principles. Senior-level officials regularly consult with each on issues of mutual importance.

The United States established consular representation in New Zealand in 1839 to represent and protect American shipping and whaling interests. Since the U.K. was responsible for New Zealand's foreign affairs, direct U.S.-New Zealand diplomatic ties were not established until 1942, when the Japanese threat encouraged close U.S.-New Zealand cooperation in the Pacific campaign. During the war, more than 400,000 American military personnel were stationed in New Zealand to help bolster its defenses and to prepare for crucial battles such as Tarawa and Guadalcanal.

New Zealand's relationship with the United States in the post-World War II period was closely associated with the Australian, New Zealand, United States (ANZUS) security treaty of 1951, under which signatories agreed to consult in case of an attack in the Pacific and to "act to meet the common danger." During the postwar period, access to New Zealand ports by U.S. vessels contributed significantly to the flexibility and effectiveness of U.S. naval forces in the Pacific.

Growing concern about nuclear testing in the South Pacific and arms control issues contributed to the 1984 election of a Labour government committed to barring nuclear-armed and nuclear-powered warships from New Zealand ports. The Labour government's anti-nuclear policy proved incompatible with a long-standing, worldwide U.S. policy of neither confirming nor denying the presence or absence of nuclear weapons on board U.S. vessels. Moreover, Labour's pledge, subsequently enacted as legislation, also prohibits visits by nuclear powered ships.

Implementation of New Zealand's policy effectively prevented practical alliance cooperation under ANZUS. After extensive efforts to resolve the issue proved unsuccessful, in August 1986 the United States suspended its ANZUS security obligations to New Zealand. The United States would welcome New Zealand's reassessment of its legislation to permit that country's return to full ANZUS cooperation.

Despite suspension of U.S. security obligations, the New Zealand Government has reaffirmed the importance it attaches to continued close political, economic, and social ties with the United States and Australia. In trade, the United States is New Zealand's second-largest supplier and customer after Australia. Total bilateral trade for 1996 was $3.5 billion (with a $300 million surplus in favor of the U.S.), U.S. merchandise exports to New Zealand were $1.9 billion. U.S. direct foreign investment in New Zealand (as of 1996) totaled $4.8 billion, largely concentrated in manufacturing, forestry, telecommunications services, and finance.

New Zealand has worked closely with the U.S. to promote free trade in the GATT/WTO, the Asia-Pacific Economic Cooperation (APEC) forum, and other multilateral fora. The U.S. and New Zealand hold annual high-level trade and investment meetings.

The U.S. and New Zealand work together closely on scientific research in the Antarctic. Christchurch is the staging area for the shared logistical support of both the U.S.'s three permanent bases in Antarctica and New Zealand's one base, (located just three kilometers from the principal U.S. base).

Ambassador--Josiah H. Beeman
Deputy Chief of Mission--Richard T. Miller
Political and Economic Counselor--Karen Krueger
Agricultural Attache-David Young
Defense Attache--Capt. John Langer, USN
Public Affairs Officer-John Ohta
Administrative Officer--Boyd Doty
Consul (Auckland)--Michael Thurston
Senior Commercial Officer (Auckland)-Edward Cannon

The U.S. Embassy in New Zealand is located at 29 Fitzherbert Terrace, Thorndon, Wellington (tel. 64-4-472-2068, fax 64-4-471-2380); the U.S. Consulate General is located on the 4th Floor, Yorkshire General Building, corner of Shortland and O'Connell Streets, Auckland (tel. 64-9-303-2724, fax 64-9-366-0870). For information on foreign economic trends, commercial development, production, trade regulations, and tariff rates, contact the Bureau of Export Development, International Trade Administration, U.S. Department of Commerce, Washington, DC 20230. This information also is available from any Commerce Department district office.

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