HISTORICAL EVOLUTION AND TRADE PATTERNS

Beginnings

Overseas trade has always occupied a central position in the development of New Zealand. Indeed, settlement was incidental to trade, the first European settlers being traders who came to exploit the country's natural resources. This exploitation, which was often an uncontrolled plunder of nature, continued to be a substantial factor in New Zealand's trade until well into the nineteenth century.

As early as 1792, only 23 years after the first visit of Cook, a small band of sealers settled in Dusky Sound for nearly a year. Their interest was in sealskins, but they also built a small vessel from New Zealand timber, though the real beginning of commercial trade in kauri timber came in 1794, when the Fancy took a shipload from the Thames. Whaling also, like sealing and timber cutting, quickly became established as an export industry, and the export value of the native flax (Phormium tenax) was soon recognised; Whaling). The early exports were therefore sealskins, seal and whale oil, timber, and flax, with tattooed Maori heads a gruesome additional item. Ruthless exploitation and wanton slaughter had, by about 1820, largely destroyed the basis of the seal trade, and whaling was not very important after about 1860. Timber and flax, however, continued as significant export items until the First World War. Imports in this early period were goods required mainly for barter with the Maoris – iron tools, muskets, and gunpowder – or for use by the traders themselves – clothing, flour, and spirits.

Reliable and complete statistics of trade are not available until 1853, when the Crown Colony period had ended. According to A. S. Thomson's The Story of New Zealand, published in London in 1859, exports (to New South Wales) increased from £30,000 in 1826 to £135,486 in 1829, with a sharp fall to £37,246 by 1842; imports (also from New South Wales) were stated at £1,735 (1826), £12,692 (1829), and £131,784 (1842). In 1853 the official statistics, compiled for the first time for New Zealand as a whole, show exports valued at £303,000, with imports at £598,000.

The period up to 1853 divides itself naturally into two parts, the dividing line being the beginning of organised settlement in 1840. The early years before 1840 have little importance for the economic historian, the trade in whale oil, sealskins, timber, and flax contributing only negatively to future economic development of the colony. More significant was the development, especially in the 1830s, of shore whaling stations, usually with a farm for self-sufficiency in food. Such farms, and the similar establishments attached to mission settlements, foreshadow the change from an economy based on extractive industries to one based on farming. The beginning of systematic colonisation in 1840 marked the real start of the change, though small quantities of wool had been exported to Sydney and Hobart during the 1830s.

Up to about 1850 the new colonists were substantially occupied in producing food for survival. Moreover, there was no ready means of exporting such farm products as could be produced under the comparatively “intensive” Wakefield type of land settlement. The settlers, however, were soon pushing out from the Company settlements, particularly to the Wairarapa and Canterbury Plains, which were suitable for sheep. By 1853 wool made up 22 per cent of the value of exports, second only to timber (31 per cent). The Australian gold rushes were then at their height and the infant New Zealand farming industry found there a ready market for such basic foodstuffs as potatoes (value in 1853, £30,000, or 10 per cent of total exports), grain (£19,000, or 6 per cent), and butter and cheese (£12,000, or 4 per cent). Other major exports of 1853 were kauri gum (16,000, or 5 per cent) and whale oil (£22,000, or 7 per cent), a survival from the pre-settlement days. The trend continued, and by 1855 wool and potatoes each comprised 25 per cent of total exports, with grain accounting for 22 per cent. Timber had dropped to 2 per cent and thereafter never recovered its earlier importance. By 1860 wool made up 76 per cent of New Zealand's exports.

The Gold-rush Period

The pastoral age which had begun was overshadowed for a period by the discovery of gold in New Zealand. The export of wool continued to increase, but was from 1861 to 1871 eclipsed by gold which, from 3 per cent of total exports in 1860, rose to 55 per cent in 1861 and to a peak of 70 per cent in 1863. In only one year of the 11 did gold supply less than half of total exports, and throughout the period gold and wool together accounted for between 82 per cent and 94 per cent of all exports. In 1861 exports of wool were valued at £524,000, those of gold at £753,000, and in 1871 wool reached £1,606,000, compared with £2,788,000 for gold (but these figures were almost exactly reversed within a year). From 1871 the production and export of gold decreased gradually, although until 1911 gold always accounted for more than 10 per cent of total exports. Indeed, for about 10 years after 1900 there was a revival in the importance of gold exports, with the development of deep-level quartz mining in the North and dredging in the South.

The Pastoral Age – Wool

Production and trade in wool increased steadily from the time of its first appearance in the trade statistics. In 1853, 1·1 million pounds of wool, valued at £67,000 were exported; in 1863, 12·6 million pounds; and in 1873, 41·5 million pounds. Exports climbed to 100 million pounds in 1889, 200 million in 1910, 300 million in 1936, 400 million in 1948, and 500 million in 1959, with a record 564 million pounds in 1963. From 1872 onwards wool has remained the leading single export item in terms of value, though in 1918 and from 1921 to 1949 dairy products as a group were greater exchange earners than wool.

In the 1870s wool accounted for over half the value of New Zealand's export trade; from 1880 to 1898 its share was from 40 per cent to 50 per cent; and from 1899 onwards wool has consistently earned about one-third of New Zealand's export receipts. Wool has indeed been New Zealand's golden fleece.

Refrigeration – the New Export Pattern

The Australian gold rushes encouraged crop farming, since grain and potatoes were needed by the miners. A small dairying industry also exported a little butter and cheese to Australia, but dairying, like the meat industry, had to await the coming of refrigeration before any substantial export trade could develop. The export trade in grain and potatoes was in the sixties almost extinguished by local demand brought about by the New Zealand gold rushes, though grain was again an important export for a few years in the eighties until the greater profit in frozen meat and dairying diverted wheat lands to other uses. Real and lasting diversification of New Zealand farm production was made possible by the introduction of refrigerated transport in 1882. The success of refrigeration meant that New Zealand was no longer restricted to Australia as a market for butter and cheese; it meant, too, that meat could be exported as well as sold to the local butcher. The sheep was useful both for its meat and for its wool, skin, and tallow. The sale of fat lambs made a valuable addition to the wool cheque and the extra income enabled farmers to improve both their land and their flocks. Sheep farmers were quick to learn the lesson and pay attention to breeding for meat as well as wool. The timing of the introduction of refrigeration was also important. It came at about the middle of the “Long Depression” (1870–95) when the price of wool, already at a low level, was still falling. The new export commodities were therefore doubly attractive to producers.

Given the relatively large sheep population and the relative speed of increasing lamb production compared with the inherent rigidity of dairy production, it is not surprising that exports of frozen meat increased more rapidly than those of butter and cheese. By 1884, that is, in two years from the inauguration of the trade, frozen meat reached 5 per cent of the value of total exports; by 1890, 11 per cent; and by 1902, 20 per cent. From about 1930 frozen meat has usually provided about 25 per cent of New Zealand's total export earnings, and in recent years meat, including canned meat, has displaced dairy products as the second New Zealand export, the value in 1964 being £106 million. Frozen lamb and mutton now make up over 60 per cent of the value of meat exports, with frozen and chilled beef and veal supplying about 30 per cent. The early trade after 1882 was almost entirely in sheep meat. Beef and veal became significant as exports about 1912 and increased sharply during the First World War to about 6 per cent of all exports – not greatly below the present 8 per cent.

The great expansion of exports of dairy products came later. It was encouraged not only by the use of refrigerated transport, but by two other technical advances: the separation of cream by centrifugal force from about 1880, and the Babcock test for determining the cream content of milk. These made possible the centralised factory production of butter. Butter reached 5 per cent by value of total exports in 1899, but cheese did not until 1909. By 1912 butter comprised 10 per cent of all exports, and cheese 8 per cent. During the First World War, and in 1919 and 1920, the value of cheese exports exceeded those of butter, preference being given to cheese under the Imperial Government Requisition Scheme (mainly because of greater ease of transport). Since 1920 exports of butter have increased about tenfold in quantity, but those of cheese are now only about 50 per cent above the 1920 level. Butter now accounts for about 15 per cent by value of total exports, cheese for about 5 per cent, and other dairy products for about 4 per cent, so that dairy products as a group about equal frozen meat in importance. During the Second World War cheese exports were once more increased at the request of the British Government.

The great increase in dairy farming after about 1895, and especially after 1900, encouraged by rising prices, had special significance for New Zealand's economic development. It not only broadened the range of farm production but also made more intensive farming a fact. The more efficient use of the land increased productivity quite sharply.

A significant fact is that the “diversification” was merely a change in the products of grasslands farming. Far from lessening the dependence on pastoral farming, the changes tied New Zealand's export trade, and hence prosperity, even more tightly to the exploitation of the country's grasslands. Instead of converting grass into wool, New Zealand farmers henceforth were to turn that grass into wool, meat, and skins through the grazing of sheep, and into butter, cheese, meat, and hides through grazing cows or cattle.

The changing pattern of New Zealand's exports from 1853 until 1964 is clear from table I.

By 1860 pastoral farming had become dominant, supplying nearly 80 per cent of total exports. In the 1860s and 1870s this dominance was masked by the gold-rush period and, from 1880 to about 1910, by the combined effect of gold mining and a renaissance of agricultural cropping and forestry. From 1913 onwards pastoral farming has accounted for 80 per cent of total exports – since 1920, for more than 90 per cent in almost every year. Table II gives detailed values from 1853 to 1964 of the four major exports; wool, frozen and chilled meat, butter, and cheese, and also shows percentage shares of total exports for these products.

Minor Exports

The pattern of minor exports has changed with that of the “big four”. This is because the more important of the present-day minor exports are by-products of the meat and dairying industries. Among these by-products the most important are hides and skins valued at over £15 million in 1964 and representing 4 per cent by value of total exports; others are tallow and sausage casings, valued in 1964 at about £9 million, or 2 per cent of total exports. The meat byproducts first appear in the export statistics for 1863, the value of £12,000 representing tallow and sheep skins. The trade in these products increased steadily with the wool trade and, later, with the meat-export trade. Sausage casings were, relatively, a latecomer, the export value in 1914 being £139,000, or about 05 per cent of total exports, compared with nearly £6 million, or 15 per cent, in 1964.

Minor dairy products, other than butter and cheese, have also increased in importance. In 1964 exports of these products, which include casein, dried milk, condensed milk, and lactose, were valued at nearly £16 million, 4 per cent of total exports. Casein exports have grown significantly in recent years, reaching nearly 50,000 tons in 1964 compared with only 8,000 tons 10 years earlier. New Zealand is now the world's largest exporter of casein.

Forestry products, which substantially disappeared from the export statistics after 1930, reappeared in the early 1950s. Exports in 1964 were valued at over £11 million, nearly 3 per cent of total exports. The reappearance of forest products as an export item was mainly the result of the maturing of exotic softwood forests which had been planted from about 1925 onwards. From these were exported in 1964 sawn timber and logs to the value of over £25 million; wood pulp, nearly 3 million; and newsprint, nearly £6 million. It is worth noting that timber was the only forest product exported before the Second World War; now the processed products, wood pulp, and newsprint are more important than timber.

Apart from the major livestock products, exports of farm products are not high, “agricultural” crop products in 1964 contributing £72 million, or only 1·8 per cent of the total exports. The leading item in the group is apples and pears, valued at about £3 million; followed by grass and clover seeds (£12 million), and seed peas (£05 million). Other items include canned and frozen vegetables and food peas.

The fishing industry is also a source of exports, valued in 1964 at £2 million, about 05 per cent of total exports.

Former important items which have virtually disappeared from the export scene include kauri gum, flax, rabbitskins, and coal. From 1853 until about 1900 kauri gum, which is peculiar to New Zealand, normally accounted for up to 5 per cent of total exports, but the trade fell off gradually with the substantial exhaustion of the supplies. Flax, or Phormium tenax, which was among the first exports, has varied greatly in importance At its peak in 1905 flax comprised 5 per cent of total exports. Rabbitskins are now a prohibited export as part of the campaign to overcome the rabbit scourge, while coal was never able to supply more than about 1 per cent of total exports.

The Pattern of Imports

It is difficult to summarise imports to show significant trends in the values of important groups. In contrast with the export trade, imports include a very wide range of commodities; moreover from time to time the method of classification has been changed by the Customs Department to bring it into line with modern usage. Long-term comparisons of the values of major groups of imports are therefore not completely valid.

Imports before organised settlement began in 1840 consisted mainly of goods for bartering with the Maoris, or for meeting the simple needs of the small number of European settlers. The major item was muskets, which were keenly sought after by the warlike Maori, and there were also substantial imports of gunpowder, iron tools, hardware, flour and other foodstuffs, spirits, and clothing.

Permanent settlement in 1840 called for continuing and increasing imports of clothing, metals and manufactures to sustain and provide for the development of the infant colonies. From the earliest days of organised settlement the general nature of imports changed relatively little up to the First World War, the main traditional groups being metals and machinery, textiles and clothing, sugar, beverages and food, paper and stationery. Newer groups are fuels, motor vehicles, and chemicals.

Changes in the nature of New Zealand's imports are apparent from tables III and IV, though the classifications are not strictly comparable.

More interesting is the classification of imports according to end use. The percentage figures in table V show the trend of imports (from 1935 onwards) towards producers' and, particularly, manufacturers' equipment and materials. This, of course, reflects New Zealand's economic development. The pattern was considerably distorted by the Second World War.

Total Trade

The sharp upward trend in the value of total trade and of total imports and exports, and the similar trend in the value of total trade per head of population, are shown in the diagrams (pp. 425–7). It is clear from the diagrams that difficult marketing conditions in the last two years, as in 1930 and during the “Long Depression” of 1870–95, have, at least temporarily, halted this trend. The diagrams illustrate the direction of New Zealand's trade in 1964 and the changes in the direction of its external trade since 1860.

Direction of New Zealand's Trade

The obvious feature, both of the import and of the export trade of New Zealand, is the overwhelming importance of Britain and, to a less extent, other Commonwealth countries in New Zealand's external trade. Britain's importance, while still great, has decreased since 1950. In 1964 Britain supplied 38 per cent of all New Zealand's imports and bought nearly 50 per cent of its exports. Other Commonwealth countries have held their relative position well and Australia, since 1950, has increased its share of New Zealand's imports from 12 per cent to 20 per cent. Increased trade, export and import, with the United States, Continental Europe, and, to a lesser but increasing extent, Japan has filled the gap resulting from Britain's decreased share of New Zealand's trade. Tables VI and VII illustrate the changes in the direction of New Zealand's external trade since 1860.

Summary

It is apparent that the main features of New Zealand's external trade have persisted almost from the beginning of organised settlement. In 1962, as in 1862, New Zealand exported primary products and imported manufactured or processed goods, and over the whole period there has been a very great dependence on one country, Britain. The main changes have been an increasing reliance on the export of the products of grasslands farming, replacing the earlier extractive industries, and, recently, a moderate reduction of the degree of dependence on Britain as a market and source of imports.

by R.W.T.

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

*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.

New Trends

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.

TRADE WITH BRITAIN

From the 1840s to the early 1870s New Zealand traded mainly with Australia. With the growth of regular direct shipping services in the 1870s Britain became, and has remained, New Zealand's best customer and the main source of imports.

Exports

Exports to Britain from the earliest period have been mainly primary products. Wool accounted for 60 per cent of total annual exports in the later 1870s, with gold, Phormium tenax (flax), and grain among the other important items. But it was not until the introduction of refrigeration in the 1880s that the familiar pattern of New Zealand exports of butter, cheese, frozen meat, and wool was established. In 1885 exports of butter and cheese were only 273 cwt and 272 cwt respectively; by 1892 they had risen to 41,509 cwt and 30,000 cwt. Gold and Phormium were beginning to decrease in importance in a growing export trade which reflected an increasingly pastoral character of production within New Zealand. In 1924 butter, cheese, meat, and wool, together, accounted for £38,000,000 out of total shipments of £42,000,000. From 1875 to 1914 the value of New Zealand exports to Britain quickly increased; 80 per cent of the country's total exports went to Britain. Throughout the 1920s, however, the value of exports to Britain fluctuated and the percentage of exports absorbed by the United Kingdom showed a decline. The depression caused a fall in world prices for pastoral products, reflected by a drop in the value of exports to Britain during 1929–32. Britain's share rose to 88 per cent of New Zealand's total exports in 1932.

Immediately after the Ottawa Agreement of 1932 the value of exports to Britain began to rise again; by 1937 it reached £50,000,000, an increase of about £20,000 on the value for 1931. Just before the Second World War butter, frozen meat, wool, cheese, gold, hides and skins, tallow, apples, dried milk, and sausage casings were the main goods exported. The “big four” (butter, cheese, wool, and meat) had reached proportions in terms of quantity closely approximating those of today. During the Second World War the value of exports fluctuated. Trade was then based on bulk purchase of primary produce. Bulk purchase of wool and sheepskins was given up when the war ended; but for dairy produce and meat it continued until 1955.

Since the war the export trade with Britain has increased in value (from £98 million in 1947 to £165 million in 1959), but has decreased as a proportion of New Zealand's total exports, partly because of greater British home agricultural production and partly because of greater competition on the British market. The prospect of Britain's association with an increasingly protectionist Europe has made New Zealand not only explore other markets for its primary produce but also try to sell a more diverse range of goods to Britain. It is apparent, however, that in the absence of alternative markets of equivalent size New Zealand must always regard Britain as its main export market. Britain has also served as an entrepôt to distribute New Zealand goods (mainly wool) to Western Europe and Africa. In some years the value of such re-exported goods has exceeded £5 million.

Imports from Britain

When direct shipping services started in the 1870s Britain replaced Australia as the main source of New Zealand imports. In contrast with exports, the range of imports from Britain has been wide: apparel, textiles, metals, machinery, vehicles, oils, waxes, newsprint, and luxury goods. In the 1880s and the 1890s New Zealand imported from Britain about 60–70 per cent by value of its total imports. But by 1900 other countries, especially Canada and the United States, had begun to increase their share at Britain's expense, with the result that in 1929 Britain's share dropped to 47 per cent (£22 million out of a total value of £48 million). After the First World War the range of products available to importing countries became wider – especially those of the motor, artificial silk, cinema, and radio industries; and the United States in particular competed strongly with Britain to supply these products to New Zealand. During the 1930s the United Kingdom regained its former strong position, as trade with the United States declined after the Ottawa Agreement of 1932, with its system of preferential tariffs. At the same time British manufacturers became more vigorous in meeting foreign competition.

A Declining Market for Britain

In the Second World War the value of imports from Britain declined steadily (as did total imports) until 1942. In 1943, however, the value of imports from all sources rose, especially those from the United States, on account of lend-lease goods. The British share that year dropped to 34 per cent. After the war Britain once again became New Zealand's main source of supply, helped to some extent by post-war dollar restrictions. Thus imports from Britain, which were only £31,061,188 in 1945, rose to £87,583,194 by 1950.

The increase in multilateral trading which was a feature of the development of international trade in the 1950's resulted in a decline in the British share of total New Zealand imports. Whereas in 1954 the British share was 56·63 per cent, it had declined by 1960 to 43·52 per cent and in 1964 had fallen further to 37·8 per cent. Despite Britain's diminishing share of New Zealand's import requirements, the value of goods imported from Britain in 1964 was nearly £120 million, approximately twice the value of imports from the next largest supplier to the New Zealand market.

by John Bernard Prendergast, M.COM., Director, Overseas Trade Division, Department of Industries and Commerce, Wellington.

TRADE WITH CENTRAL AND SOUTH AMERICA AND THE CARIBBEAN

Three factors have dominated (and to a lesser extent still dominate) the history of trade between New Zealand and Central and South America and the Caribbean. First, the general similarity in national economies; secondly, the relatively underdeveloped nature of the Central and South American and Caribbean economies and hence the generally low industrial activity and consumer spending power; and, finally, the lack of regular and frequent shipping services. New Zealand's trade relations with the following countries are governed by the GATT: Brazil, Chile, Cuba, Dominican Republic, Haiti, Jamaica, Nicaragua, Peru, and Uruguay. Argentina has acceded provisionally to the GATT. New Zealand and Argentina at present treat each other as “most favoured nations”. Trade relations with British colonies in the area are governed by the terms of the New Zealand – United Kingdom Trade Agreement and, in general, by the GATT.

Exports

New Zealand's exports to Central and South America and the Caribbean have been slow to develop and, even now, the area does not take much of New Zealand's total export. Up to 1920 there were hardly any exports to the area. Argentina, Chile, and Uruguay were regular but small customers, while sporadic shipments were made to various other countries, mainly of apples, sheep, and bunker coal. It is likely that purchases of New Zealand produce by the area were greater than official statistics reveal, for these would not show the extent to which New Zealand produce was re-exported by such entrepôt centres as Britain. This qualification would also apply to some degree today.

The period 1920–42 saw a little more trade with Argentina, Brazil, Uruguay, the British West Indies, and the Panama Canal Zone. Exports to the first three countries fluctuated considerably with no definite trend. A large shipment of potatoes to Uruguay in 1937 caused exports to rise to £127,000, at that time the highest to any one country in the area. Shipments to the Argentine reached a peak of £74,000 in 1929, but between 1931 and 1935 export values were under £5,000 each year. Major items of export were apples and sheep. During the 1920s exports to the British West Indies and the Panama Canal Zone were negligible, but in the 1930s trade (mainly in butter) improved markedly, particularly to the Zone. Between 1930 and 1942 exports averaged £66,000 a year to the Panama Canal Zone and £40,000 to the British West Indies. Exports to other countries in Central and South America and the Caribbean, except to Chile, were very small and intermittent. During these years Chile was a regular customer, but exports in any one year were always below £20,000. Trade came almost to a standstill during the Second World War, but in 1946 came the resumption, when exports to the British West Indies and Argentine jumped from nil to £43,000 (mainly butter) and £21,000 (apples, sheep) respectively.

The introduction of a direct shipping service to the west coast of South America and the Caribbean in 1958 considerably helped to develop New Zealand's export trade, as can be seen from the following figures: in 1964 exports to the British West Indies were valued at £36 million; to Peru, at £538,000; Panama and the Canal Zone, £285,000; Netherlands Antilles, £252,000; and Mexico, £279,000. Meat and dairy products are the major items, although Mexico has been buying wool. Apart from the odd shipment (mainly sheep), exports to the east coast of South America have fallen away after the war. This development is in part a reflection of the growth of the agricultural economies in Argentina, Brazil, and Uruguay.

Imports

Up to and including 1919, New Zealand's import statistics were recorded on the basis of country of shipment (and not on country of origin, which has since been the case). As a result, the extent of New Zealand's actual purchases from countries in the Central and South American and Caribbean area is obscure. Available statistics reveal that imports from the area up to 1919, expressed as a percentage of total imports, were very small. Between 1900 and 1919 the British West Indies was a consistently small supplier, the peak year being 1919, when imports (mainly cocoa beans and rum) were worth £9,000. Between 1910 and 1919 there was also a small and regular import trade with Chile (nitrate of soda) and Cuba (cigars). The value of imports from each of these countries was under £10,000 in every year. Negligible and spasmodic shipments were received from some other countries in the area. This lack of trade was due mainly to New Zealand's major demand for manufactured goods, which the underdeveloped economies in the area could not supply. In the next 20 years imports from a number of countries fluctuated considerably, with no clear-cut trends. The British West Indies continued to export cocoa beans and rum, together with some asphalt and bitumen. In the 1930s shipment of these items declined, to be replaced by fruit. Imports from this source averaged £26,000 in 1920–29 (with swings from ££15,000 in 1925 to 36,000 in 1929) and £42,000 in 1930–39 (with swings from 14,000 in 1933 to 67,000 in 1930).

In 1926 Cuba began exporting large amounts of sugar to New Zealand (£383,000 in 1926, 330,000 in 1927). Shipments declined heavily in 1931–35, recovered somewhat in 1936 (£189,000), but then petered out. Peru (in 1924, 1927–28, 1930, and 1939) and the Dominican Republic (in 1939) also supplied large amounts of sugar to New Zealand. Between 1929 and 1939 Mexico was a frequent supplier of asphalt and bitumen, the peak coming in 1928, when imports were valued at £71,000. In the same period Chile had a small trade in nitrate of soda, and Brazil in shipped cocoa beans, edible nuts, and precious stones. During the war (1940–46) imports from the British West Indies, Brazil, the Argentine, and Chile remained few and fluctuating. In 1943 manure replaced nitrate of soda as the major import from Chile. Imports from Peru, however, expanded in a spectacular fashion. This time it was oil, not sugar. Between 1942 and 1946 New Zealand's purchases of oil averaged £1,043,000 a year.

Since the war New Zealand has imported much more from the area, particularly minerals and oils. The Netherlands Antilles, Venezuela, Peru, and the British West Indies have become important suppliers of motor spirits and oil to New Zealand. Other imports are sodium nitrate from Chile, sulphur from Mexico, nuts and wax from Brazil, and fruit and rum from the British West Indies. As the economies of New Zealand and the countries in Central and South America and the Caribbean develop, New Zealand's imports from the area should continue to increase.

by John Bernard Prendergast, M.COM., Director, Overseas Trade Division, Department of Industries and Commerce, Wellington.

TRADE WITH EAST

Early Development

Countries of the East, particularly China and India, have traded with Europe almost throughout the history of Western civilisation. This trade was changed and expanded by the productivity which the industrial revolution in Europe brought in its train. As far as New Zealand was concerned, although its immigrants of the nineteenth century were mainly of European stock, the colony in its early years had little commerce with the countries of Asia and the Far East. The main reason for this state of affairs was that the industrial revolution had not reached those countries and they, like New Zealand, had economies based largely upon primary production. The nature of their industries did not allow much scope for a mutual trade in raw materials or finished goods. By far the greatest trade was with China, which supplied quantities of tea, some textiles and, during the 1860s, purchased seal skins, the product of the almost defunct seal fisheries. In the latter half of the nineteenth century New Zealand developed a flourishing shipbuilding industry, and small quantities of teak and other hardwoods were imported from Burma, and sisal and hemp from the Philippines and from Java. It was in 1881 that shipments first came to New Zealand directly from India and Burma, the former supplying jute which previously had come via Britain. At about the same time Japan began supplying the New Zealand market with fancy goods, rice, silk, and cotton goods, but until about 1900 the annual value of imports from that country rarely exceeded £10,000.

By about 1890 Ceylon had begun to surpass China as a supplier of tea, and after 1903, when preferential duty rates of 2d. per pound were extended to teas from British possessions, the tea trade with China almost disappeared. Tea and jute were also supplied by India, but trade with that country was supplemented by exports from New Zealand. In 1887 the Union Steam Ship Co. inaugurated a direct shipping service between New Zealand and Calcutta which ran three times yearly for several years and catered for shipments of horses purchased by the Indian Army. Bullion and wool and, later, tallow became other items of export to India. At the present time tallow and milk powders are the main items exported to India, others being wool and some dairy machinery and equipment. Imports from India include jute, textiles, tea, and, until recently, large quantities of petroleum spirit. In 1964 the value of imports from India was £49 million and the value of exports was £734,000. The shipping service between India and New Zealand includes scheduled ports of call at Singapore, Malaysia, Burma, Ceylon. Imports from Ceylon in 1964 (mainly tea and coconut) were valued at £21 million, and exports (tallow, dairy products, and other foodstuffs) were valued at £276,000. During 1920 and 1921 the value of trade with Ceylon and India was as follows:

Changing Trade Pattern

The First World War changed the pattern of trade with a number of countries in the area, and some of the change was the result of technological advances made in the use and development of new materials. Until 1914 Japan had supplied less to New Zealand than had either India or Ceylon, but after that date the quantities of textiles – mainly silk – and apparel supplied increased rapidly. A peak was reached in 1920 when imports from Japan were valued at 1,470,071, the largest amount to that time ever imported from any one country of the East. Exports (some wool, some scrap metal), made to Japan were of no great amount and were valued at £4,904 in 1920 and 20,149 in 1921. The Second World War interrupted the trade with Japan, but, from about 1947 onwards, trade and exports in particular began to grow again, with wool and dairy products becoming important items. The inauguration of a shipment of meat in 1953 and of a shipment of logs in 1957 led to considerable exports of those goods. The trade in meat was almost wholly in beef and it received a setback in 1957 when the high prices being offered by the United States diverted supplies to that country. A trade in mutton, however, arose and is now well established. Meantime, Japan had become a source for some base metals, electrical and industrial machinery, and other goods, in addition to the traditional trade in textiles. Silk, however, had largely been displaced by cottons and textiles made from synthetic fibres. In 1958 New Zealand signed a trade agreement with Japan under which each accorded the other most favoured nation tariff treatment. The agreement was revised in 1962.

The following table shows exports to and imports from Japan.

Indonesia

New Zealand has had a long-standing trade with Indonesia, but little of this trade has been in exports. Between the wars, Indonesia became an important supplier of rice, of tropical fruits, and of sisal, hemp, kapok, and raw rubber. In the aftermath of the Second World War, Indonesian goods were in short supply and imports were mainly confined to petroleum, oils, kapok, sisal, and raw rubber. On the other hand, Singapore and also Malaysia have become quite a useful market for New Zealand goods, as well as being a source for certain base metals, rubber, canned pineapple, and some timbers. Singapore's role as an entrepôt port is of use also in diverting the export of New Zealand goods to Sarawak, North Borneo, and Brunei.

Summary of the Trade

In 1961 New Zealand and Malaysia signed a trade agreement under which each country gives reciprocal British preferential rates of duty to the other upon certain commodities.

Philippines and China

Both the Philippines and China had early developed trading ties with New Zealand, but it was some time before exports began to flow to those countries. China's war with Japan and her internal political difficulties might have stimulated her buying New Zealand wool; on the other hand, it might have made it difficult to develop trade in New Zealand meats and dairy products. The close association of the Philippines with the United States effectively restricted export avenues for New Zealand goods. After the Second World War, however, New Zealand was able to supply meats and dairy products to the Philippines; China became a more substantial buyer of wool, of tallow, and, on occasion, of wood pulp. Given suitable conditions, trade with the two countries could grow as regular shipping links (inaugurated in 1956 with the Philippines, in 1962 with China) have been established.

Summary of the Trade

The 1939–45 war accelerated the development of Hong Kong as an entrepôt centre and as an international free port. During the 1950s Hong Kong became an established supplier to New Zealand of cotton textiles and garments. By the same token, Hong Kong became a market for meats, dairy products, and for quality foodstuffs such as quick frozen vegetables. This trade is well established and supported by a number of shipping services.

Summary of the Trade With Hong Kong

by John Bernard Prendergast, M.COM., Director, Overseas Trade Division, Department of Industries and Commerce, Wellington.

TRADE WITH EUROPE

The origins of the trade between New Zealand and continental Europe are obscure, but no doubt there was at least a nucleus about the mid-nineteenth century. This obscurity continues into the later nineteenth century, for any continental trade was done through English ports and warehouses and is thus officially recorded as trade with Britain.

Exports

The history of New Zealand's export trade with Europe has always been the history of New Zealand's wool trade with European countries. European wool production fell steadily throughout the nineteenth century as more land was needed for tillage and food production. European textile industries demanded increasing amounts of raw wool and looked to the new world for supplies. New Zealand shared these wool markets mainly with Australian and South African producers.

Until the First World War, New Zealand's export trade was limited to a very few countries. Throughout the nineteenth century exports to Britain and Australia comprised practically the whole total. Exports to Germany (which early established itself as the main European market for New Zealand) and other European countries were affected by the high import tariffs maintained by these countries on foodstuffs, so that direct New Zealand exports to Europe remained an insignificant part of the export trade. Wool, together with a little kauri gum and scheelite, made up total direct exports to Europe in the nineteenth century.

No doubt more of these products, and one or two other products, entered Europe than the official statistics show. But these indirect exports did not alter the pattern of New Zealand's export trade with Europe. In 1895, when total exports were valued at £8.5 million, direct exports to Germany were ££valued at only £2,500, and Germany was the main European importer from New Zealand in that year. In 1909, when total New Zealand exports were ££19.6 million, exports to Germany were 77,000, consisting of wool, kauri gum, casings, and seeds. Exports (almost all wool) to France in the same year were £47,000. These two countries dominated New Zealand export trade with Europe to 1910, although in that year there was a small export trade with Russia, Holland, Sweden, and Denmark. By 1914, when total New Zealand exports were 26.2 million, exports to Germany were 456,000 (or 1.7 per cent of total exports); to France, £227,000; and to Belgium, £33,000.

It is clear, however, that there was a considerable export trade with European countries which is not recorded in official New Zealand statistics. In 1909, for example, exports of wool to Britain were valued at £7 million; but 2 million of this was re-exported from London to the manufacturing centres of Belgium, Northern France, and Germany. To 1914, up to 25 per cent of all New Zealand wool exported to Britain was re-exported to Europe. Other New Zealand products re-exported from Britain to Europe each year were sausage casings, kauri gum, Phormium, sheepskins, and copra (shipped through New Zealand from the Pacific Islands). It would seem, therefore, that up to 1914 about 15 per cent of total New Zealand exports by value each year went to Europe, either direct or through Britain.

The First World War saw the first break in the steady increase in trade with Europe which had marked the previous three to four decades. Exports to Germany ceased after 1914 and did not really begin until the early 1920s. Exports to France, however, increased steadily throughout the war, and by 1918 had quadrupled their 1914 value. Exports to other continental countries stopped completely throughout this disturbed period. In the twenties the pre-war pattern of trade with Europe was reestablished. The removal of the embargo on imports of German goods from 1 September 1923 was responsible for the huge increase in exports to Germany in 1924 – over £1 million, compared with £190,000 in 1923. A similar pattern of re-exports from Britain to Europe took place, although the percentage by value of total New Zealand export trade with Europe averaged from 10 to 12 per cent, somewhat lower than the pre-war average. In the 1930s France replaced Germany as the major market. In certain years exports to Belgium were even greater than those to Germany.

New Zealand trade with Europe ceased during the Second World War. Features of the post-war trade with Europe have been the preponderance of wool as the major export; the rise in the importance of Italy as a buyer of New Zealand products, along with France (the major market), West Germany. and Belgium; restrictions imposed in all European countries on imports of meat and dairy produce, which has severely limited exports of New Zealand produce; the formation of the European Economic Community, whose common agricultural policy is likely to make it increasingly difficult for New Zealand to expand exports of foodstuffs to Europe; and the irregular but, nevertheless, substantial purchases of New Zealand wool by eastern European countries, notably the U.S.S.R. and Poland.

Imports

In the nineteenth century New Zealand imported mainly from Britain and Australia, but no doubt manufactured goods from Europe came through Britain. As, however, New Zealand exports to Europe expanded in the later nineteenth century, imports also increased. By 1892 Germany was the major European supplier – direct imports from that country being £90,000 out of a total New Zealand import of £7 million. Small imports of a few thousand pounds each are recorded from France, Belgium, Holland, and Italy. In 1910 imports from Germany were £390,000 out of a total import figure of £17 million. The main imports from Germany were glassware, musical instruments, tools, fancy goods, and even cloves and grass seeds; those from France, wines and spirits; from Italy, almonds and marble; and from other European countries, dried and preserved fruits and foods, chemicals, and fancy goods. By 1914 Germany was supplying £610,000 out of total imports of £21 million. It is interesting to note that imports from Switzerland at this time were mainly confectionary and textiles. Import trade almost ceased from 1914 to 1918, although regular imports were recorded from Italy and Sweden. A ban on imports from Germany in the early 1920s meant that France and Italy were the major European suppliers to New Zealand, although the value of imports from the Continent was a small part of total New Zealand imports.

Imports from Europe showed a small but steady increase up to the Second World War; their origin and range were more diverse. For example, in 1926 New Zealand imported nearly £1 million or 2 percent (of a total of £49 million) from European countries, with Belgium and France the largest suppliers. By 1939 the percentage had risen to 9.4 per cent of the total imports and Germany was again the largest exporter to New Zealand, with a wide range of commodities, especially clothing, steel goods, hardware, and paper. Other exporters of any size were Czechoslovakia (glass and hosiery), Italy (silk goods), France (silks), Sweden (hardware, agricultural and dairying machinery), Belgium (glassware), Finland (paper), and the U.S.S.R. (motor spirit). Post-war Europe contributed only a small percentage of New Zealand imports (3.5 per cent in 1949). But the rapid rate of European reconstruction and industrial expansion has led to a significant increase in imports from continental Europe (9.5 per cent of total imports in 1964). In 1964 the seven major European exporters to New Zealand were Western Germany (£8.8 million, from a wide range of commodities, especially machinery, cars, fertilisers, and optical instruments); the Netherlands (£3.9 million, the major item being electrical machinery); Switzerland (£3.0 million, mainly pharmaceutical products and watches); Sweden (£3.0 million, mainly machinery and paper); Italy (£3.0 million, mainly fabrics and cars); France (£2.5 million, mainly cars and wines); and Belgium (£2.4 million, mainly steel, glass, and fabrics). Finland, Norway, Denmark, Austria, Czechoslovakia, Portugal, Spain, and East Germany contributed smaller amounts. The value of imports from European countries in 1964 amounted to £29.94 million out of a total import expenditure of £317 million.)

by John Bernard Prendergast, M.COM., Director, Overseas Trade Division, Department of Industries and Commerce, Wellington.

TRADE WITH NORTH AMERICA

North America has always been one of New Zealand's major trading partners. Almost from its foundation as a colony, New Zealand began exporting to and importing from the United States, which has ever since been consistently New Zealand's second or third biggest customer and supplier. Until the end of the Second World War there were also strong trading links with Canada. In the post-war years, however, while Canada has generally maintained her position as a supplier of goods, she has become relatively less important as a customer for New Zealand exports. Trade relations today between New Zealand and the United States are governed by the GATT. While the general trade relations between New Zealand and Canada are also within the terms of the GATT, conditions of reciprocal tariff treatment are determined specifically by the Canada – New Zealand Trade Agreement.

Exports – United States and Canada

In New Zealand's early colonial days the United States became an important market for New Zealand's exports. In 1882, the year in which the first shipment of refrigerated produce left the colony, New Zealand's exports to the United States were valued at £435,000; by 1891 they had reached £515,000. Kauri gum, Phormium tenax, and gold were major exports in 1891. Ten years later, wool, skins, and sausage casings had also become major items. Until 1912 New Zealand's exports to the United States fluctuated considerably in value, with no definite indication of an increase. A peak of £716,000 in 1905 was not exceeded until 1913. Thereafter, apart from 1917, exports increased year by year to £7.5 million in 1920. In that year the United States was a customer second only to Britain, and took nearly 15 per cent of total exports. Major items of export in order of importance were: hides and skins (£3 million), lamb (2 million), gold, kauri gum, sausage casings, tallow, mutton, Phormium tenax, and oleomargarine. Exports of wool in 1920 were negligible, although there had been heavy shipments in the immediately preceding years.

In 1921 exports declined drastically by £4.8 million to 2.7 million, and thereafter fluctuated until 1940. On three occasions exports totalled over £4 million (1925, 1928, and 1937), and twice were under £1 million (the depression years of 1931 and 1932). Nevertheless, the United States kept second place as customer in 13 of the 20 years between 1921 and 1940, and third in the remaining seven years. Exports to the United States expressed as a percentage of total exports varied during this period from 8.43 per cent in 1926 to 1.94 per cent in 1932. In 1941 exports showed a sudden increase from £2.8 million to 5.2 million. Since then exports have generally tended to increase, the largest being £55 million in 1963. In this year the United States was still New Zealand's second biggest market, taking 17 per cent of total exports. The rising trend was temporarily interrupted between 1953 and 1955 mainly by falling demand (especially for wool) in the aftermath of the Korean War boom. In 1953 the United States imposed severe restrictive quotas, since intensified, on New Zealand's dairy-product exports. Thus the United States is now a closed market for any significant amount of butter, cheese, and milk powder. At the present time the main exports to that country are meat, wool, hides and skins, casein, crayfish tails, sausage casings, and cheese.

New Zealand's export trade with Canada has followed a different historical trend. There were few exports in the nineteenth century. Between 1901 and 1920 they increased considerably from £2,000 to 1.4 million, which made Canada New Zealand's fourth largest market. The main items in 1920 were (in order of importance) hides and skins, butter, meat, sausage casings, Phormium tenax, and kauri gum. In 1921 exports fell heavily and remained at a low level until 1927, when they suddenly rose above the 1920 figure. In 1929 exports reached a peak of £3.4 million, with substantial Canadian purchases of wool, meat, butter, hides and skins, sausage casings, and apples. Although exports fell in 1930, they were sufficient, at 6 per cent of the total exports, to place Canada next only to Britain as an outlet for New Zealand produce. Exports fell in the depression and did not regain the 1929 level until the Second World War. In 1943 exports were valued at £4.5 million, or over 6 per cent of total exports. After the war Canada declined as an export market. Exports rose during the Korean War, but in 1959 New Zealand exported less in value to Canada than in 1929. Canada is only New Zealand's tenth largest market, partly because New Zealand's trade with other countries has grown and partly because Canada, like the United States, severely restricts imports of New Zealand butter, cheese, and milk powder.

Imports – United States and Canada

New Zealand's import trade, although spread over more countries than her export trade, has still mainly been confined to Britain, Australia, the United States, and Canada. The United States has been exporting to New Zealand almost from the foundation of the colony, and its share of New Zealand's imports increased steadily up to 1910, when it was 11 or 12 per cent. The extension of tariff preferences in favour of goods of British origin caused a temporary drop to about 7 per cent, followed by an increase. The major items imported from the United States in 1905 were kerosene, tobacco, boots and shoes, iron and steel, machinery, tools, and implements. New Zealand's demand for these and other products, particularly motor vehicles, saw the United States, in the period between 1920 and 1930, consistently supplying 16 – 20 per cent of New Zealand's import needs. The proportion fell to about 11 – 12 per cent during 1930–40, the decline due in part to decreased imports of motor vehicles. In 1929 the United States supplied 41 per cent (by value) of the cars entering New Zealand and 53 per cent of the lorries, trucks, vans, and buses; in 1937 the respective percentages were 24 and 27. Trade declined mainly because of the high rate of exchange against New Zealand (particularly before the United States currency measures of 1933 and 1934) and the preferential tariff favouring the import of British goods. During the Second World War imports rose considerably (1943, 37 per cent of total imports); but immediately after the war the dollar shortage forced a severe drop (1950, 7 per cent). Dollar liberalisation measures, which were introduced in 1951 and subsequently progressively widened, have permitted increased exports to New Zealand, in terms of percentage of total imports, although not to 1920–30 levels. In 1964 New Zealand's imports from the United States totalled £33 million.

New Zealand's imports from Canada have fared better than its exports. Although subject to fluctuation, imports from Canada continued to rise from 1900 to the end of the Second World War. Canada, like the United States, was a “hard” currency area immediately after the war. Dollar discrimination measures consequently hindered her export trade to New Zealand until dollar liberalisation. Imports from Canada were 1 per cent of the total in 1911, 4 per cent in 1920, 9 per cent in 1930, 6 per cent in 1940, 2 per cent in 1950, and 4 per cent in 1964. In 1911 Canada was New Zealand's sixth biggest supplier, was third in 1930, and fifth in 1964. Imports have grown from £2,000 in 1891 to 12 million in 1964. Products imported in 1911 were confined mainly to fish, machinery, paper, and motor vehicles. By 1964 imports comprised a wide range of manufactured goods.

by John Bernard Prendergast, M.COM., Director, Overseas Trade Division, Department of Industries and Commerce, Wellington.

TRADE WITH THE PACIFIC ISLANDS

Traditionally, New Zealand's role in the Pacific Islands' trade has been that of a supplier of agricultural products, essential foods, and, more recently, manufactured consumer goods. In turn, the Pacific Islands have supplied New Zealand with tropical fruits, sugar, and copra. This trade has been hampered by two major problems – the relative economic backwardness of many of the islands and the lack of frequent, regular, and direct shipping services to certain areas. In general, the economies of the islands throughout the Pacific depend almost entirely on agriculture, with only one or two major crops for export. Typical export commodities are combinations of coconuts (copra), cane sugar, coffee, cocoa, pineapples, and other tropical fruits. Industries are usually confined to the initial processing of such crops. Only Fiji, Papua – New Guinea, New Caledonia and the Solomon Islands have any workable mineral deposits and these are not always fully exploited.

New Zealand is well placed to provide shipping services to the islands, and in recent years there has been a marked improvement in this direction. Allied with this problem, however, is that of inadequate storage facilities, especially for refrigerated goods.

Pattern of Trade

In 1889 New Zealand's exports to the Pacific Islands (including Norfolk Island) were £300,000. More than half went to Fiji, while imports were over £200,000, most of which came from Fiji. There was also a small but growing entrepot trade with the Pacific Islands.

During the First World War New Zealand's trade with the Pacific Islands fell away because of the need to conserve supplies in New Zealand and, of greater urgency, to send New Zealand meat, butter, and other foodstuffs to the United Kingdom. After the war it became evident that the trade between New Zealand and the Pacific Islands (Samoa and Fiji in particular) had begun to fall off. This was accentuated by the introduction of a direct shipping service from Australia to the Pacific Islands, en route to Britain, which resulted in a diversion of trade away from New Zealand. When, by 1922, world prices had fallen, steps were taken by New Zealand to try to regain those markets which had been temporarily passed by, even though it was realised that the Pacific Islands could not offer a very large market.

Throughout the Second World War New Zealand provided an important source of supplies for the Pacific areas, made available under Reverse Lend-Lease without charge to the United States. In 1940 New Zealand's total exports to the Pacific Islands constituted a record, but the volume of trade established in that year was eclipsed in 1942. In the following three years, considerable quantities of meat and dairy produce were supplied to the United States forces, both in New Zealand and in the Pacific Islands, under Reverse Lend-Lease. These supplies were not regarded as exports; the volume of goods supplied to the Pacific Islands from New Zealand consequently fell sharply in 1943, the year following the conclusion of the Reciprocal Aid Agreement between New Zealand and the United States, and there was little variation over the next two years. After this, however, as a result of increased prices for many commodities, the total value of exports rose substantially in the next three years.

In recent years New Zealand's trade with the Pacific Islands has shown a steady increase. Meat, dairy products, and other foodstuffs, which New Zealand has been exporting to the Pacific Islands since before the turn of the century, have played an important part in building up trade, but of late increasing interest is also being shown in manufactured goods.

The Pacific Islands mentioned below are, with the exception of Western Samoa and the Cook Islands, all dependent territories administered by members of GATT, and consequently New Zealand's trade relations with them are in general governed by GATT. Again, New Zealand has formal commitments in regard to those islands which are British territories by virtue of the United Kingdom – New Zealand Trade Agreement which provides for reciprocal British preferential tariff treatment between those islands and New Zealand. Exports from New Zealand receive most favoured nation tariff treatment from the Society Islands, New Caledonia, and American Samoa.

Fiji

In its early years New Zealand imported its sugar requirements from Mauritius but, after 1890, Fiji displaced Mauritius as New Zealand's supplier of sugar. This caused an increase in New Zealand's imports from Fiji and virtually eliminated trade with Mauritius. By 1900 New Zealand was exchanging for the raw sugar, fresh fruits, molasses, and grain and pulse from Fiji, a wide variety of items including livestock, meat, butter, coal, timber, wooden ware, apparel and slops, bran, bags, and sacks. In the years preceding the First World War, trade between the two countries grew steadily and several new exports appeared, the more prominent being specie, cement, and potatoes. Specie ranked second to meat in value as an export to Fiji at the time.

Though New Zealand's trade with the Pacific Islands declined during the war years, trade with Fiji continued to increase. In 1917 New Zealand's imports from Fiji were the highest on record, and over the next three years they doubled in value. Raw sugar continued to hold first place; bananas made up the greatest part of the fresh fruit imported; and there was a substantial growth in imports of cocoa beans. In 1923 almost half of the total Fiji trade was with New Zealand, and direct shipping helped the trade to expand. Raw sugar remained the major item of import and this, together with practically the whole of Fiji's banana exports, made New Zealand the most important customer of Fiji. The lack of direct shipping facilities from southern ports inhibited New Zealand's export trade with Fiji and it continued to remain small.

In the early 1930s imports of sugar from Fiji showed a substantial increase. On the other hand, imports of fresh fruits declined substantially because of the effect which hurricanes had had on the crops during the previous year. But New Zealand still supplied very little of Fiji's imports. In the period 1939 to 1942, however, New Zealand's exports to Fiji grew four-fold, then declined slightly but almost doubled over the next seven years.

By 1949 imports from Fiji, though substantially reduced from the high wartime level, were still almost 20 times that of 1939. During the decade a trade in fresh apples and unprepared peas was established and meat and milk exports were expanded. In recent years, New Zealand's balance of trade with Fiji has shown a steady improvement.

Tonga

New Zealand's trade with Tonga began in 1901 when the Treaty of Friendship and Protection, which provided Tonga with Britain's protection, was ratified. In the early years trade consisted of an exchange of meats and biscuits for copra. By 1920 New Zealand was exporting goods to Tonga valued at £167,000. While New Zealand's export trade in general declined sharply during the 1929–33 period, exports to Tonga fell only slightly. By 1937 New Zealand sold mostly tinned meats, films, textile piece goods, and refined sugar to Tonga, while the main imports were copra and fresh fruit. The sale of bananas began in 1931 and since then shipments have continued to increase. Small quantities of kumaras, pineapples, and watermelons have also been sent to New Zealand. In 1964 imports from Tonga were £154,000, virtually all of which represents fruit.

New Zealand is the main supplier of goods to Tonga; in 1964 exports totalled £238,000, of which meat, butter, lard, tobacco, soap, and shooks for banana cases were the main items.

French Possessions in the Pacific

The origin of New Zealand's trade with the Society Islands can be traced back well into the nineteenth century. By 1900, New Zealand's exports to these islands were running at an annual value of £28,000, while imports were £13,000. Trade with the other French Pacific possessions had not begun, except in a few items of small value. New Zealand's trade with New Caledonia and the Tuamoto Archipelago began in 1914 and grew quite rapidly. While New Zealand's exports to Tuamotu Archipelago were negligible, quantities of dairy products, meat, sugar, films, soap, and other items were sent to the Society Islands and New Caledonia. New Zealand's imports of guano and rock phosphate from Tuamotu Archipelago grew by 1920 to a value of £74,000. From New Caledonia and the Society Islands fruits, copra, and vanilla beans were imported. After 1922 imports from Tuamotu Archipelago declined substantially and in 1937 ceased altogether. Trade with New Caledonia also fell away over this period but trade with the Society Islands remained at a relatively high level.

During the Second World War, following the capture of Nauru and Ocean Islands, New Zealand became almost wholly dependent on the Tuamotu Archipelago for her rock-phosphate requirements, and the annual average at £414,110. On the export side, shipments of cement and coal to New Caledonia ceased in 1945, while exports of foodstuffs and other merchandise to the Tuamotu Archipelago expanded considerably in the period. Wool excluded, French Oceania in the immediate post-war years absorbed practically all New Zealand's exports to the French possessions, and, notwithstanding the United Kingdom meat contracts, New Zealand has maintained her traditional interest as an exporter of canned and frozen meat to French Oceania. Rock phosphate continued to dominate New Zealand's import trade with French Oceania; imports from Tuamotu Archipelago were more than 50 per cent higher than the wartime average. The importation of guano from Walpole Island in New Caledonia, which ceased during the war, was not resumed, due primarily to the poor quality and high price of the New Caledonian product. New Zealand exports to New Caledonia declined from over £18,000 in 1948 to less than £1,000 in 1949, but have since increased substantially to total £136,400 in 1964.

Trade with the Society Islands and French Oceania (which includes Tahiti), though fluctuating from year to year, is now at a relatively high level. Frozen and canned meat, processed milk, butter, cheese, potatoes, and onions are exchanged for vanilla beans and tropical fruits and raw phosphate. New Zealand's exports to the French Pacific possessions in 1964 totalled £442,000 and imports were valued at £529,000.

Commercial trading with the New Hebrides began in 1901 in a very small way and did not increase until 1923. In 1924 New Zealand imported small quantities of uncrushed cocoa beans from the islands. Trade, however, declined in the 1930s and remained negligible until 1949, when exports to the New Hebrides rose to the value of £31,000, principally canned meat, timber, and dairy products. They remained about this level for the next five years, but then dropped substantially so that the total trade is now negligible, due mainly to a poor shipping service

Samoa

New Zealand's trade with Samoa, though small, was established long before the group of islands was partitioned between Germany and the United States in 1899. In 1900 imports from Samoa totalled £3,000, mainly uncrushed cocoa beans. In return, New Zealand supplied butter, meat, sugar, textile piece goods, soap, and other commodities worth £25,000.

The occupation of Western (German) Samoa by New Zealand troops in August 1914 led to an expansion of New Zealand's trade with the area. This has continued to expand over the years, except for the period 1929–33 when exports to Western Samoa eased a little. In later years, from 1957 to 1959, New Zealand's trade with Western Samoa almost doubled. In 1964 New Zealand's exports to Western Samoa totalled £927,000 and imports totalled £558,000. The principal items now being exported to Western Samoa are dairy products, meats, foodstuffs, fish, vegetables, margarine, tobacco, timber, and soap. New Zealand's major imports from Western Samoa are bananas, cocoa, and copra.

It is only in recent years that trade with Eastern (American) Samoa has been of any significance. Meat is the principal item exported, and accounts for two-thirds of the total value of New Zealand exports to Eastern Samoa. Imports are made up entirely of fresh fruit.

Papua – New Guinea

New Zealand trade with the territory of Papua – New Guinea, which began in 1902, was negligible for many years. In 1926–28 tinned meat and mining machinery were exported to the territory, but New Zealand's imports were nil. Trade between the two countries has continued to be very small, though recently small increases have been recorded over earlier years. In the period 1957 to 1960, exports to Papua – New Guinea increased steadily. The entry of frozen and preserved meat into the area in 1960 accounted for a substantial increase over previous years; hitherto only canned meat was imported from New Zealand. Butter was another new export to the area, while other items were machinery and some printed matter. One of the obstacles to the expansion of New Zealand's export trade with Papua – New Guinea has been the lack of a regular direct shipping service.

New Zealand's exports to Papua – New Guinea comprise meat (which is by far the most important item), dairy products, vegetables, and paper. The main item imported into New Zealand from the territory is coffee.

Nauru Island

In 1919 an agreement was drawn up between the Governments of Britain, Australia, and New Zealand, which administer the mandated territory of Nauru Island and the nearby Ocean Island, concerning the utilisation of rock phosphate mined on the islands. Under this agreement the three countries have an allocation in proportion of 42 per cent, 42 per cent, and 16 per cent respectively of the annual production. New Zealand did not import any rock phosphate from Nauru before the 1919 agreement. Thereafter, except for the Second World War period when the islands were occupied by the Japanese, substantial quantities of phosphate have been imported.

Gilbert and Ellice Islands

Virtually the only commercial products of the group are phosphate of lime from Ocean Island and copra from the remaining islands. Trade did not develop between New Zealand and the colony until after the end of the First World War. By 1928 a substantial quantity of rock phosphate was imported from the area and, in turn, tinned and preserved meats were exported to the islands. Trade continued to develop up to 1942, when the islands were occupied by the Japanese. New Zealand's trade with the Gilbert and Ellice Islands now consists of an exchange of meat and cereal preparations for rock phosphate.

Norfolk Island

Trade with Norfolk Island began in 1901 when New Zealand's exports to the area totalled £2,000, while imports were negligible. It is still relatively very small and consists mainly of exports of meat, butter, cheese, clothing, and agricultural machinery to Norfolk Island.

Cook Islands and Niue

The Cook Islands were proclaimed a British protectorate in 1888. The greater part of the island's trade is with New Zealand. The principal export commodities are bananas, and copra; other items include fancy baskets, kumaras, and the well known Niue hats. Until 1925 the export of fruit was hampered by the difficulty and irregularity of communication with New Zealand, but with the maintenance of a regular shipping service by a Government vessel these drawbacks have been removed.

Trade with the Cook and other annexed Pacific islands is not regarded as external to New Zealand, but merely as an interchange between different parts of the Dominion. The total amount of produce received from the Cook Islands in 1902 was valued at £32,163, the principal articles of produce being bêche-de-mer, lime juice, raw coffee, copra, raw cotton, fruit, candlenuts, coconuts, vanilla beans, and hats. Oranges and bananas had been the chief exports of the group, but for some years prior to 1901 they barely cleared expenses during the months of May to August. Not only was the trade showing no improvement but it was also becoming less remunerative owing to the competition of Tahiti, Tonga, Fiji, Samoa, and New South Wales. Coffee was also displaced by the flood of an inferior bean from Costa Rica that sold more cheaply.

The interchange of goods between New Zealand and the Cook Group has grown continually over the years and, as might naturally be expected, apart from copra exports, most of the trade of the group has remained with New Zealand, though by 1925 the United States had stepped into second place. Before the Second World War New Zealand had been exchanging meat, dairy products, biscuits, and refined sugar for fruit, coconuts, copra, hats, and caps. In 1937 she took two-thirds (£58,000) of the total amount of produce available for export, and in return supplied three-quarters (£61,000) of the total requirements of the group.

The United Kingdom, Japan, and Hong Kong are among the main suppliers of goods to the Cook Group, while Australia is the second largest buyer. By far the bulk of the trade is, however, with New Zealand. In 1964 she sent £1 million worth of goods to the islands and took £921,000 worth of the islands' produce in exchange.

The principal items imported from New Zealand in recent years have been foodstuffs, drapery and piece goods, oils and petrols, tobacco and cigarettes, vehicles and parts, and fruit cases and sacks. The return trade consists of citrus fruits, bananas, pineapples, tomatoes, copra, mother-of-pearl shell, clothing, jewellery and handicrafts from the Cook Islands, and copra, bananas, kumaras, and native plaited ware from Niue. Recent ventures in Rarotonga have been the setting up of plants canning orange juice, pineapples, and pineapple juice.

by John Bernard Prendergast, M.COM., Director, Overseas Trade Division, Department of Industries and Commerce, Wellington.