New Zealand (01/03)

For the most current version of this Note, see Background Notes A-Z.

PROFILE

OFFICIAL NAME:
New Zealand

Geography
Area: 270,500 sq. km; about the size of Colorado.
Cities (2002): Capital--Wellington (347,000). Other cities--Auckland (1,120,000), Christchurch (344,000), Hamilton (172,000).
Terrain: Highly varied, from snowcapped mountains to lowland plains.
Climate: Temperate to subtropical.

People
Nationality: Noun--New Zealander(s). Adjective--New Zealand.
Population (2002): 3,955,600.
Annual growth rate (2002): 1.6%.
Ethnic groups: European 80%, Maori 14%, other Polynesian 6%.
Religions: Anglican 28%, Presbyterian 20%, Roman Catholic 23%.
Languages: English, Maori.
Education: Years compulsory--ages 6-16. Attendance--100%. Literacy--99%.
Health (2000): Infant mortality rate--6.1/1,000. Life expectancy--males 76 yrs., females 80 yrs.
Work force (2001, 1.9 million): Services and government--65%; manufacturing and construction--25%; agriculture, forestry, fisheries, and mining--10%.

Government
Type: Parliamentary.
Constitution: No formal, written constitution.
Independence: Declared a dominion in 1907.
Branches: Executive--Queen Elizabeth II (chief of state, represented by a governor general), prime minister (head of government), cabinet. Legislative--unicameral House of Representatives, commonly called parliament. Judicial--three-level system: District Courts, the High Court, and the Court of Appeals, with further appeal possible to the Judicial Committee of the Privy Council. There also are specialized courts, such as employment court, family courts, youth courts, and the Maori Land Court.
Administrative subdivisions: 12 regions with directly elected councils and 74 districts (15 of which are designated as cities) with elected councils. There also are a number of community boards and special-purpose bodies with partially elected, partially appointed memberships.
Political parties: Labour, National, the Jim Anderton's Progressive Coalition Party, New Zealand Green Party, New Zealand First, ACT, United Future, and several smaller parties not represented in Parliament.
Suffrage: Universal at 18.

Economy
GDP (2002): U.S.$50.2 billion.
Real annual GDP growth rate (2002): 3.2%.
Per capita income (2002): U.S.$12,804.
Natural resources: Timber, natural gas, iron sand, coal.
Agriculture (9.7% of GDP): Products--meat, dairy products, forestry products.
Industry (46.1% of GDP): Types--food processing, textiles, machinery, transport equipment.
Trade (2001-02): Exports--U.S.$13.9 billion: meat, dairy products, forest/wood/paper products, metals, fruit, machinery and equipment. Major markets--Australia, U.S., Japan, U.K. Imports--U.S.$13.7 billion: machinery and equipment, vehicles, plastics, mineral fuels, petroleum, medical equipment. Major suppliers--Australia, U.S., Japan, China.

PEOPLE
Most of the 3.9 million New Zealanders are of British origin. About 18% 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, 231,800 Pacific Islanders 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 (with almost one-third in Auckland alone), where the service and manufacturing industries are growing rapidly. New Zealanders colloquially refer to themselves as "Kiwis," after the country's native bird.

HISTORY
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 United Kingdom 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, the 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.

The 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.

GOVERNMENT
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, six of which currently are reserved for Maori elected on a separate Maori roll. However, Maori also may run for, and have been elected to, nonreserved seats. Parliaments are elected for a maximum term of 3 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.

Principal Government Officials
Chief of State--Queen Elizabeth II
Governor General--Her Excellency the Honorable Dame Silvia Cartwright
Prime Minister--Helen Clark
Ambassador to the United States--John Wood
Ambassador to the United Nations--Donald James MacKay

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) or through the following website: http://www.tourisminfo.govt.nz.

POLITICAL CONDITIONS
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 largescale public works program, a 40-hour work week, 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 again formed the government, for the first of three, 3-year terms. In 1996, New Zealand inaugurated a mixed-member proportional (MMP) system to elect its Parliament. The system was designed to increase representation of smaller parties in Parliament and appears to have done so in the MMP elections to date. Since 1996, neither the National nor the Labour Party has had an absolute majority in Parliament, and for all but one of those years, the government has been a minority one. The current Labour government followed its November 1999 election success by outpolling National 41% to 21% in July 2002 elections. Labour formed a coalition, minority government with Jim Anderton's Progressive Coalition, a left-wing party holding two seats in Parliament. The government relies on support from the centrist United Future Party to pass legislation.

ECONOMY
New Zealand's economy has been based on a foundation of exports from its very efficient agricultural system. Leading agricultural exports include meat, dairy products, forest products, fruit and vegetables, fish, and wool. New Zealand was a direct beneficiary of many of the reforms achieved under the Uruguay Round of trade negotiations, with agriculture in general and the dairy sector in particular enjoying many new trade opportunities. The country has substantial hydroelectric power and reserves of natural gas. Leading manufacturing sectors are food processing, metal fabrication, and wood and paper products.

Since 1984, government subsidies including for agriculture were eliminated; import regulations liberalized; tariffs unilaterally slashed; exchange rates freely floated; controls on interest rates, wages, and prices removed; and marginal rates of taxation reduced. Tight monetary policy and major efforts to reduce the government budget deficit brought the inflation rate down from an annual rate of more than 18% in 1987. The restructuring and sale of government-owned enterprises in the 1990s reduced government's role in the economy and permitted the retirement of some public debt. As a result, New Zealand is now one of the most open economies in the world.

Economic growth has remained relatively robust in recent years (i.e., around 3%), benefiting from a boost in exports provided by a weak Kiwi dollar, good weather, and favorable international commodity prices. In 2002, consumer spending and housing investment have played a larger role in underpinning this expansion. New Zealand did not experience the slowdown in growth seen in many other countries following the events of September 11, 2001 and the subsequent fall in overseas share markets. The prolonged period of good economic growth led the unemployment rate to drop from 7.8% in 1999 to 5.4% in late 2002. The growth also has helped to substantially narrow the current account deficit, which stood at 8% of GDP in 2000. Forecasters now expect this ratio to be in the 4%-5% range over the next few years.

New Zealand's economy has been helped by strong 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 22 million people, and this has provided new opportunities for New Zealand exporters. Australia is now the destination of 20% of New Zealand's exports, compared to 14% in 1983. Both sides also have agreed to consider extending CER to product standardization and taxation policy. New Zealand initialed a free trade agreement with Singapore in September 2000 and is seeking other bilateral/regional trade agreements in the Pacific area.

U.S. goods and services have been competitive in New Zealand, though the strong U.S. dollar has created challenges for U.S. exporters in 2000-01. 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 and investment prospects are for information technology, tourism, food processing and packaging, biotechnology, and medical equipment. On the agricultural side, the best prospects are for fresh fruit, snack foods, specialized grocery items such as organic foods, and soybean meal.

New Zealand welcomes and encourages foreign investment without discrimination. The Overseas Investment Commission (OIC) must give consent to foreign investments that would control 25% of more of businesses or property worth more than NZ$50 million. Restrictions and approval requirements also apply to certain investments in land and in the commercial fishing industry. OIC consent is based on a national interest determination, but no performance requirements are attached to foreign direct investment after consent is given. 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 operate through local agents, and some are in association in joint ventures. The American Chamber of Commerce is active in New Zealand, with its main office in Auckland and a branch committee in Wellington.

NATIONAL SECURITY
New Zealand has three defense policy objectives--defend New Zealand against low-level threats, contribute to regional security, and play a part in global security efforts. New Zealand considers its own national defense needs to be modest. Its defense budget provides for selected upgrades in equipment, most of which is devoted to the army. Shortly after winning the 1999 election, the Labour government canceled a lease-to-buy agreement with the United States for 28 F-16 aircraft. In 2001, they contracted to purchase 105 LAVIIIs for U.S.$300 million, with initial delivery in 2003. In 2002, they announced planned upgrades of its P3 and C-130 Hercules aircraft and committed to spend U.S.$250 million to purchase a multirole vessel and several offshore patrol vessels, and U.S.$100 million for two used Boeing 757s.

In May 2001, the government announced it was scrapping its combat air force. New Zealand states it maintains a "credible minimum force," although critics maintain that the country's defense forces have fallen below this standard. With a claimed area of direct strategic concern that extends from Australia to Southeast Asia to the South Pacific, and with defense expenditures that total around 1% of GDP, New Zealand necessarily places substantial reliance on its defense relationship with other countries, in particular Australia.

New Zealand is an active participant in multilateral peacekeeping. It has taken a leading role in trying to bring peace, reconciliation, and reconstruction to the Solomon Islands and the neighboring island of Bougainville. New Zealand maintains a contingent in the Sinai Multinational Force and Observers and has contributed to UN peacekeeping operations in Angola, Cambodia, Somalia, and the former Yugoslavia. It also participated in the Multilateral Interception Force in the Persian Gulf. New Zealand's most recent PKO experience has been in East Timor, where it initially dispatched almost 10% of its entire defense force.

New Zealand participates in sharing training facilities, personnel exchanges, and joint exercises with the Philippines, Thailand, Indonesia, Papua New Guinea, Brunei, Tonga, and South Pacific states. It also exercises with its Five-Power Defense Arrangement partners--Australia, the United Kingdom, Malaysia, and Singapore. Due to New Zealand's antinuclear policy, defense cooperation with the United States, including training exercises, has been significantly restricted since 1986.

FOREIGN RELATIONS
New Zealand's foreign policy is oriented chiefly toward developed democratic nations and emerging Pacific economies. The country's major political parties generally have 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, environment, 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 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 and 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 (now known as the Pacific Islands Forum), which meets annually at the "heads of government" level.

U.S.-NEW ZEALAND RELATIONS
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 United Kingdom 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 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 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 government's anti-nuclear policy proved incompatible with longstanding, worldwide U.S. policy of neither confirming nor denying the presence or absence of nuclear weapons onboard U.S. vessels.

Implementation of New Zealand's policy effectively prevented practical alliance cooperation under ANZUS, and after extensive efforts to resolve the issue proved unsuccessful, in August 1986 the United States suspended its ANZUS security obligations to New Zealand. Even after President Bush's 1991 announcement that U.S. surface ships do not normally carry nuclear weapons, New Zealand's legislation prohibiting visits of nuclear-powered ships continues to preclude a bilateral security alliance with the United States. 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. New Zealand is an active member of the global coalition in the war against terrorism, and deployed SAS troops to Afghanistan and naval and air assets to the Persian Gulf. The United States is New Zealand's second-largest trading partner after Australia. Total bilateral trade for 2001 was $4.1 billion--with a $106 million surplus in favor of New Zealand--and U.S. merchandise exports to New Zealand were $2 billion. U.S. direct foreign investment in New Zealand (as of March 2001) totaled $3.1 billion, largely concentrated in manufacturing, forestry, telecommunications services, and finance.

New Zealand has worked closely with the United States to promote free trade in the WTO, the APEC group, and other multilateral fora.

The United States and New Zealand work together closely on scientific research in the Antarctic. Christchurch is the staging area for joint logistical support operations serving U.S. permanent bases at McMurdo Station and South Pole, and New Zealand's Scott base--located just three kilometers from McMurdo Station in the Ross Sea region.

Principal U.S. Embassy Officials
Ambassador--Charles J. Swindells
Deputy Chief of Mission--Philip R. Wall
Public Affairs Counselor--William J. Millman
Political and Economic Counselor--Timothy P. Zuniga-Brown
Agricultural Attache--David Rosenbloom
Defense Attache--Capt. Jeff Langer, USN
Administrative Officer--Tim Harley
Consul (Auckland)--Douglas Berry
Senior Commercial Officer (Sydney)--Robert Connan

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 3rd floor, Citibank Building, 23 Customs Street East, Auckland (tel. 64-9-303-2724, fax 64-9-366-0870).