About the CBI

September 2005
 Background Note: New Zealand

New Zealand Flag is blue with the flag of the UK in the upper hoist-side
quadrant with four red five-pointed stars edged in white centered in the
outer half of the flag.

PROFILE

OFFICIAL NAME:
New Zealand

Geography
Area: 270,500 sq. km.; about the size of Colorado.
Cities (as of June 30, 2004): Capital--Wellington (367,600). Other
cities--Auckland (1,223,200), Christchurch (363,700), Hamilton (182,400).
Terrain: Highly varied, from snowcapped mountains to lowland plains.
Climate: Temperate to subtropical.

People
Nationality: Noun--New Zealander(s). Adjective--New Zealand.
Population (2005): 4,098,200.
Annual growth rate (as of June 30, 2005): 0.91%.
Ethnic groups: European 75%, Maori 15%, other Polynesian 6.5%.
Religions: Anglican 15.22%, Roman Catholic 12.65%, Presbyterian 10.87%.
Languages: English, Maori.
Education: Years compulsory--ages 6-16. Attendance--100%. Literacy--99%.
Health: Infant mortality rate (June 2005)--5.48/1,000. Life expectancy
(2000-2002)--males 76.3 yrs., females 81.1 yrs.
Work force (March 2005, 1.1 million): Services and government--59%;
manufacturing and construction--32%; agriculture, forestry, fisheries, and
mining--8.9%.

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--four-level system: District Courts, High Courts, the Court of
Appeal, and the Supreme Court, which in 2004 replaced the Judicial Committee
of the Privy Council in London as New Zealand's highest court of appeal.
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, 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 (March 2005): U.S. $99.69 billion.
Real annual GDP growth rate (December 2004): 4.8%.
Per capita income (2004): U.S. $23,900.
Natural resources: Timber, natural gas, iron sand, coal.
Agriculture (8.2% of GDP): Products--dairy products, meat, forestry products.
Industry (15.4% of GDP): Types--food processing; petroleum, coal and chemical
products; wood and paper products; metal products; machinery.
Trade (March 2004): Exports--U.S. $21.6 billion: dairy products, meat, forest
/wood/paper products, machinery and equipment, fruit, fish. Major
markets--Australia, U.S., Japan, China. Imports--U.S. $23 billion: vehicles,
machinery and equipment, petroleum, textiles, plastics, iron and steel,
medical equipment. Major suppliers--Australia, U.S., Japan, China.

PEOPLE
Most of the 4 million New Zealanders are of British origin. About 15% 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 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) usually has 122 seats,
seven of which currently are reserved for Maori elected on a separate Maori
roll. However, Maori also may run for, and have been elected to, non-reserved
seats. Parliaments are elected for a maximum term of 3 years, although
elections can be called sooner.

The judiciary consists of the Supreme Court, Court of Appeal, High Courts,
and District Courts. New Zealand law has three principal sources--English
common law, certain statutes of the UK 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.

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 chairperson 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
Foreign Minister--Phil Goff
Ambassador to the United States--John Wood
Ambassador to the United Nations--Rosemary Banks

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

In October 1990, the National Party 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 Labour Party
won elections in November 1999 and again in July 2002. In 2002 Labour formed
a coalition, minority government with the Progressive Coalition, a left-wing
party holding two seats in parliament. The government relied on support from
the centrist United Future Party to pass legislation.

Following September 2005 elections, the government has been operating in a
caretaker role while awaiting official results due October 1. In preliminary
results, Labour narrowly outpolled National 40.7% to 39.6%. With 10% of the
vote still outstanding, Labour's victory and the election outcomes of its
coalition allies remain unclear. The 2005 elections saw the emergence of the
Maori Party, which won four out of the seven reserved Maori seats.

ECONOMY
New Zealand's economy has been based on a foundation of exports from its very
efficient agricultural system. Leading agricultural exports include dairy
products, meat, 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, although the
largest gas field -- supplying 84% of New Zealand's natural gas -- is
expected to be tapped out by 2009. Leading manufacturing sectors are food
processing, wood and paper products, and metal fabrication.

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
4%), benefiting from a net gain in immigration, rising housing prices, strong
consumer spending and favorable international prices for the country's
exported commodities. 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 a
17-year low of 3.3% in late 2004.

New Zealand's economy has been helped by strong economic relations with
Australia. New Zealand and Australia 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 21% 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 has had a free trade
agreement with Singapore since 2001. In July 2005, both countries joined with
Chile and Brunei to form a Trans-Pacific Strategic Economic Partnership,
liberalizing trade in goods and services between them. In April 2005, New
Zealand initialed a free-trade deal with Thailand.

U.S. goods and services have been competitive in New Zealand, with the strong
New Zealand dollar creating opportunities for U.S. exporters in 2004-2005.
The market-led economy offers many benefits 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, hotel and restaurant
equipment, telecommunications, tourism, franchising, food processing and
packaging, and medical equipment. On the agricultural side, the best
prospects are for fresh fruit, snack foods, and soybean meal.

New Zealand welcomes and encourages foreign investment without
discrimination. The Overseas Investment Office (OIO) must give consent to
foreign investments that would control 25% or more of businesses or property
worth more than NZ$100 million. Restrictions and approval requirements also
apply to certain investments in land and in the commercial fishing industry.
OIO consent is based on a national interest determination. Foreign buyers of
land can be required to report periodically on their compliance with the
terms of the government's consent to their purchase. The OIO, part of Land
Information New Zealand, took over the functions of the Overseas Investment
Commission in August 2005. 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.

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 has considered its own national defense needs
to be modest. Its defense budget generally has provided for selected upgrades
in equipment, most of which have been devoted to the army. Shortly after
winning the 1999 election, the Labour government canceled a lease-to-buy
agreement with the U.S. for 28 F-16 aircraft. In 2001, the government
contracted to purchase 105 LAVIIIs for U.S. $300 million, with initial
delivery in 2003. In 2002, it announced planned upgrades of its P3 and C-130
Hercules aircraft, and committed to spend U.S. $250 million to purchase a
multi-role vessel and several offshore patrol vessels, and U.S. $100 million
for two used Boeing 757s as replacement VIP jet transport aircraft.

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, New Zealand necessarily places
substantial reliance on its defense relationship with other countries, in
particular Australia. However, acknowledging the need to improve its defense
capabilities, the government in 2005 allocated an additional NZ$4.6 billion
(U.S. $3.19 billion) over 10 years to modernize the country's defense
equipment and infrastructure and increase its military personnel. The funding
represented a 51% increase in defense spending since the Labour government
took office in 1999.

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 participated in Operation
Enduring Freedom and has fielded a Provincial Reconstruction Team in
Afghanistan, as well as having deployed a frigate to the Gulf of Oman. In
support of the effort to reconstruct Iraq, New Zealand deployed an
engineering team to the country.

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 U.S., 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
have generally agreed on the broad outlines of foreign policy, and the
current coalition government has been active in multilateral fora on issues
of recurring interest to New Zealand--trade liberalization, 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); 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
U.K. was responsible for New Zealand's foreign affairs, direct U.S.-New
Zealand diplomatic ties were not established until 1942, when the Japanese
threat encouraged close U.S.-New Zealand cooperation in the Pacific campaign.
During the war, more than 400,000 American military personnel were stationed
in New Zealand to 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 long-standing,
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 U.S. 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 2004 was $5 billion--with a $892 million
surplus in favor of New Zealand--and U.S. merchandise exports to New Zealand
were $2.1 billion. U.S. direct foreign investment in New Zealand in 2003
totaled $3.8 billion, largely concentrated in finance, wholesale,
telecommunications services and manufacturing sectors. New Zealand has worked
closely with the U.S. to promote free trade in the WTO, the Asia-Pacific
Economic Cooperation (APEC) group, and other multilateral fora.

The U.S. 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--vacant
Deputy Chief of Mission--David R. Burnett
Public Affairs Counselor--Roy A. Glover
Political and Economic Counselor--Katherine B. Hadda
Agricultural Attache--David Rosenbloom
Defense Attache--Capt. R. Martinez, USN
Management Officer--Ronna S. Pazdral
Consular Affairs (Auckland)--Richard Adams
Senior Commercial Officer (Sydney)--Beryl Blecher

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 Embassy
website is http://wellington.usembassy.gov/. 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).