By the early 1800s New Zealand was already a busy international trader, exporting seal furs, whale oil, kauri spars and flax. Metal goods, clothing and liquor were imported. However, before 1840 trade was not regulated, as there was no national government.
This changed in 1840, and the new government imposed duties and port charges.
From the 1840s to the early 1870s New Zealand traded mainly with Australia (70% of exports in 1865, 44% in 1871). The volume of traded goods was relatively light. In 1853, the first year for which complete export statistics are available, the lead exports were (in order of importance) native timber, wool, grain and kauri gum. By the 1860s the main export to Australia was gold.
Kauri from the Māori
In the 1800s New Zealand’s native forests were milled and much of the timber was exported (mainly to Australia), as this doggerel notes:
One summer morn in eighteen one
A ship her anchor cast,
Stole a piece of kauri from the Maori,
And used it for a mast.1
New Zealand’s first taxes were duties and tariffs (taxes on imports). From 1840 duty was collected under the New South Wales tariff. In 1841, when New Zealand was made a separate colony, duties were applied at different rates on imports such as spirits, tobacco, flour and sugar. In 1844 the country abolished customs duties only to reinstate them less than a year later.
The duties were primarily for revenue purposes and were not a significant barrier to trade. Premier Julius Vogel attempted to gain reciprocal tariff concessions (where two countries reduce tariffs for each other) with the US and Australian colonies in the 1870s, but was unsuccessful.
In the 1870s New Zealand exports centred on non-perishable sheep products (wool and tallow), native timber and gold. The country’s economic fortunes picked up with the advent of refrigerated shipping in the 1880s. Refrigeration meant that meat and dairy products could be transported as far as Europe.
This trade became concentrated on the UK, which took all that New Zealand could produce. This spurred the development of farming to meet the demand. Within five years at least 170 shipments of meat and dairy products had been sent to Britain. By the mid-1890s more than 80% of New Zealand exports were sold there.
Export eggs in one basket
From the 1870s until the 1950s New Zealand’s trade focused on Britain, and its economic ties with other countries waned. New Zealand’s trade with Australia and the US shrank. Australia took 20% of New Zealand’s exports in 1880, but by 1920 it had shrunk to 5%. A trade agreement with the new Australian Commonwealth was not signed until 1922.
By contrast, Britain took more than 80% of New Zealand exports in 1920. Of the country’s four main exports – frozen meat, butter, cheese and wool – only wool went to a variety of markets.
New Zealand’s Preferential and Reciprocal Trade Act 1903 gave British imports lower tariffs than imports from other countries. There was some expectation that Britain would do the same for New Zealand’s exports to Britain but, despite fierce debate, Britain remained committed to free trade.
Few exports, many imports
New Zealand exported a narrow range of commodities – particularly agricultural produce. This was a high-risk strategy, which was highly successful – at first.
Meanwhile, the range of imported goods was much more diverse, and from a variety of sources. Both Australia and the US were important sources. At no point up to the 1920s did the UK supply more than 70% of New Zealand’s imports.
The impact of war
During the First World War New Zealand began a purchasing agreement (known as ‘the commandeer’) with Britain. It guaranteed prices in return for New Zealand sending all of its exports of meat and dairy produce to Britain, and increasing production as much as possible. However, the British economy faced difficulties in the 1920s. The New Zealand government set up the Meat Board and the Dairy Board in part to ensure the profitable marketing of its produce in the British market – not always successfully.