Prior to the signing of the New Zealand Australia Free Trade Agreement (NAFTA) ÃÂ¢ÃÂÃÂNew Zealand and Australia did not interact with each other directly across the Tasman, but only indirectly through a giant mirror place in BritainÃÂ¢ÃÂÃÂ (North, 2000, p5); their economic relations were dominated by politics in Britain. With BritainÃÂ¢ÃÂÃÂs announcement of its intentions to join the European Economic Community (EEC ÃÂ¢ÃÂÃÂ currently known as the European Union (EU)), Australia and New Zealand realized the need to diversify their export base. Prior to joining the EEC, Britain imported AustraliaÃÂ¢ÃÂÃÂs and New ZealandÃÂ¢ÃÂÃÂs farm exports. In an effort to avoid the export restriction that would be imposed by Britain once it joined the EEC, both countries needed to develop more efficient domestic economies. As a result, NAFTA attempted to promote freer trade across the Tasman Sea in an effort to develop new markets for each countryÃÂ¢ÃÂÃÂs products. NAFTA resulted out of the need for Australia and New Zealand to broaden their trade horizons by combining the Trans Tasman Market.
The agreement was the first significant step to achieve free trade between the two countries by forming the Australia/New Zealand Joint consultative Committee on Trade. (NZ Institute, 2003, p.5).