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During the inter-war period Australia and New Zealand remained committed to retaining close relations with Britain. The relationship was manifest in the 1922 Empire Settlement Act, which enabled subsidised emigration from Britain to the dominions. Many of these emigrants went to Australia and New Zealand. To some extent this was a natural extension of the economic as well as familial links between these three countries. Both dominions retained close economic links with Britain, and participated in the system of imperial preference, which emerged from the Ottawa Imperial Economic Conference of 1932. Both dominions negotiated to maintain their share of British markets for their (primarily agricultural) exports.
The Balfour Declaration, which resulted from the 1926 Imperial Conference, acknowledged that the dominions should be autonomous in matters of domestic and foreign policy. However, although the 1931 Statute of Westminster gave the declaration legislative force, Australia and New Zealand did not ratify the statute until the 1940s. Some Australian politicians objected to these developments, believing that the terms of the statute might lead to a weaker relationship with Britain.
Both Australia and New Zealand played an active role in the Second World War. Under the Australia-New Zealand Agreement of 1944 the two dominions demanded a part in the peace settlement in the Pacific and proposed taking responsibility for regional security. The demand was mainly due to the collapse of British power in the Pacific and increasing American domination of that ocean, both during and after the Second World War.
Australia and New Zealand assisted Britain in the Korean War and in the Malayan counter-insurgency, but as British imperial power faded further, both nations became more concerned about their vulnerability to possible communist aggression in the Cold War. In 1951 Australia, New Zealand and the US signed the Australia, New Zealand, and United States Security (ANZUS) Treaty. This recognised their common security interests in the Pacific and provided for consultation if threatened. Australia and New Zealand continued to be members of the Commonwealth but in matters of security they were now much more closely identified with the US than the UK.
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