New Zealand and Australia are inching closer to an economic union, perhaps as early as 1983.
Since the first economic agreement in 1965, trade in manufactured goods has increased fourfold. In 1978, Australian Prime Minister Malcolm Fraser and New Zealand Deputy Prime Minister Brian Talboys signed the ''Nareen Declaration'' (named after Mr. Fraser's vast Victorian ranch), which went a long way toward allowing more business competition between the two nations.
Two-way trade between Australia and New Zealand jumped 22 percent in 1981 over 1980, amounting to $1.4 billion (or $1.82 billion in New Zealand dollars).
But progress toward better economic ties has been halting. A year ago Mr. Fraser said: ''We shouldn't push it, we shouldn't hurry it. It's certainly my purpose to see that the closer relationship is undertaken so there won't be scars along the way.''
There have been scars. New Zealand Prime Minister Robert Muldoon, a leading proponent of economic union, embarrassed Mr. Fraser last year while attending the Commonwealth heads of government meeting in Melbourne. He openly defied the black African nations that were protesting a tour of the South African rugby team in New Zealand. This placed in jeopardy the Commonwealth Games this year in Australia with threats of an African boycott.
The ultimate effect has been foot-dragging by Mr. Fraser over closer economic relations.
Nonetheless, at a lower level, intensive activity by manufacturers, and notably Australian Deputy Prime Minister Douglas Anthony, brought economic negotiations near a head in April. Mr. Anthony had two days of ''torrid'' talks with Mr. Muldoon to clear up outstanding issues, but returned to Canberra with two essential matters unresolved.
Australia wants New Zealand's export incentives to be phased out by 1987, but New Zealand has only promised a review in 1985. Australia also wants a terminating date put on New Zealand's highly protective import licensing system, long considered a political ''sacred cow'' by successive New Zealand administrations.
Until these issues are resolved, Mr. Fraser and Mr. Muldoon cannot meet for a summit in Canberra to sign the economic agreement.
Once they do, though, New Zealand manufacturers, protected for years by import licensing established 40 years ago as a ''temporary'' measure, will be open to the fierce competition of Australian industry.
Closer economic relations could revamp New Zealand's economy by stripping away inefficient industries and allowing more exporting and importing. Says Mr. Muldoon: ''Our foreign policy is trade.''
Because of Australia's abundance in minerals and much-wider-based economy (New Zealand's principal income is still from meat, wool, and dairy products to countries other than Australia), New Zealand could never anticipate a favorable balance of trade. New Zealand's total exports to Australia in 1980-81 were $629 million (NZ$815 million), a 29 percent increase from the previous year. Total imports from Australia in 1980-81, however, were $772 million (NZ$1 billion).
But with closer economic relations, New Zealand hopes for a freer market than at present.
Political union is definitely out. While both countries are predominantly white, middle class, affluent, and conservative, there is a friendly rivalry and independent spirit that would make political union impossible.
Both inherited the British parliamentary system, but Australia's federal system of government holds no appeal to New Zealanders. Says Mr. Muldoon: ''I want no part of, and the New Zealand people want no part of, the federal system. . .''