U.S. Secretary of State Hillary Clinton, who signed the document in the iconic Beehive executive government offices, said New Zealand "punches way above its weight."
After the signing, Foreign Minister Murray McCully and Clinton said the document represents a new era of partnership in a relationship that has been disrupted since 1986 when New Zealand's anti-nuclear legislation was passed.
The southern Pacific island nation hasn't allowed nuclear-powered vessels into its national waters, much to the irritation of the United States. The result has been cool political, as well as military, relations.
Particular fallout has been the cancellation of joint military exercises.
The new strategic partnership means New Zealand and the United States will begin closer cooperation in the Pacific in areas including renewable energy and natural disaster readiness and response.
The Wellington Declaration comes after the government published this week its first defense white paper that said closer military ties with the United States is a strategic goal over the next decade and longer.
Clinton, in her speech after the signing, noted that closer political and military ties are forthcoming.
"It is for me personally a great pleasure to help deepen and broaden and strengthen this important partnership and [I'm] hopeful that the Wellington Declaration will be a sign of closer cooperation in the years ahead," she said.
"We have a strong partner in New Zealand. This is for us a very important relationship and it is probably ... at its strongest and most productive in 25 years. Why is it so important? Together we can address issues in this region and beyond that have very real impacts on both of our peoples."
There will be regular high-level political meetings at ministerial level and military talks will take place between officials from both countries every year.
McCully said the new partnership is a great opportunity.
"We'll also make sure that our subject experts meet regularly -- there's no point in working in isolation on issues like climate change, or non-proliferation and disarmament," McCully said. "It turns a new page in the relationship and establishes a framework for close cooperation across a whole range of fields of shared interest."
During her three-day visit, Clinton will be discussing trade issues and the war in Afghanistan.
She will also discuss the role of the United States and New Zealand in the Pacific area where New Zealand could play a larger role within U.N. military operations, as noted by this week's defense white paper. The white paper noted New Zealand's strategic goal of helping more nations in the Pacific region should the countries call on Wellington for military or peacekeeping support.
Prime Minister John Key said New Zealand and the United States had important parts to play in "delivering a safe and more secure global environment." His discussions with Clinton -- whom he mistakenly called "President Clinton" during the news conference -- touched on the United States joining the Trans-Pacific Partnership and the East Asia Summit.
The thawing of military relations may come as a relief to New Zealand's defense community including private manufacturing companies. The white paper set out military spending on upgrades and new equipment New Zealand will need by 2025, in particular aircraft. Contracts could benefit New Zealand's manufacturing base.
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