WELLINGTON, Dec. 18 (Xinhua) -- The New Zealand government Thursday welcomed the announcement that the United States and Cuba are to re-establish diplomatic relations after 53 years.

"New Zealand supports this decision which is a significant step forward for both countries and the region," Foreign Minister Murray McCully said in a statement.

"To make progress on such a long standing issue shows willingness from both sides to overcome a long history of tension, and I congratulate President (Barack) Obama and (Cuban leader Raul) Castro," said McCully.

"The trade embargo which remains in place against Cuba is a handbrake not only for economic relations between the U.S. and Cuba, but for the wider Caribbean region," he said.

"The move to re-establish diplomatic relations heralds a new era for U.S.- Cuba relations and we hope both parties can go further and take the necessary steps to normalize their economic relationship."

U.S. President Barack Obama on Wednesday announced a historical, new policy toward Cuba, in a move to normalize relations and end more than five decades of estrangement between the two countries.

New Zealand already had diplomatic ties with Cuba, and McCully had visited Havana twice and Cuban foreign minister visited New Zealand in September this year.

"New Zealand and Cuba have also entered into a formal partnership which sees us working to support sustainable development in the Pacific region and we look forward to further cooperation in this area," McCully said.