Prime Minister John Key says the EU has agreed to start talks on a free trade agreement that would give New Zealand exporters greater access to the European market.
The agreement to launch talks was announced in Brussels on Thursday after Mr Key met European Commission President Jean-Claude Juncker and European Council President Donald Tusk.
In a joint statement they said the talks would focus on the next steps needed to formally launch negotiations "to achieve a deep and comprehensive high-quality free trade agreement".
"The EU and New Zealand share a strong and close bond, and today's discussions have underlined our mutual desire to further strengthen our relationship," Mr Key said.
He said a FTA should provide greater access to European markets and make it easier for New Zealand and EU companies to do business with one another.
The announcement builds on the EU's recently revised Trade Policy Strategy which has an increased focus on the Asia-Pacific region.
Mr Key said the EU was a key trading partner for New Zealand with two-way trade totalling over $NZ19 billion ($A17.8 billion).
The EU was also New Zealand's second-largest investment source and largest research and development partner.
Thursday's agreement follows the successful conclusion of New Zealand's free trade agreement with South Korea and last month's signing of the 12-nation Trans-Pacific Partnership (TPP).
"These agreements are part of the government's wider plan to diversify the economy by building strong trade, investment and economic ties around the world," Mr Key said.
In 2014 the EU stood as New Zealand's third largest trading partner, after Australia and China.
