The European Union has tonight given the green light to free-trade agreement negotiations with Australia and New Zealand.

The EU's Foreign Affairs Council met in Brussels to formally approve the talks.

This paves the way for a multi-billion dollar deal before the United Kingdom leaves the EU in March.

Trade Minister David Parker welcomed the news, saying it opened the way for a free trade deal with one of the largest economies in the world that would boost jobs and incomes.

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He said it would be worth billions of dollars to the New Zealand economy and he was hopeful it would go ahead.

"It's very significant. That flows through to more jobs and higher incomes for New Zealanders."

"I'm sure one of the areas of sensitivity for the French is our agricultural exports to Europe and that will be a difficult part to negotiate. But we want to get the negotiations started," Parker said.

He said credit must go to Prime Minister Jacinda Ardern whose strong advocacy for New Zealand's interests during her recent trip to Europe helped tip the balance.

"These negotiations offer significant economic gains for New Zealand and the EU. They are an example of like-minded countries working together at a time when the world faces a rising tide of protectionism," Parker said.

"The EU is our third largest trading partner, with two-way trade worth more than $20 billion. Even excluding the UK, our trade with the EU is worth about $16 billion annually."

EU Trade Commissioner Cecilia Malmström will travel to New Zealand in June for the formal launch of negotiations. The first rounds of talks is set down for July in Brussels.

"At the start of negotiations, we'll be releasing a package of information outlining our negotiating priorities for this agreement and how we will be engaging with New Zealanders as negotiations progress," Parker said.

In September European Commission President Jean-Claude Juncker said he wanted to fast-track the deals during his annual State of the Union address to the European Parliament.

He had wanted deals before the next European elections in May, two months after Brexit

The EU has estimated a trade deal could results in a $1.2b-$2b boost to New Zealand's GDP and up to a 20 per cent increase in exports.

It has been about a decade in the waiting and it was one of New Zealand's top priority trade agreements.

New Zealand is also one of three countries at the top of the line for free-trade talks with the United Kingdom post-Brexit.

Last month, Prime Minister Jacinda Ardern travelled to visit French President Emanuel Macron in Europe to ensure New Zealand still had France's support as well as German Chancellor Angela Merkel, who has been an open champion for New Zealand in the talks.

She followed in the steps of former Prime Ministers John Key and Bill English who also travelled to Europe to shore up support, especially after the Brexit vote meant New Zealand was losing its primary advocate in the EU: the United Kingdom.

Statistics New Zealand data shows exports to the European Union for the year ended December were worth $8.61 billion with imports of 12.98b. New Zealand's total exports were worth $76.34b for that period, with imports of $72.19b.

The Ministry of Foreign Affairs and Trade (MFAT) website lists the European Union under its free-trade agreements under negotiation section.

Mfat lists five things New Zealand wanted to achieve with the EU-NZ trade deal:

• Lower costs for consumers, making things like food and consumer goods cheaper for New Zealanders.

• Level the playing field for businesses in NZ and the EU by reducing tariffs, duties and other trade barriers.

• Ensure that the trade deal works for companies of all sizes, big and small.

• Drive economic progress in a way that protects the environment and contributes to better living conditions.

• Safeguard our ability to regulate and decide what is best for New Zealand and our people.

The EU was the world's biggest trading entity, and many New Zealand businesses had interests there.

A free-trade agreement would reduce the prices businesses paid at the European Union border by removing tariffs (import duties) and other barriers, Mfat said.

It would also level the playing field with countries that were already paying less due to existing free-trade agreements.

Bernard Savage in 2016 was appointed Ambassador of the European Union to New Zealand - the first time there has been a permanent, resident ambassador in Wellington.

When asked last year if the EU saw itself in a race with Britain to secure trade deals, Savage said that even before Brexit - Britain's pending exit from the EU - became a household word, the EU had been looking to do a deal with New Zealand.

Being in a race with Britain "was not a consideration", and Savage said at that time that he hoped formal talks would begin in the new year and "can be completed as quickly as possible".

A key element to the talks would be the services sector, which included technology, tourism, law, education, financial services and accounting, with a strong emphasis on deals beneficial to New Zealand small to medium enterprises, he said.

"The free-trade agreement [with New Zealand] will stand or fall on the benefits to the small to medium enterprises ... the big companies are already experienced in these deals."