New Zealand dairy companies could lose the right to use terms such as Feta, Parmesan, Brie and Camembert if a free trade deal goes ahead with the European Union, warns a trade expert.

The EU has given the green light to trade talks with New Zealand and Australia, with free-trade agreement (FTA) negotiations set to take place in the coming months.

Trade commentator and former negotiator Charles Finny said it was "very good news" but the negotiations would have challenges.

Read more: EU gives green light to free-trade talks with New Zealand

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Finny said geographical indications around dairy could be the most challenging part of negotiations, although forcing change would be "ridiculous".

"If you look at their mandate [the EU] you'll see that they've got pretty strong interests in protecting their terminology and I would have thought we wouldn't be too keen on that, so that will be a tough bit of the negotiation," he said.

"What they're wanting is [a] very similar regime to what we have now in the wine area, we used to be able to make New Zealand champagne and now we can't.

"We don't call wine Bordeaux or Burgundy anymore, so we can survive in the wine area, we can probably survive in dairy. I think some of these terms are of such common usage that it would be ridiculous to force change."

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

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.

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

"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."

Finny said the talks were made possible by the hard work of others over many years in keeping access to that market open.

"It's particularly important from a strategic perspective at a time when we are seeing a number of other players looking inward. This demonstrates that the EU, New Zealand and Australia are looking outward and wanting to expand their free trade networks."

Beef + Lamb New Zealand chief executive Sam McIvor said the agreement to start negotiations represented a significant milestone for the sector in the face of growing protectionist rhetoric worldwide.

"The FTA will create a stable and level playing field which is crucial to the growth and future prosperity of the sheep and beef sector and New Zealand as a whole," McIvor said.

"Over 600,000 New Zealand jobs directly depend on international trade, with the red meat sector alone employing over 80,000 people in New Zealand. All these jobs depend on our ability to export competitively and in a stable and predictable trading environment."

The EU is an important market for New Zealand red meat products, worth more than $1.8 billion in the year ended December 2017.

EU trade commissioner Cecilia Malmstrom said that Australia and New Zealand "are important friends and allies. They are part of this circle of friends who believe in good trade and in multilateralism."

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