The European Union's willingness to progress free trade negotiations with New Zealand is a positive first step, Fonterra says.
Prime Minister John Key said New Zealand had taken a significant step towards expanding trade and economic links with the European Union, with a commitment to progress free trade negotiations.
In a joint statement Mr Key European Commission President Jean-Claude Juncker and European Council President Donald Tusk agreed to start discussions on a comprehensive free trade agreement.
The discussions will focus on the next steps required to formally launch negotiations, including scope and overall approach.
Fonterra group director co-operative affairs, Miles Hurrell, said Fonterra welcomed the news that had come out of Brussels overnight.
"Like any free trade discussion they will take some time. You've seen that in what happened with the TPP negotiations but we are certain there will be a positive outcome in the long term.
"Dairy for us in Europe at this point in time is not that significant. We have free trade agreements - those in play or in place now - with most of our trading partners around the world with the exception of Europe so we are very positive about the announcement overnight."
The EU is a key trading partner for New Zealand with two-way trade totalling over $19 billion.
It is also our second-largest investment source, as well as our largest research and development partner.
"The EU is a key trading partner for New Zealand with two-way trade totalling over $19 billion. It is also our second-largest investment source, as well as our largest research and development partner.
