International Trade Secretary Liz Truss has faced criticism over the environmental impact of shipping food to and from the other side of the world.
She said “great progress” has been made in the sixth round of talks between the two countries which ran from July 19-30.
The prospect of a deal with Australië has prompted controversy, with many British farmers raising concerns about being undercut and some LP’s questioning how environmentally friendly it is to ship food to and from the other side of the world.
The Department for International Trade said deals will not be signed that compromise high environmental protections and food standards.
It said a free trade agreement could see the removal of tariffs on UK and New Zealand goods, reducing costs for consumers and opening up access for UK services and investment.
Ms Truss said the deal is also “an important step” towards joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a £9 trillion free trade area of 11 Asia-Pacific nations.
The International Trade Secretary said: “We made great progress in our trade talks with New Zealand this week.
“We’re closing in on an agreement in principle, with six more chapters now complete. The UK and New Zealand share core values, a long history and a commitment to free trade. I want a modern agreement that pushes new frontiers in areas like green and digital trade.
“This deal is also an important step towards joining the CPTPP: a high-standards agreement covering half a billion people across four continents.
“Membership would open up new opportunities for our Great British businesses, farmers and services, giving them access to some of the largest and fastest-growing markets in the world.”