The European Union (EU) and New Zealand signed a free trade agreement (FTA) on Sunday in Brussels. 

European Commission President Ursula von der Leyen and New Zealand Prime Minister Chris Hipkins attended the signing ceremony.

The EU is New Zealand's third largest trading partner, von der Leyen said, adding that trade between the EU and New Zealand would increase by 30 percent. 

The signed trade deal still needs to be approved by the EU Parliament and ratification. 

"This landmark agreement could save EU businesses 140 million euros a year and boost EU investment in NZ by 80 percent. It will bring us even closer together," the EU said in a tweet after the ceremony.