Talks of free-trade agreement between NZ and the EU

German Chancellor Angela Merkel and John Key met to discuss a free-trade agreement. Photo / Getty Images

A free-trade agreement between New Zealand and the European Union has been discussed at a meeting between Prime Minister John Key and German Chancellor Angela Merkel.

The meeting in Berlin took place overnight New Zealand time and came after the relationship between the two countries had grown significantly over the past 12 months, Mr Key said.

"We talked about New Zealand and the European Union's recent commitment to move towards negotiating a comprehensive free-trade agreement. I welcomed Chancellor Merkel's renewed support for this important undertaking," Mr Key said.

"We also discussed international issues, including the international response to terrorism, the situation in Syria and refugee and migration issues."

Earlier, a venture between the University of Auckland's Bioengineering Institute and the Fraunhofer Institute for Manufacturing Engineering and Automation was announced.

The three-year ICON Bionic Joint project is co-funded by the New Zealand Government and Fraunhofer Gesellschaft, and will develop a novel arm orthosis for elbows - the "bionic joint".

"The Bionic Joint project has the potential to improve quality of life for millions of people with reduced use of their limbs," Mr Key said.

A one-off Prime Minister's First World War Centenary Peace and Security Scholarship was also announced while Mr Key was in Berlin. It will be awarded to a German student at master's level for study in New Zealand.

The Prime Minister also announced the establishment of a working group to look at how science can address "some of the global challenges facing agriculture".

Mr Key travelled to Berlin from Paris, where he told the United Nations Framework Convention on Climate Change (COP21) in Paris it was important for countries to remove fossil fuel subsidies in order to reduce greenhouse gases and free up money to spend on healthcare and education.

He said it made no sense to be calling for emissions reductions on one hand, while subsidising them on the other.

The Green Party criticised that statement, saying the Government had dished out more than $80 million in subsidies to fossil fuel industries.