The Congress voted unanimously for the deal which Vanuatu is expected to approve next month.
The trade deal will apply to about 50 products and enable Vanuatu to export agricultural goods including coffee without duties or quantity restrictions.
In return, New Caledonia can supply processed food and building materials.
This comes amid tension over the Matthew and Hunter islandswhich are claimed by both Vanuatu and France.
The trade deal is seen as a way of integrating New Caledonia into its Melanesian neighbourhood and may be replicated with Solomon Islands and Fiji.
SOURCE: RADIO NZ