WA farmers could be facing their biggest crisis since Labor's live export ban as Arab nations threaten to block Australian agricultural products amid complaints the Federal Government is pro-Israel.
About 20 ambassadors representing Islamic countries sought an emergency meeting with the Department of Foreign Affairs and Trade yesterday to express their anger after Attorney-General George Brandis refused to call East Jerusalem "occupied".
The Arab League is set to debate the issue in Cairo this month, with some member states expected to call for a suspension of imports of Australian wheat and meat.
"Everything is open now for discussion," General Delegation of Palestine to Australia ambassador Izzat Abdulhadi said.
WA farmers last year exported $2 billion in wheat, of which more than a quarter went to Iraq, which is part of the Arab League.
The State also exported $400 million in barley with three league members - Saudi Arabia, Kuwait and the UAE - among the biggest markets.
More than $3.5 billion in agricultural exports from Australia to league countries could be at risk from an outright ban.
"We have a very strong trade relationship with the Middle East and we will continue to ensure that this remains uninterrupted," Federal Agriculture Minister Barnaby Joyce said.
Under questioning during a Senate hearing last week, Senator Brandis repeatedly refused to say whether the Government recognised East Jerusalem as "occupied" by Israel. Instead, he said the term had "pejorative implications" that were "neither appropriate nor useful".
Almost all countries, including the US, recognise East Jerusalem as occupied by Israel under international law. East Jerusalem fell under Israeli control after the 1967 war. Islamic countries believe the change in language is part of a shift by the Abbott Government to give greater support to Israel.
Other countries not happy about the Government's change in language include Indonesia, Turkey, Pakistan and Iran.
WAFarmers Federation president Dale Park said it seemed the Government did not understand the consequences of its change in policy.
"What the hell is going on," he said.
Asked why the Government had changed its policy, Prime Minister Tony Abbott said: "The truth is they are disputed territories and let's try to ensure that disputes are resolved fairly to all as best we can in an imperfect world."