Federal Trade Minister Steve Ciobo has vowed to stop a proposed 'Buy Queensland' policy that undermines his hard work of growing export markets.
Queensland Premier Annastacia Palaszczuk created a stir last month when she flagged that local businesses would receive weightings of up to 30 per cent when state government contracts were considered.
The decision has led to a trade stoush across the Tasman with New Zealand.
Mr Ciobo hosted NZ Trade Minister Todd McClay in Canberra on Wednesday for urgent talks on the issue.
Mr Ciobo confirmed a second foreign government had also raised eyebrows about the Queensland first policy.
"Potentially this could put us in breach of agreements we have Chile, Japan, the United States, Korea, New Zealand and possibly the deal... we just did with Singapore," he told reporters in Canberra.
There was potential for retaliatory action from each of those countries.
Mr Ciobo urged Ms Palaszczuk to ditch the "reckless policy".
Ms Palaszczuk has dismissed a long-standing trade agreement between Australia and NZ as "not good" for Queensland and said the state may abandon the arrangement.
Mr McClay pointed out Queensland companies had provided $100 million of goods and services to the NZ government in recent years.
"We expect New Zealand companies to be treated fairly," he told reporters.
But he stopped short of declaring a trade war between Brisbane and Wellington if Ms Palaszczuk did not back down.
The Queensland premier in state parliament on Wednesday accused Mr Ciobo of whipping up the issue, but said she made no apologies for putting "Rockhampton over Rotorua".
"Shamefully, Mr Ciobo has stirred up the New Zealand Trade Minister Todd McClay to criticise the 'Buy Queensland' policy," she said.
"I am happy for Mr McClay to be briefed on the policy when he visits Australia this week."
Mr McClay has sought a meeting with Ms Palaszczuk.