The government has filed a formal complaint with the World Trade Organisation in protest at the way Canada applies rules over the sale of Aussie wine.
Australia's complaint expands on a similar US argument filed one year ago against British Columbia, and encompasses other provinces including Ontario and Quebec.
He says that while China is the biggest export market for local wine producers, Canada is just as crucial.
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The dispute is the first brought by Australia against Canada in the history of the WTO, and follows a rise in trade tension between Canada and the United States.
In October, Washington accused the Canadian province of British Columbia of providing an unfair advantage to local vineyards by giving their wine an exclusive retail channel in grocery store shelves and cutting out US competition.More news: Federer begins Australian Open title defence with win
Ciobo's statement continued: "This step responds to concerns from the Australian wine industry regarding the Canadian measures, which negatively impact trade with Australia's fourth largest export market for wine, now valued at $185 million. The Nova Scotia wine measures provide reduced product mark-up for local producers and preferences through supplier competitions and price bands".
"While it would have been preferable to resolve this issue bilaterally, it is appropriate to commence dispute proceedings given the lack of progress".
But the wine industry is hoping the WTO dispute will bolster their cause in trying to gain market access to Canada.
The complaint goes on to state: "The Ontario measures appear to operate so as to favour products of Canadian origin and potentially exclude or limit imported products from being displayed and sold".
"In this case, we've got a number of provinces in Canada that are putting in place pro-protectionist policies", said Australian trade minister Steve Ciobo. ExportNZ executive director Catherine Beard said the WTO action was a welcome attempt to address tariff and non-tariff barriers in Canada that put exporters at a disadvantage. "We know we have some of the best wine in the world and I want to ensure that Australian wines have their very best chance of reaping the benefits of export sales in a market like Canada".