Australian cotton growers could be the latest victims of increasingly bitter trade tensions with China.
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Chinese spinning mills have been told to stop buying Australian cotton and the industry could soon face tariffs of up to 40 per cent.
Cotton millers in China are given an import quota each year and have been told they might not receive the allowance if they buy from Australia.
Agriculture Minister David Littleproud said the developments were a significant concern for the cotton industry.
"We are working as quickly as we can with the industry to get an appreciation of the scale and the veracity of this," he told reporters in Canberra on Friday.
"We're not going to jump the gun but we think it's important that Chinese officials give us clarity with respect to this."
He called on China to respect international trade rules and engage with Australia.
"We're playing under a fair marketplace. We expect everyone that trades with us to do the same."
Australia sells about $800 million worth of cotton to China each year and industry groups are disappointed by the deterioration in export conditions.
Cotton Australia and the Cotton Shippers Association are working with the federal government to investigate what is going on.
"The Australian cotton industry will continue having meaningful conversations with stakeholders to fully understand this situation," they said in a statement.
"We will continue working with the Australian government to respectfully and meaningfully engage with China to find a resolution."
Trade Minister Simon Birmingham is seeking clarity from Chinese officials.
"Our cotton exporters have worked hard to win contracts and establish themselves as reliable suppliers of high quality cotton in the Chinese market, which is an important input for many Chinese businesses," he told AAP.
"China should rule out any use of discriminatory actions against Australian cotton producers."
China has targeted Australian beef, barley and wine in recent months and has reportedly enforced a go-slow on importing coking and thermal coal.
Mr Littleproud refused to say if the government was concerned about other agricultural commodities.
"To speculate on any particular industry won't advance agriculture in this country," he said.
He said exporters should look at other markets to avoid concentration.
"The government doesn't tell our exporters to go and export to China. That is a commercial decision they make themselves."
Opposition Leader Anthony Albanese said the government had mishandled the trade relationship with China.
"You have a trade minister who can't pick up the phone to their counterpart in Beijing," he told reporters in Sydney.
"I can't remember a worse time of relationships at the same time as the government's presided over circumstances whereby 48 per cent of our exports go to one destination - China."
Australian Associated Press
