Australian ban on NZ apples is ruled illegal
The WTO rejected Australia's arguments that the apple restrictions are necessary to keep out pests and diseases.
However, New Zealand apples are unlikely to appear on Australian markets any time soon. The WTO can authorise punitive sanctions against countries that continue to break trade rules - but usually only after years of litigation - and Australia can file a number of appeals.
The ban was first imposed in 1921 to prevent the spread to Australian trees of fire blight - a disease that damages apple trees.
Australia has also turned away imports over concerns New Zealand's apples could carry European fruit canker or apple leaf-curling midge.
But the WTO's three-member panel found Australia's ban was not based on a scientific risk assessment. The WTO experts did not back Wellington on all its claims, disagreeing Australia's sanitary controls were arbitrary.
New Zealand brought the case to the world trade referee in 2007, alleging that 17 Australian requirements for apple imports were illegal.
The dispute marks a rare tiff across the Tasman Sea, involving two neighbours with about $13 billion a year in two-way trade. Both countries have strict quarantine rules to protect their agriculture from foreign infections.
New Zealand claims the apple trade in Australia could be worth up to $6.2 million a year.
The ruling could also open other markets, according to industry lobby Pipfruit New Zealand. "The implications for us run a lot deeper in terms of other market access issues that we currently have," said Pipfruit NZ chairman Ian Palmer.
New Zealand had particular problems with Japan and South Korea. "Korea is one of the expanding markets that we would like to be in, but they have the same fire blight ban that the Australians have," Mr Palmer said.
New Zealand exports 75-80 per cent of its annual crop of about 400,000 tonnes, mainly to Europe and especially Germany and Britain, as well as to the United States and Asia..