New Zealand has vowed to continue to fight Premier Annastacia Palaszczuk's "Buy Queensland" procurement policy after failing to stop the controversial plan coming to effect.
The policy, which officially starts on Friday, gives preference to local suppliers for state government contracts and has angered the federal government and New Zealand, which say it breaches Australia's free trade obligations.
New Zealand Trade Minister Todd McClay has hinted at possible retaliation, saying the country "would not stand by" as the policy began to affect NZ companies, while his Australian counterpart, Steve Ciobo, accuses the premier of putting Queensland jobs at risk.
"Initiating consultations sends a strong message that the Bill English-led government will not stand by whilst an Australian state government undermines our mutually beneficial relationship," Mr McClay said on Thursday night.
"Queensland companies continue to provide millions of dollars worth of goods and services to our government. New Zealand businesses must be shown the same courtesy in Australia."
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He said New Zealand has begun formal consultations with the Australian government over the policy.
Mr Ciobo has also lashed the premier, saying Queensland would lose jobs if New Zealand or other countries with free trade agreements with Australia decided to retaliate.
"Queensland exports are worth $70 billion a year. The Queensland Government procurement market is worth $14 billion. Did Premier Palaszczuk fail maths?" he said on Friday.
