The World Trade Organisation has agreed to examine China's complaint that Australia took action on imported steel goods, like kitchen sinks, in contravention of trade agreements.
China is alleging Australia's decision to impose anti-dumping duties on imports of wind towers, stainless steel sinks and certain railway wheels break the rules.
China's initial request for the issue to be examined was blocked in January but now the WTO has agreed to set up a dispute panel to look at the complaint.
China is arguing this was one in a series of "continuous and long-standing failures" by Australia to meet its obligations under WTO agreements, the WTO said in a statement on Tuesday.
"Australia said it was disappointed that China has proceeded with its second request for a panel," the WTO said.
"Australia was confident it complied with its WTO obligations ... (and) added it remained ready to resolve this matter with China through bilateral discussions."
The European Union, United States, Russia, Canada, Brazil, Switzerland, Norway, Singapore, Korea, India, Chinese Taipei and Japan have reserved their third-party rights to take part in the proceedings.
