The Vanuatu government has banned the import of biscuits made in Fiji.
The trade is currently worth 1.2 million US dollar a year.
The move is aimed at protecting a local biscuit manufacturer in Vanuatu but the ban is contrary to the free trade agreement between Pacific island countries and a similar agreement between countries of the Melanesian Spearhead Group.
Biscuit manufacturer Flour Mills of Fiji says the ban could cost jobs at its factory.
The prime minister, Laisenia Qarase, says the minister for external affairs and foreign trade, Kaliopate Tavola, will approach the Vanuatu government on the issue.