Australia's restrictions on imports of New Zealand apples break international trade laws and should be amended, the World Trade Organization has said.
Its disputes panel has rejected Australia's argument that importing New Zealand apples would risk the introduction of the bacterial disease of fireblight.
Three years ago, Biosecurity Australia agreed to end an 86-year ban on New Zealand apple imports, but imposed severe quarantine restrictions which New Zealand argued amounted to a continued ban.
The Government took a case to the World Trade Organisation (WTO) and in July 2009 the disputes panel heard submissions from New Zealand and Australia.
Trade Minister Tim Groser told Morning Report the ruling is not quite the end of the road, because there are procedural issues to be resolved, but it is the decisive step.
Pipfruit New Zealand chief executive Peter Beaven says it's a clear cut win for the industry and he hopes New Zealand will be exporting apples to Australia by 2012 at the latest.
The organisation's chairman, Ian Palmer, says the ruling could have implications for access to other markets, such as South Korea which has the same fireblight ban as Australia.
Mr Groser agrees the victory is not only about the $20 million a year Australian market, but is important for the market in China, which was believed to have been watching the WTO proceedings carefully.
The WTO experts did not back New Zealand in all its claims, disagreeing that Australia's sanitary controls were arbitrary.
But in a 597-page report they found that Australian safety checks on New Zealand apples were unscientific and disrupted trade more than necessary, and that New Zealand's rights under global trade law had been damaged as a result.
Australia banned New Zealand apples in 1921 because of fears that fireblight, a disease that attacks apple and pear trees and rose bushes, could spread. Wellington has tried to have the ban lifted since 1986, and began a challenge at the WTO in 2007.
The two countries now have 60 days in which to appeal.