A statement on Minister for Trade, Tourism and Investment Steven Ciobo's website said: "Australia has taken the first step in commencing formal consultations with Canada regarding measures Australia believes impose arbitrary and disadvantageous restrictions on the sale of imported wine in Canadian grocery stores, inconsistent with Canada's WTO obligations".
Australia filed a trade complaint against Canada on Tuesday, accusing the North American nation of placing "discriminatory" regulations on the sale of wine imported from overseas.
Australia has complained at the World Trade Organization about Canada's rules on wine sales, expanding a similar US complaint against one Canadian region.
The country is New Zealand's fourth-largest market for wine, with $107 million of exports in 2017 - behind only the U.S., the United Kingdom and Australia.
Minster Ciobo said he would prefer to have resolved the issue bilaterally, but that "it is appropriate to commence dispute proceedings given the lack of progress".
Mr Ciobo said Canadian rules had the potential to threaten jobs in Australia.
"I'm not going to stand by and see Aussie exporters jeopardised".
But Canberra's objection also targets policies in Ontario, Quebec and Nova Scotia, as well as federal measures, which "appear to discriminate against imported wine", allegedly in violation of a WTO agreement.
"Wine sales in Canada are controlled by provincial liquor boards".
But the wine industry is hoping the WTO dispute will bolster their cause in trying to gain market access to Canada. "We are delighted the Australian Government has chose to take action over these issues and the winners will be Australian producers and Canadian consumers".
The complaint acts as a request for a consultation between the two countries in an effort to avoid litigation. The new Australian-led WTO action addresses these same concerns as well as others across the Canadian provinces.