SYDNEY – Arab nations may boycott Australian goods in protest at Canberra’s “shameful” declaration last week that it will no longer refer to East Jerusalem as “occupied.”

A delegation of almost 20 ambassadors and senior diplomats – including representatives from Indonesia, Egypt, Saudi Arabia and Pakistan – lodged a formal complaint with the Department of Foreign Affairs and Trade in Australia's capital last week, local media reported.

One of the envoys, Jordanian Ambassador Rima Alaadeen, said activists were urging people to boycott Australian goods during Ramadan later this month.

In the West Bank, Tom Wilson, Australia’s diplomatic representative to the Palestinian Authority, was summoned for a diplomatic dressing-down by Foreign Minister Riyad al-Maliki, who blasted the “radical change in Australia’s position on Palestine.”

At the same time, the Arab League and the Organization of Islamic Conference agreed to hold a joint emergency meeting to determine their response to the furor.

Australian Foreign Minister Julie Bishop is expected to meet a delegation of Arab ambassadors this week to help calm the crisis, which was triggered when Australia’s top lawyer told a Senate committee that the term “occupied” was neither “appropriate nor useful.”

“The description of East Jerusalem as ‘occupied’ is a term freighted with pejorative implications,” Attorney-General George Brandis said. “It should not and will not be the practice of the Australian government to describe areas of negotiation in such judgmental language.”

But local media revealed this week that Brandis' comments had apparently caught the government off-guard. Prime Minister Tony Abbott, who was visiting the United States at the time, stressed that it was a “terminological clarification” and did not constitute a policy shift.

“There has been no change of policy, absolutely no change in policy. There’s been a terminological clarification,” he said. “This is an area where people are, inevitably, extremely sensitive.”

He added: “People trade with us because we are a good trading partner... Nothing that has happened in the last couple of days could detract from that.”

But Palestinian Authority spokesman Xavier Abu Eid was among those fuming.

“With its shameful statements against international law, the Australian government has become part of the problem rather than part of the solution,” he said.

Izzat Abdulhadi, the head of the General Delegation of Palestine to Australia, said a boycott was a possibility. “I’m afraid this will really cast a lot of shadows, negative shadows, over relations between Australia and the Arab world, and there will be a sort of negative consequences,” he told the Australian Broadcasting Corporation.

Australia’s live sheep trade and agricultural products to the Arab world is worth in excess of $2 billion a year.

“We are very concerned about [the incident] and we are working closely with the agriculture minister,” said Brent Finlay, president of the National Farmers’ Federation. “It is an unfortunate hiccup.”

While the declaration sparked a furious response in the Arab world, Israeli Prime Minister Benjamin Netanyahu – who is scheduled to visit Australia next month – hailed it as “refreshing, given the chorus of hypocrisy and ignorance.”

“I certainly appreciate this stand by the Australian government," Netanyahyu added, "and I am certain that all those who want to see an agreement here based on peace, justice and truth – and it is impossible to build peace based on historic lies – would agree.”