The Federal Government is planning to exempt Saudi Arabia from the most contentious aspects of animal welfare laws governing the export of sheep and cattle from Australia.

An exemption would re-open the door to one of the most lucrative live export markets in the world for WA sheep and cattle.

Agriculture Minister Barnaby Joyce said Saudi Arabia was a special case because all livestock processing facilities were government-owned and it enforced strict animal welfare laws.

The Exporter Supply Chain Assurance Scheme, which applies to other markets for Australian livestock, is unacceptable to Saudi Arabia.

The oil-rich kingdom wants Australian sheep and cattle but will not accept the application of ESCAS rules inside its borders.

It imports about 8 million sheep and cattle a year and was once Australia's biggest live sheep market.

Mr Joyce said officials were working on an agreement which involves Saudi Arabia providing verification that animals are processed to agreed standards.

"Being government-owned facilities we are working on what level of verification we require," he said.

A deal with Saudi Arabia is set to pre-empt a major overhaul of ESCAS, which is under review.

Perth-based exporter Graham Daws said resuming shipments to Saudi Arabia would create a spike in demand for WA sheep and cattle.

"The numbers that are likely to go in the first year are at least another one million sheep and may be a couple of hundred thousand cattle," Mr Daws said.

Saudi Arabia is a signatory to the OIE (World Organisation for Animal Health), which has strengthened its welfare laws and has outlawed home slaughter of livestock.

The Government moved yesterday to cut some of the ESCAS red tape amid warnings of softer demand for WA sheep and lambs.