Negotiations to strike a free trade deal with the United Arab Emirates will begin in the new year, after Australia's talks with the European Union collapsed.
Trade Minister Don Farrell, who announced the development on Wednesday, said the government remained committed to helping Australian businesses diversify.
"A trade deal with the UAE will strengthen our relationship with one of our most important trading and investment partners in the Middle East," he said.
"More trade means more export opportunities for Australian businesses, more national income, and more well-paying local jobs."
Two-way goods and services trade with the UAE were valued at $9.26 billion last year.
Key Australian exports to the UAE include alumina, meat, oil seeds, and higher education.
In a statement, the Group of Eight which represents Australia's leading research-intensive universities, said international engagement was important to the sector, as students wouldn't pick destinations and services perceived poorly.
"Rebuilding our national reputation as an outward looking, engaged, responsible regional partner, with internationally recognised, highly ranked universities, is the foundation upon which diversification will be built," the statement reads.
The Australian Chamber of Commerce and Industry said a trade agreement with the UAE would connect the nation to the Middle East, and act as a stepping-stone to a larger agreements in the region.
It comes as negotiations with the EU for a trade agreement failed, with the sticking point being greater market access for Australia's agricultural products.
The talks have been put on ice as the European parliament enters its election cycle ahead of polling in June next year.
With domestic issues dominating, both governments consider the likelihood of an agreement being reached as unlikely.
