Australian’s foreign minister met Arab and Islamic ambassadors Thursday to try to soothe concerns over Canberra’s stance on East Jerusalem, insisting there was no policy change despite moves to stop referring to it as “occupied.”

The meeting followed fury in the Arab world after Attorney-General George Brandis said the term would not be used as it carried pejorative implications and was neither appropriate nor useful.

Eighteen diplomats from countries including Egypt, Saudi Arabia and Indonesia protested and warned of possible trade sanctions.

Australia’s export trade with the Middle East accounts for billions of dollars annually, particularly in wheat and meat.

Foreign Minister Julie Bishop said there had been a “constructive” discussion and released a letter to the diplomats re-affirming there was no change in the government’s position on the legal status of the Palestinian Territories.

“Our position is consistent with relevant UN resolutions adopted over many years, including UN Security Council Resolutions 242 and 338,” it read.

“Senator Brandis’s statement was about nomenclature, and was not a comment on the legal status of the Palestinian Territories.”

While avoiding the term “occupied” altogether and asserting that “we do not consider it helpful to engage in debates over legal issues, nor to prejudge any final status issues that are the subject of these negotiations,” it added that Australia continued to be a strong supporter of a two-state solution “with Israel and a Palestinian state existing side by side in peace and security.”

The diplomats were furious with the comments on East Jerusalem, which was annexed by Israel in a move never recognized by the international community, and concerned that it was a “substantial policy shift.”

The Palestinians claim Arab East Jerusalem as the capital of their future state.

The international community views all Israeli construction on land captured in 1967, including the West Bank, as illegal and a major obstacle to a negotiated peace agreement.

The head of the Palestinian delegation to Canberra, Izzat Abdulhadi, said he was satisfied with the way the meeting went.

“The foreign minister was very clear about it today, that, yes, East Jerusalem is occupied. She repeated it several times,” he told Sky News.

Abdulhadi added that it appeared Brandis, who said Australia would no longer call East Jerusalem occupied but disputed, had overstepped the mark.

“The other important development was that she said that from now on … the policy of Australia is declared by either herself or the prime minister only.”

Jordan Ambassador Rima Ahmad Alaadeen, on behalf of her fellow ambassadors, said the meeting was “positive.”

“They assured us that there was no change in their position,” she told reporters. But the reasoning behind the shift in terminology was apparently not discussed.

“‘Disputed’ was not discussed this afternoon,” Alaadeen said.

“Occupied East Jerusalem is a very, very important and very raw nerve for 1.5 billion Muslims and… Christians in our part of the world,” she said.

Alaadeen said she could not say whether there would be trade sanctions against Australia. The controversy was on the agenda of the 57-state Organization of Islamic Cooperation summit of foreign ministers in Jeddah this week.

“There is a clause or a paragraph … on the recent events in Australian policy regarding East Jerusalem, so we have to wait and see what transpires,” she said.

Iraq’s Ambassador to Australia, Mouayed Saleh, who also attended the meeting, similarly said he could not rule out trade sanctions.

Before the meeting, Bishop played down the international furor.

“I’m sure that the ambassadors will want to continue the very strong relationship that we have with their countries,” she told Australian Broadcasting Corp.

But Arab Bank Australia chief executive Joseph Rizk saw some economic risk to Australia, telling ABC that while he does not see a Middle East boycott of Australia, “over time, it will affect trade if the policy isn’t clarified.”