Sheep industry is one of the important agricultural industries in Australia. More than 50 percent of the sheep sold in Australia are exported live and of the total live sheep exports, 70 to 80 percent is exported to the Middle-East countries. In August 2003, Saudi Arabia’s rejection of the MV Cormo Express led to a widespread concern among the members of the industry as well as among the citizens at large. Many started to question about the need for live-sheep trade. This paper examines the effects of reductions in live-sheep exports on the Western Australian economy in a general equilibrium framework.