Middle powers can — and likely will — maintain and improve the rules-based trading system. The question is how they should seek to do so.
The right path is to uphold the principles of non-discrimination and openness that have guided the postwar trading system since its creation. This is the path that will allow the greatest policy certainty, provide scope for cooperation on the widest range of issues and avert a descent into two closed economic blocs.
Those principles were a foundation for the postwar trading system not to achieve untrammelled free trade, but to reflect a wartime conviction that economic exclusion would endanger any lasting peace. The Atlantic Charter of 1941 and allied mutual assistance agreements echoed the understanding that without non-discriminatory access to trade and raw materials, global security would remain at risk. Non-discrimination was necessary to turn a patchwork of plurilateral bargains into a public good.
Compared to the interwar and Cold War periods, today’s global economy is much more interdependent. Decades of liberalisation have given rise to complex global value chains. Connector countries — those that do not obviously side with either the United States or China — help prevent the extremely costly economic bifurcation that could otherwise occur under such intense geopolitical pressure. The United States and China have reduced their bilateral trade but reducing their interdependence is, thankfully, a much tougher ask.
The rise of global value chains and connector economies has depended on the assumption that trade rules limit discrimination between trading partners. That principle is now frequently ignored, as illustrated most egregiously by the US ‘Liberation Day’ tariffs.
Combining multilateral principles with smaller groups is not a new idea. The Asia Pacific model of open regionalism, which guided the creation of APEC, is one example. Others argue for principled plurilateralism and pathfinder multilateralism. What has changed is that momentum and urgency have grown, such that this class of model appears increasingly necessary to salvage the benefits of rules-based trade.
The fact that WTO rulemaking has slowed does not mean the problems on its agenda have vanished. It remains gridlocked over specific areas of longstanding concern — subsidies, state-owned enterprises and trade remedies. While issues such as what counts as a public body or how dumping margins are calculated have been flashpoints, the deeper problem is that WTO members have not reached a shared understanding of what these disciplines should look like.
That is the kind of gap that middle power economic diplomacy can help close, since these are the countries with both the interest and the agency to rebuild the rules.
In terms of existing industrial policy standards, an exemplar is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Expanding those rules could come either through growing the agreement’s membership or using its provisions as a template in other settings. Applicants for accession to CPTPP include Costa Rica, Ecuador, Taiwan, Ukraine, Uruguay and China.
For China, joining CPTPP would require deep and extensive reform — potentially taking many years, if WTO accession is any guide — but it is a process in which CPTPP members have a substantial interest. It would mean, among other things, China’s dramatically curbing support for state-owned enterprises, easing restrictions on data flows and making credible commitments on labour rights. Other paths exist—such as managed trade agreements among the great powers — but the CPTPP stands out because its middle power members have leverage and could realise substantial gains from the reduced fragmentation that would come from broader membership.
The most pressing task in trade governance is to develop shared rules and norms compatible with the green energy transition. Two approaches from earlier agreements could be starting points — ‘traffic light’ classifications for permitted, limited and prohibited policies, and the requirement that governments use the least trade-distorting instrument available to achieve a given goal. While not easy, approaches like these offer proven conceptual architecture that can be adapted to current needs rather than newly invented.
Open plurilateral agreements — non-discriminatory in application and open to any economy prepared to meet their standards — are the ideal model. Examples include the WTO Joint Statement Initiative on services domestic regulation and the Agreement on E-Commerce, whose 66 participants adopted interim arrangements in March 2026 to bring digital trade rules into force while continuing to seek their incorporation into the WTO rulebook. The process was co-led by Australia, Japan and Singapore — three countries that have been called middle powers in Asia.
In enforcement, the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) has helped resolve WTO disputes while the Appellate Body is inquorate. It has grown to cover most of world trade without US participation, with Paraguay, Malaysia, the United Kingdom and Vietnam joining in 2025.
To avoid fragmentation of international trade, cooperative arrangements should be open to countries prepared to make the necessary commitments. This means the timely and judicious expansion of membership. But accession processes are often opaque, slow and resource intensive, and that risks deterring economies with less negotiating capacity. To reduce those costs, applicants could be bundled and assessed collectively against transparent membership criteria, streamlining the process and making accession more feasible.
None of this is to say the WTO is finished. It still makes progress, conducts reviews, increases transparency and, as of 2026, even collects its dues from the United States. Even were the WTO to make no further progress at all, it would leave behind a stock of agreed rules that future agreements and smaller coalitions could build on. The problem is that the disciplines the institution most needs to update are ones it cannot currently address.
With the world moving towards multipolarity, middle powers may come to be defined by how they contribute to a renovated trading system. Middle powers are those with the incentive and influence to keep rules and norms alive when great powers defect, and to supply the enforcement and information needed for a cooperative trading system to function. As the trading system has grown weaker, middle powers may come to be known as those that stepped up and defined the next era.
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