Introduction ------------ Middle powers can help strengthen rules-based trade during great-power rivalry by working together to defend existing rules, develop practical new ones, and keep institutions functioning. Their influence rests not only on market power, but on their ability to coordinate credible groups of economies around issues such as subsidies, supply chain resilience, digital trade, dispute settlement, and transparency. That role is becoming more important as trade policy uncertainty, tariff escalation, and security-driven economic measures weaken predictability in global markets[1]. Contextual background --------------------- Middle powers are economies with enough diplomatic, commercial, and institutional capacity to shape trade rules, but without the dominance of the United States or China. This gives them a distinct role in trade governance: they can help preserve space for cooperation by building issue-specific coalitions that remain open, rules-based, and compatible with the World Trade Organization (WTO). Their central challenge is to defend trade rules without making every issue appear aligned with one great-power bloc[2]. How middle powers can strengthen rules-based trade -------------------------------------------------- ### 1. Strengthen the WTO through plurilateral cooperation Middle powers can strengthen the WTO by forming cross-regional coalitions on issues where full consensus is difficult but broad agreement remains possible. These include improving subsidy notifications, clarifying rules on industrial policy, and advancing dispute settlement reform. Open plurilateral agreements can be especially useful when they remain transparent, allow future members to join, and avoid becoming exclusive blocs[3]. This approach matters because the WTO’s consensus model has struggled to update rules quickly enough for today’s trade realities. Industrial subsidies, local content requirements, export restrictions, and security-linked trade measures increasingly shape market access, but many existing rules do not fully reflect the growing use of trade policy for industrial and security objectives. Middle powers can help close this gap by developing narrower, enforceable rules that may later serve as building blocks for wider WTO reform[4]. ### 2. Strengthen dispute settlement and legal predictability A rules-based trading system depends on enforceable commitments. Middle powers should continue supporting dispute settlement reform, interim appeal arrangements, and mediation mechanisms that keep trade disputes within legal channels rather than leaving them to power-based retaliation. The 13th WTO Ministerial Conference in 2024 renewed the objective of restoring a fully functioning dispute settlement system accessible to all members, but the system remains politically constrained[5]. For middle powers, effective dispute settlement is central to preserving leverage in the trading system. Smaller and medium-sized economies are more exposed when enforcement weakens because they have limited ability to retaliate against larger trading partners. A functioning dispute settlement system gives them a way to challenge discriminatory measures, preserve market access, and reduce incentives for unilateral responses. ### 3. Develop rules for responsible industrial policy Industrial policy is now a permanent feature of global trade, especially in clean energy, semiconductors, batteries, and critical minerals. Middle powers should focus on shaping rules that allow governments to pursue legitimate public objectives while limiting measures that distort trade or shift costs onto trading partners. This could include stronger subsidy transparency, limits on discriminatory local content requirements, clearer treatment of climate-related support, and consultation mechanisms before major measures are introduced. These rules would reduce the risk of industrial policy becoming a subsidy race dominated by the largest economies. They would also protect middle powers that lack the fiscal capacity to match subsidies by major economies[6]. ### 4. Strengthen supply chain resilience without abandoning openness Middle powers can make supply chains more resilient through diversification, stockpiling for genuinely critical goods, cooperation with reliable partners, and better risk monitoring. But resilience should not be treated as a case for broad reshoring or self-sufficiency. Competitive and diversified global markets remain an important source of resilience because they provide alternative suppliers, reduce single-country dependence, and preserve scale efficiencies[7]. This is especially important during great-power rivalry, when supply chain security can easily become a justification for protectionism. Middle powers should support evidence-based risk assessments that identify specific vulnerabilities rather than applying sweeping restrictions across entire sectors. This would help keep economic security policies targeted, proportionate, and compatible with trade rules. ### 5. Reduce trade policy uncertainty through transparency and coordination Trade policy uncertainty has become a growing challenge for global commerce. Sudden tariff changes, unclear security measures, and retaliatory restrictions raise costs for firms, weaken investment, and erode trust in existing agreements[8]. Middle powers can help counter this by committing to advance notice for major trade measures, transparent consultation procedures, and predictable implementation timelines. They can also use regional and plurilateral agreements to develop common standards on digital trade, customs procedures, sustainability measures, and regulatory cooperation. These agreements should serve as bridges to the multilateral system rather than substitutes for it. The goal should be to preserve openness while making trade rules more responsive to emerging policy concerns. Conclusion ---------- Middle powers can strengthen rules-based trade by making the system more effective, rather than simply defending the status quo. Their most useful role is to build coalitions that keep trade disputes within legal channels, improve transparency around industrial policy, preserve open supply chains, and reduce uncertainty. During great-power rivalry, such rule-building can limit fragmentation and give smaller and medium-sized economies a stronger voice in shaping the future of global trade.
