What’s in a middle power? Global trade’s future.

Middle powers are in the spotlight with the US-China geopolitical competition straining the core tenets of the global rules-based order – the multilateral trade rules of the World Trade Organization (WTO).

WTO rules are unable to deter unilateral tariffs being imposed by the US on its trade partners and the counter-responses from some of them. The tariffs and ensuing uncertainty in global trade policy have adversely impacted world merchandise trade, which is projected to significantly contract. Global commercial services trade, while not directly impacted by tariffs, is still expected to grow, though at a slower pace.

The significance of middle powers in helping ‘shape trade rules and norms’ came into focus in remarks made by Ngozi Okonjo-Iweala, Director General of the WTO, in a speech in Singapore on 2 December, 2024. The focus has since sharpened manifold following the disruptions arising from US trade policies.

Who are the middle powers?

Various definitions of middle powers distinguish them either in terms of national economic characteristics and capacities; or behavioral patterns in external engagements coupled with abilities for securing geopolitical influence. Intuitively, middle powers represent countries with significant presence in the global economy complemented by a recognition of their views on global affairs as distinct from ‘great powers’ or least developed countries, which combine to endow them middling degrees of influence in global rule making. The instinctual idea, naturally, identifies several countries as middle powers. But those identified are not a homogeneous bunch given the economic, political, cultural and institutional differences within and among themselves, raising doubts over the feasibility of their collective action.

Several major country and regional coalitions, such as the Group of Seven (G7), Group of 20 (G20), the Organisation for Economic Co-operation and Development (OECD), the European Union (EU), the Asia-Pacific Economic Cooperation (APEC) grouping, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), BRICS, and the Association of Southeast Asian Nations (ASEAN), contain middle powers. In these coalitions, the middle powers tend to identify with bloc-specific personalities, as opposed to any overarching character. This makes the ‘identity’ of middle powers a vexing notion and a key obstruction in visualizing their united contribution to global trade rules.

Identifying middle powers

Table 1 lists countries with shares between 1%-4% in both global goods and services trades¹. The US, China, and Germany are excluded as they have shares of more than 4% in both trades. Shares of non-EU countries are noted both as proportions of global trade including intra-EU trade and excluding it (in parentheses). Countries are also identified through the groups and blocs they belong to.

Findings and Implications

1. Almost all of the world’s 20 largest economies are in Table 1, except Russia, Indonesia, and Saudi Arabia. While the three economies have considerable geopolitical heft, their shares in global goods and services trades are not significant enough to make them key actors in shaping global trade rules.
2. Along with the G7 group of countries, several G20 members are in Table 1, with the exception of Argentina, Indonesia, Russia, Saudi Arabia, and South Africa. If middle powers need to come together for addressing the problems of global trade, the initiative might have to begin with the G20.
3. Belgium, Ireland, Switzerland, Singapore, Thailand, and the UAE – while not among the world’s top 20 largest economies – belong in the top 30. These countries are not in the G20, implying that galvanizing efforts by G20 middle powers will need to go beyond the group.
4. The Global South is represented through Brazil, India, Thailand, and Turkiye, though Mexico and UAE might also be so. The representation gets limited due to absence of developing-country G20 members – Argentina, Indonesia, and South Africa. This also explains the relatively low representation from BRICS. The middle power collective based on the studied identity will have lower contribution from the Global South.
5. European countries dominate Table 1. Seven EU economies – Belgium, France, Ireland, Italy, the Netherlands, Poland, and Spain – feature in the list, along with Switzerland, Türkiye, and the United Kingdom. Asia follows with eight members – Australia, Hong Kong, India, Japan, Korea, Singapore, Thailand, and UAE. The two continents will be prominent in prospective middle-power initiatives.
6. Among regional trade blocs, the CPTPP has most members in Table 1 (Australia, Canada, Japan, Mexico, Singapore, and the UK). All CPTPP members, except the UK, also belong to APEC, making the latter well-represented, as it also includes Hong Kong, Korea, and Thailand.
7. The EU and APEC together account for 15 out of 21 countries in Table 1. Moreover, EU and CPTPP members, along with non-EU European countries, and non-CPTPP APEC members, account for almost all of Table 1, except Brazil, India, and the UAE. The EU-CPTPP combine can be noted as a distinct middle power grouping.

Can middle powers deliver?

A statistical definition for middle powers attempts to homogenize them apolitically. However, such a broadbrush doesn’t do away with other problems.

The most substantial challenge for middle powers in moving forward collectively is in locking on to a common agenda. The latter, arguably, is adhering to the rules-based global trade order and ensuring its reforms. While the first part of the agenda might be a shared objective, the latter will be interpreted through divergent priorities and can generate conflicts of interest, arising from differences in proficiencies and prominence of countries in global trade of goods vis-à-vis services. It is not clear how these conflicts might be resolved. Indeed, countries with large shares in both goods and services trades might themselves be confused over prioritizing their interests across the two spectrums.

One possible way forward could be for some of the identified middle powers with greater strategic heft to initiate convening a process of working together that extends beyond the statistical identity. This must be through an agenda that, while crafted by middle powers, will be inclusive in spirit and able to appeal to wider sections of the WTO membership from apparently unaligned geographies.

The EU and the CPTPP, along with APEC, can take the lead in this regard by charting out a course of global trade policy action that appeals to other middle powers, especially those from the Global South, such as Brazil and India. This has to be a purposefully inclusive agenda that can deliver lasting benefits. Such an approach is necessary as the crisis for global trade and the WTO is much bigger than the storm unleashed by Trump tariffs, with its roots running deep in a rising lack of faith in global trade rules.

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[1] Countries with shares of less than 1% in either goods or services trade have been excluded, even if their shares are more than 1% in either of the two. For example, Taiwan, Russia, Israel, and Vietnam have been excluded in spite of having more than 1% share in global goods trade, as their shares in services trade are less than 1%. Similarly, Austria, Denmark, Luxembourg, and Sweden have been dropped in spite of having more than 1% shares in services trade, as they account for less than 1% of goods trade.

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