China has contributed to the impotence of trade rules in its own way, exploiting gaps in WTO rules on state subsidies and using macroeconomic policy to artificially expand export supply and suppress import demand. Like Washington, but over a longer timeframe, Beijing disregards trade obligations when it judges vital interests are at stake.
Beijing has repurposed (Opens in new window) WTO trade remedy tools – anti-dumping and countervailing duty investigations – as instruments of retaliation rather than genuine responses to unfair trade. Australian wine exports collapsed under tariffs of up to 218% for three years and still haven’t fully recovered since the duties were lifted in 2024. These actions follow WTO procedures on paper, but their deterrent effect is immediate – a rules-based façade that still lets Beijing impose rapid costs on governments considering action against surges in imports of Chinese goods.
Australia’s response should follow a clear hierarchy: defend the WTO where possible, anchor practical cooperation in the CPTPP, and adapt domestic policy to a more coercive environment. As a middle-sized, trade-reliant nation, Australia can afford neither nostalgia for a functioning WTO nor resignation to power-based trade.
To abandon the WTO would concede power-based trade is the new norm – but Australia needs to be realistic. Washington won’t easily cede the unilateral flexibility Trump has uncovered, and even modest WTO reform is trapped by consensus decision-making.
The CPTPP is now Australia’s strongest practical platform, representing about 15% of global GDP and drawing interest from others. But the CPTPP, now eight years old, has been slow to realise (Opens in new window) its potential. Australia should use it more actively: support credible new accessions, deepen its EU relationship, and position it as a platform for economies committed to open markets and strong, predictable rules. In that regard, China’s membership aspirations defy Beijing’s track record of weak domestic reforms.
Australia should also prepare for more predictable unpredictability, reapplying coalition-building tactics we have used before, Cairns Group-style, to defend and advocate for open markets sector by sector. Washington or Beijing may misconstrue any grouping that excludes them as a threat – but acting collectively projects a stronger voice and raises the cost of punitive measures against any one member.
Global supply-chain shocks in recent years have returned industry assistance to the policy mainstream. One lesson from the United States is that trade orthodoxies collapse quickly once the government stops selling the benefits of open markets. Trade policy should be grounded in clear national benefit, not the assumption that Australia’s domestic free-trade consensus will hold indefinitely.
Australia’s first move should be to work with CPTPP partners and credible accession candidates around a practical agenda for rules-based trade, sector by sector, while preparing domestic policy for a world where resilience and openness must be managed together. That is how Australia can find its way in a fractured trading system: not by waiting for the old order to return, but by building the strongest rules-based space still available.
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