The election of the Hawke Labor government in March 1983 made possible a fundamental reassessment of Australia's approach to multilateral trade policy and the GATT. Such a reappraisal was long overdue. The sustainability of domestic insulation and industry protection depended on the viability of Australia's rural and mineral commodity export sectors. However for most of the postwar era the prices received for these commodities fell relative to the prices paid for its manufactured imports. Despite high productivity growth in agriculture, Australia was still confronted with a steady deterioration in its terms of trade, a widening current account deficit, a chronic balance of payments problem, and a real decline of national income, culminating in the ‘banana republic’ crisis following the collapse of world commodity prices in 1985–86.

Although Richard Higgott's claim that, by the mid-1980s, Australia had more in common with many of the least developed countries than the newly industrialising countries greatly overstated the case, his more general point about the growing marginalisation of Australia in the world economy was certainly valid. For instance, Australia's failure to participate in the expanision of trade in high value-added manufactures, intellecutal property, services and capital had seen its share of postwar global trade decline from 2.5 to about 1 per cent of the total, while dropping out the list of top twenty-five trading nations (having been twelfth in 1978).