Are we moving towards Bilateralism in International Trade?

In recent years, there has been a noticeable shift in international trade towards bilateral agreements, where two countries negotiate trade terms directly, bypassing multilateral organizations like the World Trade Organization (WTO). This trend reflects growing frustration with the slow pace of global negotiations and the complexity of multilateral deals. Bilateral trade agreements allow countries to tailor terms that better suit their specific interests, often leading to quicker and more focused trade deals.

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On the downside, bilateralism leads to fragmenting the global trading system. Multiple bilateral deals can lead to a “spaghetti bowl” effect, where businesses face conflicting regulations and tariffs. Moreover, smaller nations may struggle to negotiate favorable terms without the leverage of a multilateral framework. This may also lead to negative role for the WTO.

In conclusion, while bilateralism offers short-term advantages, the long-term trend towards fragmented trade deals may undermine the stability and predictability of the global trade system.