The EU has concluded or negotiated such bilateral trade agreements: some conservatives define unilateral trade policy as the absence of any trade agreement. In this definition, the United States would lift all tariffs, regulations, and other trade restrictions. It is one-sided because it does not require other nations to do the same. The argument is that the government should not restrict the rights of its citizens to trade anywhere in the world. Multilateral trade agreements are concluded between two or more countries in order to strengthen the economies of Member States by exchanging goods and services between them. More details on multilateral trade agreements have been written separately on this web blog, you can click here to read; How does a multilateral trade agreement work? In this scenario, other countries would maintain their tariffs on U.S. exports. This would give them a unilateral advantage. They could send cheap goods to the United States, but to the United States. Exports would be more expensive in their country.
Bilateral agreements are not the same as trade agreements. The latter involves the reduction or elimination of import quotas, export restrictions, tariffs and other interstate trade barriers. Rules on trade agreements are also set by the World Trade Organization (WTO). How to distinguish between the multilateral trade agreement and the unilateral trade agreement? Despite the possible tensions between the two approaches, it would appear that multilateral and bilateral/regional trade agreements will remain characteristics of the global economy. However, both the WTO and agreements such as NAFTA have become controversial among groups such as anti-globalization protesters, who argue that such agreements serve the interests of multinationals and not workers, while free trade is a proven method to improve economic performance and increase overall incomes. To accommodate this opposition, there has been pressure for labour and environmental standards to be included in these trade agreements. Labour standards contain provisions on minimum wages and working conditions, while environmental standards would prevent trade if there were fears of environmental damage. On the other hand, bilateral agreements are not bound by WTO rules and do not focus solely on trade-related issues. Instead, the agreement generally targets specific policies to strengthen cooperation and facilitate trade between countries in certain areas. Critics of bilateral and regional approaches to trade liberalization have many additional arguments. They indicate that these approaches could undermine and replace the WTO`s multilateral approach, which should be favoured for a comprehensive approach based on a non-discriminatory approach, instead of supporting and complementing it. Therefore, the long-term outcome of bilateralism could be a deterioration of the global trading system into competing and discriminatory regional trading blocs, which complicates the fluidity of goods flows between countries.
Moreover, the reform of issues such as agricultural export subsidies cannot be effectively addressed at the bilateral or regional level. For many countries, unilateral reforms are the only effective way to reduce barriers to internal trade. However, multilateral and bilateral approaches – the removal of trade barriers in coordination with other countries – have two advantages over unilateral approaches. First, the economic benefits of international trade are strengthened and enhanced if many countries or regions agree to mutually remove barriers to trade. . . .