Multilateral Trade Agreements Advantages And Disadvantages

“Many U.S. companies benefit from the rules-based global trading system.” – Rob Mulligan Sometimes the bilateral approach is the best solution for the United States and, in other cases, multilateral agreements can be beneficial. Both approaches are tools available in the international trade toolkit, and the Trump administration`s thinking could change over time. The United States has a gross domestic product (GDP) of about $17 trillion and a high GDP per capita. Faced with a huge market, U.S. negotiators actually hold a lot of cards at the negotiating table. However, several bilateral agreements, with many technical provisions, can make it more expensive and more difficult for U.S. exporters to use market opening opportunities. In theory, it would be possible to have uniform rules on issues such as rules of origin and transshipments, through bilateral agreements. In practice, there are usually discrepancies in the measures, which creates a cat cradle of commercial rules. As a result, many U.S. companies have started to take common steps that can be made available through multilateral agreements.

All global trade agreements are multilateral. The most successful is the general agreement on trade and customs. Twenty-three countries signed the GATT in 1947. The aim was to reduce tariffs and other trade barriers. Multilateral negotiations are the most effective way to liberalize trade in an interdependent global economy, as concessions made in a bilateral or regional agreement risk undermining concessions made to another trading partner in a previous agreement. It is also important to note that regional trade agreements are under way under multilateral trade agreements, as evidenced by the North American Free Trade Agreement (NAFTA) and the European Union (EU). The most important organization for multilateral negotiations, agreements and treaties is the WTO. This organization has a unique set of agreements to which all members are required to respect and implement global rules on international trade. The most important requirements are the removal of barriers to trade between countries and the guarantee that Member States act in accordance with established rules.

The General Agreement on Tariffs and Trade (GATT) is the fundamental multilateral treaty between WTO members (Farm Foundation, 2002, ITCD online 2004, Carbaugh, 2004). The second advantage is that it increases trade for each participant. Their businesses benefit from low rates. This makes their exports cheaper. Bilateral agreements strengthen trade between the two countries. They open markets to successful sectors. If companies take advantage of it, they create jobs. They are easier to negotiate than multilateral trade agreements because they cover only two countries. This means that they can come into force more quickly in order to reap the commercial benefits more quickly.

If negotiations for a multilateral trade agreement fail, many countries will instead negotiate a series of bilateral agreements. Canada is at a historic point in trade policy, deciding on the ratification of Canada-EU agreements and the Trans-Pacific Partnership, after the multilateral option was virtually abolished at the WTO Ministerial Conference in Nairobi in 2015 and faces constraints to obtain additional economic benefits through serious bilateral agreements. The key issues facing Canada are the regime and, in particular, the intellectual property rules, which are promoted by mega-regional agreements. This letter argues that Canada must do the math on the agreements and urgently put in place a trade and innovation regime to compete in the age of innovation. This broad scope makes them more robust than other types of trade agreements as soon as all parties sign. Bilateral agreements are easier to negotiate, but only between two countries. On the other hand, bilateral agreements are not bound by the rules established by the