Bilateral Versus Multilateral Trade Agreements
The main drawback of multilateral agreements is that they are complex. This makes them difficult and tedious to negotiate. Sometimes the length of the negotiations means that it will not take place at all. The first WTO project was the Doha Round of Trade Agreements in 2001. It was a multilateral trade agreement among all WTO members. Developing countries would allow imports of financial services, particularly banks. This should modernize their markets. In return, developed countries would reduce agricultural subsidies. This would stimulate the growth of developing countries, which are good at food production. 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. Multilateral trade agreements are trade agreements between three or more nations. All signatories treat each other in the same way. The contracts aim to offer benefits such as tariff reductions and facilitate the import and export of products by participating countries, expand access to the other country`s markets and increase each country`s economic growth. These agreements harmonized trade activity and trade rules; establishing fair labour standards and protecting the environment.
The aim is to prevent one signatory country from stealing the other`s intellectual property, from engaging in dumping practices at reasonable prices, or from using unfair subsidies. Since multilateral agreements open the conditions for competition to all signatories, they are particularly beneficial for emerging countries, which are smaller and less competitive. Some regional trade agreements are multilateral. The most important was the North American Free Trade Agreement (NAFTA), ratified on January 1, 1994. Nafta quadrupled trade between the United States, Canada and Mexico from 1993 to 2018. The U.S.-Mexico Agreement (USMCA) came into force on July 1, 2020. The USMCA was a new trade agreement between the three countries, negotiated under President Donald Trump. The Uruguay cycle began in September 1986 in Punta del Este, Uruguay. The focus has been on extending trade agreements to several new areas. These include services and intellectual property. It has also improved the agricultural and textile trade.