Multilateralism Doi (identifier) Sovereign state

Bilateralism is the conduct of political, economic, or cultural relations between two sovereign states. It is in contrast to unilateralism or multilateralism, which is activity by a single state or jointly by multiple states, respectively. When states recognize one another as sovereign states and agree to diplomatic relations, they create a bilateral relationship. States with bilateral ties will exchange diplomatic agents such as ambassadors to facilitate dialogues and cooperations.

Economic agreements, such as free trade agreements (FTA) or foreign direct investment (FDI), signed by two states, are a common example of bilateralism. Since most economic agreements are signed according to the specific characteristics of the contracting countries to give preferential treatment to each other, not a generalized principle but a situational differentiation is needed. Thus through bilateralism, states can obtain more tailored agreements and obligations that only apply to particular contracting states. However, the states will face a trade-off because it is more wasteful in transaction costs than the multilateral strategy. In a bilateral strategy, a new contract has to be negotiated for each participant. So it tends to be preferred when transaction costs are low and the member surplus, which corresponds to “producer surplus” in economic terms, is high. Moreover, this will be effective if an influential state wants control over small states from a liberalism perspective, because building a series of bilateral arrangements with small states can increase a state's influence.[1]



There has been a long debate on the merits of bilateralism versus multilateralism. The first rejection of bilateralism came after the First World War when many politicians concluded that the complex pre-war system of bilateral treaties had made war inevitable. This led to the creation of the multilateral League of Nations (which was disbanded in failure after 26 years).

A similar reaction against bilateral trade agreements occurred after the Great Depression, when it was argued that such agreements helped produce a cycle of rising tariffs that deepened the economic downturn. Thus, after the Second World War, the West turned to multilateral agreements such as the General Agreement on Tariffs and Trade (GATT).[citation needed]

Despite the high profile of modern multilateral systems such as the United Nations and World Trade Organization, most diplomacy is still done at the bilateral level. Bilateralism has a flexibility and ease lacking in most compromise-dependent multilateral systems. In addition, disparities in power, resources, money, armament, or technology are more easily exploitable by the stronger side in bilateral diplomacy, which powerful states might consider as a positive aspect of it, compared to the more consensus-driven multilateral form of diplomacy, where the one state-one vote rule applies.[citation needed]

A 2017 study found that bilateral tax treaties, even if intended to "coordinate policies between countries to avoid double taxation and encourage international investment", had the unintended consequence of allowing "multinationals to engage in treaty shopping, states’ fiscal autonomy is limited, and governments tend to maintain lower tax rates."[9]

See also


  1. ^ Thompson, Alexander. "Multilateralism, Bilateralism and Regime Design" (PDF). Department of Political Science Ohio State University. Retrieved 23 September 2013.
  2. ^ "Canada country brief - September 2010". Department of Foreign Affairs and Trade. Retrieved 3 June 2011.
  3. ^ [1] Oxford Journal
  4. ^ "BBS Reports, December 2013" (PDF). Retrieved 16 July 2017.
  5. ^ Cha, Victor D. (9 January 2010). "Powerplay Origins of the U.S. Alliance System in Asia". International Security. 34 (3): 158–196. doi:10.1162/isec.2010.34.3.158. S2CID 57566528. Retrieved 16 July 2017 – via Project MUSE.
  6. ^ Cha, Victor D. (Winter 2009–10). "Powerplay Origins of the U.S. Alliance System in Asia". International Security. 34 (3): 158–196. doi:10.1162/isec.2010.34.3.158. S2CID 57566528.
  7. ^ "Why is There No NATO in Asia? Collective Identity, Regionalism, and the Origins of Multilateralism" (PDF). Archived from the original (PDF) on 10 January 2020. Retrieved 16 July 2017.
  8. ^ [2] Archived 5 October 2016 at the Wayback Machine, Ikenberry G. John. "American Hegemony and East Asian Order." Australian Journal of International Affairs, Vol. 58, No. 3, pp. 354-355, September 2004.
  9. ^ Arel-Bundock, Vincent (1 April 2017). "The Unintended Consequences of Bilateralism: Treaty Shopping and International Tax Policy". International Organization. 71 (2): 349–371. doi:10.1017/S0020818317000108. ISSN 0020-8183.