Multilateral Trade involves trade agreements or negotiations among three or more countries, typically through international organizations like the World Trade Organization (WTO), aimed at promoting free trade and reducing trade barriers across multiple nations. Bilateral Trade involves trade agreements between two countries, focusing on mutual trade benefits and concessions tailored to their specific needs.
Aspect | Multilateral Trade | Bilateral Trade |
Number of Countries | Involves three or more countries (e.g., WTO agreements, regional trade blocs like ASEAN). | Involves only two countries (e.g., India-USA Free Trade Agreement). |
Scope | Broad, aiming for global or regional trade liberalization with standardized rules. | Narrow, focusing on specific trade terms between the two nations. |
Negotiation Complexity | More complex due to multiple stakeholders with diverse interests. | Simpler, as it involves only two parties with clearer objectives. |
Trade Barriers | Reduces barriers across multiple countries, promoting wider market access. | Reduces barriers only between the two countries, limiting market scope. |
Examples | WTO agreements, Regional Comprehensive Economic Partnership (RCEP). | India-Japan Comprehensive Economic Partnership Agreement (CEPA). |
Benefits | Greater market access, economies of scale, and harmonized trade rules. | Customized agreements, faster negotiations, and targeted trade benefits. |
Challenges | Consensus-building is difficult; benefits may be diluted across many nations. | Limited scope; may lead to trade diversion from non-partner countries. |
Multilateral Trade: India participates in the RCEP, involving 15 Asia-Pacific countries, to reduce tariffs and enhance trade. Bilateral Trade: India and Australia sign the Economic Cooperation and Trade Agreement (ECTA) in 2022 to boost trade in goods like textiles and agriculture.
Case for Free Trade
The act of opening up economies for trading is known as free trade or trade liberalisation. This is done by bringing down trade barriers like tariffs. Trade liberalisation allows goods and services from everywhere to compete with domestic products and services.
Globalisation along with free trade can adversely affect the economies of developing countries by not giving equal playing field by imposing conditions which are unfavourable. With the development of transport and communication systems, goods and services can travel faster and farther than ever before. But free trade should not only let rich countries enter the markets, but allow the developed countries to keep their own markets protected from foreign products.
Countries also need to be cautious about dumped goods; as along with free trade dumped goods of cheaper prices can harm the domestic producers.
Two batteries of emf's \(3V \& 6V\) and internal resistances 0.2 Ω \(\&\) 0.4 Ω are connected in parallel. This combination is connected to a 4 Ω resistor. Find:
(i) the equivalent emf of the combination
(ii) the equivalent internal resistance of the combination
(iii) the current drawn from the combination
Four students of class XII are given a problem to solve independently. Their respective chances of solving the problem are: \[ \frac{1}{2},\quad \frac{1}{3},\quad \frac{2}{3},\quad \frac{1}{5} \] Find the probability that at most one of them will solve the problem.