[LETTERS to the editor]Bilateralism better for trade
There has been intense debate over whether multilateralism or bilateralism is more effective in international relations. The debate is especially relevant to liberalization of trade. Multilateral-ism in trade means many nations set a single standard in trade, such as what the World Trade Organization has been pursuing. Bilateralism concerns trade between two countries, exemplified by free trade agreements. These two approaches are different in method but share a common goal: to further liberalize international trade. The general consensus is that multilateral trade is ideal and more effective in the long run, but the failure of the WTO in the past few years contrasts with the success of bilateral agreements.
Bilateralism has flexibility and ease that a multilateral system lacks; only two countries are involved, which makes it easier to reach an understanding and compromise. It is easier to liberalize sensitive sectors such as services and agriculture under bilateral trade since it can be more flexible. Agriculture is an especially sensitive sector that most countries want to avoid in multilateral talks, but when only a few countries are involved in decision-making, there are more possibilities to include agricultural goods. For example, the Asean Free Trade Area agreement includes agricultural goods in the list of free trading items. Bilateral trade is more efficient since it requires less time and effort to reach a consensus. In addition, bilateralism benefits both countries more than multilateralism.
Many countries are involved in multilateral talks, which entail more conflict and difficulty in reaching a standard agreement. The WTO reduced tariff rates significantly from around 200 percent all the way to 8 percent but its efforts with the Doha Development Agenda encountered a deadlock in 2006. In contrast, bilateral trade arrangements, such as FTAs, eliminate or further lower tariffs on both sides. This makes it cheaper to make goods available to a wider range of people. Also, FTAs encourage countries to export products in which they have a comparative advantage. For example, after the ratification of the Korea-Chile FTA, Korea imported from Chile cheaper copper, iron ore and other raw materials that are scarce in Korea. Both sides gain and enjoy economic benefits. This example shows that bilateral free trade results in a win-win situation for both parties.
Finally, bilateralism promotes further trade liberalization by encouraging more countries to engage in bilateral talks. Countries that are not parties of a bilateral agreement experience disadvantages because they cannot sell their goods as efficiently as those in bilateral agreements. This spurs more bilateral talks by countries left out of FTAs in order to receive equal benefits. After Nafta was ratified, Korea negotiated with the United States and signed the Korea-U.S. FTA. The European Union criticized this, claiming that the FTA would undermine the spirit of multilateralism. However, after this, Japan, China, and even the EU initiated free trade talks with South Korea. In sum, Nafta stimulated bilateral trade liberalization efforts in the Pacific. Therefore, bilateralism promotes more global trade liberalization. To sum up, compared to multilateralism, bilateralism is more effective in international diplomacy, especially with regards to trade.
Kim Yu-ri, student,
Daewon Foreign Language High School