In the last 5 years there has been tremendous growth in the tendency of joining bilateral agreements in the multipolar world. Recent example of PTA (preferential trade agreements), FTA (Free trade agreement like India Australia), currency swap agreements like India- UAE etc shows countries moving towards bilateralism. The slow advancement of the multilateral trading system has led to a wave of preferential trade agreements (PTAs) in Latin America and the Caribbean resulting in a web of bilateral and plurilateral PTAs, with countries both within and outside the region.

In this line ,  In this particular essay we will discuss the trends in international multipolar order , Also we will highlight the reasons for countries’ preference to bilateral agreements , then we will comment on the importance of multilateralism, India’s stand in multilateral regimes and ways for promoting multilateralism for sustainable development.

Understanding terms : Base for sailing through discussion .

Bilateralism and multilateralism are two types of foreign policy coordination among countries. Bilateralism is having a matching arrangement on each of two sides, meaning that two countries cooperate with each other on specific issues or interests. Multilateralism is the  process of organising relations between groups of three or more states. meaning that more than three countries cooperate with each other on general principles or goals.

For example, the United States and Canada have a bilateral trade agreement called the United States-Mexico-Canada Agreement (USMCA), which replaced the North American Free Trade Agreement (NAFTA). This agreement is between the United States, Canada, and Mexico and covers trade and investment between the three countries. On the other hand, the World Trade Organization (WTO) is an example of a multilateral organisation that deals with the rules of trade between nations. It has 164 member countries and provides a forum for negotiating and monitoring trade agreements. In summary, bilateralism involves direct negotiations and agreements between two countries, while multilateralism entails engaging multiple nations through international organisations and forums.

First and most important,  Bilateralism allows for faster negotiations as there are only two parties involved, which can be particularly useful in urgent situations. For example, in 2022, India and UAE negotiated a Comprehensive Economic Partnership Agreement (CEPA) in just 88 days.

Another one is ,In a bilateral context, each country has greater control over the outcome of negotiations and can tailor agreements to their specific needs. For example, in 2019, Japan and the United States negotiated a trade agreement that included provisions on digital trade and agricultural products that were specifically tailored to their respective interests. On the same line India and Japan are also involved in the technology transfer and some investment models in railway connectivity .

Another reason is, bilateralism  allows countries  to avoid the red tapism and time consuming decision-making processes associated with multilateral institutions. For example, in 2019, the United States withdrew from the Paris Agreement on climate change, citing concerns over the agreement’s nature that might hurt its economy. But in 2020, the United States started discussion with India for sustainable energy use and tackling climate change. That shows the bilateral agreement is more easy than multilateral ones.

Next important reason is  similar political ideologies . such as a desire to strengthen ties with a particular country or to address specific security concerns. For example, in 2019, India and the United States signed a defence agreement aimed at strengthening their military cooperation. Further, India’s relation with the UK is driven by the ideology of democracy, while China- Russia relations are driven by Socialist principles .

Another most important reason is pragmatic economic benefits. Bilateral agreements can provide economic benefits for both parties involved. For example, in 2018, China and Japan signed a currency swap agreement that allowed them to settle trade in their own currencies rather than relying on the US dollar. India’s free trade agreement with Australia, Rupee-Dirham agreement with UAE are some of the examples. The Rupee-Dirham pact will help to promote investments and remittances between the two countries.

And the next important reason is the issues in multilateral regimes and pressure from some particular powers . Some countries may turn to bilateralism if they feel that multilateral negotiations are not making progress on important issues. For example, in 2019, India pulled out of the Regional Comprehensive Economic Partnership (RCEP) negotiations, citing concerns over the lack of progress on issues such as tariff reduction and market access.

Negative Impacts of Bilateral regimes : Lost hopes 

But the above discussion is only one side of the coin,  there are several negative impacts of growing  bilateral agreements. First and most important is Fragmentation of the global trading system where countries prioritise their own interests over that of the global community. This can lead to increased protectionism and reduced cooperation between countries. The 2020-21 USA-China trade war shows this phenomenon .

Next is Bilateral negotiations can often result in unequal negotiating power, particularly between developed and developing countries. This can lead to agreements that favour the stronger party and disadvantage the weaker party. It can also lead to prolonged negotiations. India-EU Free Trade Agreement negotiations is an example. The negotiations broke down in 2013 and now it’s now resumed in 2022.

Another most common negative impact is Increased transaction costs and reduced transparency . Negotiating and implementing bilateral agreements can be costly and time-consuming, particularly for smaller countries with limited resources. China’s trade relations with  African countries particularly after 2015 shows such a trend. Also it opened up the chapter of China’s Cheque book diplomacy and this had a negative impact as we can see the condition of Sri Lanka under Chinese debt trap.

Above points cumulatively underlines the role and effectiveness of multilateral institutions such as the World Trade Organization (WTO), which are designed to promote global cooperation and reduce trade barriers. Its main function is to ensure the smooth and free flow of global trade. The WTO administers agreements, handles trade disputes and monitors country-specific trade policies while training and cooperating with developing nations and other international organisations .

Multilateralism : Way for world sustainability and development .

Multilateralism promotes a level playing field by ensuring that all countries, regardless of their size or economic power, have an equal say in the rules and regulations that govern global trade. For example, the WTO’s most-favoured-nation principle ensures that all members receive equal treatment in terms of tariffs and trade policies. Also the UN system provides a democratic system that gives voice to each and every smaller country for its own sustainable development .

Multilateralism encourages cooperation between countries by promoting dialogue and negotiation. This can lead to the development of mutually beneficial agreements that promote sustainable development. For example, the Paris Agreement on climate change was negotiated through multilateralism and encourages countries to work together to reduce greenhouse gas emissions.

Multilateral institutions provide a platform for collective action on global issues such as poverty reduction, health, and environmental protection. For example, the United Nations Sustainable Development Goals (SDGs) provide a framework for countries to work together to achieve sustainable development. Also World bank groups support developing and underdeveloped countries giving extremely positive results .

Multilateral institutions promote transparency, accountability and ways for a peaceful world by providing a forum for civil society and other stakeholders to participate in decision-making processes. For example, the WTO allows non-governmental organisations (NGOs) to participate in its meetings and provides regular updates on its activities to the public. UNO, WHO, G-20, BIMSTEC etc work for a more equitable world by bringing countries with different competence and different approaches together.

In the changing dynamics of cyber security,  AI, Climate Change etc. It is imperative to have a multilateral strong hold . Take the example of India’s stand against cyber attack by using the G 20 forum and SCO shows how multilateral regimes are also important for human development. Multilateralism provides greater certainty and predictability for businesses and investors by establishing clear rules and regulations that govern global trade. This can reduce uncertainty and encourage investment in sustainable development projects. Not only sustainable economy but sustainable ecology , sustainable humanity and global values system.

India’s context for a multilateral world for sustainable development.

Historically  India has been a strong advocate of multilateralism and has been actively involved in various multilateral institutions such as the United Nations, World Trade Organization, and World Health Organization. India has played a leading role in promoting South-South cooperation through initiatives such as the India-Africa Forum Summit and the International Solar Alliance.

India has been a vocal advocate for reforming the United Nations Security Council to make it more representative and reflective of current global realities. India has also been actively involved in negotiations on climate change through multilateral platforms such as the Paris Agreement and has committed to reduce its greenhouse gas emissions.

India has played a significant role in promoting regional multilateralism through initiatives such as the South Asian Association for Regional Cooperation (SAARC) and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). The ongoing presidency of G-20 by India shows how we see multilateral arrangements as a way for sustainable human development.

Finding golden means for world’s sustainable development : effective use of bilateral plus multilateral regimes .

It is important to acknowledge that both multilateralism and bilateralism have their own strengths and limitations. While multilateralism allows for greater cooperation and consensus-building among multiple nations, bilateralism can provide more focused and tailored solutions to specific issues in a swift manner. Multilateralism can be particularly effective in addressing global issues such as climate change, health pandemics, and disarmament. For example, the Paris Agreement on climate change is a multilateral effort that involves 196 countries.

Bilateralism can be effective in addressing issues that require a more targeted approach, such as trade and investment agreements. For example, the United States-Mexico-Canada Agreement (USMCA) is a bilateral agreement that replaced the North American Free Trade Agreement (NAFTA).

Next, It is important to build partnerships between multilateral and bilateral efforts to ensure that they are complementary and not in conflict with each other. For example, bilateral groups can be invited on multilateral platforms to share their experiences and expertise. So that, a partnership between multilateral and bilateral groups can be fostered.

Ultimately, finding a middle path between multilateralism and bilateralism requires a commitment to dialogue and cooperation among nations. This can involve regular consultations, joint initiatives, and shared responsibility for addressing global challenges. For example, the Quad (comprising India, Japan, Australia, and the United States) is a platform for dialogue and cooperation on issues such as maritime security and regional stability. We should take the best of both worlds and work towards the betterment of the global community.