Commerce & marketsen
Bilateral trade
Trade exchanges between two countries or economic blocs, often governed by a bilateral trade agreement defining market access conditions.
Definition
Bilateral trade refers to the exchange of goods and services between two countries or two economic blocs. It is distinguished from multilateral trade (involving multiple partners simultaneously) and constitutes the most common form of international trade relations.
Legal framework
Bilateral trade may be governed by:
- A bilateral free trade agreement (FTA)
- An economic partnership agreement (EPA)
- A trade and cooperation agreement (such as the EU-UK post-Brexit agreement)
- WTO MFN rules in the absence of a preferential agreement
Measurement and indicators
Bilateral trade is measured by:
- Total trade volume (exports + imports)
- Bilateral balance (exports - imports)
- Composition by product (comparative advantages)
- Trade intensity (partner's share in total trade)
Practical implications
Operators need to know the applicable bilateral framework to optimise their operations:
- Check for a preferential agreement allowing reduced duties
- Identify available bilateral tariff-rate quotas
- Comply with the agreement's specific rules of origin
- Monitor any trade defence measures between the two partners