Bilateral trade
Topic: International Trade: Patterns, Ports and the WTO · NCERT: Class 12, Ch 8 "International Trade"
Meaning
Bilateral trade is trade between two countries under an agreement to exchange certain goods with each other. For example, country A may supply a raw material, and country B supplies a specified item in return. The terms are set only for those two partners. This helps them secure supplies and markets, especially when money or foreign exchange is short.
Example
In the Soviet era, India and the USSR traded under a rupee–rouble deal. India sent goods such as tea and textiles. In return it got machinery, oil and defence equipment, and the two countries settled payments without using US dollars.
Don't confuse with
- Multilateral trade: this is trade with many countries at once under common rules, such as those of the WTO.
- Most Favoured Nation (MFN): this rule, GATT Article I, says any trade advantage given to one WTO member must be given to all members. It does not allow special two-country terms.