What is "bilateralism"

1852, from bilateral + -ism.

n. 1 Having a matching arrangement on each of two sides. 2 The policy of having bilateral agreements between two countries (as opposed to unilateralism and multilateralism).

n. the property of being symmetrical about a vertical plane [syn: bilaterality, bilateral symmetry]

Bilateralism refers to the political, economic, or cultural relations between two sovereign states. It is in contrast to unilateralism or multilateralism, which refers to the conduct of diplomacy by a single state or multiple states, respectively. When states recognize one another as sovereign states and agree to develop diplomatic relations, they exchange diplomatic agents such as ambassadors to facilitate dialogues and cooperations that will be exchanged. It is an agreement that is affecting or undertaken by two parties; a mutual agreement.

Economic agreements, such as free trade agreements (FTA) or Foreign direct investment (FDI), signed by two states, are a common example of bilateralism. Since most economic agreements are signed according to the specific characteristics of the contracting countries to give preferential treatment to each other, not a generalized principle but a situational differentiation is needed. Thus through bilateralism, states can obtain more tailored agreements and obligations that only apply to particular contracting states. However, the states will face a trade-off because it is more wasteful in transaction costs than the multilateral strategy. In a bilateral strategy, a new contract has to be negotiated for each participant. So it tends to be preferred when transaction costs are low and the member surplus, which corresponds to “ producer surplus” in economic terms, is high. Moreover, this will be effective if an influential state wants control over small states from a liberalism perspective, because building a series of bilateral arrangements with small states can increase a state's influence.