Bilateral agreements are not the same as trade agreements. The latter relates to the reduction or elimination of import quotas, export restrictions, tariffs and other trade barriers between states. In addition, the rules governing trade agreements are defined by the World Trade Organization (WTO). Some regional trade agreements are multilateral. The most important was the North American Free Trade Agreement (NAFTA), ratified on January 1, 1994. Nafta quadrupled trade between the United States, Canada and Mexico from 1993 to 2018. The U.S.-Mexico Agreement (USMCA) came into force on July 1, 2020. The USMCA was a new trade agreement between the three countries, negotiated under President Donald Trump. Bilateral trade liberalization has implications for the offshoring of higher-cost goods and services, as well as the disadvantages of diversion of goods and services from countries, which seems to be more beneficial than multilateral trade liberalization. As we see the real problem of WTO negotiations in the context of multilateral agreements, many developing nations are discriminated against and protective tariffs are absolutely necessary for their economic success. But liberalisation is expected to reduce tariffs in the near future.
Following the April 2006 negotiations, the federal government and the European Committee put forward a counter-proposal for developing countries to reduce their tariffs more than advanced countries, which would put them at a disadvantage. These nations need tariffs because they are an effective instrument for promoting industrial development (Frankfurter Rundschau, 2006) The third advantage is that it normalizes trade rules for all trading partners. Businesses save court costs because they follow the same rules for each country. On the other hand, bilateral agreements are not bound by WTO rules and do not focus solely on trade-related issues. Instead, the agreement generally targets specific areas of action that aim to strengthen cooperation and facilitate exchanges between countries in certain areas. One of the practical advantages of bilateral agreements (EEA) is that they are faster and easier to negotiate than multilateral agreements, since only two parties are involved in bilateral negotiations. In addition, bilateral free trade agreements are an important driver of trade liberalization, even though multilateral agreements are more important. As noted in the example that has allowed Australia and New Zealand to become a single economy in terms of substance; Australian New Zealand Closer Economic Relation Agreement (ANZCERTA). This has had a major influence on New Zealand`s export volumes to Australia, from 14 per cent in 1983 to 20.5 per cent in 2004. Since 1990, trade between the two countries has increased by an average of 9-10% per year. That is why both countries have really benefited from this free trade agreement. The main difference between multilateral and bilateral free trade agreements is the number of participants.