Bilateral relationships are crucial in international diplomacy, exemplified by the close ties between Australia and Canada. Both countries not only share a constitutional monarchy, with the same titular head of state, but they also boast similar political systems and cultural values. Their relationship dates back to the late 19th century, when Canada initiated diplomatic outreach with a trade commission established in Sydney by John Larke in 1895. The formalization of this bilateral relationship reached a significant milestone in 1935 when Canada appointed Charles Burchell as its first High Commissioner to Australia. As wartime allies, both nations have nurtured strong economic and trade links over the years, contributing to their mutual prosperity and security.
The historic bilateral relationship between India and Nepal is rooted in ancient history, extending back to before the birth of the Buddha. Official treaties during modern times, including the pivotal India-Nepal Treaty of Friendship signed in July 1950, have solidified these ties, enabling both nations to collaborate economically and politically. The treaty facilitated greater freedom of movement for citizens, allowing the populations of both countries to live, work, and engage in business without the usual restrictions of visas or passports. Additional agreements, such as the 2011 Bilateral Investment Promotion and Protection Agreement, have been instrumental in the evolution of international investment law, fostering economic opportunities and bolstering their longstanding relationship that transcends borders. The relationship is further strengthened by the presence of Gurkhas in the Indian Army and the substantial Nepali community residing in India.
In East Asia, the United States maintains a web of bilateral relationships, particularly with South Korea, Japan, and Taiwan. The establishment of formal alliances with these nations stems from strategic security concerns, with treaties such as the Security Treaty with Japan and the U.S.-South Korea Status of Forces Agreement highlighting this focus. Unlike the multilateral frameworks seen in Europe, particularly within NATO, the U.S. approach in East Asia is characterized by direct bilateral engagements. This method aids in avoiding potential conflicts that might arise from complex multilateral treaties and mitigates the risks of treaty defects. The geographical factors that separate East Asian countries, along with the varying political regimes and lack of a unified regional threat, complicate the establishment of multilateral alliances. Each country faces distinct challenges, making bilateral agreements more feasible.
The varying political landscapes and historical contexts also play a significant role in the U.S.' choice of bilateral relations in East Asia over multilateral approaches. As Victor Cha noted, while European nations were able to form a cohesive multilateral defense agreement rooted in a common threat—namely the USSR—East Asian countries present a divergent set of threats and regimes. The Republic of China and the Republic of Korea, for example, each contend with unique adversaries that hinder cooperation. This situation is exacerbated by U.S. decision-makers possessing a perception of an "inferior" Asian governance capacity for complex agreements. Such social perceptions have historically influenced U.S. foreign policy, contributing to a preference for maintaining direct control through bilateral pacts.
Cha's Powerplay theory adds another layer of understanding to the bilateral alliances formed by the United States in East Asia. This theory posits that these alliances were structured to contain potential threats from "rogue" allies, thereby preventing behaviors that might provoke larger military confrontations. In the context of post-World War II, the U.S. sought to prevent aggressive actions from leaders like Taiwan’s Chiang Kai-shek and South Korea’s Syngman Rhee, whose ambitions could destabilize the region. Additionally, the U.S. maintained a wary eye on the re-emergence of Japan as a dominant power post-war. This security architecture also aimed to enhance dependency on the U.S. economy among these nations, thereby reinforcing American influence in the region.
The U.S.-Japan alliance stands as a significant example of how these bilateral relationships functioned to stave off the expansion of communist influence in the Asia Pacific. In exchange for security guarantees, Japan and other countries in the region pledged support to U.S. diplomatic and military endeavors. This arrangement has been understood as a component of a wider American-centered postwar order aimed at containing communism. Moreover, the U.S. has historically engaged Panama through various bilateral agreements, commencing with the Hay-Bunau-Varilla Treaty, which granted the U.S. rights over the Panama Canal, and adapting over time to include treaties to ensure mutual interests, showcasing the adaptability and significance of bilateral relationships in international contexts.
History
The debate between bilateralism and multilateralism has deep historical roots and has evolved significantly over time. In the aftermath of the First World War, many politicians and scholars critically assessed the complex web of bilateral treaties that had been established prior to the conflict. They concluded that these agreements had inadvertently contributed to heightened tensions and, ultimately, the outbreak of war. As a result, there was a concerted effort to seek a more cooperative and inclusive framework for international relations, which culminated in the establishment of the League of Nations. Unfortunately, this multilateral endeavor faced numerous challenges and was ultimately disbanded after 26 years of struggling to maintain peace and cooperation among nations.
The economic turmoil of the Great Depression further fueled skepticism towards bilateral trade agreements. Critics argued that such agreements created a competitive atmosphere that led to a proliferation of tariffs. These tariffs, in turn, exacerbated the economic crisis by hindering international trade. The cyclical nature of this protective practice highlighted the risks of bilateralism in a global economy, leading to a shift towards multilateral frameworks post-Second World War. The establishment of the General Agreement on Tariffs and Trade (GATT) marked a significant development in promoting trade liberalization through a multilateral approach.
Despite the presence of prominent multilateral institutions like the United Nations and the World Trade Organization, a considerable amount of international diplomacy continues to be conducted through bilateral channels. This preference for bilateralism can be attributed to its inherent flexibility and simplicity, which often allows for quicker negotiations and more tailored agreements that accommodate the specific interests of the parties involved. In bilateral negotiations, power dynamics play a crucial role, as the stronger party can exercise significant influence over the terms of the agreement. This aspect can be appealing for powerful states, as they may find it easier to secure favorable terms in direct negotiations compared to the consensus-driven nature of multilateral diplomacy, which often involves compromises that may dilute their negotiating power.
In recent years, concerns have emerged regarding the impact of bilateral tax treaties. A 2017 study highlighted that while these treaties were designed to prevent double taxation and encourage foreign investment, they inadvertently led to complications such as tax avoidance strategies by multinational corporations. This phenomenon, referred to as "treaty shopping," allowed businesses to exploit discrepancies among countries' tax regulations to their advantage, further complicating the fiscal autonomy of individual states. Consequently, governments faced pressure to lower tax rates in order to remain competitive, thus undermining their ability to collect revenue effectively. This illustrates the complexities and unintended consequences that can arise from bilateral agreements in a globalized economy.