What is the definition of unilateral trade?


Unilateral trade refers to a trade arrangement between partner nations or organizations in which one of the partners benefits more than the other. It is based on trade agreements or policies in which one partner imposes terms and conditions on the other. Often, the more economically stable and empowered partner benefits more by designing and dictating terms of engagement, which are normally not equally beneficial to the weaker partner.

In most trade agreements, partner countries or trade blocks have the objective of expanding their trade and economic growth. Unilateral trade thus does not qualify as a trade agreement, based on its definition. Instead, unilateral trade enables the strategies, policies and actions of one partner country and allows it to expand its trade, market and economic powers at the expense of the other. In unilateral arrangements, the more economically powerful partner seeks to increase its exports to the economically weaker partner while restricting imports from the partner. The country restricting its imports benefits more from a unilateral agreement. The assumption by which weaker partners are exploited in unilateral trade is that free trade benefits both partners. That is, the actions of one partner are not perceived to harm the other in free trade.

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