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For decades, free trade agreements (FTAs) and large regional trade blocs have been the hallmark of global economic integration. From the European Union’s single market to NAFTA (now USMCA), from ASEAN’s free trade framework to the African Continental Free Trade Area (AfCFTA), the dominant narrative was clear: bigger is better when it comes to trade agreements. The more countries included, the greater the efficiency gains, the smoother the supply chains, and the wider the market access. But recent geopolitical shifts, rising protectionism, and the weaponization of trade have raised a provocative question—are we moving into a post-FTA world where bilateral deals dominate?

The Declining Appetite for Mega-FTAs

The early 2000s saw a boom in FTAs and regional trade deals, with the World Trade Organization (WTO) even predicting a “spaghetti bowl” effect due to overlapping agreements. However, several trends have started reversing this momentum:

Political backlash against globalization has intensified in both advanced and developing economies, fueled by fears of job losses, deindustrialization, and income inequality.

Security concerns now influence trade more than efficiency metrics. Countries are scrutinizing supply chains for strategic vulnerabilities, as seen in the US CHIPS and Science Act, which aims to localize semiconductor manufacturing.

Mega-deals stalling—such as the Trans-Pacific Partnership (TPP) losing US participation, or the RCEP being ratified without enthusiasm in certain sectors—reflect diminishing political appetite for broad, binding commitments.

Why Bilateral Deals Are Gaining Ground

Bilateral agreements give countries the flexibility to customize terms without the complexity of multi-country negotiations. They allow for:

1. Targeted concessions—Instead of making uniform commitments to multiple nations, partners can selectively open sensitive sectors while protecting others.


2. Strategic alliances—Countries can align trade with diplomatic and security priorities, evident in India-UAE CEPA or US-Japan trade arrangements.


3. Faster negotiation cycles—Large multilateral FTAs can take a decade or more; bilateral deals can be struck within two to three years.

The US, once the primary driver of multilateralism, has shifted toward transactional bilateralism under both the Trump and Biden administrations. The EU, traditionally a champion of multi-country FTAs, is increasingly pursuing bilateral pacts with strategically important economies rather than large new regional frameworks.

The WTO Paralysis and the Bilateral Pivot

A key structural factor pushing the world toward bilateralism is the near-paralysis of the WTO’s dispute settlement system. With the appellate body effectively non-functional, enforcement of multilateral rules has weakened. Without a strong global referee, trust in large-scale multilateral agreements has eroded, making direct, enforceable bilateral pacts more attractive.

Economic and Strategic Implications

A bilateral-dominated world would fundamentally reshape global trade patterns:

Fragmentation of trade norms—Instead of uniform rules, countries will face a patchwork of commitments, raising compliance costs for exporters.

Geopolitical leverage—Major economies will use bilateral deals to reward allies and pressure rivals, turning trade into a diplomatic tool rather than purely an economic one.

Erosion of global supply chain efficiency—Regional agreements encourage integrated production networks; bilateralism may lead to duplication and inefficiencies as firms adapt to different sets of rules for each market.

The India Example

India’s trade policy over the last five years shows this shift vividly. After exiting RCEP in 2019, India has preferred targeted bilateral agreements such as CEPA with the UAE, ECTA with Australia, and negotiations with the UK and Canada. The reasoning is clear: control over sensitive sectors like agriculture, dairy, and data privacy is easier in bilateral talks.

However, this also means India risks missing out on wider regional value chains that mega-FTAs facilitate. For example, RCEP members enjoy preferential access to one another’s markets, potentially reducing India’s competitiveness in Southeast Asia.

Is This Really the End of FTAs?

It might be premature to declare FTAs dead. Large regional blocs like the EU, ASEAN, and AfCFTA continue to deepen integration. But their success now seems to depend more on political alignment than on pure economic efficiency.
In reality, we may be entering a hybrid era—where bilateral deals dominate the headlines, but a few strong regional FTAs continue to anchor trade in politically aligned regions.

The Road Ahead

If current trends hold, the future will likely see:

A proliferation of bilateral and “minilateral” deals (small groups of like-minded countries).

Sector-specific agreements—covering digital trade, green technologies, and strategic minerals—replacing broad, all-encompassing FTAs.

Trade as a geopolitical instrument—with tariffs, exemptions, and bilateral concessions linked to strategic partnerships rather than purely market forces.

The age of the “mega-FTA” may indeed be fading, not because free trade as an idea has failed, but because trust, security, and politics have overtaken economics as the primary drivers of trade policy. In this environment, bilateralism offers governments control and speed—advantages that are hard to ignore in a fractured world.

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