Distinguish between bilateral trade and multilateral trade. 

Bilateral Trade

Multilaterial Trade

(i) Bilateral trade is the exchange of commodities between two countries.

(ii) Here only commodities are exchanged e.g. one country providing raw materials and the other manufactured goods in exchange.

(iii) Here commodities of two countries are complementary.

(iv) This type of trade is possible only to a limited extent for certain commodities.

(i) Multilateral trade is the exchange of goods or services among a number of countries.

(ii) Here goods and services are bought or sold in terms of values.

(iii) Here raw materials, finished goods and services all becomes items of trade. The trade is not complementary but supplementary.

(iv) This type of trade is trade based on has no limit for same commodities only.