CFA Level I · CFA Level I Exam · Introduction to Geopolitics
An analyst argues that a major regional power's refusal to join a multilateral trade pact, in favor of bilateral deals with individual partners, is most likely to:
Bilateral deals most likely strengthen the larger power's bargaining position relative to each partner. Negotiating one-on-one lets its economic size dominate, whereas a multilateral pact would let smaller states combine their influence. Competition between the parties would continue rather than disappear.
- AIncrease the power of smaller states to jointly set common rules
- BStrengthen the bargaining position of the larger power relative to each partnerCorrect
- CEliminate competition between the power and its trading partners
Explanation
In bilateral negotiations a large economy faces one partner at a time, so its relative size gives it more leverage. Multilateral pacts, not bilateral deals, let smaller states pool influence. Bilateral deals do not remove competition.
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