States with bilateral ties will exchange diplomatic agents such as ambassadors to facilitate dialogues and cooperations.
Since most economic agreements are signed according to the specific characteristics of the contracting countries to give preferential treatment to each other, not a generalized principle but a situational differentiation is needed.
[citation needed] Despite the high profile of modern multilateral systems such as the United Nations and World Trade Organization, most diplomacy is still done at the bilateral level.
In addition, disparities in power, resources, money, armament, or technology are more easily exploitable by the stronger side in bilateral diplomacy, which powerful states might consider as a positive aspect of it, compared to the more consensus-driven multilateral form of diplomacy, where the one state-one vote rule applies.
[citation needed] A 2017 study found that bilateral tax treaties, even if intended to "coordinate policies between countries to avoid double taxation and encourage international investment", had the unintended consequence of allowing "multinationals to engage in treaty shopping, states' fiscal autonomy is limited, and governments tend to maintain lower tax rates.