Countertrade

Summary of Countertrade

A commercial arrangement in which the buyer pays for his purchases, wholly or partly, with something other than money. Very often countertrade deals include some cash, but a significant portion of the transaction is settled with commodities or services. Countertrade has been employed heavily and successfully in trade arrangements with communist nations and countries of the Third World, where shortage of foreign exchange might otherwise preclude trade. Countertrade arrangements are structured in many forms, each known by a specific name. For details on the various countertrade options, see Barter, Buy-Back, Clearing, Compensation Deal, Counterpurchase, Swapping, Switching.

(Main Author: William J. Miller)

Countertrade and the GATT Policy Negotiations

In relation to the GATT Policy Negotiations, Christopher Mark (1993) provided the following explanation and/or definition of Countertrade: An international commercial agreement in which a buyer pays for purchases wholly or partly with something other than money. Countertrade transactions can take various forms:

* Counterpurchase contracts obligate the foreign seller to purchase from the buyer goods and services unrelated to the goods and services sold.

* Reverse countertrade contracts require the importer to export goods equivalent in value to a specified percentage of the value of the imported goods.

* Buyback arrangements obligate the foreign seller of a plant, machinery, or technology to buy from the purchaser a portion of the subsequent production during a specified time period.

* Clearing agreements between two countries stipulate that each signatory is required to purchase certain amounts of each other’s products over a specified period using a designated “clearing currency.”

* Switch trading involves a purchaser in one country assigning to a seller in another country an obligation due from a third party as compensation for goods purchased.

* Swap schemes involve parties exchanging equivalent goods at different locations to minimize transportation costs.

In the United States

For information about Countertrade in the context of international trade, click here

Countertrade in International Trade

Meaning of Countertrade, according to the Dictionary of International Trade (Global Negotiator): All foreign trade transactions resulting from exporter’s commitments to take products from the importers or from their respective countries in full or part payment for their exports. Countertrade is typical of trade with developing countries, which often suffer from a lack of foreign exchange and/or credit facilities. Countertrade transactions include barter, buy-back or compensation, counterpurchase, offset requirement and swap. See respective terms.

Resources

See Also

Further Reading

• Information about Countertrade in the Encyclopedia of World Trade: from Ancient Times to the Present (Cynthia Clark Northrup)

Countertrade and the Laws of International Trade

In the United States: The Webb-Pomerene Act of 1918 and the Export Trading Company Act of 1982

Export Trade Companies and the Export Trade Certificates

Hierarchical Display of Countertrade

Trade > Trade > Trading operation

Countertrade

Concept of Countertrade

See the dictionary definition of Countertrade.

Characteristics of Countertrade

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Resources

Translation of Countertrade

• Spanish: Comercio de compensación
• French: échange compensé
• German: Kompensationshandel
• Italian: Scambio di compensazione
• Portuguese: Trocas compensadas
• Polish: Handel kompensacyjny

Thesaurus of Countertrade

Trade > Trade > Trading operation > Countertrade

See also

• Animal production
• Farm animal
• Dairy production
• Domestic animal
• Game animal
• Poultry
• Breeding animal
• Live animal
• Rabbit
• Livestock farming
• Pasture fattening
• Animal breeding
• Free-range farming
• Apiculture
• Fattening
• Zootechnics
• Indoor livestock farming
• Poultry farming
• Sericulture
• Intensive livestock farming

• Three-way trade