Forms of countertrade:
• Barter– Simplest form of countertrade, in which each party simultaneously swaps its products or services for
the products or services of other party
• Compensation Deal
– Semi-barter or simple compensation - importer makes part payment in cash and balance in goods or
services
• Counterpurchase (Parallel Barter)
– Two separate contracts specifying products to be exchanged
– One contract for payment of exported goods
– Second for exporter’s counter-purchase obligation with penalty for non-fulfillment
• Advance Purchase
– Exporter buys goods in advance from countertrading country before making exports to that country
• Buy-Back Agreement
– Also called compensation agreement
– One party exports production equipment, machinery, technology, or turnkey plant to another party -
the exporter buys-back part of the output as compensation
• Offset Agreement
– Used often in military-related or technology purchases (air crafts)
– Exporting firm permits certain portion of purchase to be produced or assembled in the importing
country - called direct offset.
– May take the form of co-production, licensing, subcontracting, or joint venture
– Indirect offsets do not relate to the purchase equipment - that is some other equipment is produced or
assembled in the importing country
• Clearing Accounts
– A refined form of barter done at government level on log-term basis covering broad range of products
– Clearing accounts established to track credits and debits of trades
– Balance in accounts over the long run
• Switch Trading
– Three or more parties required to complete countertrade transactions
One party not willing to accept all the goods or clearing credits received in the transaction
– Professional switch trader or a bank steps in and provides a secondary market for the goods or credits
using own network of firms and personal contacts
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