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Forms of Countertrade

Those companies who have engaged in countertrade seem to agree that it is not as efficient as the free market, multilateral system. It certainly is complex, risky, and sometimes costly. Clearly, many exporters, especially smaller companies, will not be able to use countertrade effectively. Nevertheless, those who can use it will find countertrade to be a rational and practical approach to difficult international economic circumstances, such as restrictions on foreign exchange, protectionism, structural limitations, and other external market risks.

Countertrade contracts vary from deal to deal and from customer to customer. Their form and content are limited only by the imagination of the parties involved. Some contracts involve only the exporter and its customer. Others involve third or even fourth parties in other countries. Coun-tertrade contracts may entail payment entirely in goods or services or payment partly in goods and services and partly in cash. The cash portion may be denominated in the currency of the buyer or in that of the exporter. Moreover, a contract may require additional services beyond the mere delivery of goods to be performed either by the exporter or by the buyer. The many variations of countertrade can be discussed under several broad headings:


  

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