COUNTERTRADE

Trade in which portion or all of payment is made in goods or services, instead of paying a hard currency. Countertrade has three categories: barter, offset, and counterpurchase. Barter is the oldest countertrade agreement. It entails exchanging goods and/or services with the same value but without cash settlement. In offset agreement, the seller assists in marketing products manufactured by the purchasing nation or allows part of the assembly of the exported product to be carried off by manufacturers of that nation. While in counter agreement, the foreign seller agrees to purchase products or services from the purchaser’s country within a specified amount.