FORMS OF COUNTER-TRADE 1. BARTER: - Direct exchange of goods and/or services - A shadow price is determined for both prods/svces.

to calculate the quantitie s of these to be traded. Often short-term to guard against currency exchange fluctuations. - One contract for the whole transaction - Most often directly between Governments. 2. COUNTER-PURCHASE: 2 contracts, 2 sales, 2 deliveries of roughly equal amount Paid in cash Also called Parallel Trading or Parallel Barter

3. OFFSET: - Typically, Government purchases of expensive military equipment where the importing country reduces its cost by locally manufacturing/assembling part of the equipment. - The local component ( offset ) is usually not much more than 20% to 30% of the deal value./ 4. COMPENSATION TRADING (OR BUY-BACK ): - A country sells a manufacturing plant or power plant, but buys back all or part of its production - One contract for the whole deal. 5. COOPERATION AGREEMENTS: - Triangular deal where -for example- a US firm sells to a cash-strapped Eas tern European country that delivers the bartered goods to a Western European on e which, in turn, pays the US company. - Good for bulky, heavy goods -avoids transportation costs over large distanc es 6. HYBRID COUNTERTRADE: - Approval by of foreign investment by a Government conditioned to the commitment by the investing Co. to export all or most of its production 7. SWITCH TRADING: - A form of triangular trading also called Swap - Similar to Cooperation Agreementrs where the third party or intermediary is a specialized trading organization that usually buys the bartered goods a di scount for resale at a profit. - Sometimes they accept soft currencies as payment.