chapter  12
22 Pages

Countertrade

Countertrade is any commercial arrangement in which sellers or export­ ers are required to accept, in partial or total settlement of their deliveries, a supply of products from the importing country. In essence, it is a nation’s (or firm’s) use of its purchasing power as leverage to force a private firm to purchase or market its marginally undesirable goods or to exact other concessions to finance its imports, obtain needed hard currency, or acquire technology. Although the manner in which the transaction is structured may vary, the distinctive feature of such arrangements is the mandatory performance element that is either required by the importer or the import­ er’s government or made necessary due to competitive considerations (Verzariu, 1992; 1985).