Page 20 - Countertrade

Fisher Controls International, a subsidiary of Monsanto,
counterpurchased ball bearings and chair frames to be sold in Western
Europe in a countertrade opportunity for control valves sold to Romania.
This countertrade purchase activity set Fisher apart from its competitors,
and enabled it to be awarded the contract.

Counterpurchase Components

• Counter purchase is a reciprocal buying agreement. It occurs

when a firm agrees to purchase a certain amount of materials in
future back from a country to which a sale is made.

• The volume of the trade does not have to be equal (may be
covered by cash)

• Countertrade is covered by two separate contracts.

• Countertrade is more flexible than barter

• Under one of the contracts, the sale of goods between an exporter
and importer is negotiated and paid for in a specified currency. The
second contract obligates the exporter to purchase goods from the

importer at a specified value over a period of time. Unlike
buybacks, counter purchases involve hard currency.