Page 22 - Countertrade

Many MNEs establish or help local firms to build manufacturing plants in
the importing nation. Offset trading as stated,is associated with joint

ventures, licensing, or turnkey arrangements and is used to offset the
negative effects of large purchases on the balance of payments of the
importing country.

Offset trading can be divided into two main categories direct and
indirect.

Direct offset occurs when some components of the item sold are

manufactured within the buyer’s country and that the seller agrees to
buy those components to use them in-house.

Indirect offset when the buyer requires the seller to enter into a long
term industrial or other co-operation and investment, but which is not
related to goods supplied by the seller.