Page 6 - Countertrade

Incidence and use of Countertrade

The proportion of countertrade in all international trade has remained
fairly constant over the years at about 30%. This figure is only an

approximation, as no country collects accurate statistics, but it is an
estimate agreed on by most experts in the field.

So, countertrade is an important component in international trade, is
practised world-wide, and exporters who neglect it are depriving
themselves of entry into new markets and expanding their exports to

existing markets.
The Australian Countertrade Association Ltd

Countertrade is a national response to environmental constraints and
market imperfections and is increasing in popularity.

Firms and nations use countertrade to:

1. Expand or maintain foreign markets,
2. Increase sales,

3. Solve liquidity problems
4. Build customer relationships/goodwill.
5. Overcome host country protection regulations
6. Repatriate blocked funds/clean-up bad debts
7. Obtain foreign contracts
8. Fund lower cost commodity source
9. Gain a competitive edge over competing suppliers.

Countertrade aids the growth of international trade. However, as in any
unconventional tactic, it is inevitable that there will be haggling over the
trades, which may lead to long, drawn-out negotiation until all parties are

satisfied.

Ultimately, the firms which do best with countertrade arrangements tend
to be the large diversified multinational enterprises who can use their
worldwide network of contacts and affiliates to (internally) dispose of
countertrade goods.