Types of Counter Trade

Types of Counter Trade

Counter trade is general term used to describe the reciprocal trade activities between two countries. Counter trade concept was primarily introduced to control the foreign exchange rate and to promote local industry.

1.    Direct  Offset

Under direct off set, one country export (sell) or raw material to other country, and purchase the finished goods from the other country. For Example selling raw cotton and purchasing cloth. This counter Trade lack flexibility.

2.    Indirect  offset

One country purchase good from the other country on condition that other country will make a long term investment in the first country. For example set up a factory by the second country in the first country.

3.    Switch Off

First country will sell any product or product to second country, and second country will purchase any product or products from the first country depending on the need. This trade is more flexible in nature and usually