Emerging Legal Challenges for Countertrade Techniques in International Trade

Abstract

Countertrade might generally be said to be a form of trade that involves the exchanging of goods or services, between buyer and seller, which are paid for, in whole or part, with other goods or services. The UNCITRAL Legal Guide on International Countertrade Transactions provides in Chapter I that: “Countertrade transactions covered by the Legal Guide are those transactions in which one party supplies goods, services, technology or other economic value to the second party, and, in return, the first party purchases from the second party an agreed amount of goods, services, technology or other economic value”. Countertrade, in modern times, appears in several variants, namely: barter, counterpurchase, buyback, switch trading, bilateral agreements, offset and build-operate-transfer (BOT). Although the concept of trading without using liquid cash or cash equivalents might seem a little anachronistic, the re-growth in countertrade in international trade is now an acknowledged fact. This is despite the falling away of the Eastern communist bloc. This begs the question as to what the impetuses are behind this continued renaissance. This article evaluates the emerging trends in countertrade and explores some of the new challenges faced by participants in countertrade.

Keywords: countertrade, international trade law