Global Financing Essay Example | Topics and Well Written Essays - 1000 words

Global Financing - Essay ExampleCountertrade is classified under v divergent pillowcases namely occupation, heel counter purchase, offset, switch trading and buyback. There are five distinct types of countertrade -- occupation, counter purchase, offset, switch trading, and buy back. Under this essay, we will focus on the meaning and the significance of distributively type in the international trade scenario.Barter can be defined as a straight off vary of goods and services, or both, between two parties without a money transaction. It involves exchange of goods for goods and does not involve cash payments or receipts. Although in theory barter appears to be the simplest arrangement, in practice it is not commonly utilise or practically implemented.It can be said that the expansion of bartering in the US is mainly because of barter companies or barter exchanges. According to popular estimates, there were roughly 600 barter exchanges among which 500 acted as clearinghouses for the exchange of goods and services between their clients and 100 were corporate trade brokers that exchange trade credits for assets, and goods and services so as to make it a part trade and part cash transaction. In a manner, barter dealers or barter exchanges facilitate a common platform upon which members exchange goods and services either by pure barter or through mixture of barter and cash. The barter exchange generates its profits from membership and renewal fees and from certain commissions which are based on a component of the gross worth of each operation. The fees usually range between 5 to10 percent. Under certain arrangements, some barter exchanges also consign a monthly administrative fee. The most significant purpose of a barter exchange is to foregather the needs of potential traders.Counter PurchaseCounter purchase is a form of mutual purchase agreement. It occurs when a firm agrees to purchase a certain tote up of materials back from a country to which a ba rgain is made. Typically, there will be two distinct contracts. One of them will relate to the sale of goods/services by the trading company for which it will be paid a specified amount of hard currency. The other form will require the trading company to spend some correspondence of this revenue to buy goods from a list provided by the importing country. The counter-purchase may vary in survey between 10 and 100% of the original export order. The imports bought require not be related in any way to the goods/services exported. Generally, there is a specific time period (normally three years) deep down which the counter-purchase must be made. Thus, in this form of counter-trading (unlike pure barter), exports only partly finance the purchase of imports. In fact, they simply help equilibrise costs on imports at a later date. In this manner, a counter-purchase transaction is not undertaken because of a lack of convertible currency or incapability to obtain credit. Nevertheless, it h as practically been used by planned economies as a tool for scheming foreign trade and ensuring that exports balance imports.OffsetOffset is similar to counter purchase since the exporter is required to purchase goods and services with an agreed percentage of the proceeds from the original sale. The main difference is that the exporter can fulfill this obligation with any firm in the country to which the sale is being made. Certainly, its importance appears to be growing fast. It involves an agreement under which an exporter integrate into his final examination product, along with certain components and