Counterpurchases

Counterpurchases, also known as countertrade or offset, are a form of international trade where the seller agrees to accept goods or services from the buyer's country in partial or full payment for their own goods or services. This arrangement is often employed when a buyer has difficulty obtaining foreign currency or wishes to stimulate domestic industry.

There are several types of counterpurchases. Buyback is when a company sells technology, equipment, or a plant and agrees to purchase a certain percentage of the output produced by that technology or plant. In a switch transaction, a seller accepts payment in the form of transferable export credits, which can then be sold to a third party. Direct offset involves the seller providing goods or services directly from their own production, while indirect offset involves the seller facilitating the purchase of goods or services from third-party suppliers in the buyer's country.

Counterpurchases can offer benefits such as facilitating trade in situations with currency shortages, promoting economic development in the buyer's nation, and potentially leading to new markets for the seller's buyback goods. However, these arrangements can also be complex to negotiate and manage, may involve the seller in markets they are unfamiliar with, and can sometimes lead to the resale of goods at unfavorable prices. Their use is prevalent in sectors like defense, aerospace, and large infrastructure projects.