Countertrading

Counterpurchase and buy-back are commercial transactions through which the seller agrees as part of his contractual obligations to purchase goods and services from the buyer up to an agreed percentage of his deliveries. In buy-back the object of primary transaction being machinery, equipment patents, know-how or technical assistance that will be used to set up production facilities for the buyer. The parties agree that the seller will subsequently buy from the buyer products produced in those production facilities. As in counterpurchase, both flows of products are paid for in money, and the value of the products bought back may be lower than, equal to or higher than that of the products of the primary transaction.

Countertrade, of which barter is one form, is heavily practised by developing and East European countries. It is estimated to countup to 10% of world trade. The process has taken very different legal forms and developed in a very uneven fashion from one region of the developing world to another.