The basic characteristic of countertrade transactions is that in compensation arrangement, the price of the technology or equip

Countertrade is a sale that encompasses more than an exchange of goods, services, or ideas for money. In the international market, countertrade transactions are those transactions which have as a basic characteristic linkage, legal or otherwise, between exports and imports of goods or services in addition to, or in place of, financial settlements. Historically, countertrade was mainly conducted in the form of barter, which is a direct exchange of goods of approximately equal value between parties, with no money involved.
      However, such straightforward barter transactions, which were quite frequent in the 1950’s, are less often used today, because it is difficult to find two parties prepared to make a simultaneous or near simultaneous exchange of goods of equivalent value.
      Increasingly, participants in countertrade have resorted to more sophisticated versions of exchanging goods that often also include some use of money. One such confinement of simple barter is the counter-purchase, or parallel barter agreement. In order to unlink the timing of contract performance, the participating parties sign two separate contracts that specify the goods anal services to be exchanged. Frequently, the exchange is not of precisely equal value, therefore some amount of cash will be involved.
      Another common form of countertrade is the buy-back, or compensation arrangement. One party agrees to supply technology or equipment that enables the other party to produce goods with which the price of the supplied products or technology is repaid. These arrangements often "include larger amounts of time, money, and products than straight barter arrangements."
     Another form of more refined barter, which tries to reduce the effect of bilateralism and the immediacy of the transaction, is called clearing account barter. Here, clearing accounts are established to track debits and credits of trade. The entries in the account merely represent purchasing power, however, and are not directly withdrawable in cash. As a result, each party can agree in a single contract to purchase goods or services of a specified value. Sometimes additional flexibility is given to the clearing account by permitting switch-trading, in which credits in the account can be sold or transferred to a third party.
      A final form of barter arrangements is called offset. These arrangements are most frequently found in the defense-related sector and in sales of large-scale, high-priced items such as aircraft and were designed to "offset" the negative effects of large purchases from abroad on the current account of a country.
      With the increasing sophistication of countertrade, the original form of straight barter is probably the least-used form today. Most frequently used is the counter-purchase agreement.
      Increasingly, countries are deciding that countertrade transactions are more beneficial to them than transactions based on financial exchange alone. Even firms in industrial countries view countertrade as an excellent mechanism to gain entry into new markets. When a producer believes that marketing is not its strong suit, particularly in product areas that face strong international competition, countertrade is seen as useful. The producer often hopes that the party receiving the goods will serve as a new distributor, opening up new international marketing channels and ultimately expanding the original market.