Which Of The Following Is A Drawback Of A Countertrade Agreement

Counter-trade is a reciprocal form of international trade in which goods or services are exchanged for other goods or services and not for hard currency. This type of international trade is more common in developing countries where foreign exchange or credit facilities are limited. Counterpart trading can be divided into three broad categories: barter, counter-purchase, and clearing. In any form, counter-trade provides a mechanism for countries with limited access to liquid funds to exchange goods and services with other countries. Countertrade is part of an overall import and export strategy that ensures that a country with limited domestic resources has access to the necessary items and raw materials. In addition, it offers the exporting nation the opportunity to offer goods and services in a larger international market and promote the growth of its industries. One of the main advantages of counter-trade is that it facilitates the preservation of foreign currencies, which is a major consideration for countries in financial difficulty and an alternative to traditional financing that may not be available in developing countries. Other benefits include lower unemployment, increased sales, better capacity utilization, and easy entry into difficult markets. Barter is the oldest counter-trade agreement. This is the direct exchange of goods and services of equivalent value, but without compensation in cash. The exchange transaction is called a transaction. For example, a bag of nuts could be exchanged for coffee beans or meat.

A major disadvantage of counter-trade is that the value proposition can be uncertain, especially in cases where the traded goods have significant price fluctuations. Other disadvantages of counter-trade are complex negotiations, potentially higher costs and logistical problems. Counter-exchange transactions are often extremely complex and difficult compared to direct trading, especially if they involve transactions over time and complicated pricing mechanisms. Another name for a buyer is a(n) _____. These companies represent foreign companies that want to buy the products of another company. They look for the lowest prices and receive a commission for their work. In an ideal counter-transaction, a company receives goods that it can use internally or pass on to established customers. Companies considering adopting counter-trade obligations should create lists of products, goods and services that can be easily used or disposed of. Large chemical companies such as Dow Chemical Co. or companies that do a lot of external purchases, such as Union Carbide Corp., are particularly well placed to process counter-traded goods.

What is the U.S. government agency whose job it is to help fund the United States? Exports of products and services to support U.S. employment and competitiveness? Manufacturing companies must establish subsidiaries to settle counter-trade agreements or to use the services of commercial companies specializing in such activities. 1. The desire to conceal from the national public that the sale is made below its cost. This reason for counter-exchange is important for many developing countries and also for a number of communist countries 2. A counter-exchange transaction can provide additional security in an uncertain world. 3. Counter-exchange transactions allow secret updating in a phase of market weakness. OPEC countries have sold oil at a discount through counter-trade transactions without openly violating OPEC`s price preservation regulations. Faced with high unemployment and overcapacity, many companies in developed countries wanted to sell everything they could sell beyond their variable costs – provided that these sales did not disrupt their markets and normal price models.

In short, counter-trade allows price discrimination between customers. .