Compensation Trade

Compensation trade in Global Commerce Policy

In this regard, compensation trade is: a trading arrangement whereby the supplier of raw materials, manufactures or services to a foreign enterprise agrees to be paid in the form of part of the output of that enterprise. For the buyer enterprise in question, the advantages are that it does not need foreign exchange to import production components, there is no need to make any repayments until the operation is up and running, and it has a ready market for some of its products. The entries on trade policy are here. It may, however, find that sometimes it will be competing against its own products if they have only a limited market, and that it has to make its products available to its suppliers at a discount. See also barter trade and countertrade.[1]

Compensation tradein the wold Encyclopedia

For an introductory overview on international trade policy, see this entry.

Resources

Notes and References

1. Dictionary of Trade Policy, “Compensation trade” entry (OAS)

See Also