Section 1 : Overview Chapter 1: lntroduction 3 Chapter 2: Definitions lntroduction Barter Compensation agreeınents Counterpurchase Buy-back Advance cornpensation Offset Switch trading Cooperation agreements Bilateral agreements Clearing accounts International trading certifıcates (fTCs) Warehouse receipts Escrow accounts Evidence accounts Tolling Build-Operate-Transfer (BOT) Further reading 7 7 7 8 8 8 9 9 10 10 11 il 12 12 12 13 13 13 17 Chapter 3: Trends 19 Three ages of countertrade 22 Appendix: Countertrade regulations - regional examples 22 o 8 O 6 1 9 9 9 iii CONTENTS Section 2: Management, legal and financial issues Chapter 4: Countertrade management lntrcduction Countertrade risks Organising for countertrade Offering countertrade Accepting countertrade Countertrade intermediaries Countertrade insurance Export credit insurance Private-sector insurance cover 27 27 27 29 29 30 30 31 31 32 Chapter 5: Legal issues and contract drafting Basic defınitions Applicable laws Settlement of disputes Contract structure Relationships between contracts Performance of linked obligations and contract termination Content of countertrade contracts Filling contract gaps Further reading Appendix: Arbitration - resolving business disputes quietly Chapter 6: lslamic banking and countertrade: study Chapter 7: lnternational trade: payments and finance lntroduction Payment techniques and short-term credit Medium- and long-term finance Securities for payment and perforrnance Managing business payments Chapter 8: Export credit insurance Basic principles lnternational regulations Terms of cover Countertrade issues Build-Operate-Transfer (BOT) projects Appendix: Export credit guarantees companies - national examples 37 37 38 39 39 42 43 43 46 48 48 51 59 59 60 63 66 68 73 73 74 76 76 78 79 iv Section 3: Particular techniques Chapter 9: Counterpurchase 1 ntroduction Advantages of counterpurchase Counterpurchase and barter Counterpurchase structure Contents of counterpurchase agreernent Legal issues Chapter 1 O: Trading steel for oil: a countertrade dispute lntroduction Outline of events Court proceedings The decisi on of the courts Points of order 89 89 89 90 91 92 93 95 95 95 97 98 99 Chapter 11: Buy-back Uses Main features Advantages Variants Legal considerations Applicable law Contract categorics Contract structure Contract gaps Negotiating points 101 101 101 102 103 103 104 104 105 106 106 Chapter 12: Offset Categories Multipliers lnternational rules Negotiating and procedural issues Contract conditions Force majeure Arbitration Appendix 1: National offset rules - examples Appendix 11. Offset in Saudi Arabia Appendix 111. The UK Deferıce Export Services Organisation (DESO) 109 109 110 111 111 113 113 114 114 116 117 V CONTENTS Chapter 13: Build-Operate-Transfer (BOT) operations 121 Introduction 121 Basic structures 122 Privatisation programmes 123 Regulations 124 lnitiating a BOT project 125 Contract networks 125 Negotiations with the government 125 Key issues 126 Agreements between consortium meınbers 127 Forıning the project company 127 Lenders' requ i rernents 128 Agreements with contractors 128 Some key terıns 132 Further reading 132 Chapter 14: Countertrade in the construction sector 133 Nigerian refineries 133 Austro-Bulgarian trade 134 Brazilian power stations 135 A Franco-Soviet joint venture 136 Hungarian electricity 137 Section 4: Corporate and country studies Chapter 15: Corporate study: GKN 141 Chapter 16: Study: countertrade regulations in the Philippines 145 lntroduction 145 Objectives 145 Exernptions 146 PITC powers 146 Applying the policy 146 Contents of countertrade agreements 147 Perforınance of countertrade obligations 148 Credits for perforınance 148 Buy-back arrangernents 149 Offset deals 149 Further information 152 Contact details 152 vi CONTENTS Chapter 17: Study: industrial cooperation in lsrael lntroduction Commercial cooperation undertakings and crediting procedures Umbrella lndustrial Cooperation Agreements (UICA): basic principles Crediting policy Preference far lsraeli products and mandatory commercial cooperation Commercial cooperation undertaking UICA: operation Contact details 153 153 154 155 155 156 157 157 158 Chapter 18: Study: ACECO Further reading Contact details 161 165 166 Section S: Final observations Chapter 19: Conclusion 169 lnternational organisations 171 vii