Barter trading or countertrade: tie-in sales
There are two broad categories:
Where the price of one transaction is conditioned by terms of other transactions between the seller and the buyer
It follows that in such sales the price is not the sole consideration. Such tie-in sales represent a situation wherein the price is subject to a condition or consideration. Thus the provisions of Article 29.1(b) of the Code apply. Examples are given in the Interpretative Note thereto in Annex 23 to the CCIP.
Caution must be exercised to ensure that application of these provisions is not extended beyond the intended purpose.
|If a seller grants a…||the fact that a…||does not…|
|quantity discount calculated on the quantity or the monetary value of a single order||buyer qualified for the discount by placing an order consisting of a number of different items, none of which of themselves would have qualified for the discount||represent a situation where the provisions of Article 29.1(b) would apply.|
Where condition or consideration relates to the sale of the goods
It includes what has commonly been termed as ‘countertrade’.
Countertrade is taken to mean transactions in which sales to a country are intimately linked to sales from that country, although, in some instances, sales from yet another country can be involved. Countertrade is essentially a mechanism for paying for goods in international trade through the exchange of products for products. In some instances, countertrade can involve the exchange of services for products and vice versa.
Countertrade provides a means by which a country can obtain required goods from foreign sources and at the same time maintain balanced trade flows by ensuring export sales of its own products - counter products. Countertrade may involve the full or partial payment for an imported product in the form of products produced in and exported from the importing country, rather than payment in currency. Frequently, however, payment for both transactions will be in currency.