Offset agreement

The term barter (English: offset or: offset agreement) are in the business referred to trade financial statements in which a product must not only be paid for with money, but is paid wholly or partly with other goods or services in the course of an offsetting transaction. Compensation transactions are now mainly engaged in import - export business common when the business partner or partner countries are financially weak or weak currency. A variant of such swap transactions domestically through a multilateral pool is also called barter trade (s: barter transaction) respectively. Other typical terms are counter business or association business.

Compensation transactions in foreign trade

Compensation transactions are often settled in foreign trade, in order to avoid or to keep it balanced the balance of trade foreign exchange problems. In the ideal case goods are exported with the same value abroad are imported from there like in return. Supporting the economic and trade ministries and often convey such compensation transactions that are defined by the term barter ( barter goods for goods ).

Besides, many different companies can be involved, as part of a compensation business exchange their goods in the cross-border movement of goods. However, this is not the moneyless barter, but it will for simplicity quite settled all transactions between the various parties involved in money value. Ultimately, however, to compensate abroad to specific companies the purchase of products of these companies the money back flow from the sale and delivery of goods.

Compensation transactions with countries with weak currencies can open up new markets. These countries are then able, for example, to import industrial products and export raw materials in return. In addition to the associated opportunities, there are also risks, eg when falling commodity prices or in the marketing of the goods received in compensation path. Therefore, there is also offsets specialized trading company.

The exchange of real goods between trading partners makes up about 5 percent of total world trade of $ 6 trillion, that is 300 billion USD.

Compensation transactions with securities

A barter for securities is a trade in which purchases and sales can be offset within a bank without involving an exchange.

In Germany, banks have voluntarily submitted to the stock exchange constraint, so they usually go with all securities purchases and sales on the stock exchange. Such compensation transactions may therefore be exceptional at the express request of a customer.

Compensation transactions at arms

A special case are compensating, counter or offset transactions ( in English and Industrial Participation) in the field of armaments. Buy a State for a larger amount at a company from another country, compensation (offset liability) is often due. This need not be provided in the contract, but may be regulated in a law that works like " Terms and Conditions ", and sometimes can lead to surprises when an inexperienced provider. The claim for compensation of large procurement contracts is common in most states, responsible is often the Ministry of Economy and not the Department of Defense. It can be defined ( as a% of armor business, 30 to 130% is common), punishment for non-compliance, duration and type of approved compensation transactions, as well as official control authority in law or contract scope.

A distinction is made between direct and indirect participation, the former is called direct manufacturing investment in the armaments (ie provision or licensed production, etc. of the product that is purchased ), the second are general orders to the industry of the buyer country. With multiplication " factors " is sometimes trying to promote individual sectors specifically. Example: A job for the defense industry of the buyer country is 1.4 provided with the " factor " in order to give an incentive to promote this industry of their own country.

What are " eligible compensation " goods depends on the objectives of economic policy within the buyer country. In Europe, there are usually high-tech industrial goods, no products from agriculture, mining, services, commodities, financial products, etc. In less industrialized countries may be the focus on general employment -generating investments.

Failure to meet the compensation obligation within the prescribed period usually leads to heavy fines of up to about 15% and this usually solves the obligation not definitively from. Also, the debtor risks to become blacklisted.

There are specialized companies for the settlement of the offsetting transactions, these usually require a single-digit percentage of the total sum as commission business and then try systematically to generate the necessary value. Also, there are web-based platforms and other tools where companies with offset obligations can search for a counter- partner to satisfy the debt.

If two offset obligations ( the industry) of two states off against each other ( for example, by application of two companies, each with a debt in another country), one talks of a " swap " of commitments.

The State political justifications for offset transactions vary by state, but usually it is an instrument to obtain know-how or value for their own country. This sometimes for domestic political reasons to strange events. Compensation transactions have nothing to do with nepotism or corruption, although comes close sometimes dangerous in third world countries, this. Most services, agricultural and mining products are excluded because their sustainability is limited.

Contrary to the general ideas of a liberal world trade is observed compensation in recent years an increase in the desire for (even in disguise ). This also applies to European countries. The reasons are probably to be found in the fears of the loss of technology and jobs with large foreign orders.