Tugas Resume General Agreement On Tariffs and Trade Halaman 1-14

Mata Kuliah : Export-Import

Kelompok 3 :
- Khofifah 22001081008
- Arif Gian Saputra 22001081010
- Juned Farhan 22001081079
- Ahmad Dahyat Alifan 22001081279
- Moch. Amiruddin Al Baihaqi 22001081175
- Dea safrillia 22001081038
- Sultan Nur Fanaul Akbar 22001081083

One of the most important achlevements of international economlc co-operation

in the early post-war perlod, was the dlsmantling of the tangled web of bilateral
payments arrangements which had been constricting and distorting interna-
tional trade since the early 1930s.Thls permitted the effectlve multllateral liberallzat-
lon of international trade within the GATT, and the unprecedented growth in world
trade that followed. In recent years, however, there has been evidence of a rise in
commercial arrangements with a barter content whlch are reminiscent of the lnter-war
bilateral agreements.
The report is in two parts. Part I descrlbes the dlfferent forms of countertrade
and addresses some of the empirlcal and economlc lssues lnvolved. Part II examines
the consistency of various countertrade practices with the General Agreement and
9ome of the codes supplementary to it.
The word countertrade initially entered the commercial vocabulary to describe a
range of bilateral trade practices which became common ln East-West trade in the
1970s.
transactions in East-West trade had evolved in foms which used money in thrce ways:
(a) as a means of pricing goods (in the customary way), (b) to provide finance to
one or both of the parties during the transaction period, mad (c) as outright paym-
sot, to cover any differences io the exchange value of imports and exports.
"countertrade" is that there bas xlxost always been an element of necessity be -
hind such transactions, in the eease that at least one party has believed that if it had
refused to take goods in place of money the deal would have falled through.
There appear to be three more or less distinct types or groups of countertrade
transactions, differing from each other principally in relation to the nature of the goods
traded, the extent to which the trade flows offset ooe another and the length of time
needed to complete both trsnsact{ons. The first type is closest to the traditional pure
barter, aod will be here referred to as "classical" barter. It involves.
Counter-purchase transactions these transactions in practice take five years or
more to complete. There are two agreements in its implementation, the first is a stan-
dard sales contract that cannot be used in normal foreign trade transactions
The Second can take many forms of goods ranging from 'standard' contracts simi-
lar to the type of merchandise. , quantity, quality and price are all specified, for a gen -
eral commitment to purchase any item among the items that may be in stock. Gen-
erally stipulates that the value of the second transaction is a certain percentage of the
first transaction and provides a pricing formula (such as "international price recog -
nized at the time of purchase"). for government purchases of military equipment and
commercial aircraft, where the private company selling these items agrees to “offset”
a portion of the costs to the purchaser by (a) purchasing or producing components for
these items on the local market (b) purchase components for other related products,
not included in direct sales (c) agreeing to purchase directly, or find a buyer for, a
range of local products unrelated to the military or aircraft industries
The third broad category of countertrade, known as buybacks, involves paying in
products that stem from the initial sale -buyback transactions are generally different
from buybacks because the amounts involved are much larger and the contract period
is longer (10 to 20 years).
The history of clearing arrangements has been that bilateral trade imbalances
frequently arise and can prove impossible to eliminate even over protracted "account -
ing" periods. This is called switch trading. Being ad hoc in nature, it is properly a form
of countertrade, but it arises as a result of the existence (and malfunctioning) of com -
prehensive bilateral payments arrangements.
Circumstantial evidence suggests that countertrade has grown considerably in re-
cent years. In the Eastern trading area, trade with industrial countries has always in-
volved some counter-purchases, but the requirements have apparently become more
rigid since the mid-1970s and the share of counter-purchase has tended to increase.
In the trade of developing countries, counter-purchase is a very recent phenomenon.
Only a few countries have imposed counter-purchase requirements in any systematic
way, but several are alleged to be proceeding selectively (e.g. in motor vehicles trade)
and unofficially.
While most observers would agree with this outline of recent trends, considerable
disagreement exists about the current magnitude of countertrade. For example, in
1983, estimates of the proportion of world trade accounted for by countertrade ranged
from 1 per cent (by the IMF) to 40 per cent." Countertrade transactions are not distin-
guished separately in foreign trade statistics and up to now have not been subject to
any reporting requirements in developed countries.
Counter-purchase and Buy-back: It is generally agreed that these two types of
countertrade have taken place mainly in the context of industrial country's trade with
the Eastern trading area and developing countries. Recent estimates of the OECD and
the Economic Commission for Europe, based on their own surveys and the work of
other researchers, place the proportion of countertrade in East-West trade at around
15 per cent.
Based on the given information, it can be concluded that the proportion of counter -
trade in global merchandise trade is in the range of 3 to 8 percent. Some types of
countertrade transactions discussed include buyback and repurchase agreements, as
well as "classic" barter, which is commonly found in developing countries. In the con -
text of buyback agreements, this represents a maximum of 3 percent of world trade.
Meanwhile, "classic" barter in East-West trade is estimated to be no more than 4-1
percent of global trade.
In the "offset" arrangement, there are two categories of trade that involve counter-
trade. The first category is the sale of large commercial aircraft to government-owned
airlines, which is estimated to account for only h percent of world trade. The second
category is countertrade often occurring in the export of military equipment, but this
proportion is very small in national trade statistics. Arms trade is estimated to be
around 2 percent of total world trade in 1981.
Taking all these factors into account, the estimate for the proportion of counter-
trade in global merchandise trade reaches 8 percent. However, it is important to note
that this figure represents the maximum limit, and the actual proportion could be
much smaller. The larger estimates mentioned in some sources possibly include trade
flows under bilateral payment arrangements within the East Trading Area (ETA) and
some developing countries. However, intra-ETA trade accounts for only 5 percent of
world trade, and the International Monetary Fund (IMF) estimates that bilateral clear-
ing arrangements among IMF members now represent less than h percent of world
trade, while arrangements between developing countries and the East Trading Area
might add another maximum of 1 percent. Therefore, the actual proportion of counter -
trade is likely to be lower, ranging from 3 to 8 percent of world trade.
The three groups of countertrade transactions just described, while differing in
some respects from each other, all share the characteristic of being ad hoc (mone-
tized) forms of barter, related to «a specific transaction. A State-run common clearing
account (usually at the central bank) is established in each country, say A and B. Im -
porters in country B of goods from A pay their obligations in local currency into the na-
tional clearing account, which can then be drawn down to pay exporters in B of goods
to A. International currencies may be used for accounting purposes, as a 'clearing
unit'. In such circumstances, a third party will sometimes take over the purchasing
obligations of the surplus
country as part of a countertrade deal with that country. This is called switch trading.
Being ad hoc in nature, it is properly a form of countertrade, but it arises as a result of
the existence (and malfunctioning) of comprehensive bilateral payments arrange-
ments.
A related argument is that countertrade can allow a country to obtain a higher
price for its exports than would otherwise be possible. It has been suggested that in
lending to countries with a poor credit rating, repayment in goods can be less risky
than that in hard currency.
Countertrade has also been used as an instrument of industrial policy, to favour par -
ticular industries or the export sector generally. Finally, in some countries there may
be administrative or political reasons for engaging in countertrade. This applies in par -
ticular to non-market economies, where countertrade may be favoured (a) as a device
to facilitate long-term economic planning, or (b) as a means by which Foreign Trade
Organisations can exceed their budget allocations. Economic effects
Bilateral trading practices give rise to two sorts of cost. First, there is the cost
derived from restriction of choice. By tying import and export transactions, it becomes
impossible to choose the cheapest source of supply and the most profitable outlet, ex-
cept in the unlikely event that they happened to coincide.
The original exporter may simply undertake to try to find buyers for any
goods produced by the country concerned. He will normally charge the country an im-
plicit marketing fee, but from a global perspective this mainly represents a transfer of
income from the country to the firm, rather than a cost, because marketing expendi-
tures would be incurred anyway.
From this lower extreme, the costs of countertrade begin to escalate when any of
the following features are present: (a) high 'coverage ratios' (the value of the import
commitment expressed as a proportion of the value of the initial export transaction);
(b) large penalties for non-compliance; (c) restrictions on resale or use of traders; (d)
regional limitations on marketing; (e) short transaction periods; and (f) unpredictability
of the final requirements themselves.
At the upper extreme, where all these features are present, the costs of coun -
tertrade could become so high as to virtually bring a country's trade to a standstill, es -
pecially if it refused to accept the consequences of its actions for the terms of ex -
change. Of course, the private firms involved in futile negotiations will waste resources
as well. Nevertheless, it should be recognized that where access to the multilateral
trade and payments system is inhibited by rigid exchange controls and overvalued ex -
change rates, certain countertrade practices may naturally emerge as a second-best
solution, allowing some additional trade to take place and improving economic wel-
fare.
The most important distinction between the two is that countertrade (counter-
purchase and buy-back) is generally imposed unilaterally on foreign private firms,
which can choose to sell their goods elsewhere if they find the conditions too onerous.
(This in itself is a check on how onerous these conditions can become.) Bilateral pay-
ments arrangements, in contrast, can only be made to work by regulating trade in
both countries. To prevent the imbalances which inevitably arise in any two countries'
trade, traders must eventually be constrained to buy and sell in particular markets.
The restriction of choice is much greater under these pure forms of bilateralism than
in countertrade, and discrimination becomes essential.