India Has Counter Trade Agreement With Which Countries

Finally, the counter-exchange company offers companies the opportunity to recoup profits. As you see in Chapter 15 “Understanding the Roles of Finance and Accounting in the Global Competitive Advantage,” some governments limit the amount of money that can come out of their countries. (Governments do this to obtain foreign exchange reserves.) Countertrade offers companies the opportunity to recoup profits through goods, not money. Trans-Pacific Partnership (TTP), signed by Member States but not yet ratified, and transatlantic trade and investment partnership (TTIP), currently under negotiation. The TPP comprises twelve member countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam, as shown on the map below. The TPP will cover 40% of global GDP2 and 33% of world trade. One of the reasons why companies get involved in this practice is that some governments impose counter-negotiation with very large businesses (over $1 million) or when the agreement is in progress in a particular sector. For example, South Korea imposes a counter-trade for the purchase of public telecommunications of more than $1 million. When governments impose matching obligations, companies have no choice but to oppose the sale of goods in that country.

This is an example of counter-commerce, especially counter-purchase. By introducing this requirement, the Indian government has been able to assist a local agricultural industry, thereby mitigating criticism of the entry of a foreign beverage company. A common market is a customs union in which the movement of factors of production between Member States is relatively free. Another example in which companies have traded goods and services instead of paying hard currency is Bharat Heavy Electricals Limited (BHEL), the largest producer of electricity generation facilities in India. BHEL wanted to get more orders from overseas. To do this, BHEL sought counter-trade opportunities with other state-owned enterprises. The company made a joint effort with an Indian mineral products trading company, MMTC Ltd., to import $1 billion worth of palm oil from Malaysia in exchange for the establishment of a hydroelectric project in that country. Malaysia is the world`s second largest producer of palm oil.

Given that India imports an average of 8 million tonnes of food oil per year, but consumes 15 million tonnes, food oil imports are valuable. Utpal Bhaskar and Asit Ranjan, “Bhel Looking at Counter-Trade Deals to Secure Overseas Orders,” Live Mint, May 11, 2010, recovered November 18, 2010, www.livemint.com/2010/05/11224356/Bhel-looking-at-countertrade.html. Air India and Indian (First Indian Airlines) have entered into sales contracts with Boeing Company, United States, Airbus, France, General Electric Company, USA – CFM International, France, for the supply of 111 aircraft/engines. In accordance with the agreement, STC has entered into agreements with these companies to implement and monitor these clearing/counter-trade commitments. The exchange means exchanging goods or services wholly or partially paid for by other goods or services, not money. However, a monetary valuation can be used in return for accounting purposes. The concept of bilateral trade is used for transactions between sovereign states. Outside Asia, free trade agreements have been concluded with Chile (2006) and MERCOSUR (2004). However, Indian parties participating in the counter-negotiation with Romania are now allowed to precede their exports to Romania from that country.