Comprehensive information on barter trade

Barter Trade refers to the payment and settlement method of exchanging goods for goods, that is, goods are exchanged after pricing to supplement trade in which spot currency is insufficient. Barter trade between countries is also called agreement trade and requires the signing of a trade agreement and a payment agreement. Private barter trade includes compensation trade, and can also combine part of the spot exchange with part of the barter. Basic introduction Chinese name: Barter trade Category: Trade method Characteristics: Combination of export goods and imported goods of equal value Commonly used internationally: Definition of open letter of credit method, direct barter, comprehensive barter, introduction, characteristics, tax refund (exemption) Regulations, settlement definition, settlement methods, key points of settlement, two forms, direct barter, comprehensive barter, development of barter trade, development trends, main characteristics, operating principles, cases, barter trade, Sino-tin trade, Egypt's barter trade, behavioral choices, participants, transaction model, *** role, definition Barter trade refers to a trade method that directly combines export goods and imported goods of equal value on the basis of exchange. Traditional barter trade generally involves buyers and sellers exchanging goods of equal value. It does not involve monetary payment, and there is no third party involved. The two parties to the barter sign a contract that includes the mutual exchange of compensation goods, and the relevant matters are included. Sure. In international trade, barter is more commonly used through open letters of credit. Direct barter Direct barter is also known as general barter. In a strict legal sense, bartering means exchanging goods for goods. This form of direct barter often requires import and export transactions to be concluded at the same time. A transaction generally only involves the signing of a contract including the delivery of mutually compensated goods by both parties, and does not involve a third party. It is the most common and currently the most widely used form of barter. Comprehensive barter Comprehensive barter is mostly used for transactions between two countries based on accounting or payment (clearing) agreements. According to the signed payment agreement, the two parties will set up accounts in each other's banks. The banks of both parties will settle the foreign exchange based on the shipping documents and record the accounts in the other country's bank accounts, and then the banks will settle the foreign exchange within the agreed period. Settlement. Introduction Features Barter trade is relatively flexible in practice. For example, in terms of delivery time, imports and exports can be traded at the same time, or on a first-come-first-served basis; in terms of payment methods, payment can be made in cash or through account accounting. Offset each other from the accounts; in terms of transaction objects, the import object can be one person, while the export object can be another person designated by the importer, etc. Tax refund (exemption) regulations: The accounting of barter trade export sales is basically the same as self-operated export sales. However, in terms of foreign exchange settlement, barter trade generally involves mutual accounting and no foreign exchange is received. Export tax rebates for barter trade are mainly handled in accordance with the method of self-operated export tax rebates. Settlement definition: A form of trade in the form of goods transactions, settled at the end of each year according to the agreed settlement currency or other methods. There are many settlement methods, and the specific operation methods vary greatly and can be handled separately according to the actual situation of the trade. In practice, barter trade accounts for a large proportion of settlement through special accounts. Key points of settlement: 1. The approval of the barter trade from the foreign trade department and the customer's application form are required; review the relevant barter trade contract, and the contract should stipulate the scope of use of the account, term, interest accrual, and handling of differences; After consulting foreign banks in accordance with relevant regulations and obtaining confirmation, a special barter trade account will be established for the customer. 2. The scope of use of the barter special account is limited to the settlement of transactions and ancillary expenses stipulated in the contract, and corresponding business processing is carried out according to the same delivery conditions, specified payment methods and specified documents stipulated in the barter contract. Two forms of barter are mainly represented in the following two forms in international trade practice: Direct barter For parties who need to transport goods through transportation, since this form of barter generally requires import and export to be carried out at the same time, it is applicable There are difficulties. As a result, in actual business, some alternative practices have emerged, the most common of which is barter trade through open letters of credit. When bartering using a split letter of credit, the two parties to the transaction first sign an exchange contract. The two parties agree that each other promises to purchase a certain amount of the other party's goods within a certain time. The goods exported by each are priced in the agreed currency, and the total amount is consistent or basically the same. The payment for goods is settled by opening a split letter of credit, that is, both parties use the other party as the beneficiary and issue letters of credit with equal or substantially equal amounts.

Operating Principles In view of the shortcomings and difficulties existing in the internal operating rules of various barter companies around the world, according to the relevant provisions of the WTO on trade in goods and trade in services, the future global unified barter trade organization should follow the following general operating principles: 1. Follow the WTO The main principles of the multilateral trading system are to conduct non-discriminatory and freer trade, realize bilateral or multilateral trade through restraint, promote fair competition, and encourage economic development. 2. Comply with the trade regulations and tax regulations of various countries. 3. The principle of integrity. 4. The principle of market access. For the future global unified barter trade organization, each member's participation in barter trade must comply with the principle of national conditions and not violate the requirements of global trade liberalization. Through the specific commitments made by each member to participate in barter trade, it is ensured that the goods, investments, services, etc. of each member can compete fairly and freely within the members of the barter trade organization. 5. The principle of fair settlement of disputes. Once a trade dispute arises between members, the relevant trade dispute should be properly resolved through fair, objective, equal and friendly consultations. Case barter trade: a new and ancient way of trade. Barter trade. Since the second half of 2002, Egypt has been seeking to carry out barter trade with its trading partners in its foreign trade activities. Many Egyptian companies also hope to use barter. ways to conduct trade and project cooperation. For example, in the first half of this year, Egypt proposed that it hopes to import wheat through barter trade with Russia, Ukraine, Australia and other countries. Egypt uses citrus, phosphates, metallurgical products, etc. as barter items; Cotton Importers and Exporters Association, The Egyptian Broadcasting and Television Union has expressed the hope to conduct trade and project cooperation through barter trade (or settlement in Egyptian pounds). In June 2002, Bartercard Egypt was officially established in Cairo and joined Bartercard International (established in 1992 to serve small and medium-sized enterprises) headquartered in Australia as a member. China-Ceylon Trade In September and December 1952, China and Ceylon, based on their respective needs, signed a comprehensive trade agreement with the main content of exchanging rice for rubber. It was the first country to sign an independent trade agreement and established trade relations between New China and Ceylon, which promoted the rapid growth of trade volume between the two countries. In August 1957, when China and Tin Tin signed the second five-year trade agreement, faced with the problem of "overprice", Zhou Enlai proposed to negotiate trade and aid separately, that is, rubber trade should be based on fair market prices, but China would also give The concept of Ceylon's economic assistance brought the negotiations into a relatively smooth stage. The implementation and renewal of the Sino-Titanian trade agreement has opened up the gap in the US blockade and embargo against China from the direction of South Asia and Southeast Asia, and promoted the development of Sino-Titanian friendly relations. Barter trade in Egypt Today, when the financial industry is highly developed and currency is widely used as a general equivalent, the ancient trade method of barter trade has been reborn in Egypt. This is in line with the current economic situation, foreign exchange management system, and economic structure characteristics that Egypt is facing. and*** are closely related to factors such as the implementation of the foreign trade policy of "limited entry and rewarded exit". 1． Current status of economic development. The service industry plays an important role in Egypt's national economy. In recent years, service industry revenue has accounted for more than 50% of Egypt's GDP, of which tourism alone accounts for 11.2%. In foreign trade activities, Egypt's annual goods trade deficit is approximately US$10 billion. Its international balance of payments mainly relies on income earned from service trade such as tourism, Suez Canal transit fees, and overseas remittances. In the late last century, due to the excessive investment in real estate investment projects in Egypt, the excessive cost of large projects, and irregular bank lending, some structural contradictions and financial risks in economic development were gradually exposed, and the economy showed a downward trend. Under the attack of a series of events such as the turmoil in the Middle East, the "911" incident, the war on terrorism, and the United States' war with Iraq, Egypt's tourism and related service industries suffered heavy losses, which had a serious impact on the development of the national economy, and foreign exchange income increased significantly. Decline, international balance of payments imbalance, rising unemployment, shrinking market demand, and further intensified economic decline. 2. Foreign exchange management system and changes. Since the early 1990s, Egypt has implemented bold reforms to its financial system with the help of the International Monetary Fund: free foreign exchange convertibility under the current account and capital account; economic organizations and residents can freely open foreign exchange accounts; foreign exchange earnings Can be freely remitted abroad.

All commercial banks and foreign currency exchange offices carry out foreign currency exchange business based on the exchange rate determined by the central bank. The implementation of this measure once became an important symbol of Egypt's economic openness policy and good investment environment. However, since "911", due to the decline in foreign exchange income and the imbalance of foreign exchange supply, banks and foreign currency exchange offices have handed over the foreign currency purchased from the market, and the foreign currency selling business has been frozen, resulting in a situation where foreign currency has a market but no market, and only inflows and no outflows are possible. situation. Since the beginning of 2002, the Egyptian pound's freely convertible foreign currency system has existed in name only. At the same time, the foreign exchange black market (mainly the U.S. dollar black market) is actively trading, forming a pattern in which the black market and official prices coexist. *** Directly participate in the allocation of foreign exchange resources to ensure the import of key commodities and the use of foreign exchange by key enterprises. Generally, enterprises and residents can only purchase foreign exchange on the black market. 3． Industrial structure characteristics. The characteristics of Egypt's industrial structure determine that it must maintain necessary imports. Due to the rapid growth of Egypt's population and limited arable land, it is currently a country that cannot be self-sufficient in food. It spends a large amount of foreign exchange to import food every year to ensure the basic living needs of the people. For example, 4-5 million tons of wheat, 1 million tons of edible oil, and 400,000 tons of sugar are imported every year, accounting for about 55%, 90%, and 40% of total domestic consumption respectively. Among Arab countries, Egypt's industrial manufacturing level ranks at the forefront. The petrochemical, transportation, electric power, textile, clothing, pharmaceutical, food, steel, cement and other industries have achieved rapid development in recent years. Technology industries and others have established some assembly plants. But overall, the level of Egypt's processing industry is not high, the industrial system is not sound, and the raw materials and parts required for production mainly rely on imports. Egypt also basically relies on imports for the industrial equipment, instruments, instruments, etc. required for production. Behavioral Choices At present, although Egypt has more than 14 billion US dollars in foreign exchange reserves, under the long-term instability in the Middle East, it generally does not use this part of foreign exchange easily for the sake of long-term strategic and national economic security considerations and to cope with possible crises. . In the face of a shortage of hard currency, the main measures taken by Egypt *** to protect people's lives and develop the economy include: actively seeking foreign aid; strictly controlling the import of general consumer goods; actively expanding commodity exports and increasing sources of foreign exchange earnings. Due to factors such as Egypt's strategic position and regional political power, the United States, Europe, Japan and other countries provide Egypt with large amounts of aid every year. In early 2002, Egypt held a donor conference in Sharm el-Sheikh. The United States, Europe, Japan and other countries, as well as international and regional financial institutions, promised to provide Egypt with more than 10 billion US dollars in aid support in the next few years. However, the aid that donor countries can provide in a certain period of time must be limited. Some grants and loans come with certain conditions. For example, in 2002, the Egyptian government rejected a US$1 billion loan from the World Bank because the reform requirements proposed by the World Bank were beyond its ability to bear. After the United States launched the war in Iraq, the two sides conducted multiple rounds of negotiations on this loan, but never reached an agreement. In order to establish the image of a major country, Egypt maintains a certain scale in the use of foreign debt and gives priority to soft loans with low interest rates and relatively long repayment periods. In terms of restricting imports, Egypt adopts administrative means, financial means, tariff measures, anti-dumping measures, technical trade barriers, etc. to restrict imports, especially restricting the import of general consumer goods. For example, Egypt adjusts the allocation of foreign exchange resources through banks to ensure basic The import of daily necessities, industrial raw materials and parts, and the import of general commodities basically cannot obtain foreign exchange from banks; the Egyptian Bank requires consumer importers to provide 100% foreign currency guarantee when opening a letter of credit; the tariff on clothing has been significantly increased; the general consumer goods have been strictly implemented Inspections and sometimes deliberate delays in customs clearance, overestimating the value of goods, and making unreasonable difficulties result in increased costs. The sharp depreciation of the Egyptian pound was a measure forced by the Egyptian government. The implementation of this policy objectively inhibited imports. Since January 29, 2003, Egypt has abandoned its past exchange rate system of floating around the central price and implemented a free floating exchange rate system. At the same time, foreign exchange controls have been strengthened, requiring companies to sell 75% of their foreign exchange earnings to banks; hotels can directly collect foreign currency from foreign tourists for settlement without exchanging the foreign currency into Egyptian pounds in advance. Despite this, foreign currency transactions in banks and foreign currency exchange offices are still only in but not out. While restricting imports, we will increase export support. In addition to simplifying export procedures, Egypt *** also passed legislation in 2002 to establish an export incentive fund to subsidize exports. The fund increased from 400 million Egyptian pounds last year to 650 million Egyptian pounds this year.

However, due to the slowdown in world trade growth and Egypt's own resource conditions and output levels, the scale of export growth will be limited in a certain period. In this case, barter trade has become a realistic option for Egypt to maintain the development of its national economy. The biggest advantage of this method is that it can obtain the country's scarce resources without paying foreign exchange and at the same time expand Egypt's exports. It can be seen from the above situation that Egypt advocates barter trade for two reasons: first, in the case of shortage of foreign exchange, imports are required to meet the needs of people's lives and development of production, that is, demand-pull; Under the premise that demand exists, an exchange market condition is proposed to expand exports, that is, market interchange type. Therefore, even if Egypt's foreign exchange earnings increase in the future, *** will still use barter trade to expand exports. In practice, barter trade occurs in the following three situations: First, in order to ensure the supply of basic domestic items and undertake key projects, when foreign exchange is in short supply and loans are not available, barter is sought. Such as *** imported wheat, imported railway carriages, etc. In this case, *** will offer to help with the barter items. Second, under the current Egyptian foreign exchange management system, some entities in Egypt have investment capabilities and are willing to undertake projects and carry out technological transformation through imported equipment. The project can be approved by the government, but the government is not responsible for solving foreign exchange resources. These units have considerable Egyptian pound income every year, and the project units are willing to pay Egyptian pounds. In this case, the export enterprise needs to solve the problem of barter items by itself. Third, there are some transactions where part of the payment is paid in installments. For example, in a transaction, the two parties agree to pay 40% of the payment in U.S. dollars first, and the remaining part will be paid in Egyptian pounds on a revenue-sharing basis. In this case, small transactions are made between the exporter (or exchanged through the black market, but this is an illegal transaction and faces greater risks) and other enterprises, and only those who have established economic entities in Egypt Only in this way can units carry out trade. Some larger transactions ultimately require barter. The completion of a barter trade by participating entities may directly involve five interested parties: The provider of goods or projects and technical services, that is, the export enterprise; The recipient of goods, projects, and technical services, that is, the import enterprise; The provider of barter An economic entity that accepts barter goods and accepts payment from B in the currency of the country where enterprise B is located; An economic entity that accepts barter items and pays A in the currency of the country where enterprise A is located; An intermediary who represents the interests of Party A and pays B in the currency of the country where B is located Party collects the payment, pays the payment to C, and supervises C's performance of the transaction. Transaction model Depending on the difficulty of the transaction and the number of participants, barter trade manifests itself in two basic models, namely the casual barter trade model and the expanded barter trade model 1. Accidental barter patterns. During the transaction, both parties agreed that after A provides goods or services to B, B will provide corresponding goods as a means of payment (B's own goods or goods obtained from any third party); after A directly imports barter goods , as raw materials for the enterprise or its affiliated enterprises, or to realize its value after being sold by the enterprise or its affiliated enterprises in the domestic market. The transaction process can be described as: A→B→A. For example, a Chinese company A provides steelmaking equipment to an Egyptian company B, and B pays for the steel products. A is a comprehensive group enterprise, and its subsidiary, the real estate company, needs steel materials to build houses. This transaction model is an accidental cross-border barter-barter exchange. The premise for a transaction to occur is that both parties need each other's goods or services. The transaction process is completed directly by both parties in the form of use value, without involving any third party. 2. Expanded barter trade model. In practice, more often than not, it is a transaction model involving multiple parties. During the transaction, the two parties agreed that after A provides goods or services to B, B will pay C the corresponding payment in its own currency, C will provide the goods to D, and D will finally pay A the payment. The transaction process can be described as: A→B→C→D→A. For example, a Chinese company A provides 200 railway carriages to an Egyptian company B. The two parties agree to pay 50% of the payment in US dollars; the other 50% of the payment is in 250 yuan produced by Egyptian company C. Cars are bartered. A entrusts a Chinese company D, which specializes in the automobile business, to import cars from C and be responsible for sales, and pays the price to A in RMB. This transaction model is an expanded form of cross-border barter-barter exchange. The selection and value realization of barter goods require the participation of a third party, a fourth party or even a fifth party.

Its characteristics are: there are many transaction links, high transaction costs, and risks in delivery time, payment recovery interval, and quality of goods are difficult to control. In practice, this trading method may evolve into the following modes: M1 mode: A→B→D→A. During the transaction, the two parties agreed that after A provided goods or services to Party B, B would provide the corresponding goods for payment, and A would find party D to help it realize the value form of the goods, and then D would pay the payment to A. M2 mode: A→B→C→A. During the transaction, both parties agreed that after A provided goods or services to Party B, B would look for C according to A's requirements and provide the goods A needed. M3 mode: A→B→A→C→A or A→B→Z→C→A. During the transaction, the two parties agreed that after A provided goods or services to B, B would pay A (or Z) the corresponding domestic currency, and then A (or through Z) would purchase the goods it needs from C and import them to After being exported domestically, it will be supplied to A itself or its affiliated enterprises as raw materials or to realize its value in the domestic market. That is, B provides equivalents, and A (or Z) looks for C to better provide items that meet A's needs. M4 mode: A→B→A→C→D→A or A→B→Z→C→D→A. The first few steps of the transaction are similar to the M3 model. Later in the transaction, A needs to find D to convert the bartered goods into value form, and D will finally pay A for the goods. The role of *** Looking at the history of bilateral economic and trade exchanges between China and Egypt, we can see that in the 30 years since 1956, China and Egypt have been implementing bookkeeping trade under the leadership of ***: trade is controlled by both parties. The state-owned company performs annual accounting and liquidation. In this way, China imports a large amount of cotton from Egypt (not just long-staple cotton). It was not until January 1, 1985 that the two countries implemented spot exchange trade. The current barter trade method uses a single contract to negotiate barter conditions. Although this is very different from the past accounting trade, *** still plays an important role in the transaction process, as shown in: 1. *** Can facilitate transaction completion on a wider scale. There are many barter trade contracts, especially some large-scale trade contracts, which are proposed by ***, and both parties *** negotiate and assist in finding the barter party. In terms of the selection and value realization of barter goods, the importing party*** can help find barter goods that are easily acceptable to the other party in a wider range; the exporting party*** can help find items as payment items in a wider range The object of value realization. 2. The goods available for barter are generally bulk commodities, some of which are controlled by the government and require the government to provide corresponding preferential policies. Egypt is a country with relatively few resources. It is currently self-sufficient in oil and exports a little. Although natural gas reserves are large, they are still in the early stages of development. Although marble and granite have large reserves, they are all scattered private operations and the product quality is poor. Difficult to control, making bartering difficult. At present, the main commodities that can be bartered are: long-staple cotton, linen, small amounts of petroleum and petrochemical products, steel, assembled cars, gypsum, phosphates, citrus, etc. Most of these products are goods strictly controlled by *** and require policy support from *** when bartering. 3． In terms of payment, there are many practices that are quite different from spot trade, and some are even incompatible with current laws. This requires both parties to negotiate and make corresponding institutional arrangements. For example, in the M3 and M4 modes, if B pays A in its own currency, and A does not have an office or account in country B, it will be very difficult to collect the payment or pay the payment to C. Problems encountered in my country's trade and financial management system include: export foreign exchange collection issues, export tax rebate issues, etc. These all require *** to formulate corresponding management measures, especially the establishment of corresponding transaction mechanisms, including the establishment and functional positioning of Z; the establishment of dispute handling mechanisms. 4. Especially under the expanded barter trade model, since there are more entities participating in the transaction, this will inevitably lead to increased transaction costs, prolonged transaction cycles, and increased risks. *** Subsidies can be provided for some key businesses, or an insurance mechanism can be established to provide support for the exchange risk of currencies that may inflate during the transaction process and performance guarantees. Strengthen communication in the trading world.