Governments’ Attitudes Toward Countertrade

Consistent with their commitment to a nondiscriminatory trading system, many countries are opposed to government-mandated countertrade because it distorts the free flow of trade and investment. Yet, they do not publicly discourage firms from engaging in countertrade (U.S. ITC, 1985; U.S. Office of Management and Budget, 1986). The U.S. policy on countertrade was developed

1 Comments

The Bofors-India Countertrade Deal

Bofors AB is a Swedish company that specializes in the manufacturing and sales of weapon systems such as antiaircraft/antitank guns, artillery, and ammunition. The Indian government concluded an agreement with Bofors AB for the purchase of 410 FH77B howitzers ($1.3 billion) in 1986. The FH77B howitzer is a powerful, highly mobile artillery system. It

Offsets in U.S. Defense Trade

Offsets in defense trade encompass a range of industrial compensation arrange­ments required by foreign governments as a condition of the purchase of defense articles and services from a nondomestic source. This mandatory compensa­tion can be directly related to the purchased defense article or service, or it can involve activities or goods unrelated to the

1 Comments

Capital Sources for Export-Import Businesses

Capital needs to start the business or to finance current operations or expansion can be obtained from different sources. Internal financing should be explored before resorting to external funding sources. This includes using one’s own resources for initial capital needs and then retaining more profits in the business or reducing accounts receivables and inven­tories

1 Comments

Private Sources of Export Financing

In many export transactions, the buyer is unable or unwilling to pay for the goods at the time of delivery. This means that the seller has to agree to payment at some future date or that the buyer should seek financing from third parties. The seller may seek financing from the buyer or third

2 Comments

Tadoo’s Sales to Belgium

Tadoo Inc. is a chemical company incorporated in the state of Tennessee and engaged in the production and sale of various chemical products used to kill harmful insects or strip leaves from trees. Since the company was established, in 1980, it has generated gross sales of more than $60 million, largely from sales in

Export Credit Agencies (ECAs) in Various Countries

ECAs differ in their goals, magnitude, and types of services. All offer medium- and long-term credits. They also provide other products and services such as short-term export credits, let­ter of credit guarantees, and bond unfair calling. (see Table 14.1). Two areas in which ECAs differ are their mission and their organizational structure. Some emphasize

1 Comments

Export-Import Bank of the United States (Eximbank)

The Eximbank was created in 1934 and established under its present law in 1945, with the aim of assisting in the financing of U.S. export trade. It was originally established to finance exports to Europe after World War II. Eximbank’s role in promoting U.S. exports is likely to be more significant now than in

2 Comments

Small Business Administration in International Trade

The Small Business Administration (SBA) also provides a few programs for U.S. export­ers. The SBA Act defines an eligible small business as one that is independently owned and operated and not dominant in its field of operation. To qualify for the programs, applicants must meet the definition of a small business under SBA’s size

1 Comments

Overseas Private Investment Corporation (OPIC)

The Overseas Private Investment Corporation (OPIC) is a wholly owned U.S. government corporation that supports American private investment in developing nations and emerging market economies. OPIC programs are presently available for new and expanding businesses in some 150 countries worldwide. The program has generated positive net income for every year of operation since its

1 Comments

Private Export Funding Corporation

The Private Export Funding Corporation (PEFCO) is a major source of capital for intermediate- and long-term fixed-rate loans for U.S. exports. It acts as a supplemental lender to traditional sources by making loans available for foreign purchasers of U.S. goods and services. PEFCO is a private corporation owned by banks and industrial and financial

1 Comments

U.S. Department of Agriculture

The U.S. Department of Agriculture (USDA) provides financial support for U.S. agricultural exports through various programs, including the following: The GSM-102 program provides credit guarantees for up to three years and covers 98 percent of the export value and up to 2.8 percentage points of interest on the guaran­teed value. The GSM-103 program offers

1 Comments

Trade Finance for Small and Medium-Size Enterprises in Transition Economies

Primary and intermediate commodities continue to dominate the composi­tion of exports from the Commonwealth of Independent States (CIS): Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Russia, Moldova, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan. Such exports may not need elaborate long-term financial arrangements, unlike the high value-added exports from countries of Central and Eastern Europe. According to

2 Comments

Eximbank Financing: Selected Cases

1. Omni Helicopters International (OHI) of Brazil (Credit Guarantee) In December 2012, the U.S. Export-Import Bank (Eximbank) agreed to guar­antee financing to support the export of U.S.-made helicopters to Brazil. The Bank approved a final commitment to guarantee support for 85 percent of the U.S. content of the export, a portion amounting to $23.2

1 Comments

Export Licensing and Administration

Governments use export controls for a variety of reasons. Such controls are often intended to achieve certain desired political and economic objectives. The first U.S. export control was introduced in 1775, when the Continental Congress outlawed the export of goods to Great Britain. Since then, the United States has restricted exports to certain countries

1 Comments

Antiboycott Regulations

The U.S. antiboycott provisions of the Export Administration Act prohibits U.S. firms from participating in foreign boycotts or embargoes not authorized by the U.S. government. Even though this law was primarily aimed at the Arab boycott against Israel, it prevents U.S. firms from being used to implement foreign policies of other nations that are

1 Comments

Foreign Corrupt Practices

The U.S. antiboycott provisions of the Export Administration Act prohibits U.S. firms from participating in foreign boycotts or embargoes not authorized by the U.S. government. Even though this law was primarily aimed at the Arab boycott against Israel, it prevents U.S. firms from being used to implement foreign policies of other nations that are

1 Comments

Antitrust Laws and Trade Regulation

The Foreign Corrupt Practices Act (FCPA) of 1977 was enacted as a public response to the Watergate scandal of the early 1970s and to revelations of widespread bribery of foreign officials by U.S. companies. In the 1970s, Securities and Exchange Commission (SEC) in­vestigations revealed that more than 400 U.S. companies admitted making illegal payments

1 Comments

Incentives to Promote Exports

From the 1870s until 1971, U.S. exports typically exceeded U.S. imports, except during World War II. Even during this period, U.S. exports fell below imports because a substantial per­centage of the exports was not sold but provided to allies under the Marshall Plan. All this began to change in the 1970s. The United States

1 Comments

Export Trade Certificate of Review

1. Export Activities to Reduce Costs and Risks Export Trade Certificates of Reviews (COR) are issued by the Department of Com­merce (with the concurrence of the Department of Justice) and provide antitrust protection for certain specified export activities. Companies holding certificates can work together in the appointment of exclusive agents or distributors, the set­ting

1 Comments