INTERNATIONAL TRADE FINANCE LAW Essay Example | Topics and Well Written Essays - 3000 words

INTERNATIONAL TRADE FINANCE LAW - Essay ExampleBuy-back and the countertrade, are long-phase trade agreements with the reciprocal trade flows happening at varied phases of the period. Where readily viable credit facilities and readily acknowledged forms of money exchange are available, markets eschew inefficient and awkward countertrade transactions. However, due to governmental restrictions on operation of markets and due to international liquidity issues have motivated many nonmarket economies ( NMEs) and majority of the less-developed countries and industrially developed nations, to usher creative line transactions that bypass the normal exchange medium of contemporary markets2. It is estimated that about 25 to 30% of international trade are carried through unofficially by way of countertrade or barter system and various empirical evidence prove that whenever on that point is a financial or economic crisis, there is an increased practice of these kinds of trade. As per Agg arwal, government may persist on countertrade to safeguard or to chivvy the output of municipal industries. This kind of protectionism may kindle counter-purchase or offset deals which in turn may facilitate to purchase much required skills to develop the economy further. According to Lecraw, countertrade practices can be busy to override other guises of protectionists trade policies and finally the government policies which go about to balance and plan its foreign trade, may involve statutory countertrade3. From what has been mentioned above, this research essay, an earnest attempt will be made to find out the legal principles involved in the financing of countertrade transactions in the international oil and gas business with a particular emphasis to whether the present law is adequate to support business in this province with decided cases on the subject, in order to converse the issue adequately before coming to a conclusion. Legal Principles involved in Countertrade The l egal principles in the financing of countertrade transactions 1. Discrimination principle As per IMF estimates , the countertrade is presently employed by half of its parts and is viewed as a guise of exchange restriction and trade which is especially condemned in cases of debt rescheduling by a member nation as in the case of Romania in 1982-1983. In the countertrade , the export revenue will not be distributed fairly and hence there is a legal principle of discrimination exists in countertrade. 2. Protection of domestic industries The WTO Anti-Dumping Agreement states that Member nations may levy anti-dumping duties, where dumping is considered to create material damage to the domestic industry. countertrade is frequently said to be means of destabilising or evading anti-dumping law, because countertraded goods lack a translucent, arms-length export price. Hence , countertrade has the legal principle of offering no protection to domestic industries . 3. Consultation principle Cou ntertrade identical any other export or import transactions includes negotiation of disputes through alternate dispute mechanism like arbitration etc. 4. Stable basis of trade Countertrade helps to maintain permanent prices during the period of extreme exchange volatility and also helps to attain a stable export revenue for a nation. 5. Types of letters of credit framework of agreement obligations Letter of Credits are significant in countertrade transactions concerning parallel L/Cs and are also significant to make sure payment on