In recent years the payment systems and the export credits between the East and West have been changed. The main payment systems in the beginning were those of barter, counter-purchase, and clearing account. But recently the buy-back system has emerge...
In recent years the payment systems and the export credits between the East and West have been changed. The main payment systems in the beginning were those of barter, counter-purchase, and clearing account. But recently the buy-back system has emerged in which the importing countries demand that the exporting ones take back the goods produced by imported skills and facilities.
At the same time the countertrade on an offset system has been popularized between the East and the West for mutual industrial cooperation.
Some additional predictions could be made concerning the future of the East and West trade relations, The more successful the economic policies in the East European countries will be, the less possibility of countertrade in general there will be between the East and the West. But one thing is clear : until their economic policies prove to be successful, the demand for the countertrade will increase continuously. In this respect, the countertrade between the East and the West is expected to be on the increase until the end of 1990s. This means that the aspects of the East-West trade will certainly be transformed from the present government-oriented political motives to the private-enterprise oriented marketing ones. This also means that the bilateral clearing account systems, which have been controlled wholly by the government, will disappear gradually, or decrease drastically. It is also estimated that the FTOs, which are being reorganized into incorporated companies, rather than newly emerging private enterprises, will lead the East-West trade in the future as well. But between the East European countries, even after the clearing agreement was abolished, some forms of bater trade which does not require foreign exchange are expected to be more favored for the time being than the hard currency payment by L/C. Besides, the advance purchase based countertrade will favored instead of the traditional counterpurchase based one since the introduction of competitive system in business will block the third competitor's involvement, and at the same time some mixed forms of buy-back system will be highly favored in the near future.
To meet all this transition, the Korean government is required to centralize the windows of negotiation in the trade with the Eastern bloc and have appropriate contorls of trade items and trade countries. The government is also required to extend the relevant financial and insurance functions, and it is desired that the regulations concerning foreign exchange be loosened gradually so that mini-clearing agreements will be made to accelerate long-term cooperation in the East-West trade. With this the Korean enterprises should make use of tripartite trade and seek mixed buy-back system in the long term. They should also make use of the International Trading House to minimize the danger over counter-purchased goods and set up a new post or reinforce the existing one so that it will be able to assume full responsibility of the East-West trade.