| I’d like to start by saying that foreign trade is an | | | | futures |
| exchange of goods and services between various | | | | Auction is a method of selling publicly, letting intending |
| countries. In this context let me tell U that foreign | | | | buyers gether and compete with each other by |
| trade in Russia may successfully be carried on direct | | | | making bids. |
| between Russian enterprises and foreign firms and | | | | The goods like fur, tea, spices whose quality varies |
| indirect through middlemen: | | | | from year to year, from lot to lot cannot be |
| Direct sales. | | | | accurately graded and are sold at auctions according |
| The most common means of doing business | | | | to sample. |
| nowadays is through straight sales of foreign goods | | | | Tender is a written offer by a supplier to supply |
| in exchange for foreign currency or commodities, | | | | certain goods and services at a started price, usually |
| which were produced in our country (countertrade). | | | | in competition with other tenders. Trade by tenders |
| Countertrade is a term, which denotes various | | | | is often used in developing countries for construction |
| methods of linking two export operations. In | | | | work or for delivery of goods. |
| countertrade transaction the Seller agrees to take full | | | | Fair is a special place where producers can advertise |
| or partial payment in goods. | | | | their new goods, attract more customers and |
| Frame work Agreement | | | | conclude profitable contracts. |
| Normally it is advisable to conclude the framework | | | | Foreign economic restructuring has effected the |
| agreement within which the individual countertrade | | | | development of foreign trade, the banking system |
| transactions shall operate. But sometimes in a | | | | and the role of Russian enterprises in the economy. |
| contract it is usually to build the | | | | The main point of the foreign trade reform are: |
| 1. The clear definition of the mutual obligation of the | | | | - enterprises now have a right to conduct |
| parties. | | | | international trade; |
| 2. Specification of the countertraded goods and | | | | - industrial enterprises are allowed to maintain hard |
| condition of setting the value on FOB and CIF basis. | | | | currency bank accounts; |
| 3. Restrictions of the market where the goods may | | | | - great emphasis is made on export and import world |
| be sold/ | | | | marketing technique; |
| 4. The arrangements for settlement account and | | | | - inward investment by means of joint ventures is |
| evidence account and for the payment of the credit | | | | encouraged. |
| balance of terminations of the agreement in cash. | | | | One of the most serious problems facing Russian |
| 5. The conditions of participating of the factor in a | | | | economy is not convertibility of the ruble, which is a |
| countertrade process. | | | | serious handicap in relations within trade |
| 6. Penalty provision for non-performance of the | | | | counter-parts. The economic reform sets a task to |
| countertrade obligations by the exporter. | | | | make ruble convertible. |
| 7. A choice of law clause and arbitration clause. | | | | A joint venture can be created between any number |
| Sometimes the framework agreement takes a form | | | | of foreign and Russian enterprises. A joint venture |
| of a letter of intent, which is undesirable because a | | | | has limited liability. It should be self-supporting and |
| letter of intent is not enforceable in law. | | | | self-financing. J/V offer foreign investors direct |
| Countertrade covers barter, counterpurchase, | | | | access to the Russian market. |
| buyback, reciprocal sales. | | | | The main features of interest to the Russian |
| A barter deal involves an exchange of goods to an | | | | participant are: |
| equal value. | | | | 1. To satisfy the requirements for the domestic |
| Counterpurchase refers to short and medium-term | | | | market, |
| transactions. The western Seller commits himself to | | | | 2. To attract foreign technology and foreign |
| purchase an agreed value of the Buyers products to | | | | management experience |
| help finance the original sale. | | | | If the parties want to form a partnership a Protocol |
| Buyback refers to long-term contracts and is | | | | of Intent is normally signed. A J/V becomes a juridical |
| connected with the development projects supported | | | | person after it has been registered with the Ministry |
| with huge credits. Buyback involves two phases, one | | | | of Finance. The foundation documents and the |
| for the delivery of equipment to the Buyer and a | | | | Feasibility Study are the most important documents |
| second for the delivery of the end product to the | | | | for the application procedure. The foundational |
| Seller. | | | | documents include the Agreement between the |
| Reciprocal sales or counter deliveries. These are two | | | | partners on the establishment of a J/V and the |
| contracts; the export contract and the countersale. | | | | Charter or Statute of J/V. The feasibility study |
| Then there is the so-called commercial triangular | | | | covers the objective of a company, the working |
| form, which involves a third party in this or that way. | | | | capital, the product to be manufactured, and the |
| It is rather complicated and varies from country to | | | | technical back-up of a project. |
| country, from deal to deal. | | | | A J/V must be managed by a Board of Directors. |
| Companies prefer doing their business abroad through | | | | The Board is governing body which sets out the |
| intermediaries: agents & distributors. | | | | strategy of a company. |
| It necessary to distinguish clearly between the Agent | | | | The authorized fund is formed from initial |
| & the Distributor. The essential difference is that | | | | contributions made by the Parties and may be |
| whereas the commercial Agent is engaged in the | | | | supplemented from the profits of J/V. |
| negotiation with customers about the contract for | | | | A J/V is a legal person. It may sue and may be sued. |
| the sale of goods on behalf of a principal & for | | | | After deductions have been made to the funds the |
| his account for which the Agent reserves & | | | | rest profit is divided between the partners in |
| agreed commission. The Distributor operates on his | | | | proportion to the share of the authorized fund |
| own account as an independent purchaser for sale of | | | | belonging to the individual participant. |
| the Supplier's products, getting his remuneration from | | | | There are some other methods of international trade |
| whatever profit he may make out of these sales. | | | | such as tolling, consignation, leasing, and futures. |
| The relations between the Distributor & the | | | | - Tolling is a kind of commercial deal based on the |
| Supplier are determined by a distributorship | | | | exchange of raw materials for finished goods being |
| agreement, stating that the Supplier grants to the | | | | produced from these raw materials. Both parties in a |
| Distributor the sole & the exclusive right to | | | | deal benefit from tolling. |
| purchase from the Supplier certain specified goods | | | | - Consignation is a method of trade by providing the |
| for sale in a given territory. | | | | goods by the exporter to be sold by the importer. |
| Agency agreement is usually concluded for terms of | | | | The exporter still retains and the owner of the |
| 3 or 5 years, while distributorship agreement is signed | | | | goods. The importer does not own the goods but is |
| for longer periods, after which the matter can be | | | | responsible for its safety. |
| reviewed with & intention of prolonging its | | | | - Leasing is one of the forms of credit of durable |
| effect. | | | | exports(cars, equipment, machinery).It is based on |
| Indirect sales is supplying goods through middlemen | | | | the lease of equipment with the future buyout by a |
| agencies, distributors, JV, through signing licensing | | | | higher price which includes leasing payments and a |
| agreements. And a part of it can be carried on at | | | | cost of equipment. The seller is interested in selling of |
| auctions, commodity exchanges, fairs, by tenders. | | | | the equipment, but the buyer does not have any |
| Also, you can buy & sell commodities at | | | | capital to buy. |
| commodity exchanges, auctions & by tenders. | | | | - Futures are trade in future contracts to buy and sell |
| Commodity exchanges are centers in commodity | | | | standardized class of commodity at a started price at |
| markets where all dealings either in actuals or in | | | | some fixed time in the future (commodity exchange. |