Philosophy

It is our professional approach to the disciplines and techniques integral to a successful and meritorious program which separates C&I Projects from other Countertrade/Offset organisations.

What is Offset?

Offset is that special form of Countertrade that traditionally has been reserved for reciprocal trade in relation to the sale of defence equipment to Government defence procurement organisations. The purchaser in this case can secure economic compensation for the country by exerting leverage over the companies bidding for major defence procurement work. In exerting this leverage the purchasing Government provides an area of significant discretion to bidders which can be a crucial factor in the decision to award. Thus successful defence equipment suppliers have developed offset as a significant marketing tool which can separate their bid from others - assuming the technical, price and quality requirements are met.

• Offset requirements accrued due to the sale of defence equipment have traditionally required the offset solution to be defence industry related but in many countries this is no longer the case. Methods of providing offset solutions include implementing the following in the purchasing country or for the benefit of the purchasing country:-
• Transfers of technology, through licensing and other arrangements to existing local manufacture's;
• Investment in existing industries related to the product being purchased, through the provision of financial capital, new technology, know how, plant and equipment and/or technical personnel;
• Technical and professional training, either locally or in the supplier's country;
• Establishing or assisting in research and development related to the subject matter of the purchase contract;
• Maintenance and servicing facilities, either confined to the purchaser's country or available to other countries in the region;
• Procurement of locally made components;
• Assistance in the export marketing of products manufactured by direct investment or from capital equipment and technology supplied.
• Assistance in the export marketing of the buying country's commodities and semi and fully manufactured goods, not related to the product sold;
• Investment in unrelated industries;
• Technical and professional training.

When applied to defence offset these solutions can apply directly or indirectly; -

Direct offset - refers to the arrangement of the aforementioned solutions that relate directly to the defence goods to be delivered under the contract.

Indirect offset - refers to the arrangement of the aforementioned solutions to defence goods other than those to be delivered under the contract.

What is Countertrade?

•  Countertrade is a collective term which is used to refer to various methods of linking two export transactions between companies in different countries or, in some instances, between countries themselves.

•  The various forms of reciprocal trade which fall within the Countertrade umbrella include:-

a. Barter. This involves the direct exchange of unrelated goods with, in principle, no alternative means of payment.

b. Counterpurchase. This is the most common form of Countertrade and involves two separate flows of goods usually done under two separate contracts. In a short term agreement the seller is committed to buy goods from the importing country but this obligation will normally be assigned to a third party trader and the seller will neither handle nor see the outbound goods - only receive cash into its bank account. The value of the counterpurchase goods is an agreed percentage of the price of the exported goods.

c. Buyback. An exporter of equipment agrees to take back products produced by that equipment as payment. The buyback agreement specifies precise particulars as to the products to be bought and perhaps the markets in which they can be sold.

•  Offsets. The seller of defence, aerospace and sometimes other hi-tech products is required to undertake the local purchase of components, technology transfer, investment, training and sometimes straight counterpurchase as a condition of the sale.

•  Countertrade is now a worldwide practice and has emerged as a significant medium of world trade. Estimates vary but on average suggest that Countertrade today accounts for more than 20% of total world trade.

•  For further detail please contact us.

WHITE CLELAND'S SUPPORT

•  Note that White Cleland's emphasis on the defence industry and intellectual property law was enhanced in June 2002 when it commenced a two and a half year funded program to conduct IP audits and training with 300 Australian defence industry SME's. The Department of Defence has approved this program as an AII (Australian Industry Involvement) initiative.

•  If required, the provision of all necessary legal services associated with the development of industrial cooperation proposals can be co-ordinated through White Cleland Pty. This might particularly entail advice and services in relation to intellectual property and contract issues.