Barter trade grows

Press, 13 June 1978, Page 16

Barter trade grows

By

JANE McLOUGHLIN

in the “Guardian”

The barter arrangement which has given Poland the edge over British shipbuilders in a £4OM (SNZ72M) order for ships because the Poles are willing to accept New Zealand lamb and butter in part-payment i> only one example of what is now a common feature in international trade

Perhaps we showed the Poles the way, with our own barter deal with Finland earlier this year: 50 Hawk »et trainers bought for iIIOOM (SNZIBOM) - most of it to be paid off by Hawker Siddeley salesmen selling Finnish liquorice allsorts to Americans. Over the next ten years, Hawker salesmen will be selling Finnish goods to the value of the order — and in support, the Kingston department store, Bentalls, near the Hawker factcry, held a Finnish promotion wek to sell £175,000 ($NZ315,000) worth of goods. International barter tends to develop when economies seem out of control In the 19305, during the Weimar republic period of wild inflation the Germans exchanged mouth organs for oil from Esso. But it is also a factor of a buyers’ market — when the Germans tried to sell Zeppelins for Man-

churian soya beans in the same era.

We are seeing another aspect of international barter during the present trade battle between Boeing, McDonnell Douglas and Lockheed to sell planes to British Airways. In this case, the plastic footballer in the cornflakes packet is the amount of work to be done on the American planes by British workers. The international barter trade has grown up particularly between Western countries and the countries of the Eastern bloc, which have a disastrous shortage of convertible currency. The 30 or so firms in Britain which specialise in arranging these deals with Eastern bloc countries, or South America, Africa and the Middle East may be prepared to include an extraordinary range of goods in the package. Though the Government admits it does not encourage barter, saying the use of money is more efficient and gives greater scope for choice in buying and selling, they have had to come to terms with the fact that in a time of economic recession, if the British have to be beggars, they cannot be choosers. But they will offer the full range of trade services

available in an ordinary deal to a barter arrangement for exporters; British embassies abroad will give the same help to exporters whether the deal is paid for in cash or goods. Even the Export Credits Guarantee Department may underwrite a barter transaction.

In fact, so sophisticated has the international barter system become that often goods taken in part exchange for one product are then passed on to another customer country in exchange for another. For a long time, importers here wondered why they were offered quantities of cardamom by Rumania in part payment, when the spice comes only from India. But the Indians had earlier “bought” goods from Rumania and paid cardamom which the Rumanians in turn were offering for barter. Any country doctor will remember being paid in chickens or cakes or vegetables for his services. It’s an attractive system for everyone — up to a point. What is surprising is the extent to which it is catching on internationally. At least you know what you’ve got in a few hundred container loads of dead lamb; with money, half the value can disappear overnight.