Legal aspects of countertrade under the General Agreement on Tariffs and Trade and the national laws of Canada and Thailand


University of British Columbia

Date Issued


Document Type



Master of Laws - LLM




Countertrade is no longer a new term in international trade. Countertrade will continue to grow in the next decade despite opposition from various developed countries. Nevertheless, little attention has been given to develop a generally acceptable definition of countertrade and a classification of its forms. More importantly, the study of the legal implications of countertrade under GATT and national laws of countries involved in countertrade is still limited. This thesis is a first step to explore the definition and forms of countertrade, as well as its national and international legal implications. The first part of this thesis, respecting the overview and framework of countertrade, contains three chapters. The first chapter describes the purposes and methodology employed in the research of this thesis. Chapter two discusses the development of countertrade in world trade and the definitions and major forms of countertrade transactions. A definition of "countertrade" is proposed. The discussion of elements contained in each form of countertrade will assist classification of the forms of countertrade. The advantages and disadvantages of countertrade from the perspective of both developed and developing countries is also discussed. In Chapter three, the development of countertrade policy in Canada and Thailand is examined. The writer concludes that countertrade should be encouraged but with care taken to adopt the form most suitable to the specific problems each country is facing. Generally, Thailand and Canada should study the impacts of countertrade on their economies prior to implementing countertrade policies. In respect of their mutual relations, Thailand and Canada should put an emphasis on the development of countertrade practice in the forms of Offsets and Compensation. The second part respecting the legal implications of countertrade, consists of Chapters four, five and six. Chapter four examines the legal implications of countertrade under the major provisions of the GATT and its Codes. The writer concludes that there are a number of unresolved problems with which GATT and the Codes cannot deal efficiently because they were drafted while countertrade was still unimportant in international trade. A study of the impact of countertrade and a detailed study of the legal implications under GATT is still required. In Chapters five and six, the writer examines countertrade transactions under the private and regulatory laws of Canada and Thailand. The discussion, within the limited scope of the thesis, is aimed only at providing some precautions respecting possible effects of such laws on countertrade transactions. The private law aspect deals only with basic problems of choice of law principles, the State Immunity principle, and the enforcement of foreign or international arbitral awards that arise from disputes concerning countertrade agreements. The discussion of regulatory law is divided into three parts based on the purposes and nature of the legislation: Fiscal and other regulatory control laws; Remedial regulatory laws; and the Promotion and Administrative regulatory law. Specific provisions of the legislation are examined. Certain suggestions are made for reform of the law. The last part of this thesis, Chapters seven relates to practical consideration of negotiating and drafting countertrade agreements. The purpose of this part is to guide practitioners in preparing and structuring countertrade agreements efficiently. The writer also suggests the preparation of model countertrade agreements to overcome problems of time and cost in drafting agreements, and to strengthen the developing countries' bargaining power. Chapter eight, the conclusion, summarizes the major points which are discussed in previous chapters. The diversity of countertrade transactions probably precludes the development of uniform domestic or international rule to regulate this type of international commerce. This thesis has shown that lawyers in developed and. developing countries need, however, to be aware of the special nature of countertrade transactions when considering the application of laws of a general character so as to preserve the value of this form of trade.


Countertrade -- Law and legislation -- Canada; Countertrade -- Law and legislation -- Thailand; General Agreement on Tariffs and Trade (1947)

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