ECONOMIC - FOREIGN TRADE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00809A000600150228-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: December 22, 2016
• Document Release Date: June 15, 2011
• Sequence Number: 228
• Publication Date: August 17, 1955
• Content Type: REPORT

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CLASSIFICATION B-B-c-R-8 T
CEtITR.A! INTELUefNCE AGENCY
REPORT
CC NC:
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COUNTRY German Democratic Rem blic
SUBJECT Economic '- Frareig:: ade
DATE DST./7AU9 1955
GDR PROCPsi7JRE FOR fIAIWLI* BAFM TRAIISACTIONS
als with GDR procedures for harAling
barter transactions. The report identifies types of barter trans-
actions, the duties and responsibilities of various Gl1t foreign-
trade agencies in negotiating and carrying out barter transactions,
and various arrangements among GIB foreiga-trade agencies Intended
to facilitate the movement of commodities under barter contracts.
The date of information is prior to July 1954.
The term "trading DIA," as used in this report, refers to all
DIAs except the DIA for Barter Trade.)
Barter transactions are exchanges of commodities in which no payments are
made, but deliveries and counterdeliveries are balanced with one another by
the trade partners. Although in larger barter transactions clearing accounts
may be established in banks of several countries, it is the decisive character-
istic of this type of transaction that no transfer of currency tabs place.
With the growth of barter trade after Vorld War I, the barter trade firm
appeared in the field of international trade as a broker ubo broibt together
i t :r s and ?vr^rtarn and Leo arranged for the he . !i g of deliveries.
CLASSif1CATiON Si-C-R-"
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The following types of barter contracts are used by the Glyn:
1, Global agreements are concluded between a G1R foreig:a-trader .:cr
and a foreign barter trade firm vhich either Is authorized by the foreign
state to sign the agree aeut or has a monopoly position.' The global agree-
ment is a coutrnetunder international civil law and provides for the exchange
of listed eomwoditiess of equel total value. The fo sips partner is not him-
self a dealer in the individual cost iitieo wed under the agreeae,rot.
Instead, every firm in the foreign partner's country has the right, subject
to licensing regulations, tot and cell. grx a under the provisions of this
agreement.
'barter corittset are fully specified as to cowAodity, prices, delivery dates,
agency and ex foreign part-nor who tmpcrys and exports cone o the ecaessoditics
listed in he contract on his own account, end sho acts as a Yrroher with
reseect to the other, co oditiea. Good to be i rte-d under a global
foreign commission merchant. In such a contract, import and export corn..
are fully specified.. [individual barter contracts may be concluded under
provisions of existing global agreements, global barter contracts, and sfel?.to.,
barter contracts,
5. House barter contracts are signed between a DIA and a single foreign
firm, and provide for the exchange of goods falling wholly within the area of
responsibility of the contracting DIA. Individual DIM say sign and carry
out such contracts with the consent of the DIA for Barter Trade.
6. A barter share is a trading DIA's share in the total goc-d." to be
traded under a barter contract which provides for the exchange of goods falling
within the areas of responsibility of several trading DIAs.
providing only for the purchase and sale of certain specified commodity
groups in values indicated for each group. Actual imports and exports are
agreed upon later in individual contracts containing specific provisions.
4. Individual barter contracts are signed by a GDR foreign-trade a-,--,
with a foreign trade enterprise doing business or. its own account, or ?A;--i
the contract on his own ecc?ant.Goncral7.y, these are preliminary eontracts,
quotas for cosnmc?dity groups.
When a trading DIA requests arrangement of a barter exchange, the DIA
for Barter Trade has the following duties:
1. To negotiate and conclude global agreements, global barter contracts,
skeleton barter contracts, and individual barter contracts.
3. To submit the contracts to the !lain Department for Cmsarcial Policies
in the Xinistry of Foreign and Intra-German Trade for approval.
4. To register and control the execution of all barter contracts (except
house barter contracts) concluded by GIxt trade enterprises in foreign and intra-
rermn trade.
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In arranging a barter exchange, she participating trading DIAs have t
following duties:
1. They must investigate the urkats and find parties interested '_r the
goods they wish to sell, and they mast conduct negotiations with respect to
their barter shares and inform the DIA for Barter Trade of the results. The
trading DIAs must Inform the DIA for Barter Trade, not more than one month
after they have been informed of the{i;, foreign trade plan, what commodities
they wish to exchange with individual countries under barter arrangements, no
that the DIA for Barter Trade will be able to cora-elude the necessary barter
agreements and contracts.
2. The DIAs must nego-: iece and wo icluda house barter contracts as well
as individual export and im artcontracts called for by existing global agree-
ments and barter contracts.
3. Each DIA is responsible for the shipment of the comatx itiea within
ite area of competence which era exchanged under the proviei as of barter
contracts is which it has a share.
In carrying out barter transactions, the DIA for Barter Trade has the
following responsibilities:
1. When an export order is requested for an individual barter transaction,
the DIA for Barter Trade must fix the date on which the export order asst. be
returned to it and enforce observance of that date, and it must transmit .l
the same time the approved individual barter contract to the trading DIA con
cerned.
2. In negotiating barter agreements and contracts, the DIA for Burt
Trade must check the credit of the foreign partner and must see to it ta-,
the foreign partner obtains authorization for the barter contract [presi17.~:'
from competent authority in his country] at the proper time.
3. The DIA for Barter Trade mist submit to the trading DIAS concerned
a draft of any barter contract in which such DIM will participate. After
the draft is checked by the trading DIA, it is returned to the DIA for
Barter Trade. Three days after receiving this draft, the DIA for Barter
Trade must return the fully signed contract to the trading DIR.
4. The DIA for Barter Trade must control the execution of barter con-
tracts. Two days after individual barter contracts have been signed, it
must check whether the provisions of these contracts agree with the provisions
originally agreed upon in the export orders for the goods now covered by these
barter contracts. If the provisions of the individual barter contracts and
the export orders are the same, the DIA for Barter Trade must confirm the
individual barter contract as being a part of a global agreement, global barter
contract, or skeleton barter contract. The DIA for Barter Trade must also
transmit to the appropriate trading DIAs individual export and import lieenaeb
issued by foreign countries under global agreements. It must further authorize
the dispatch of exports not less than 20 days before they are scheduled to be
dispatched from the production enterprise, provided counterdelivery has been
received or a collateral letter of credit or a bank guarantee has been furnished.
It must also decide whether to grant authorization for the opening of import
letters of credit, and approve requests for such authority which are submitted
by the DIAs to the Ministry of Foreign and Intra-0erman Trade.
In carrying out barter transactions, the exporting DIA has the following
responsibilities:
mom
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barter share in any barter contract. It mist complete and transmit to the
month, on inventory available or becoming available for export. I -i i,
promote the sale abroad of commodities which it wishes to include in t,r
pros eetus material of export commodities and submit otters when :..asr
renuested from abroad. It must make a monthly report, by the 15th
tracts can be ;made available for export.
individual contracts covering barter shares allocated to it under any Vlob+..
agreement. global barter _ontract, and skeleton barter contract. If there
barter contracts for-
covered by suc. con-
contracts are properly submitted to the DIA for Barter Trade. The exporting
DIA must provide in the export order that the production unterprise wilt
notify the DIA for Barter Trade, 4 weeks in advance of the delivery dote
provided for in the export order, on which date the commodities x'.11
be ready for shipment. If the export goods are not to be rent to the
party to the barter contract, but to another purchaser, the e:cportinE, id
must obtain, preferably through the actual purchaser, a certificat^
party to the barter contract permitting delivery of the goods to the t...-
party.
5. The exporting DIA must procure all individual [import) licenses
[from the recipient country when the goods to be exported under a barter
contract are not covered by a single foreign import license]. It must also
obtain all letters of credit, collateral letters of credit, bank guarantees,
and other collateral required by barter contracts.
6. The exporting DIA must see to it that shipments of goods whose
dispatch has been authorized are actually made. If such goods cannot be
dispatched within the time limits set, the exporting DIA must so notify
the DIA for Barter Trade, indicating a new shipping date, so that the DIA
for Barter Trade can make other arrangements. The DIA must in general see
to it that commodities are shipped on schedule, by sending authorization of
shipment to the production enterprises and drawing up and sending out the
export bill of lading at the proper time. The exporting DIA is responsible
for checking the conditions of letters of credit, and fcr drawing on letters
of credit, guarantees, and other collateral. Within 18 days after the dis-
patch of the commodities, the exporting DIA must settle with *he Department
of Contract Settlement of the DIA for Barter Trade on the basis of a book-
keeping voucher on a foreign-exchange invoice.
The importing DIA bas the following responsibilities in carrying out
barter trenawetlone
are properly drawn up, that their provisions agree with t;.ouc of the barter contract under which the goods are to be traded, and that these individual
Trace before two thirds of the period allowed in the barter contracts ror
1. In connection with the negotiation of barter contracts, it mist
obtain and proce n on schedule Offers of fR'M igu goods. It must make an
effort to find import goods which it will include in its barter shares; and
it must mke available to the ll_A for Barter Trade all specifications o:
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quested by the DIA for Barter Trade, assuming that binding negotiatio^_ `.nave
been made previously [presumably between the importing DtA and itr tu?w'_,:,;;
supplier]. Wore submitting these specifications to the DIA for Bamer
Trade, the importing DIA asst have obtained the required purchase pei?raits
from the competent GDR authority.
5. The importing DIA is also responsible for the procurement of all
individual [export) licenses [from the country of origin, when the goods
to be imported under a barter contract are not covered by a single foret,:r,
export license.] It must also obtain all letters of credit, collateral
letters of credit, and bank guarantees required by barter contracts.
6. Thg_importing DIA must facilitate the movement of comesoditicr
making the import bill of lading available on schedule at the boundary cr
at the border control point. The importing DIA must notify the DIA for
Barter irsde of the receipt of any imports within 5 days after their arrival
in the QM. The trade office of the DIA which is importing any commodities
must notify its own Department for [Invoice] Settlement and Audit, which in
turn sends an export release to the DIA for Barter Trade. In case of a house
barter contract, the APpertment for [Invoice] Settlement and Audit sends the
export release to the exporting trade office of the same DIA. The importing
DIA must settle with the DIA for Barter Trade (on the basis of a bookkeeping
voucher or a foreign-.exchange invoice) within 10 days after the receipt of
the imports or notify the DIA for Barter Trade why settlement cannot be made
within this period.
When a trading DIA enters into a house barter contract, it must submit
the contract to the Desk for Contract Registration of the DIA for Barter Trade
for approval and registration. Cancellations and changes under such contracts
must be reported to the DIA for Barter Trade in the form of a supplement. The
trade office of the trading DIA which has the largest share in such a cancel-
lation or change must prepare such a supplement.
Unlike the trading DIAs, the offices of the DIA for Barter Trade are
organized on a country basis, as follows:
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Area of tlemzu; it+i' ity Chief
Sweden, Norway Schober
Denmark, Great Britain, Kalbitz
Ireland, Iceland
Netherlands Yolk 367
France, Belgium Stillmann 361
Switzerland, Italy, Austria Quietzsch 278
Non-European Countries Llebsch 288
West Germany Schramm 362
Since the DIA for Barter Trade has the functions of a broker and
c?ordinator,.the provisions of the general contract system do not regulate
the relations between the DIA rer Barter Trade and the trading DIMa. Since
1953, the DIA for Barter Trade has issued [uonthly?) circular letters con
t.aiiaing intoi tioa of use to other GLR agencies. The Work Control
ment [presumably of each DIA) supplies pertinent information from these
circular letters tc the appropriate trade offices of its DIA.
The DLA for Barter Trade r.as agreed to h,ild monthly consultation:.
with the directors and trade office chiefs of [each?] trading DIA.
the occasion warrants it, the DIA for Barter Trade will also inv :.t
trade office chief in a trading DIA to participate in direct negotiato:.
with a foreign customer.
There is no reason for demanding or accepting prices in barter trans-
actions other than these which would be demanded or accepted in transactions
in which payment is made by letter of credit. The price is dependent on the
market and on the quantity of goods sold. The trade office chief is ren;ponsible
for obtaining the highest possible price for exports and the lowest possible
price for imports (in barter as well as in other types of transactions).
To achieve a uniform price policy [for all GDR foreign trade agencies],
the competent trade office chief or director (of a trading DIA) may request
an investigation of prices for all goods or for a single commodity to be
traded in a barter transaction from the Department for Markets and Prices of
nis DIA, which then passes this request on to the Department for Markets and
Prices of the Ministry of Foreign and Intra-German Trade. The prices are then
checked by a commission consisting of representatives of the following:
Department for Markets and Prices, Ministry of Foreign and Intra-German
Trade (chairman of the commission),
Main Department for Commercial Policies, Ministry of Foreigz: and. Intra-
German Trade
Competent import or export desk in the Ministry of Foreign and Intra-
German Trade
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Competent trade office chief, trading DXA
Chief, Dept:rtmeut fur ? ar-e ,n and Prices, trading MI.A
h" carried out in 48 hours. [Aresumibly there is one commission for each
This commission meets weekly, but in urgent cases such an Lovestigut',n c-3-.
the agreed [salesl price.
very beginning of trade negotiations '.hat the GDR uw t enforce t~sc .ontract
provision imposing penalties on t::e .:otter merchants for off."aring gc3oda hel.ow
beii:u; offered at a lover r1. e by foreign hurter mereUa.ts than by the t ra ing
DIA [on a nonbarter basis), it must be printed out-to barter s rc}s nts at the
the esme goods under barter contracts Sand when tine representatives are excluuad
when the foreign representatives of the trading DLLs themselves arrange i
number of suitable transactions to be included in a barter contract. Other-
wise the trading DIA must gusrertee to its reprensritativen the special pro-
tection which it eves then when lricen are cut by other tleiters who receive
Measures to Expedite Barter Tradir'
The DIA has issued the 'ioli.rving regulations to expeuite barter trac'.r.c,:
Each barter contract deter:niree the maximum balance ui' export;
to imports delivered which may exist, at any time for the duratio: of L
tract, and it provides in detail for the arrangements under which gods
be exchanged, such as advance deliveries of imports, atvsnce delitieri:
exports, barter exchange with or without a balancing of accounts, nwi.i
and exchange through trustees. The contracts my also provide snot ban.;
antees or collateral letters of credit be made available. Such instrument
lessen the risk of barter transactions, and they further facilitate then
cause they usually moke the delivery of exports independent of the deli'-?7111
of imports.
It is the task of the DIA for Barter Trade to facilitate exports and
imports to the largest possible extent. However, the DIA for. Barter Trade
may not go to the length of substituting the cash-against-documents method
of payments when the opening of the letter of credit has been delayed. It
must, on the contrary, stri"e t.r have a letter of credit opened on time in
every case. The DIA for Barter Trade may turn to cash-against-documents
payment in barter transactions which are supposed to be guaranteed by a
letter of credit, only in well-founded exceptional cases, because, under the
cash-against-documents procedure, the imports are delayed until the cash-
collection order is executed.
Advance delivery of imports is usually provided for in barter contracts
which do not proviia for a final financial balancing of accounts. Under such
an arrangement, the foreign barter partner is required to deliver his commodities
first. He receives counterdelivery only after his commodities have arrived or
have been transferred to the purchaser at a place provided for in the contract,
or after documents have been received by the importing DIA. After the importing
MA has confirmed receipt ui f,iic importn to the win for Bartcr the letter
authorizes the exporting DIA to dispatch the export counterdeliveries.
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 .-)ainuGCU ~uNY ^NN~uvcu IUI i~cicaac Gv i iiuvi iu ~,in-iwruu-uvuucnuuuuuu IJVGG(l-G ~.
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t vithdraun from tha rcco:art of the importing DIA under such an arra::,;e-
if the contract does not provide for any bank guarantee or collateral letter
Under such an arrangement, the accounts of the imuortinx and exDor?inx
authorized when an export order has been altered to a cash-aaalnst.dorumaats
hasis. The corrected export order must bear the notation, in such a case,
that the proceeua from the cash-collection order are to he credited to the
barter trade account of tine exporting DIA. In the latter two ruses, tnc
GM accounts of the importing a;.ra exporting DIAs are balanced tiu?cug,!_
German Bank of Issue.
When the barter contrcct provides for the establishment of a
credit by each party, with accounting to be handled in clearing forei,3n
chrrge through clearing accounts, authorization to dispatch export cora,aoc._ ,..
will oe given as soon as the letter of credit has been properly opened. Is'
the barter contract provides for a swing balance, the authorization will be
dependent on the extent to which the parties have availed themselves of the
swing balance and on delivery arrangements already made between the parties
but not yet carried out. If a letter of credit under this type of barter
contract should be delayed, an export order may be altered to a cash-against-
documents basis. In such a case, the cash collected by the German Bank of
Issue must be credited to a special account of the exporting DIA. This al-
ternate procedure may be limited, nowever, to a quantity of exports which
will not exceed the swing b',laice.
A final form of barter erchea;^.e is that in which a balancing of deliveries
is placed in the hands of a trustee. Such transactions are usually handled.
without a bank collateral as pure barter transactions. The DIA for Barter
Trade authorizes dispatch of the export commodities when it has been informed
that both the exports and the counterdeliveries from abroad are ready for
shipment. Dispatch is then authorized with the proviso that they are to be
shipped on request of the forwarding firm which has been appointed trustee.
An undistrubed exchange of commodities, balanced in value, is possible under
such an arrangement only if the parties to the contract ship the goods strictly
in accordance with the arrangements made by the trustee. Every export order
must accord with these arrangements, and no dispatch of commodities can be
authorized except in accordance with these arrangements.
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 AU of the to-. ogoug -og: :i of ski* DA for a'tea:' %%*& provide
that t5 "-# Sz ,A era;, in eirtt~$n can", 6VAY for stzti tsatioo to
dispatch export cca it'loe its rae a tsjbUj%y, wUldb to generc.1
staciUtat.s the di4ra eh of s = ,