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Variations on Sourcing Models: Reciprocal Sourcing: Barter/Countertrade
Reciprocal Barter. On a rare occasion, a sourcing provider and an enterprise customer may choose to barter services by one party in return for services by the other. EDS and Worldcom adopted this model, but Worldcom later filed for bankruptcy protection, exposing EDS to a duty to deliver services without any assurance of receiving reciprocal services from the bankrupt customer.
Countertrade Agreements. Such bilateral barter agreements have a solid foundation in international trade with the former Soviet Union, its former Comecon members (Czechoslovakia, East Germany, Hungary and Poland) and the former Chinese foreign trade organizations before the capitalist market reforms in China. Countertrade requires special contract monitoring on each side. Key issues include:
Further reading:
EDS-Worldcom Reciprocal Sourcing Agreements
SOURCE: http://www.outsourcing-law.com/2009/10/reciprocal-outsourcing-by-eds-and-worldcom-inc/
P. Verzariu, S. Bozek & J. Matheson, “East-West Countertrade Practices: An Introductory Guide for Business,” U.S. Dept. of Commerce Industry & Trade Admin. Aug. 1978).
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