In a switch trading arrangement, a third party facilitates a countertrade when one party cannot use all the goods received, resolving the issue and satisfying all parties involved. This is particularly useful when dealing with perishable goods or when attempting to secure future contracts.
In the context of countertrade, the type of arrangement where a third party steps in to facilitate the exchange when one of the original parties does not want or cannot use all of the goods received is commonly known as barter trade with a third party involvement or switch trading. In this situation, the third party, usually a specialized switch trading firm, buys the unwanted goods and sells them to someone who does want them, thus satisfying all parties involved. For example, if one country wants to buy goods from another but does not want the goods that the second country offers in a barter, a switch trader could buy the unwanted goods and sell them to a different country that does want them, thereby completing the transaction.
A barter system faces challenges, particularly when dealing with perishable goods or trying to enter into future contracts. For instance, imagine a farmer aiming to trade a fresh crop of strawberries for a tractor in six months; this arrangement is vulnerable to the perishable nature of strawberries, making it hard to secure the future transaction.