Offset

Offset is a form of countertrade, involving an agreement to purchase a specified amount of product from a particular country. For example, a government may award a tender to a contractor to make tanks for their armed forces, with an offset obligation to place 20% of the contract’s value with suppliers in that country. In order to meet the offset obligation, the contractor must source local suppliers or may need to develop a local supply base. See also Countertrade.