Trade Credit Offsets are a contractual obligation that occurs when a business domiciled in one country signs a contract to do business in another country.

As part of the agreement, a percentage (usually between 20-30%) of the total contract value is obligated to be paid from the company to the foreign country during the term of the contract. In this regard, offsets are essentially like coupons. Offsets can be repaid to the country in three ways: cash, training/capacity building (3X cash value multiplier) and proprietary technology transfer (10X cash value multiplier). From the multiplier rates, it seems obvious that companies prefer to transfer technology rather than cash as, in many cases, it would not be profitable to send (up to 30% of) a cash flow back to a customer.

In order to identify offsets, we start by tracking international business procurement contracts which can be input into the Trade Credit Offset form. Identifying offsets, countries, national development goals, Global Innovation Commons Challenges and related technologies give commons users a path to form relationships with companies, countries, innovators, knowledge, markets and potentially capital. 

More background on TCO's can be found HERE