The Trade Agreements Act was enacted to regulate trade agreements between the United States and abroad. One of the main features of the law is that it limits U.S. government procurement to products made in the U.S. or made in certain countries. These products are then called “TAA compliant”. The BAA`s restrictions do not apply to products that are not available in the country or to “information technology that is a commercial item.” As a result, organizations can obtain commercial information technology (p.. B e.g. computer software, firmware, etc.), regardless of their national content and place of manufacture. Thus, in general, the TAA applies in three circumstances: (1) The contract is worth more than $182,000 for goods and services or more than $7,008,000 for construction; (2) the procurement concerns goods or building materials listed in the trade agreement concerned; and (3) none of the other exceptions mentioned in trade agreements apply (e.B. the contract is reserved for small businesses or carried out as an individual contract). If you sell items directly to a federal agency (for example. B, the Defense Logistics Agency, the Ministry of Defense (Air Force, Army, Navy, etc.), the Ministry of Transportation, Health and Social Services, etc.) or if you have entered into a construction contract directly with a federal agency, you are a government prime contractor.

If you sell items or materials to a prime contractor who, in turn, sells them to a federal agency, or if you provide construction services or materials for a federal construction project, you are a state subcontractor/supplier. National preference laws such as the Buy American Act (BAA), the Trade Agreements Act (TAA), the Berry Amendment, or various federal agency Buy America Acts apply to many government contracts and subcontracts. This article focuses only on baa and TAA compliance requirements. The TAA is much newer and, when applied, offers an exception to the BAA. The Federal Circuit explained the TAA as follows: A variety of obscure national preference schemes apply to many federal markets – the Buy American Act (BAA), the Trade Agreements Act (TAA), the Berry Amendment and the Cargo Preference Act, to name a few. In Acetris Health, LLC v. In the United States, the Court of Appeals for the Federal Circuit recently dismissed a government appeal and clarified the test for determining whether a pharmaceutical product — or another product — complies with the TAA. This important decision rejects the U.S.

Customs and Border Protection`s (CBP) long-standing analytical approach to pharmaceuticals, as well as the Department of Veterans Affairs` (VA) confidence in CBP`s decision for federal procurement purposes. Where the BAA applies, the government must prioritize “domestic finished goods” when purchasing building supplies and materials for use in the United States. There are two types of products that are considered “domestic finished products”. The first type is a commercial standard item (COTS) made in the United States. An example of this type would be a chair made in Indiana and sold in various furniture stores. The second type is a U.S.-made item that consists of more than 50% U.S. components (determined by the cost of the components). According to FAR, a component is “an item, material or delivery that is directly integrated into a final product or building material.” An example of this type of domestic end product would be an automotive engine manufactured in Indiana and containing components from China, Mexico and the United States. As long as more than 50% of the cost of the components of this engine is extracted, produced or manufactured in the United States and the engine is manufactured in the United States, it is considered a domestic final product. However, the TAA does not restrict foreign trade outside the scope of federal government procurement.

This means that you can freely sell non-TAA compliant products in the commercial market. The TAA requires that the product be (1) grown, produced or manufactured entirely in the United States. or a “named country” or (2) “substantially transformed” in the United States or a “designated country”. The essential processing requirement of the TAA is different from the manufacturing requirement of the BAA. A product is “substantially transformed” when a fundamental change occurs in its form, nature or character – when it has been transformed into a new and different commercial article with a different name, character or use than the article or articles from which it was processed. A major transformation is more likely if an assembly process requires a lot of time, skill and attention to detail. strict quality control; sophisticated equipment and facilities; and tech-savvy staff. Taa`s in-depth transformation testing focuses on where (i.e. in which country) the product took on its essential character and form – where it became functional or was functional enough to be tested for its ultimate purpose. For example, Company A sells offices to the Ministry of Energy.

He orders the legs and drawers of a company in the United States and the rest of the office parts in China. All parts of the office are delivered to the establishment of Company A in Mexico, where they are integrated into the office, the office is treated with a special coating and the office undergoes various quality control and testing procedures. Since the various parts have essentially been converted into a new commercial item (the office), the offices in Mexico (a particular country) comply with the TAA standard. As we have already mentioned, the BAA is a national preferential law. This means that the government can purchase a “foreign final product” if it determines that the price of the lowest domestic product offering is inappropriate or that another exception applies. Before purchasing a foreign final product, government agencies must apply a “price penalty” when evaluating the bid. This is done for evaluation purposes only; It allows the government to compare the domestic product with a foreign product on a more equal price basis. Here are two other examples: (1) Company A`s product is made up of 70% domestic components/materials, but is made in China. .