What is TAA Compliance?

(Reviewed: January 2017) How do you know if you are TAA Compliant? TAA refers to the Trade Agreement Act. Under 19 USC 2501 Trade Agreements Act government agencies may only purchase US-made or designated country end products or US or designated country services. TAA Compliant Countries

Determine TAA compliance for products on GSA Schedule

Because the estimated value of your GSA schedule exceeds $203,000, all GSA product sales must be Trade Agreement Act (TAA) compliant, as per FAR 25.4. In order to be TAA compliant, 50 percent of the cost of manufacture or location where product is “substantially transformed” must be from a TAA Designated Country.

Are you offering services through your GSA Schedule?  Then the TAA may also apply to you but that is not always the case. The issue of how the TAA applies to services is a complex one.

How to Determine if products were “Substantially Transformed?”

If a product is completely manufactured in the United States or in a TAA designated country, you are TAA compliant.

Sometimes a product requires assembly in several countries or has components from various countries; the TAA compliance becomes murkier and a determination of where the product is substantially transformed is required. If a product is manufactured in various countries, the final product must be “substantially transformed” in a designated country. Substantial transformation would be transforming an article into a new and different article of commerce, with a name, character, or use distinct from the original article. (refer to FAR 25.001(c))

Responsibility falls wholly on the government contractor, to determine if a product has been substantially transformed. More information on International Trade: Rules of Origin available here: http://www.fas.org/sgp/crs/row/RL34524.pdf.

Who Makes the Determination for TAA Compliance?

The U.S. Customs and Border Protection states that “the responsibility for making a determination of substantial transformation rests solely with the contractor. The contractor can go to The Office of Regulations and Rulings within U.S. Customs and Border Protection, which is the Federal agency responsible for making substantial transformation determinations or giving their opinions.”

Steps to Keep Your GSA Schedule TAA Compliant.

First you must have a system in place that periodically verifies that the products being offered under your GSA schedule are TAA compliant. Furthermore, if you are not a manufacturer, we recommend that you verify countries of origin quarterly or, at minimum, with catalog updates from your suppliers to verify that products are still being manufactured or “substantially transformed” in a TAA designated country.

If your manufacturing source changes during the term of your contract and items are now manufactured in a non-designated country, your products will consequently be out of compliance. You must immediately take action to remove the non-TAA compliant items from your GSA Schedule. A GSA consultant from the Coley team can assist with getting this processed.

TAA Designated Countries are regularly updated and can be accessed from here: FAR-Clause-52_225-5.   Also, as noted on our table below, if a product is manufactured in China, Indonesia, Malaysia, or Sri Lanka, you may be permitted to sell them, but only to the VA with a required waiver. Territories belonging to the United States, are TAA compliant therefore, American Samoa, Northern Mariana Islands, Puerto Rico, and the United States Virgin Islands are compliant countries.

Current List of TAA Compliant Countries Include:

AfghanistanDenmarkLatviaSao Tome and Principe
AngolaDjiboutiLesothoSenegal
Antigua and BarbudaDominicaLiberiaSierra Leone
ArmeniaDominican RepublicLiechtensteinSingapore
ArubaEl SalvadorLithuaniaSint Eustatius
AustraliaEquatorial GuineaLuxembourgSint Maarten
AustriaEritreaMadagascarSlovak Republic
BahamasEstoniaMalawiSlovenia
BahrainEthopiaMaldivesSoloman Islands
BangladeshFinlandMaliSomali
BarbadosFranceMaltaSouth Sudan
BelgiumGambiaMauritaniaSpain
BelizeGermanyMexicoSaint Kitts and Nevis
BeninGreeceMoldova*Saint Lucia
BhutanGrenadaMontenegroSaint Vincent and the Grenadines
BonaireGrenadinesMontserratSweden
British Virgin IslandsGuatemalaMoroccoSwitzerland
BulgariaGuineaMozambiqueTaiwan
Burkina FasoGuinea BissauNepalTanzania U.R.
BurundiGuyanaNetherlandsTimor- Leste (East Timor)
CambodiaHaitiNew ZealandTogo
CanadaHondurasNicaraguaTrinidad & Tobago
Central African RepublicHong KongNigerTuvalu
ChadHungaryNorwayUganda
ChileIcelandOmanUkraine*
ColombiaIrelandPanamaUnited Arab Emirates
ComorosIsraelPeruUnited Kingdom
Democratic Republic of the CongoItalyPuerto Rico**United States of America
Costa RicaJamaicaPolandVanuatu
CroatiaJapanPortugalWestern Somoa
CuracaoKiribatiRomaniaYemen
CyprusKorea, Republic of (South)RwandaZambia
Czech RepublicLaosSamoa
**Includes all US Territories

 

 

 

 

Which are non-TAA Compliant Countries?

*FAR 52.225-5 (Reviewed: October 2016); Federal Acquisition Regulation , Trade Agreements.

AlbaniaGeorgia
MauritiusSri Lanka
Algeria
GhanaMicronesiaSudan
ArgentinaIndiaMonacoSouth Africa
AzerbaijanIndonesiaMongoliaSuriname
BelarusIranMyanmarSwaziland
BoliviaIraqNamibiaSyria
Bosnia and HerzegovinaJordanNauruTajikistan
BotswanaKazakhstanNigeriaThailand
BrazilKenyaPakistanTonga
Brunei DarussalamKorea, NorthPalauTunisia
CameroonKosovoPapua New GuineaTurkey
Cape VerdeKuwaitParaguayTurkmenistan
ChinaKyrgyzstanPhilippinesUruguay
Cote d'IvoireLebanon QatarUzbekistan
CubaLibyaRepublic of CongoVenezuela
EcuadorMacaoRussiaVietnam
EgyptMacedoniaSaudi ArabiaZimbabwe
FijiMalaysia Serbia
GabonMarshall IslandsSeychelles

VA only – Waiver Required

The VA is in charge of the healthcare related Federal Supply Schedules (FSS.)There may be some instances where certain healthcare related products needed to save lives are only manufactured in non-TAA compliance countries including China. You must obtain a TAA Waiver from a Contracting Officer before you can add any non-TAA compliant products to your Schedule. The letter must state that the product is necessary and that they are providing a waiver of the TAA for a particular contract or task order.

The VA is currently processing Non-Availability Waiver Determinations under the VA’s 65 I B Pharmaceutical and Drugs Schedule program.  Furthermore, these waiver requests can only be processed for products falling under the scope of Special Item Number 42-2A Single source drug, innovator multiple source drug, and any biological product identified under Section 600.3 of Title 21, CFR.

ChinaIndonesiaMalaysia
Sri LankaThailand
Sources:
World Trade Organization
GSA Vendor Support
VA – Office of Acquisition and Logistics  
FAR 25. 4 Acquisition.gov  
FAR 25.225-5 Acquisition.gov
Harmonized Tariff Schedule of the United States

*FAR Case 2016-009; New Designated Countries Effective as of October 31, 2016 for Moldova and Ukraine

Current List of TAA Compliant Countries Include:

Afghanistan Latvia
Angola Lesotho
Antigua and Barbuda Liberia
Armenia Liechtenstein
Aruba Lithuania
Australia Luxembourg
Austria Madagascar
Bahamas Malawi
Bahrain Maldives
Bangladesh Mali
Barbados Malta
Belgium Mauritania
Belize Mexico
Benin Moldova*
Bhutan Montenegro
Bonaire Montserrat
British Virgin Islands Morocco
Bulgaria Mozambique
Burkina Faso Nepal
Burundi Netherlands
Cambodia New Zealand
Canada Nicaragua
Central African Republic Niger
Chad Norway
Chile Oman
Colombia Panama
Comoros Peru
Democratic Republic of the Congo Puerto Rico
Costa Rica Poland
Croatia Portugal
Curacao Romania
Cyprus Rwanda
Czech Republic Samoa
Denmark Sao Tome and Principe
Djibouti Senegal
Dominica Sierra Leone
Dominican Republic Singapore
El Salvador Sint Eustatius
Equatorial Guinea Sint Maarten
Eritrea Slovak Republic
Estonia Slovenia
Ethopia Soloman Islands
Finland Somali
France South Sudan
Gambia Spain
Germany Saint Kitts and Nevis
Greece Saint Lucia
Grenada Saint Vincent and the Grenadines
Grenadines Sweden
Guatemala Switzerland
Guinea Taiwan
Guinea Bissau Tanzania U.R.
Guyana Timor- Leste (East Timor)
Haiti Togo
Honduras Trinidad & Tobago
Hong Kong Tuvalu
Hungary Uganda
Iceland Ukraine*
Ireland United Arab Emirates
Israel United Kingdom
Italy **United States of America
Jamaica Vanuatu
Japan Western Somoa
Kiribati Yemen
Korea, Republic of (South) Zambia
Laos

**Includes all US Territories

Which are non-TAA Compliant Countries?

Albania Marshall Islands
Algeria Mauritius
Argentina Micronesia
Azerbaijan Monaco
Belarus Mongolia
Bolivia Myanmar
Bosnia and Herzegovina Namibia
Botswana Nauru
Brazil Nigeria
Brunei Darussalam Pakistan
Cameroon Palau
Cape Verde Papua New Guinea
China Paraguay
Cote d’Ivoire Philippines
Cuba Qatar
Ecuador Republic of Congo
Egypt Russia
Fiji Saudi Arabia
Gabon Serbia
Georgia Seychelles
Ghana Sri Lanka
India Sudan
Indonesia South Africa
Iran Suriname
Iraq Swaziland
Jordan Syria
Kazakhstan Tajikistan
Kenya Thailand
Korea, North Tonga
Kosovo Tunisia
Kuwait Turkey
Kyrgyzstan Turkmenistan
Lebanon Uruguay
Libya Uzbekistan
Macao Venezuela
Macedonia Vietnam
Malaysia Zimbabwe

*FAR 52.225-5 (Reviewed: October 2016); Federal Acquisition Regulation , Trade Agreements.

TAA Compliance VA Waiver Required

The VA is in charge of the healthcare related Federal Supply Schedules (FSS.)There may be some instances where certain healthcare related products needed to save lives are only manufactured in non-TAA compliance countries including China. You must obtain a TAA Waiver from a Contracting Officer before you can add any non-TAA compliant products to your Schedule. The letter must state that the product is necessary and that they are providing a waiver of the TAA for a particular contract or task order.

The VA is currently processing Non-Availability Waiver Determinations under the VA’s 65 I B Pharmaceutical and Drugs Schedule program.  Furthermore, these waiver requests can only be processed for products falling under the scope of Special Item Number 42-2A Single source drug, innovator multiple source drug, and any biological product identified under Section 600.3 of Title 21, CFR.

China Indonesia
Malaysia Sri Lanka
Thailand

Sources:
World Trade Organization
GSA Vendor Support
VA – Office of Acquisition and Logistics  
FAR 25. 4 Acquisition.gov  
FAR 25.225-5 Acquisition.gov
Harmonized Tariff Schedule of the United States

*FAR Case 2016-009; New Designated Countries Effective as of October 31, 2016 for Moldova and Ukraine

2 Comments

  1. Is Puerto considered USA? Is it TAA compliant? I don’t see it listed as a TAA complaint Country.

    Thanks

    Reply
    • Hello Ann, Puerto Rico will not be in this listing because it is a territory belonging to the United States, therefore making these items TAA compliant. Other U.S. districts and territories and that are also considered TAA compliant are: District of Columbia, American Samoa, Northern Mariana Islands, the aforementioned Puerto Rico, and the United States Virgin Islands. Thanks for your question, I have updated our blog to explain how the TAA applies to US territories.

      Reply

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52.225-5 Trade Agreements.

As prescribed in 25.1101(c)(1), insert the following clause:

Trade Agreements (Feb 2016)

(a) Definitions. As used in this clause—

“Caribbean Basin country end product”—

(1) Means an article that—

(i)    (A) Is wholly the growth, product, or manufacture of a Caribbean Basin country; or

(B) In the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in a Caribbean Basin country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed; and

(ii) Is not excluded from duty-free treatment for Caribbean countries under 19 U.S.C. 2703(b).

(A) For this reason, the following articles are not Caribbean Basin country end products:

(1) Tuna, prepared or preserved in any manner in airtight containers;

(2) Petroleum, or any product derived from petroleum;

(3) Watches and watch parts (including cases, bracelets, and straps) of whatever type including, but not limited to, mechanical, quartz digital, or quartz analog, if such watches or watch parts contain any material that is the product of any country to which the Harmonized Tariff Schedule of the United States (HTSUS) column 2 rates of duty apply (i.e., Afghanistan, Cuba, Laos, North Korea, and Vietnam); and

(4) Certain of the following: textiles and apparel articles; footwear, handbags, luggage, flat goods, work gloves, and leather wearing apparel; or handloomed, handmade, and folklore articles;

(B) Access to the HTSUS to determine duty-free status of articles of these types is available at http://www.usitc.gov/tata/hts/. In particular, see the following:

(1) General Note 3(c), Products Eligible for Special Tariff treatment.

(2) General Note 17, Products of Countries Designated as Beneficiary Countries under the United States-Caribbean Basin Trade Partnership Act of 2000.

(3) Section XXII, Chapter 98, Subchapter II, Articles Exported and Returned, Advanced or Improved Abroad, U.S. Note 7(b).

(4) Section XXII, Chapter 98, Subchapter XX, Goods Eligible for Special Tariff Benefits under the United States-Caribbean Basin Trade Partnership Act; and

(2) Refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the acquisition, includes services (except transportation services) incidental to the article, provided that the value of those incidental services does not exceed that of the article itself.

“Designated country” means any of the following countries:

(1) A World Trade Organization Government Procurement Agreement (WTO GPA) country (Armenia, Aruba, Austria, Belgium, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea (Republic of), Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Montenegro, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Singapore, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Taiwan (known in the World Trade Organization as “the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei)”), or United Kingdom);

(2) A Free Trade Agreement (FTA) country (Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Korea (Republic of), Mexico, Morocco, Nicaragua, Oman, Panama, Peru, or Singapore);

(3) A least developed country (Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, Central African Republic, Chad, Comoros, Democratic Republic of Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, Laos, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Nepal, Niger, Rwanda, Samoa, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, Tanzania, Timor-Leste, Togo, Tuvalu, Uganda, Vanuatu, Yemen, or Zambia); or

(4) A Caribbean Basin country (Antigua and Barbuda, Aruba, Bahamas, Barbados, Belize, Bonaire, British Virgin Islands, Curacao, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, Saba, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Sint Eustatius, Sint Maarten, or Trinidad and Tobago).

Designated country end product” means a WTO GPA country end product, an FTA country end product, a least developed country end product, or a Caribbean Basin country end product.

“End product” means those articles, materials, and supplies to be acquired under the contract for public use.

“Free Trade Agreement country end product” means an article that—

(1) Is wholly the growth, product, or manufacture of a Free Trade Agreement (FTA) country; or

(2) In the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in an FTA country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. The term refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the end product includes services (except transportation services) incidental to the article, provided that the value of those incidental services does not exceed that of the article itself.

“Least developed country end product” means an article that—

(1) Is wholly the growth, product, or manufacture of a least developed country; or

(2) In the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in a least developed country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. The term refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the end product, includes services (except transportation services) incidental to the article, provided that the value of those incidental services does not exceed that of the article itself.“United States” means the 50 States, the District of Columbia, and outlying areas.

U.S.-made end product” means an article that is mined, produced, or manufactured in the United States or that is substantially transformed in the United States into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed.

“WTO GPA country end product” means an article that—

(1) Is wholly the growth, product, or manufacture of a WTO GPA country; or

(2) In the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in a WTO GPA country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. The term refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the end product includes services, (except transportation services) incidental to the article, provided that the value of those incidental services does not exceed that of the article itself.

(b) Delivery of end products. The Contracting Officer has determined that the WTO GPA and FTAs apply to this acquisition. Unless otherwise specified, these trade agreements apply to all items in the Schedule. The Contractor shall deliver under this contract only U.S.-made or designated country end products except to the extent that, in its offer, it specified delivery of other end products in the provision entitled “Trade Agreements Certificate.”

(End of clause)

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Julio Cardenas

Julio Cardenas

Senior Consultant
Julio has years of experience helping companies maximize the benefits of GSA Schedule ownership. His expertise spans a broad range of services, including helping companies acquire their GSA Schedule, remaining compliant with the myriad terms and conditions.

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