What is TAA Compliance?
(Updated: May 2021 )
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.
Are Your Products on GSA Schedule TAA Compliant?
Because the estimated value of a GSA schedule exceeds $191,000, all GSA product sales must be Trade Agreement Act (TAA) compliant, as per FAR 52.225-5. In order to be TAA compliant, Customs and Border Protection (CBP) considers either that 50 percent of the cost of manufacture or location where product is “substantially transformed” is from/within a TAA Designated Country.
If you offer services through your GSA Schedule, 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. Software country of origin is determined in the country where the software was compiled.
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 of 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.”
How 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:
|Afghanistan||Denmark||Latvia||Sao Tome and Principe|
|Antigua and Barbuda||Dominica||Liberia||Sierra Leone|
|Aruba||El Salvador||Lithuania||Sint Eustatius|
|Australia||Equatorial Guinea||Luxembourg||Sint Maarten|
|Belize||Germany||Moldova*||Saint Kitts and Nevis|
|Bhutan||Grenada||Montserrat||Saint Vincent and the Grenadines|
|British Virgin Islands||Guatemala||Mozambique||Switzerland|
|Burkina Faso||Guinea Bissau||Netherlands||Tanzania U.R.|
|Burundi||Guyana||New Zealand||Timor- Leste (East Timor)|
|Canada||Honduras||Niger||Trinidad & Tobago|
|Central African Republic||Hong Kong||Norway||Tuvalu|
|Comoros||Israel||Poland||**United States of America|
|Democratic Republic of the Congo||Italy||Portugal||Vanuatu|
|Cyprus||Korea, Republic of (South)|
**Includes all US Territories: Puerto Rico, US. Virgin Islands, Guam, American Samoa and Northern Mariana Islands.
Non-TAA Compliant Countries List Below:
*FAR 52.225-5 (Reviewed: June 2019); Federal Acquisition Regulation , Trade Agreements.
|Bosnia and Herzegovina||Jordan||Namibia||Syria|
|Brunei Darussalam||Korea, North||Pakistan||Tonga|
|Cape Verde||Kuwait||Papua New Guinea||Turkey|
|Cote d’Ivoire||Lebanon||Philippines||United Arab Emirates|
|Ecuador||Macao||Republic of Congo||Uzbekistan|
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.
Julio is a Senior Consultant with Coley GCS, LLC, a Government Contracts Consulting, Coaching and Training company. Julio has over 10 years’ experience helping companies succeed with their GSA schedules.