Companies with a General Services Administration (GSA) contract must comply with the Trade Agreements Act (TAA). Products sold through the GSA must originate or be substantially transformed in the U.S. or a TAA-designated country.
What Is Trade Agreements Act Compliance?
TAA compliance means that products sold under a GSA Schedule must not come from the following non-TAA countries:
- China
- India
- Indonesia
- Iran
- Iraq
- Malaysia
- Pakistan
- Russia
- Sri Lanka
- Brazil
Companies must not buy goods manufactured in these countries to avoid violating GSA Schedule requirements. They should also verify that any product they sell was substantially transformed in TAA-designated countries (listed below).
Substantial transformation means turning an item into a new commercial product with a different character, use, or name. If you’re selling goods that have undergone multiple production processes outside the US, the substantial transformation rule applies to the last country the products were in before reaching the US. To maintain compliance, 50% of the production must have occurred in TAA-designated countries, including the US.
TAA Compliance Checklist
Businesses using materials or selling products manufactured outside the US should follow the TAA requirements below to avoid potential issues:
- Ensure correct and complete documentation of the country of origin (COO), including the COO code and the latest country of origin.
- Maintain a record of all agreements with suppliers.
- Ensure you know the latest information from the US Customs and Border Protection (CBP), the agency that determines how TAA is applied.
- Keep a comprehensive inventory of sample products and product markings.
- Research and quickly address any TAA compliance issues within the company.
- Join product training and sampling regularly.
- Consult professionals for expert guidance on TAA compliance issues.
How to Identify TAA-Compliant Products From Non-TAA-Compliant Products
The best way to determine whether a product complies with TAA guidelines is to verify with the provider. TAA-compliant organizations usually provide relevant TAA information about their products on their websites.
For example, on the TAA compliance page on Fortinet’s website, the company declares that it offers G and USG products for organizations that must comply with TAA. The products are validated with the country of origin, as required by TAA. In another example, IBM proclaims on its QRadar certification page that all its QRadar xx28-C appliances are TAA-compliant.
Conversely, identifying non-TAA-compliant products can be tricky. However, there are red flags to watch out for:
- Contractors and manufacturers who don’t know or understand TAA compliance requirements
- Products not commonly available in the US or any of the TAA-compliant countries
- Resellers who can’t provide the latest data on their products’ country of origin
- Materials purchased from suppliers who cannot establish the country of origin or provide TAA certification
- Products manufactured in countries whose status changed from TAA-compliant to non-compliant
Countries That Comply With the Trade Agreements Act
As of 2021, there are four officially recognized TAA-compliant country groups, according to the Federal Acquisition Regulation (FAR):
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World Trade Organization (WTO) Agreement on Government Procurement (GPA) Countries
WTO Agreement and GPA Procurement countries are Armenia, Aruba, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Israel, Japan, the Republic of Korea, and Latvia.
The list also includes Liechtenstein, Lithuania, Luxembourg, Malta, Moldova, Montenegro, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Singapore, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Taiwan, Ukraine, and the United Kingdom.
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Free Trade Agreement Countries
This group includes Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, the Republic of Korea, Mexico, Morocco, Nicaragua, Oman, Panama, Peru, and Singapore.
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Least Developed Countries
Under this classification are Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, the Central African Republic, Chad, Comoros, the Democratic Republic of Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, Laos, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, and Nepal.
Also included are Niger, Rwanda, Samoa, Sao Tome, and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, Tanzania, Timor-Leste, Togo, Tuvalu, Uganda, Vanuatu, Yemen, and Zambia.
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Caribbean Basin Countries
Included here are Antigua and Barbuda, Aruba, Bahamas, Barbados, Belize, Bonaire, the 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, and Trinidad and Tobago.
Companies using, selling, and working with products and services made outside the US must understand and follow TAA requirements to remain compliant. Noncompliant businesses forfeit their chances of securing highly profitable government contracts.
Securing GSA Schedule contracts with government agencies can be lucrative. And because the government can only use TAA-compliant products, understanding what the TAA requires is the first step toward maintaining compliance and avoiding hefty fines.
