Trade Agreements Act (TAA)

The Trade Agreements Act applies to federal purchases above a threshold set by trade agreement, and it works by waiving the Buy American statute rather than by adding a second domestic requirement. Where it applies, an agency may buy a U.S.-made end product or a designated country end product, and may not buy an end product from a country that is neither.

The test is country of origin, and the rule is substantial transformation. FAR 25.003 defines a U.S.-made end product as one "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." The same wording carries across to the designated country definitions, with the country changed.

Designated countries fall into four groups: parties to the World Trade Organization Government Procurement Agreement, free trade agreement partners, least developed countries, and Caribbean Basin countries. The World Trade Organization group is the largest and includes Australia, Canada, Israel, Japan, the Republic of Korea, the United Kingdom and Taiwan. FAR 25.003 carries the current list, and it changes as countries accede.

Both statutes govern what a federal agency may buy, and a product can satisfy one and fail the other. The tests are not versions of each other.

The Buy American Act asks about components. It requires that an article be manufactured in the United States and that the cost of its domestic components exceed a threshold percentage of the cost of all components. That percentage is 65 percent for items delivered in calendar year 2026 and rises to 75 percent for items delivered from 2029.

The Trade Agreements Act asks about countries. It requires that the end product be made in, or substantially transformed in, the United States or one of the designated countries, and it counts no percentages at all. A product substantially transformed in a designated country is acceptable under the Trade Agreements Act and is not a domestic end product under the Buy American Act.

Which statute a purchase is subject to depends on the contract value and the clauses in the solicitation, and that is why a solicitation names the clause it is written to. A supplier who answers "we are compliant" without naming the statute and the test has not answered the question.

A Trade Agreements Act certification is made against a specific solicitation, for the end products on that order, at the time it is signed. It is a representation to a contracting officer about identified items.

A statement on a website that a company's products are TAA compliant is a different kind of statement. It is standing, it covers everything the company sells, and it survives changes in sourcing that a per-order certification does not.

For a buyer this distinction is practical rather than legal. If a solicitation carries a Trade Agreements Act clause, the useful step is to send the clause and the configuration and get an answer for that order, because that is the level at which the determination is actually made.