The Trade Agreement Act and China: What You Need to Know
The Trade Agreement Act (TAA) is a law that governs the procurement of goods and services by the United States federal government. This act requires that products and services procured by the government must be manufactured or substantially transformed in the United States or in a designated country. However, the question of whether China is a designated country under the TAA is a complex and often confusing issue.
The TAA was enacted in 1979 and has been amended several times since then. The current version of the act, as amended in 2013, defines a “designated country” as a country that has a free trade agreement with the United States, is a member of the World Trade Organization (WTO), or has been designated by the U.S. government as a “least developed country.”
China is a member of the WTO, but it is not currently a party to a free trade agreement with the United States. Therefore, the question of whether products manufactured in China can be procured by the U.S. federal government is a complicated issue that requires careful consideration.
There are some exceptions to the TAA that allow products manufactured in non-designated countries to be procured by the U.S. government. For example, if there are no domestically-made products available that meet the government`s requirements, then products manufactured in non-designated countries can be procured. Additionally, if the cost of domestically-made products is unreasonable, then products manufactured in non-designated countries can be procured.
However, even if an exception applies, there are additional requirements that must be met before products manufactured in non-designated countries can be procured by the U.S. government. For example, products manufactured in non-designated countries must comply with the Trade Agreements Act Certification (TAA Certification) requirements. These requirements specify that the product must be manufactured or substantially transformed in a designated country or by a U.S. manufacturer, and that the cost of the foreign components must not exceed 50% of the total cost of the product.
In summary, the question of whether products manufactured in China can be procured by the U.S. federal government is a complex issue that requires careful consideration. While China is not a designated country under the TAA, there are exceptions that allow products manufactured in non-designated countries to be procured. However, even if an exception applies, there are additional requirements that must be met before products manufactured in non-designated countries can be procured by the U.S. government. It is important for companies that are interested in doing business with the U.S. federal government to be familiar with the TAA and its requirements.