TAA made Simple, Well kind of…
The Trade Agreements Act (TAA), to simplify states for a manufacturer to be TAA compliant, a manufactured good must wholly made/sourced in the United States, or be substantially transformed within the United States or a designated country within the Trade agreements.
Note: Don’t confuses the Trade Agreements Act (TAA) with the more popular Trade Adjustment Assistance (TAA)
Life is ease if you can satisfy the first requirement, “a manufactured good must wholly made/sourced in the United States”. All this means is if at least 50% of its overall manufacture cost originates from the US or designated countries you are TAA compliant.
If you fail the first requirement lets talk about the second part.
What does substantially transformed mean and who is a designated country? Let’s start with the easier of the two questions.
Who can be considered a Designated Country?
A world map and table are below for your quick and easy view.
TAA Compliant countries are found in the list of agreements under:
- Free Trade Agreement Countries
- World Trade Organization Government Procurement Agreement Countries;
- Least Developed Countries; and Caribbean Basin Countries
Note: See reference notes at the bottom of table
Trade Agreement Act Map
List of TAA Designated Country
| A to E | F to N | N to Z |
| Afghanistan | Finland | New Zealand |
| Angola | France | Nicaragua |
| Antigua & Barbuda | Gambia | Niger |
| Armenia | Germany | Norway |
| Aruba | Greece | Oman |
| Australia | Grenada | Panama |
| Austria | Guatemala | Peru |
| Bahamas | Guinea | Poland |
| Bahrain | Guinea-Bissau | Portugal |
| Bangladesh | Guyana | Romania |
| Barbados | Haiti | Rwanda |
| Belgium | Honduras | Saba |
| Belize | Hong Kong | Samoa |
| Benin | Hungary | Sao Tome & Principe |
| Bhutan | Iceland | Senegal |
| Bonaire | Ireland | Sierra Leone |
| British Virgin Islands | Israel | Singapore |
| Bulgaria | Italy | Sint Eustatius |
| Burkina Faso | Jamaica | Sint Maarten |
| Burundi | Japan | Slovak Republic |
| Cambodia | Kiribati | Slovenia |
| Canada | Korea (Republic of) | Solomon Islands |
| Central African Republic | Laos | Somalia |
| Chad | Latvia | South Sudan |
| Chile | Lesotho | Spain |
| Colombia | Liberia | St. Kitts & Nevis |
| Comoros | Liechtenstein | St. Lucia |
| Costa Rica | Lithuania | St. Vincent & the Grenadines |
| Croatia | Luxembourg | Sweden |
| Curacao | Madagascar | Switzerland |
| Cyprus | Malawi | Taiwan |
| Czech Republic | Mali | Tanzania |
| Democratic Republic of Congo | Malta | Timor-Leste |
| Denmark | Mauritania | Togo |
| Djibouti | Mexico | Trinidad & Tobago |
| Dominica | Moldova | Tuvalu |
| Dominican Republic | Montenegro | Uganda |
| El Salvador | Montserrat | Ukraine |
| Equatorial Guinea | Morocco | United Kingdom |
| Eritrea | Mozambique | Vanuatu |
| Estonia | Nepal | Yemen |
| Ethiopia | Netherlands | Zambia |
What is Substantially Transformed?
This one is not so clear. Why this is so important? if you can control or identify the country of origin than you can claim TAA Compliance.
The simple version we have seen is from the Congressional Research Service.
If still not sure, know that when the Department of Veterans Affairs (VA) and the U.S. Customs and Border Protection (CBP) is found by a federal court to have the wrong interpretation of the TAA, life will be hard for the simple business person. Your not alone.
Great information regarding interpretations: Substantial Transformation of the FAR Trade Agreements Clause,(02.13.20) By Stephan E. Becker, David B. Dixon from Pllsbury and Substantial Transformation of IT Products Under the TAA Requires Careful Consideration,(12/05/16) BY John Parsi from Davis Wright Tremaine LLP
Another great break down reading of the U.S. CODE is from Cornell Law School
So what to do? Some of the best things you can do is to reach out to your TAA representative, hire legal representation and a compliance agency.
(FYI, compliance agencies don’t tend to take legal responsibility for inaccuracies or wrong information. Read the fine print, effectively they are an insurance policy of due diligence as liken to a tax preparer.)
So here is our basic due diligences strategy (You can build off of this for your needs):
- Confirm the Industry you are gathering the information. For example, Textile and textile products may have different rules or schemes, and let’s not get started on Software or IT products.
- Find out what Government Regulation, ACT, or Interpretation you are trying to comply with (GSA, FAR, CBP, FTA, etc.) and follow their rules.
- Document the information and all phone calls, keep digging for more information and most of all, document this repeated cycle.
The number one thing we do as a business for our TAA goods is “just buy off the TAA list”. We have TAA goods and a non TAA goods and have processes to keep them isolated.
The reason this is so hard there are many interpretations of what substantially transformed means. Below is a good case study for understanding, its important to know what you are looking for.
There are Exclusions for TAA
We will update you with more information regarding exclusions. This subject is a touchy subject for small businesses as you may not need to provide TAA regulations which would reduce cost, thus helping you in the bidding process. However, we have seen vendors/installers who buy for Gsa contracts not bid on projects with small business products, as they don’t want to take on any risk without clean/clear paperwork. Therefore you may miss out on some big orders or a buyer may move on. Selling on the GSA web portal yourself is much fairer and, in some cases, may lean on the side of small businesses.