Tag Archives: TAA

Back to Basics: Trade Agreements Act

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The Trade Agreements Act (TAA) and its companion, the Buy American Act (BAA), both set policies for a preference for increased domestic purchases by the federal government and its contractors. However, the TAA is designed as kind of a counterweight to the BAA. The BAA (passed in 1933), “the first of the major domestic content restriction laws, requires federal agencies to apply a price preference for ‘domestic end products’ and use ‘domestic construction materials’ for covered contracts performed in the United States.” So, the BAA encourages use of US-produced goods.

The TAA, on the other hand, waives some of those BAA requirements for goods coming out of certain favored countries that have trade agreements with the US. In other words, the TAA puts items from those favored countries on an even playing field with the US items. The TAA has some other unique aspects, including a “substantial transformation” test to determine if something is an end product.

In this post, we discuss the basics of the TAA.

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FAR Updates Trade Agreement Act Thresholds

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The The Trade Agreements Act (TAA) and its companion, the Buy American Act (BAA), both set policies for a preference for increased domestic purchases by the federal government and its contractors. However, the TAA is designed as kind of a counterweight to the BAA. The BAA (passed in 1933), “the first of the major domestic content restriction laws, requires federal agencies to apply a price preference for ‘domestic end products’ and use ‘domestic construction materials’ for covered contracts performed in the United States.” So, the BAA encourages use of US-produced goods.

The TAA, on the other hand, waives some of those requirements in favor of certain countries. The TAA permits waiver of BAA “domestic content restrictions” with respect to certain “countries that have trade agreements with the United States.” So, for “covered end products or construction materials imported from a designated country” where they are manufactured or transformed “are treated as domestic end products or materials for purposes of the BAA.”

A recent change to the FAR updates the thresholds at which the TAA becomes applicable to federal procurements. Because these thresholds can change, it can have an impact on which contracts are applicable to the TAA versus the BAA.

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TAA Can Apply to Small Business Set-Aside: COC Clarifies Trade Agreements Act and Buy American Act Applicability

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The Trade Agreements Act (TAA) and Buy American Act (BAA) are among the most complex regulatory systems in federal contracting. There’s been a lot of confusion from both contractors and agencies on when they apply to a procurement and how. We have written on the BAA and TAA in the past. Recently, the Court of Federal Claims issued a decision (Davinci Co., LLC v. United States, 178 Fed. Cl. 63 (2025)) discussing how the two laws interact, and showed that how they apply depends significantly on the circumstances of the procurement, providing some clarification on a past GAO decision we wrote on as well (which held that the TAA is inapplicable to small business set-asides). We will explore that here. 

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Some Assembly Required: GAO Addresses How Agencies Should Approach Trade Agreements Act Compliance

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The Trade Agreements Act (TAA) (along with its cousin, the Buy American Act) is one of the more complex acts to deal with in federal government contracting. We have taken a look at the TAA before, noting that it does not apply to small business set-asides and discussing how it applies in its related FAR clause, FAR 52.225-5. One of the key requirements under the TAA, as shown in FAR 52.225-5, is that the product has been “substantially transformed…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” in one of the qualifying countries: the United States, various “qualifying countries”, and “designated countries”. (These countries are ones that the US has a trade agreement with, hence the law’s name) Of course, when agencies receive offers, they generally can’t go visit the assembly sites. This raises the question: When can an agency rely on a contractor’s offer and when must it do a little more digging?

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Federal Circuit Interprets the FAR’s Trade Agreement Act Clause

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It’s relatively rare for the United States Court of Appeals for the Federal Circuit (an intermediate federal appeals court immediately below the Supreme Court) to weigh in on the Trade Agreements Act, as it applies to federal government contracts.

So, when we saw the Federal Circuit’s recent decision on the issue, we had just one thought: this has to make the blog. So, here it is.

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