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.