The Trade Agreements Act (TAA) is a federal law that governs trade agreements negotiated between the United States and other countries. Enacted on July 26, 1979, the Trade Agreements Act’s stated purposes are:
- Approve and implement the trade agreements negotiated under the Trade Act of 1974
- Foster the growth and maintenance of an open world trading system
- Expand opportunities for the commerce of the United States in international trade
- Improve the rules of international trade and to provide for the enforcement of such rules
Federal Acquisition Regulations (FAR) part 25 restricts purchases to either U.S. made or from “Designated Countries.” U.S. made products are either an article that is mined, produced, or manufactured in the United States or an article that I substantially transformed in the United States into a new and different article of commerce with some form of distinction from which it was produced.
Failure to comply with the Trade Agreements Act can result in a False Claims Act suit from the United States government. In recent years, the increase in FCA cases, President Trump’s Buy American executive order, and a new focus on TAA compliance have led to increased scrutiny of contractors’ TAA compliance efforts. In the 2017 fiscal year, there were 799 FCA cases, resulting in $3.7 billion in recoveries. Non-compliance with the TAA could also result in termination for default, suspension, and debarment.
There are over 100 TAA compliant countries that fall under World Trade Organization (WTO) Government Procurement Agreement countries; Caribbean Basin countries; least developed countries; and Free Trade Agreement countries. Notable countries not included in this list are China, Russia, and Brazil.