On May 5, 2016, many schedule contractors received a notice of the government’s continual examination of compliance to the Trade Agreements Act (TAA). Schedule contractors are required to comply with this act by verifying the country of origin for all of their products.
If you are a government contractor, here are a few tips to help you stay compliant.
The TAA states that the product produced by government contractors needs to be wholly grown, produced, or manufactured in the United States or a designated country. According to the Trade Agreements Act, the product can also be “substantially transformed into a new and different article of commerce in the US or designated country.”
To find a list of designated countries, you can reference The Federal Acquisition Regulation section 25.003. Major countries that don’t make the list are China and India. If you obtain products from multiple countries, each country of origin needs to be noted. Also, if you use suppliers, they need to tell you the country of origin for every item they provide for you.
If you are unsure if your product has been transformed in a way to make it compliant, you can find recent rulings on the Customs Ruling Online Search System (CROSS), a searchable database of rulings by the United States Customs and Border Protection (USCBP). In its role of investigating a product’s TAA compliance, the USCBP determines if the manufacturing process has changed the product’s functions or its traits.
If you are a government contractor providing services, the compliance standards are slightly different. The country of origin is determined by where the company is legally established and not by where the services are performed. So even though your services may be performed in another country, if your company is established in the United States or a designated country, you are compliant.
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