Trade Agreements Act

The current threshold for the applicability of the Trade Agreements Act (for a supply or service contract) is $203,000. The U.S. Trade Representative revises this threshold approximately every two years (refer to FAR 25.402(b)). GSA applies the threshold on a Schedule-wide basis, and therefore the Trade Agreements Act applies to all Schedule contracts and orders. All Schedule products and services must come from the U.S. or a designated country.

Sometimes an item consists of components from various countries, and the components are assembled in an additional country. It can be difficult to determine which country is the “country of origin.” The trade agreements test to determine country of origin is “substantial transformation” (e.g., transforming an article into a new and different article of commerce, with a name, character, or use distinct from the original article) (refer to FAR 25.001(c)).

The responsibility for making a determination of substantial transformation rests solely with the contractor. The contractor can go to The Office of Regulations and Rulings within U.S. Customs and Border Protection, which is the Federal agency responsible for making substantial transformation determinations or giving their opinions. Their determinations or opinions are based upon tariff laws. The contractor may also request an opinion from a third party expert or make the determination on their own.

The website for the U.S. Customs and Border Protection is www.cbp.gov.