US Trade Agreements Act of 1979

In this month’s blog, I wanted to start out the new year talking about the US Trade Agreements Act of 1979 (“TAA”). Yes, the TAA (19 U.S.C. § 2501 et seq) continues to be one of the main pain points of GSA and USG contractors and at the same time, one of the most confusing subjects to tackle. This is no more evident than in the latest DOJ lawsuit filed on November 24, 2010 against four GSA contractors. All four of these contractors have a Schedule 75 contract for Office Products / Supplies and the DOJ alleges they “offered for sale and actually sold products that did not comply with the TAA.” Here is a relevant introductory section from the filing:

“5. Each of the defendants entered into a MAS contract with GSA for the sale of office supply products. At the time of contract award and on occasions thereafter, each defendant agreed that it would sell to the United States Government only end products that originated in designated countries, and that it would not sell end products that originated in non-designated countries such as China, India, and Malaysia. But in fact, over the course of their GSA MAS Schedule 75 Contracts, each of the defendants knowingly offered for sale to Federal agency customers through the federal supply schedule office supply products that originated in non-designated countries, and sold and submitted invoices for payment to Federal agencies for thousands of individual office products that originated in China and other non-designated countries. Each of these invoices for TAA non-compliant items were false claims to which defendants were not entitled to be paid. As a result of these actions by defendants, the United States paid false claims for millions of dollars of non-compliant products that it would not have paid had it known that the products originated in non-designated countries.”

Scary huh. Many GSA contractors don’t fully understand the TAA and what countries are approved or “designated” and what are not. The TAA requires that all products sold to the US Government be manufactured in one of a list of designated countries deemed to trade fairly with the United States. Verifying the county where a product was manufactured is a very difficult process for a reseller or dealer. This can be almost impossible for a reseller or dealer that offers tens (or even hundreds) of thousands of products. Every GSA contractor is required to verify the Country Of Origin (“COO”) for each product and ensure their TAA compliance before adding it to their GSA contract and selling it to the government. I don’t think it’s unreasonable to think that many contractors with a long pricelist don’t fully vent each product properly. And don’t think it’s only contractors under the Office Products / Supplies Schedule 75 that face this daunting task. I know plenty of technology and security product companies who also have these challenges (both at the start of contract performance and on a regular basis throughout the life of the contract).

Without speculating too much about this DOJ lawsuit, I wanted to list the current TAA “Designated” countries for everyone’s reference. I hope this will at least serve as a good starting point when you’re considering the USG market (HINT: China is NOT on this list). If you need help with the TAA or COO determinations, please give us a call!

FAR 52.225-5 Trade Agreements.

“Designated country” means any of the following countries:

(1) A World Trade Organization Government Procurement Agreement country (Aruba, Austria, Belgium, Canada, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea (Republic of), Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Singapore, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, or United Kingdom);

(2) Free Trade Agreement country (Australia, Canada, Chile, El Salvador, Honduras, Mexico, Morocco, Nicaragua, or Singapore).

(3) A least developed country (Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, Cape Verde, Central African Republic, Chad, Comoros, Democratic Republic of Congo, Djibouti, East Timor, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, Laos, Lesotho, Madagascar, Malawi, Maldives, Mali, Mauritania, Mozambique, Nepal, Niger, Rwanda, Samoa, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, Tanzania, Togo, Tuvalu, Uganda, Vanuatu, Yemen, or Zambia); or

(4) A Caribbean Basin country (Antigua and Barbuda, Aruba, Bahamas, Barbados, Belize, British Virgin Islands, Costa Rica, Dominica, Dominican Republic, Grenada, Guatemala, Guyana, Haiti, Jamaica, Montserrat, Netherlands Antilles, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, or Trinidad and Tobago).

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