TAA stands for Trade Agreements Act, which enables fair and honest international trade and thus requires the U.S. government to only acquire end products from designated countries. This means specifically that the General Services Administration (GSA) must only acquire U.S.–made and/or TAA compliant products. Not everyone on the globe is TAA compliant, which makes it especially hard to source equipment from countries such as China, Russia, India, and Malaysia, and companies who sell products to the U.S. government from these countries are subject to liability. In contrast, a number of European countries, Caribbean Basin countries, Japan, Canada, the U.S., Canada, Mexico, and Australia are designated countries that are TAA compliant. Many contractors think they can acquire these goods from third-party vendors, or companies located in these countries, without realizing that just because these goods are sold at the local Target does not mean the government can acquire them from the contractor. TAA requirements are built into contracts such as GSA and most Department of Defense (DoD) contracts. In fact, all products offered for sale to government entities under GSA schedule contracts must be TAA compliant, regardless of cost.
Clearly, the government has made TAA compliance implementation a priority. With that being said, TAA auditing has led to many businesses being suspended from federal contracting altogether due to non-compliance. TAA auditing, in a sense, is also what competitors are doing to each other. A whistleblower lawsuit filed by one competitor resulted in four office-supply companies paying $27 million in penalties for TAA violations. Regardless of how the violation is exposed, lying to the federal government about TAA compliance status can have serious consequences, from hefty fines to a ban from federal contracting to potential business closure from negative publicity and loss of revenue.
Without a General Services Administration (GSA) schedule contract, it becomes more difficult to sell to contractors. Ensuring TAA compliance is simple enough: choose to work with a reputable manufacturer who can certify their compliance status and back it up with documentation. GSA will also work with schedule contractors to ensure TAA compliance by conducting audits and scheduling periodic product checks. A company who is not a product’s original equipment manufacturer (OEM) should verify with countries of origin quarterly or with catalog updates from suppliers. If a manufacturing source changes within the span of a contract, products will then fall out of compliance and must immediately be removed from the GSA schedule.
TAA compliance requires that companies who sell to the Federal Government only sell products manufactured or “substantially transformed” in the United States or that are made in TAA designated countries, including nations that currently have free trade agreements with the United States. To put it in easily understandable terms, substantially transformed simply means that at least 50% of the product’s overall manufacture cost must originate from the US or TAA designated countries. Many companies have situations where their products are assembled in several countries; however, as long as a minimum of fifty percent of the production is completed in a TAA compliant country, the end product is considered to be TAA compliant. When importing materials from outside the U.S., it’s crucial to know what is TAA compliant. Being aware of these key points will help businesses stay in compliance:
- Always retain all documents and agreements from your supplier.
- Always have the proper documentation of the country origin, whether that be their origin code or marking.
- Stay up to date on U.S Customs border patrol protection information.
- Seek professional help from a lawyer if you’ve had many sales in a country that is not TAA compliant
Understanding TAA compliance standards can be difficult. For over 50 years, SEM has been meeting all appropriate regulatory requirements for destroying classified and sensitive information, including TAA compliance. We strive to educate our clients to successfully stay compliant navigating through these complex TAA requirements. From paper to hard drives to various mixed media, SEM provides TAA compliant data destruction devices to meet any volume or security regulation.