The Trade Agreements Act (TAA) is a US federal law passed in 1979 that specifies where the US government is permitted to source goods. Above certain contract values, government agencies may only purchase products that have been manufactured or ‘substantially transformed’ in the US or in an approved partner country. In the case of IT hardware, this is referred to as TAA compliance.
A product is TAA-compliant if its economic origin lies in a recognised country – either because it was manufactured there or because it underwent a substantial transformation there. A substantial transformation means that the individual parts are combined to create a new product with its own name, character or intended use. Mere repackaging or simple assembly is generally not sufficient for this.
Important: There is no official TAA certification. Conformity is a self-declaration by the supplier, who is liable for its accuracy. Nor does the place of dispatch indicate anything about conformity – the sole determining factor is place of manufacture or transformation.
Around 120 countries are considered eligible, including the US, Germany and the rest of the EU, Switzerland, the UK, Japan, Canada, Mexico, Taiwan and South Korea. Countries that are not eligible include China, Malaysia, Thailand and Vietnam – key manufacturers of network hardware, of all places. The binding list is set out in the US procurement clause FAR 52.225-5.
TAA compliance is effectively the ticket to doing business with US government agencies, for example through the framework contracts of the General Services Administration (GSA). For companies in German-speaking countries, this is of interest for two reasons: Firstly, ‘Made in Germany/EU’ is considered an approved origin. Secondly, customers in Europe – such as US military bases or subsidiaries of US corporations – may also contractually require TAA compliance.
