Alert
Alert
05.19.16
On May 5, 2016—without advance warning—thousands of U.S. General Services Administration (GSA) Multiple Award Schedule (MAS) contract holders received a notice requiring them to verify—within one week—the country of origin (COO) for all products on their Schedule contracts. This Notice continues a trend of increased congressional and regulatory scrutiny over “Made in the USA” claims for products sold pursuant to the GSA Schedule, as well as compliance with applicable laws, such as the Trade Agreements Act (TAA), 19 U.S.C. § 2501, et seq.
I. The Trade Agreements Act (TAA)
The TAA is the enabling statute that implements numerous multilateral and bilateral international trade agreements and other trade initiatives. Under the TAA, contractors must provide either U.S.-made or designated-country end products. “Designated countries” are countries that are signatories to the World Trade Organization Government Procurement Agreement, a Free Trade Agreement Country, and certain developing and Caribbean Basin countries.1 Importantly, India, China, Malaysia and Philippines are not designated countries. If a product or service has a COO that is not TAA-eligible, it may not be supplied in connection with TAA-covered procurements without a government waiver.
The TAA applies to U.S. Government acquisitions over a certain dollar threshold (currently $191,000 for most covered supply contracts). Since the estimated dollar value of each GSA Schedule exceeds the established TAA threshold, it is GSA’s position that the TAA is applicable to all Schedules.
To meet the TAA’s COO requirement, items must either be:
a. Wholly grown, produced, or manufactured in the U.S. or a designated country; or
b. Substantially transformed into new and different articles of commerce in the U.S. or a Designated Country. See 19 USC 2518(4)(b).
A “substantial transformation” occurs when a new and different article of commerce emerges from a process with a new name, character or use different from that possessed by the article prior to processing. The test is based on a totality of the circumstances. Generally speaking, a “complex and meaningful” manufacturing process will satisfy the test, while “mere assembly” of components which leaves the identity of the imported article intact will not.
GSA Schedule Contractors who may source components for their products from non-designated countries must ensure these components are substantially transformed either in the United States or a designated country. Determining the COO of an end product is typically a complex and involved process. To assist in this analysis, contractors may seek either an advisory opinion or final determination from U.S. Customs and Border Protection (CBP). Pursuant to Subpart B of Part 177, 19 CFR § 177.21 et seq., which implements Title III of the TAA, CBP issues country of origin advisory rulings and final determinations as to whether an article is or would be a product of a designated country or instrumentality for products offered for sale to the U.S. Government.
II. The GSA Notice
The GSA Notice requires each vendor with products listed on GSA Advantage to review their entire product offering and submit a spreadsheet that verifies the COO for each product approved on the GSA contract. For any item found to be manufactured in the United States or a TAA designated country, the vendor must provide either:
Download: GSA Issues Notice Concerning Trade Agreements Act and “Made in America” Compliance
(1)A World Trade Organization Government Procurement Agreement country (Armenia, Aruba, Austria, Belgium, Bulgaria, Canada, Croatia, 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, Romania, Singapore, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Taiwan (known in the World Trade Organization as “the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei))”, or United Kingdom);
(2)A Free Trade Agreement country (Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Korea (Republic of), Mexico, Morocco, Nicaragua, Oman, Panama, Peru, or Singapore);
(3)A least developed country (Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, Central African Republic, Chad, Comoros, Democratic Republic of Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, Laos, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Nepal, International Trade Niger, Rwanda, Samoa, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, Tanzania, Timor-Leste, Togo, Tuvalu, Uganda, Vanuatu, Yemen, or Zambia); or
(4)A Caribbean Basin country (Antigua and Barbuda, Aruba, Bahamas, Barbados, Belize, Bonaire, British Virgin Islands, Curacao, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, Saba, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Saint Eustatius, Saint Maarten, or Trinidad and Tobago).