25.402
General
If a procurement meets the applicable trade agreement threshold, eligible products and services from designated countries must generally be treated the same as domestic offers, so contractors must verify both country eligibility and dollar-value coverage.
Overview
- FAR 25.402 explains the basic rule for applying U.S. trade agreements in federal acquisitions. It describes when the Trade Agreements Act (TAA) allows the Government to waive the Buy American statute and similar discriminatory purchasing restrictions for eligible products from designated countries.
- The section also identifies that acquisition value is a key trigger for whether a trade agreement applies, using specific dollar thresholds by agreement and by contract type.
Key Rules
- Trade Agreements Act waiver authority
- The TAA authorizes the President, delegated to the U.S. Trade Representative (USTR), to waive Buy American and other discriminatory provisions for eligible products from countries covered by the WTO GPA, Free Trade Agreements (FTAs), or the Israeli Trade Act. When applicable, offers of eligible products must be evaluated on an equal basis with domestic offers.
- Origin of services
- For service acquisitions, the contracting officer determines origin based on the country where the service provider is established, not where incidental inputs may come from.
- Threshold-based applicability
- Trade agreement coverage depends on the estimated acquisition value and contract type. Thresholds vary by agreement. Examples include $174,000 for many WTO GPA and FTA supply/service contracts, $105,767 for several FTAs, $100,000 for Korea FTA, $50,000 for the Israeli Trade Act, and construction thresholds ranging from $6,683,000 to $13,749,689.
Responsibilities
- Contracting Officers: determine whether the acquisition meets the applicable trade agreement threshold; identify the relevant agreement; determine service origin by the provider’s country of establishment; and evaluate eligible offers without applying Buy American preferences when a waiver applies.
- Contractors: identify whether their offered products or services qualify as eligible under the applicable trade agreement and understand when equal treatment with domestic offers is available.
- Agencies: monitor threshold updates, since USTR revises most thresholds approximately every 2 years.
Practical Implications
- This section matters because it determines when foreign end products and services from designated countries can compete on equal footing with domestic offerings.
- In practice, contractors must pay close attention to agreement-specific thresholds and whether the procurement is for supplies, services, or construction.
- A common pitfall is assuming one threshold applies to all trade agreements or failing to account for periodic threshold revisions.