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Subpart 25.4- Trade Agreements

25.400 Scope of subpart.

(a) This subpart provides policies and procedures applicable to acquisitions that are subject to-
(1) The Trade Agreements Act (the Agreement on Government Procurement, as approved by Congress in the Trade Agreements Act of 1979 (19 U.S.C. 2501, et seq.), and as amended by the Uruguay Round Agreements Act (Pub. L. 103-465));
(2) The Caribbean Basin Trade Initiative (the determination of the U.S. Trade Representative that end products granted duty-free entry from countries designated by the President as beneficiaries under the Caribbean Basin Economic Recovery Act (19 U.S.C. 2701, et seq.), with the exception of Panama, must be treated as eligible products under the Trade Agreements Act);
(3) Free Trade Agreements (FTA), consisting of-
(i) NAFTA (the North American Free Trade Agreement, as approved by Congress in the North American Free Trade Agreement Implementation Act of 1993 (19 U.S.C. 3301 note));
(ii) Chile FTA (the United States-Chile Free Trade Agreement, as approved by Congress in the United States-Chile Free Trade Agreement Implementation Act (Pub. L. 108-77)); and
(iii) Singapore FTA (the United States-Singapore Free Trade Agreement, as approved by Congress in the United States-Singapore Free Trade Agreement Implementation Act (Pub. L. 108-78));
(4) The Israeli Trade Act (the U.S.-Israel Free Trade Area Agreement, as approved by Congress in the United States-Israel Free Trade Area Implementation Act of 1985 (19 U.S.C. 2112 note)); or
(5) The Agreement on Trade in Civil Aircraft (U.S. Trade Representative waiver of the Buy American Act for signatories of the Agreement on Trade in Civil Aircraft, as implemented in the Trade Agreements Act of 1979 (19 U.S.C. 2513)).
(b) For application of the trade agreements that are unique to individual agencies, see agency regulations.

25.401 Exceptions.

(a) This subpart does not apply to-
(1) Acquisitions set aside for small businesses;
(2) Acquisitions of arms, ammunition, or war materials, or purchases indispensable for national security or for national defense purposes, including all services purchased in support of military forces located overseas;
(3) Acquisitions of end products for resale;
(4) Acquisitions under Subpart 8.6, Acquisition from Federal Prison Industries, Inc., and Subpart 8.7, Acquisition from Nonprofit Agencies Employing People Who Are Blind or Severely Disabled; and
(5) Other acquisitions not using full and open competition, if authorized by Subpart 6.2 or 6.3, when the limitation of competition would preclude use of the procedures of this subpart (but see 6.303-1(d)); or sole source acquisitions justified in accordance with 13.501(a).
(b) Acquisitions of the following services are excluded from coverage of the trade agreements indicated in parentheses. Federal Service Codes from the Federal Procurement Data System Product/Service Code Manual may also be indicated in parentheses for some services:
(1) Automatic data processing (ADP) telecommunications and transmission services (D304), except enhanced (i.e., value-added) telecommunications services (Trade Agreements Act (TAA), all FTAs).
(2) ADP teleprocessing and timesharing services (D305), telecommunications network management services (D316), automated news services, data services or other information services (D317), and other ADP and telecommunications services (D399) (Chile FTA, NAFTA).
(3) Basic telecommunications network services, i.e., voice telephone services, packet-switched data transmission services, circuit-switched data transmission services, telex services, telegraph services, facsimile services, and private leased circuit services. This exclusion does not include information services, as defined in 47 U.S.C. 153(20) (Singapore FTA).
(4) Dredging (TAA, all FTAs).
(5) Operation and management contracts of certain Government or privately owned facilities used for Government purposes, including Federally Funded Research and Development Centers (TAA, Singapore FTA).
(6) Operation of all Department of Defense, Department of Energy, or the National Aeronautics and Space Administration facilities; and all Government-owned research and development facilities or Government-owned environmental laboratories (Chile FTA and NAFTA).
(7) Maintenance, repair, modification, rebuilding and installation of equipment related to ships (Chile FTA and NAFTA).
(8) Nonnuclear ship repair (Chile FTA and NAFTA).
(9) Research and development (TAA, all FTAs).
(10) Transportation services (including launching services, but not including travel agent services) (TAA, all FTAs).
(11) Utility services (TAA, all FTAs).

25.402 General.

(a) The trade agreements waive the applicability of the Buy American Act for some foreign supplies and construction materials from certain countries. The Trade Agreements Act and FTAs specify procurement procedures designed to ensure fairness. When the restrictions of the Buy American Act are waived for eligible products, offers of those products (eligible offers) receive equal consideration with domestic offers. Under the Trade Agreements Act, only U.S.-made end products or U.S. services or eligible products, including services, may be acquired (also see 25.403(c)). The contracting officer shall determine the origin of services by the country in which the firm providing the services is established. See Subpart 25.5 for evaluation procedures for supply contracts subject to trade agreements.
(b) The value of the acquisition is a determining factor in the applicability of trade agreements. Most of these dollar thresholds are subject to revision by the U.S. Trade Representative approximately every 2 years. The various thresholds are summarized as follows:
Trade
Agreement
Supply
Contract
(equal to or exceeding)
Service
Contract
(equal to or exceeding)
Construc-tion Contract
(equal to or exceeding)
TAA/CBTI*
$175,000
$175,000
$6,725,000
FTAs



  NAFTA
          -Canada

25,000

25,000

7,611,532
           -Mexico
58,550
58,550
7,611,532
  Chile FTA
58,550
58,550
6,725,000
  Singapore FTA
58,550
58,550
6,725,000
Israeli Trade Act
50,000
-      
-

* TAA/CBTI=Trade Agreements Act/Caribbean Basin Trade Initiative.

25.403 Trade Agreements Act.

(a) General. The Trade Agreements Act-
(1) Authorizes waiver of application of the Buy American Act to the end products and construction materials of designated countries;
(2) Prohibits discriminatory practices based on foreign ownership;
(3) Requires certain procurement procedures designed to ensure fairness (see 25.408).
(b) Thresholds.
(1) To determine whether the Trade Agreements Act applies to the acquisition of products by lease, rental, or lease-purchase contract (including lease-to-ownership, or lease-with-option-to purchase), calculate the estimated acquisition value as follows:
(i) If a fixed-term contract of 12 months or less is contemplated, use the total estimated value of the acquisition.
(ii) If a fixed-term contract of more than 12 months is contemplated, use the total estimated value of the acquisition plus the estimated residual value of the leased equipment at the conclusion of the contemplated term of the contract.
(iii) If an indefinite-term contract is contemplated, use the estimated monthly payment multiplied by the total number of months that ordering would be possible under the proposed contract, i.e., the initial ordering period plus any optional ordering periods.
(iv) If there is any doubt as to the contemplated term of the contract, use the estimated monthly payment multiplied by 48.
(2) The estimated value includes the value of all options.
(3) If, in any 12-month period, recurring or multiple awards for the same type of product or products are anticipated, use the total estimated value of these projected awards to determine whether the Trade Agreements Act applies. Do not divide any acquisition with the intent of reducing the estimated value of the acquisition below the dollar threshold of the Trade Agreements Act.
(c) Purchase restriction.
(1) In acquisitions subject to the Trade Agreements Act, acquire only U.S.-made end products or U.S. services, or eligible products (designated, Caribbean Basin, or FTA country end products or services) unless offers for such end products or services are either not received or are insufficient to fulfill the requirements.
(2) This restriction does not apply to purchases of supplies by the Department of Defense from a country with which it has entered into a reciprocal agreement, as provided in departmental regulations.

25.404 Caribbean Basin Trade Initiative.

Under the Caribbean Basin Trade Initiative, the United States Trade Representative has determined that, for acquisitions subject to the Trade Agreements Act, Caribbean Basin country end products and services must be treated as eligible products.

25.405 Free Trade Agreements (FTAs).

(a) General. Eligible products from FTA countries are entitled to the same nondiscriminatory treatment specified under the Trade Agreements Act (see 25.403(a)).
(b) The FTAs do not prohibit the purchase of other foreign end products or services.

25.406 Israeli Trade Act.

Acquisitions of supplies by most agencies are subject to the Israeli Trade Act, if the estimated value of the acquisition is $50,000 or more but does not exceed the Trade Agreements Act threshold for supplies (see Subpart 25.4). Agencies other than the Department of Defense, the Department of Energy, the Department of Transportation, the Bureau of Reclamation of the Department of the Interior, the Federal Housing Finance Board, and the Office of Thrift Supervision must evaluate offers of Israeli end products without regard to the restrictions of the Buy American Act. The Israeli Trade Act does not prohibit the purchase of other foreign end products.

25.407 Agreement on Trade in Civil Aircraft.

Under the authority of Section 303 of the Trade Agreements Act, the U.S. Trade Representative has waived the Buy American Act for civil aircraft and related articles, that meet the substantial transformation test of the Trade Agreements Act, from countries that are parties to the Agreement on Trade in Civil Aircraft. Those countries are Austria, Belgium, Bulgaria, Canada, Denmark, Egypt, Finland, France, Germany, Greece, Ireland, Italy, Japan, Luxembourg, Macao, the Netherlands, Norway, Portugal, Romania, Spain, Sweden, Switzerland, and the United Kingdom.

25.408 Procedures.

(a) If the Trade Agreements Act or an FTA applies (see 25.401), the contracting officer must-
(1) Comply with the requirements of 5.203, Publicizing and response time;
(2) Comply with the requirements of 5.207, Preparation and Transmittal of Synopses, including the appropriate "Numbered Note";
(3) Not include technical requirements in solicitations solely to preclude the acquisition of eligible products;
(4) Specify in solicitations that offerors must submit offers in the English language and in U.S. dollars (see 52.214-34, Submission of Offers in the English Language, and 52.214-35, Submission of Offers in U.S. Currency, or paragraph (c)(5) of 52.215-1, Instruction to Offerors-Competitive Acquisitions); and
(5) Provide unsuccessful offerors from designated or FTA countries notice in accordance with 14.409-1 or 15.503.
(b) See Subpart 25.5 for evaluation procedures and examples.

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