Subpart 25.4 - Trade Agreements

Parent topic: Part 25 - Foreign Acquisition

25.400 Scope of subpart.

(a) This subpart provides policies and procedures applicable to acquisitions that are covered by-

(1) The World Trade Organization Government Procurement Agreement (WTO GPA), as approved by

Congress in the Uruguay Round Agreements Act (Public Law 103-465);

(2) Free Trade Agreements (FTA), consisting of-

(i) USMCA (United States-Mexico-Canada Agreement, as approved by Congress in the United StatesMexico-Canada Agreement Implementation Act (Government Procurement Agreement applicable

only to the United States and Mexico) (Pub. L. 116-113) (19 U.S.C. chapter 29 (sections 4501-4732));

(ii) Chile FTA (the United States-Chile Free Trade Agreement, as approved by Congress in the

United States-Chile Free Trade Agreement Implementation Act of 1993 (Pub. L. 108-77) (19 U.S.C.

3805 note));

(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) (19 U.S.C.

3805 note));

(iv) Australia FTA (the United States-Australia Free Trade Agreement, as approved by Congress in

the United States-Australia Free Trade Agreement Implementation Act (Pub. L. 108-286) (19 U.S.C.

3805 note));

(v) Morocco FTA (The United States-Morocco Free Trade Agreement, as approved by Congress in

the United States-Morocco Free Trade Agreement Implementation Act (Pub. L. 108-302) (19 U.S.C.

3805 note));

(vi) CAFTA-DR (The Dominican Republic-Central America-United States Free Trade Agreement, as

approved by Congress in the Dominican Republic-Central America-United States Free Trade

Agreement Implementation Act (Pub. L. 109-53) (19 U.S.C. 4001 note));

(vii) Bahrain FTA (the United States-Bahrain Free Trade Agreement, as approved by Congress in the

United States-Bahrain Free Trade Agreement Implementation Act (Pub. L. 109-169) (19 U.S.C. 3805

note));

(viii) Oman FTA (the United States-Oman Free Trade Agreement, as approved by Congress in the

United States-Oman Free Trade Agreement Implementation Act (Pub. L. 109-283) (19 U.S.C. 3805

note));

(ix) Peru FTA (the United States-Peru Trade Promotion Agreement, as approved by Congress in the

United States-Peru Trade Promotion Agreement Implementation Act (Pub. L. 110-138) (19 U.S.C.

3805 note));

(x) Korea FTA (the United States–Korea Free Trade Agreement Implementation Act (Pub. L. 112-41)

(19 U.S.C. 3805));
(xi) Colombia FTA (the United States–Colombia Trade Promotion Agreement Implementation Act

(Pub. L. 112-42) (19 U.S.C. 3805 note)); and

(xii) Panama FTA (the United States-Panama Trade Promotion Agreement Implementation Act (Pub.

L. 112-43) (19 U.S.C. 3805 note));

(3) The least developed country designation made by the U.S. Trade Representative, pursuant to the

Trade Agreements Act (19 U.S.C. 2511(b)(4)), in acquisitions covered by the WTO GPA;

(4) The Caribbean Basin Trade Initiative (CBTI) (determination of the U.S. Trade Representative that

end products or construction material granted duty-free entry from countries designated 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 in acquisitions covered by the WTO GPA);

(5) 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

(6) The Agreement on Trade in Civil Aircraft (U.S. Trade Representative waiver of the Buy American

statute 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;

(3) Acquisitions of end products for resale;

(4) Acquisitions from Federal Prison Industries, Inc., under subpart 8.6, and acquisitions under

subpart 8.7, Acquisition from Nonprofit Agencies Employing People Who Are Blind or Severely

Disabled;

(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; or sole source

acquisitions justified in accordance with 13.501(a); and

(6) Goods and services specifically excluded under individual trade agreements, such as exceptions

negotiated by the U.S. Trade Representative for particular agencies. See the agency supplementary

regulations.

(b) In the World Trade Organization Government Procurement Agreement (WTO GPA) and each FTA,

there is a U.S. schedule that lists services that are excluded from that agreement in acquisitions by

the United States. Acquisitions of the following services are excluded from coverage by the U.S.

schedule of the WTO GPA or an FTA as indicated in this table:
The Service

(Federal Service Codes from

the Federal Procurement

Data System Product/Service

Code Manual are indicated in

paren-theses for some

services.)

WTO

GPA

and

KOREA

FTA

Bahrain

FTA,

CAFTA-DR,

Chile FTA,

Columbia

FTA,

USMCA,

Oman FTA,

Panama

FTA, and

Peru FTA

Singapore

FTA

Australia

and

Morocco

FTA

(1)

All services purchased in

support of military services

overseas.

X X X X

(2)

(i) Automatic data processing

(ADP) telecommunications

and transmission services

(D304), except enhanced

(i.e., value-added)

telecommunications services.

X X

(ii) 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).

X X

(iii) Basic

telecommunications network

services ( i.e., voice

telephone services, packetswitched data transmission

services, circuit-switched

data transmission services,

telex services, facsimile

services, and private leased

circuit services, but not

information services, as

defined in 47 U.S.C.153(24)).

* * X X

(3) Dredging. X X X X
(4)

(i) Operation and

management contracts of

certain Government or

privately owned facilities

used for Government

purposes, including

Federally Funded Research

and Development Centers.

X X

(ii) 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.

** X ** X

(5) Research and development. X X X X

(6)

Transportation services

(including launching

services, but not including

travel agent services).

X X X X

(7) Utility services. X X X X

(8)

Maintenance, repair,

modification, rebuilding and

installation of equipment

related to ships (J019).

X X

(9) Nonnuclear ship repair

(J998). X X

* Note1. Acquisitions of the services listed at (2)(iii) of this table are a subset of the excluded

services at (2)(i) and (ii), and are therefore not covered under the WTO GPA.

** Note2. Acquisitions of the services listed at (4)(ii) of this table are a subset of the excluded

services at (4)(i), and are therefore not covered under the WTO GPA.

25.402 General.

(a)
(1) The Trade Agreements Act (19 U.S.C.2501, et seq.) provides the authority for the President to

waive the Buy American statute and other discriminatory provisions for eligible products from

countries that have signed an international trade agreement with the United States, or that meet

certain other criteria, such as being a least developed country. The President has delegated this

waiver authority to the U.S. Trade Representative. In acquisitions covered by the WTO GPA, Free

Trade Agreements, or the Israeli Trade Act, the U.S. Trade Representative has waived the Buy

American statute and other discriminatory provisions for eligible products. Offers of eligible

products receive equal consideration with domestic offers.

(2) 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 covered by 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:

Table 1 to Paragraph (b)

Trade Agreement

Supply Contract

(equal to or

exceeding)

Service Contract

(equal to or

exceeding)

Construction

Contract (equal to or

exceeding)

WTO GPA $174,000 $174,000 $6,708,000

FTAs

Australia FTA 102,280 102,280 6,708,000

Bahrain FTA 174,000 174,000 13,296,489

CAFTA-DR (Costa Rica,

Dominican Republic, El

Salvador, Guatemala,

Honduras, and

Nicaragua)

102,280 102,280 6,708,000

Chile FTA 102,280 102,280 6,708,000

Colombia FTA 102,280 102,280 6,708,000

Korea FTA 100,000 100,000 6,708,000

Morocco FTA 174,000 174,000 6,708,000

USMCA
-Mexico 102,280 102,280 13,296,489

Oman FTA 174,000 174,000 13,296,489

Panama FTA 174,000 174,000 6,708,000

Peru FTA 174,000 174,000 6,708,000

Singapore FTA 102,280 102,280 6,708,000

Israeli Trade Act 50,000 - -

25.403 World Trade Organization Government Procurement

Agreement and Free Trade Agreements.

(a) Eligible products from WTO GPA and FTA countries are entitled to the nondiscriminatory

treatment specified in 25.402(a)(1). The WTO GPA and FTAs specify procurement procedures

designed to ensure fairness (see 25.408).

(b) Thresholds.

(1) To determine whether the acquisition of products by lease, rental, or lease-purchase contract

(including lease-to-ownership, or lease-with-option-to purchase) is covered by the WTO GPA or an

FTA, 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

WTO GPA or an FTA applies. Do not divide any acquisition with the intent of reducing the estimated

value of the acquisition below the dollar threshold of the WTO GPA or an FTA.
(c) Purchase restriction.

(1) Under the Trade Agreements Act (19 U.S.C. 2512), in acquisitions covered by the WTO GPA,

acquire only U.S.-made or designated country end products or U.S. or designated country services,

unless offers for such end products or services are either not received or are insufficient to fulfill the

requirements. This purchase restriction does not apply below the WTO GPA threshold for supplies

and services, even if the acquisition is covered by an FTA.

(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 Least developed countries.

For acquisitions covered by the WTO GPA, least developed country end products, construction

material, and services must be treated as eligible products.

25.405 Caribbean Basin Trade Initiative.

Under the Caribbean Basin Trade Initiative, the United States Trade Representative has determined

that, for acquisitions covered by the WTO GPA, Caribbean Basin country end products, construction

material, and services must be treated as eligible products. In accordance with Section 201 (a)(3) of

the Dominican Republic-Central America-United States Free Trade Implementation Act (Pub. L.

109-53) (19 U.S.C. 4031), when the CAFTA-DR agreement enters into force with respect to a

country, that country is no longer designated as a beneficiary country for purposes of the Caribbean

Basin Economic Recovery Act, and is therefore no longer included in the definition of "Caribbean

Basin country" for purposes of the Caribbean Basin Trade Initiative.

25.406 Israeli Trade Act.

Acquisitions of supplies by most agencies are covered by the Israeli Trade Act, if the estimated value

of the acquisition is $50,000 or more but does not exceed the WTO GPA threshold for supplies (see

25.402(b)). 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 statute. 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 statute 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 Albania, Austria, Belgium, Bulgaria, Canada, Croatia,
Cyprus, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece,

Hungary, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Macao China, Malta, Montenegro, the

Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland,

Taiwan (Chinese Taipei), and the United Kingdom.

25.408 Procedures.

(a) If the WTO GPA 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;

(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 WTO GPA or FTA countries notice in accordance with

14.409-1 or 15.503.

(b) See subpart 25.5 for evaluation procedures and examples.