resources · referenceTrade Agreements Act thresholds and designated countries
When the Trade Agreements Act supersedes the Buy American Act, the WTO GPA and FTA dollar thresholds that trigger it, the substantial-transformation test that qualifies a product, and why a Chinese-origin product cannot qualify.
The Trade Agreements Act (19 U.S.C. 2501 et seq., implemented at FAR Subpart 25.4 and FAR 52.225-5/-6) waives the Buy American Act's domestic content test for products of countries the United States has a trade agreement with — but only on acquisitions valued at or above a dollar threshold that varies by agreement, and only for products from a designated country. Below that threshold, or for a product from a country the statute doesn't designate, the ordinary Buy American Act component-cost test governs instead.
The dollar thresholds that trigger it
FAR 25.402(b) sets out the acquisition-value thresholds, by trade agreement and contract type, that determine whether the Trade Agreements Act covers a given acquisition at all. Most of these dollar figures are revised by the U.S. Trade Representative approximately every two years; the table below reflects the values currently codified at FAR 25.402, carried forward from the March 13, 2026 FAR rule (FAC 2026-01).
| Trade agreement | Supply contract | Service contract | Construction contract |
|---|---|---|---|
| WTO Government Procurement Agreement (GPA) | $174,000 | $174,000 | $6,683,000 |
| Korea FTA | $100,000 | $100,000 | $6,683,000 |
| Australia, CAFTA-DR, Chile, Colombia, Singapore FTAs | $105,767 | $105,767 | $6,683,000 |
| USMCA — Mexico | $105,767 | $105,767 | $13,749,689 |
| Bahrain, Oman, Panama, Peru, Morocco FTAs | $174,000 | $174,000 | $6,683,000 – $13,749,689 (varies by agreement) |
| Israeli Trade Act | $50,000 | — | — |
FAR 25.402 is the authoritative, current location for these figures — they change on the U.S. Trade Representative's own schedule, not on any schedule this page controls. A contracting officer calculates the acquisition's estimated value the same way for lease, rental, or indefinite-quantity contracts as for an outright purchase (FAR 25.403(b)): options count, recurring awards in a 12-month period are aggregated, and an acquisition may not be divided to duck below a threshold.
What "designated country" means
FAR 25.003 defines designated country as any of four groups, each with its own list:
- WTO GPA country
- A party to the WTO Government Procurement Agreement — 45 countries and territories, including every EU member state, the United Kingdom, Japan, Canada, Korea, Australia, Switzerland, Israel, Taiwan, Ukraine, and Hong Kong.
- Free Trade Agreement (FTA) country
- A party to one of 16 U.S. free trade agreements: Australia, Bahrain, Chile, Colombia, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Korea, Mexico, Morocco, Nicaragua, Oman, Panama, Peru, or Singapore.
- Least developed country
- One of 44 countries the statute lists by name, including Afghanistan, Bangladesh, Haiti, Nepal, Yemen, and Zambia.
- Caribbean Basin country
- One of 20 countries and territories in the Caribbean Basin Trade Initiative, including Jamaica, Trinidad and Tobago, Haiti, and Guyana — subject to product-specific carve-outs (tuna, petroleum, watches, and certain textile and apparel articles are excluded from Caribbean Basin country end product status regardless of origin).
A designated country end product is a product from any one of these four groups. A U.S.-made end product is the identical test applied to the United States itself. FAR 52.225-5 requires a contractor to deliver only U.S.-made or designated country end products on a covered acquisition, except for line items it identifies otherwise on the Trade Agreements Certificate, FAR 52.225-6.
The substantial transformation test
Every one of FAR 25.003's designated-country-end-product definitions uses the identical operative language: an article qualifies if it is wholly the growth, product, or manufacture of the country in question, or — where it consists in whole or in part of materials from another country — has been substantially transformed there "into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed."
That is a single, binary country-of-origin question, decided by where the last substantial transformation happened — not a calculation run against a bill of materials. It is the same test FAR 25.003 uses to define a U.S.-made end product, just relocated to a different country.
Why China doesn't qualify
China is not a WTO GPA party, not a party to any of the 16 U.S. free trade agreements, not on the least-developed-country list, and not a Caribbean Basin country. A product wholly made in China, or last substantially transformed there, cannot be a U.S.-made end product or a designated country end product under any of FAR 25.003's four categories — it is, in the FAR's own term, a noneligible product.
That absence carries a statutory consequence beyond simply missing out on equal consideration. Under 19 U.S.C. 2512(a)(1)(A), once a waiver for the WTO GPA is in effect, the President must prohibit the procurement of products "of a foreign country or instrumentality which is not designated" — subject only to the exception in 2512(a)(2), where no offer of a U.S.-made, designated country, or domestic product exists, or existing offers are insufficient to meet the requirement. FAR 25.403(c)(1) implements that bar directly: on acquisitions the WTO GPA covers, a contracting officer may acquire only U.S.-made or designated country end products (or U.S. or designated country services), unless no such offers are received or they're insufficient. Below the WTO GPA's own threshold for supplies and services, this purchase restriction does not apply — even if a lower-threshold FTA otherwise covers the acquisition.
The qualifying logic, in order
- Is the acquisition excluded outright? FAR 25.401 excludes small business set-asides, arms/ammunition/war-materials purchases, acquisitions of end products for resale, Federal Prison Industries and AbilityOne acquisitions, non-competitive procurements, and specific services each trade agreement's own U.S. schedule excludes (military support services overseas, certain telecommunications services, dredging, R&D, transportation, and utility services, among others).
- Does the acquisition's value meet a trade agreement's threshold? If it meets the WTO GPA or an FTA threshold from the table above, that agreement's rules apply.
- If covered, is the offered product U.S.-made or from a designated country? If yes, it receives equal consideration with — and, above the WTO GPA threshold specifically, exclusive eligibility over — domestic offers.
- If the product is neither U.S.-made nor from a designated country, it is excluded from award on a WTO GPA–covered line item unless no qualifying offer exists or qualifying offers can't meet the need.
- If the acquisition falls below every applicable threshold, the Trade Agreements Act does not apply at all, and the Buy American Act's domestic content threshold — a percentage-of-component-cost test, not a country-of-origin test — governs instead.
When does the Trade Agreements Act apply instead of the Buy American Act?
When the acquisition's estimated value meets or exceeds the dollar threshold for the trade agreement that covers it — the WTO Government Procurement Agreement (GPA) threshold, or a lower Free Trade Agreement threshold — and none of FAR 25.401's exclusions apply (small business set-asides, arms and war materials, sole-source awards, and a schedule of services each agreement excludes by its own U.S. schedule). Below the applicable threshold, or outside it, the acquisition reverts to the Buy American Act's domestic content test instead.
What is a "U.S.-made or designated country end product"?
Two categories, either of which satisfies FAR 52.225-5's delivery requirement. A U.S.-made end product is mined, produced, or manufactured in the United States, or substantially transformed here into a new and different article of commerce. A designated country end product is the same test applied to one of four groups of countries instead: a WTO GPA country, a Free Trade Agreement (FTA) country, a least developed country, or a Caribbean Basin country, as FAR 25.003 defines and lists each of them.
Why can't a product made in China qualify under the Trade Agreements Act?
China does not appear on any of the four designated-country lists FAR 25.003 defines — not the WTO GPA roster, not any of the 16 FTA partners, not the least developed countries, and not the Caribbean Basin countries. A product wholly made in, or substantially transformed in, a non-designated country is a "noneligible product" under FAR 25.003, and 19 U.S.C. 2512(a)(1)(A) directs the President to bar its procurement on acquisitions the WTO GPA covers, once offers of U.S.-made or designated country products exist to fill the requirement.
How is the Trade Agreements Act's qualifying test different from the Buy American Act's?
The Trade Agreements Act asks a binary, country-of-origin question — substantial transformation: where was the article's last transformation into a new and different article of commerce with a distinct name, character, or use? The Buy American Act instead runs a cost-of-components calculation on a single end product, asking what percentage of its component costs trace to the United States. A product can fail the BAA's percentage test entirely and still qualify outright under the TAA, if its last substantial transformation happened in a designated country.
- FAR Subpart 25.4 — Trade Agreements →
- FAR 25.402 — General (trade agreement dollar thresholds) →
- FAR 25.403 — World Trade Organization Government Procurement Agreement and Free Trade Agreements →
- FAR 25.003 — Definitions (Part 25, Foreign Acquisition) →
- FAR 52.225-5 — Trade Agreements →
- 19 U.S.C. 2512 — Authority to encourage reciprocal competitive procurement practices →