The Buy American Act is passed in situations where the United States has reciprocal trade agreements, including the World Trade Organization`s agreement on government procurement. The FAR clauses transposing the Trade Agreements Act allow the government to purchase finished products that are „substantially modified“ in countries party to such trade agreements, regardless of the source or cost of the components. Be aware of what you are making available and to which agency to understand the interaction between a free trade agreement and your individual purchase. See tips 3 and 4 above. The rules do a good job of making sure the rules are updated, but many of these international political issues can easily lead to their own lives. For example, in February 2010, the United States and Canada negotiated improved access for Canadian businesses to the expenses of the Recovery Act, and enforcement rules took time to catch up. President Obama „wants to ensure that any legislation that is passed is consistent with trade agreements and does not signal any change in our overall position on trade,“ White House press secretary Robert Gibbs said in a briefing Wednesday. This is a very factual issue, and U.S. Customs and Border Guards have issued numerous guidelines on what constitutes or is not an „essential transformation.“ „Designated countries“ are countries that prefer U.S. trade policy, whether because the U.S. has a free trade agreement (such as the North American Free Trade Agreement or the U.S.-Korea Free Trade Agreement) or because it is small and developing (as with Afghanistan or Haiti). FAR 25.003 lists these countries, including Canada, Germany, Hong Kong, Japan, Mexico, Singapore, South Korea and Taiwan.
Given the number of requirements imposed on the country of origin and the difficulty in understanding how these different statuses interact, most companies do not fully understand what they need to do. As a result, we often see companies asking their suppliers to „certify that a product matches Buy American.“ This certification is not only too broad (because, as mentioned above, „Buy American“ can mean a lot of different things), but also shows a fundamental misunderstanding of what the contract requires….