FAR 25.4—Subpart 25.4

Scope of subpart.

FAR 25.400 defines the scope of Subpart 25.4, which is the part of the FAR that tells agencies when and how to apply U.S. trade agreement policies in federal acquisitions. It identifies the specific trade agreements and trade-related programs covered by the subpart: the WTO Government Procurement Agreement (WTO GPA), a list of named free trade agreements (including USMCA for U.S.-Mexico procurement coverage, Chile, Singapore, Australia, Morocco, CAFTA-DR, Bahrain, Oman, Peru, Korea, Colombia, and Panama), the least developed country designation under the Trade Agreements Act for acquisitions covered by the WTO GPA, the Caribbean Basin Trade Initiative, the Israeli Trade Act, and the Agreement on Trade in Civil Aircraft. The section also points readers to agency-specific regulations for trade agreements that apply only within particular agencies. In practice, this section is a gateway provision: it does not itself set the detailed evaluation or solicitation rules, but it tells contracting personnel which acquisitions are subject to the trade agreements framework and therefore may require special product eligibility determinations, solicitation clauses, and source selection treatment. For contractors, it signals when foreign end products may be treated as eligible because of a covered agreement, and when agency-specific rules may add another layer of requirements. For contracting officers, it is the starting point for deciding whether a procurement falls under the FAR trade agreements regime or under a separate agency implementation.

Exceptions.

FAR 25.401 explains when the Buy American Act trade-agreements procedures in this subpart do not apply. It covers several categories of exempt acquisitions, including small business set-asides, certain national security and defense purchases, end products bought for resale, acquisitions from Federal Prison Industries and nonprofit agencies employing people who are blind or severely disabled, certain noncompetitive or sole-source acquisitions, and goods or services specifically excluded by individual trade agreements. It also identifies service categories that are excluded from coverage under the WTO Government Procurement Agreement (GPA) and various free trade agreements, such as military-support services overseas, certain ADP and telecommunications services, dredging, facility operation and management, research and development, transportation, utility services, and ship-related maintenance and repair. In practice, this section tells contracting personnel when they do not need to apply the trade-agreement rules in this subpart and when a procurement falls outside the agreement’s coverage because of the type of acquisition or the specific service involved. The practical significance is that it prevents misapplication of trade-agreement requirements, avoids unnecessary evaluation of foreign end products, and helps agencies use the correct acquisition framework for exempt buys.

General.

FAR 25.402 explains the basic framework for applying trade agreements in federal acquisitions. It covers the legal authority behind the Trade Agreements Act waiver of the Buy American statute and other discriminatory provisions, the role of the U.S. Trade Representative in granting that waiver, and the effect of that waiver on eligible products from countries covered by the WTO Government Procurement Agreement (GPA), free trade agreements, and the Israeli Trade Act. It also addresses how to determine the country of origin for services, which is based on where the firm providing the services is established. Finally, it identifies the dollar thresholds that determine when different trade agreements apply to supply, service, and construction contracts, noting that these thresholds are periodically revised. In practice, this section tells contracting officers when trade agreement rules must be considered and tells contractors when their products or services may receive equal treatment with domestic offers.

World Trade Organization Government Procurement Agreement and Free Trade Agreements.

FAR 25.403 explains how the World Trade Organization Government Procurement Agreement (WTO GPA) and Free Trade Agreements (FTAs) affect federal buying of products and services. It covers two main subjects: first, the nondiscriminatory treatment owed to eligible products and services from GPA/FTA countries, including the link to the fairness procedures in FAR 25.408; and second, how to determine whether a lease, rental, lease-purchase, lease-to-ownership, or lease-with-option-to-purchase acquisition is covered by the trade agreements. The section also addresses how to calculate estimated acquisition value for threshold purposes, including treatment of fixed-term, indefinite-term, and uncertain-term arrangements, the inclusion of options, and aggregation of recurring or multiple awards over a 12-month period. It further prohibits splitting acquisitions to avoid the applicable dollar threshold. Finally, it states the Trade Agreements Act purchase restriction for covered WTO GPA acquisitions, including the rule to buy only U.S.-made or designated country end products or U.S. or designated country services unless qualifying offers are unavailable or insufficient, notes that this restriction does not apply below the WTO GPA threshold for supplies and services even when an FTA applies, and identifies a Department of Defense exception for certain reciprocal agreements. In practice, this section is critical because it determines when trade agreement rules apply, what products or services may be accepted, and how contracting officers must structure and evaluate acquisitions to avoid unlawful discrimination or threshold manipulation.

Least developed countries.

FAR 25.404 addresses how the government must treat products and services from least developed countries when an acquisition is covered by the World Trade Organization Government Procurement Agreement (WTO GPA). Its core purpose is to implement U.S. trade obligations by ensuring that least developed country end products, construction material, and services are considered eligible for award on the same basis as other eligible foreign offerings under the GPA. In practice, this means contracting personnel must not exclude these offerings merely because they come from a least developed country, and offerors from those countries may compete where the WTO GPA applies. The section is narrow but important because it affects source selection, evaluation, and compliance with international trade commitments. It also helps contracting officers avoid improper rejection of otherwise eligible foreign products or services in GPA-covered procurements. For contractors, it signals that least developed country origin can matter positively in eligibility determinations under the trade agreements framework.

Caribbean Basin Trade Initiative.

FAR 25.405 explains how the Caribbean Basin Trade Initiative affects federal acquisitions that are covered by the WTO Government Procurement Agreement (GPA). It states that Caribbean Basin country end products, construction material, and services must be treated as eligible products for those covered acquisitions, which means they receive the procurement preference treatment required by the trade agreement framework. The section also ties the rule to the Dominican Republic-Central America-United States Free Trade Implementation Act and explains that, once the CAFTA-DR agreement enters into force for a particular country, that country stops being a beneficiary country under the Caribbean Basin Economic Recovery Act and is no longer included in the FAR definition of a “Caribbean Basin country” for purposes of this initiative. In practice, this section tells contracting personnel when Caribbean Basin-origin items and services qualify for consideration and when a country must be removed from Caribbean Basin status because CAFTA-DR has taken effect. It matters because country eligibility directly affects evaluation, trade agreement coverage, and whether a product or service can be treated as eligible under the applicable procurement rules.

Israeli Trade Act.

FAR 25.406 implements the Israeli Trade Act for certain federal supply acquisitions and explains when Israeli end products receive special treatment. It covers the dollar-value trigger for coverage, the agencies that must apply the rule, the agencies that are excluded, and the practical effect on evaluation of offers containing Israeli end products. The section also makes clear that the rule is limited in scope: it requires agencies to evaluate Israeli end products without applying Buy American restrictions, but it does not bar the purchase of other foreign end products. In practice, this means contracting personnel must know when the acquisition falls within the Israeli Trade Act threshold, whether their agency is subject to the rule, and how to treat Israeli-origin supplies during evaluation. The section is important because it affects competition, evaluation, and source selection for covered supply acquisitions, while avoiding unnecessary exclusion of Israeli products. It also helps distinguish this statute from broader domestic preference rules and from other trade agreement or statutory exceptions that may apply to the same procurement.

Agreement on Trade in Civil Aircraft.

FAR 25.407 explains the special trade policy treatment for civil aircraft and related articles under the Agreement on Trade in Civil Aircraft. It states that, under Section 303 of the Trade Agreements Act, the U.S. Trade Representative has waived the Buy American statute for qualifying civil aircraft and related articles that meet the Trade Agreements Act substantial transformation test when they come from countries that are parties to the Agreement. The section also identifies the covered countries, which is essential because country of origin determines whether the waiver applies. In practice, this means contracting officers and contractors must look beyond the normal Buy American analysis and determine whether the item is a civil aircraft or related article, whether it qualifies under the substantial transformation test, and whether it originates in a listed participating country. The rule matters because it can open federal procurement to foreign civil aircraft products that would otherwise be restricted, while still preserving origin-based limits and compliance checks. It is especially important in aviation procurements, where supply chains are international and origin determinations can be complex.

Procedures.

FAR 25.408 explains the procedures contracting officers must follow when a procurement is covered by the WTO Government Procurement Agreement (GPA) or a free trade agreement (FTA). It ties those procurements to the general FAR requirements for publicizing and synopsis timing, and it adds trade-agreement-specific safeguards to ensure foreign products and suppliers from eligible countries are not excluded through hidden or unnecessary solicitation restrictions. The section also requires solicitations to state that offers must be submitted in English and in U.S. dollars, which helps standardize competition and evaluation across international offerors. In addition, it requires notice to unsuccessful offerors from WTO GPA or FTA countries under the applicable FAR award-notification procedures. Finally, it points readers to subpart 25.5 for the detailed evaluation rules and examples that govern how to assess offers under these trade agreements in practice.