FAR 25.402—General.
Plain-English Summary
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.
Key Rules
Trade Agreements Act authority
The Trade Agreements Act authorizes the President to waive the Buy American statute and other discriminatory provisions for eligible products from countries that have signed qualifying trade agreements or otherwise meet specified criteria. This waiver authority has been delegated to the U.S. Trade Representative.
Eligible products get equal treatment
For acquisitions covered by the WTO GPA, free trade agreements, or the Israeli Trade Act, the waiver applies to eligible products. Those products must receive equal consideration with domestic offers, meaning they are not rejected simply because they are foreign.
Service origin is where firm is established
For services, the contracting officer determines origin by the country in which the firm providing the services is established. This is the key origin test for service acquisitions under trade agreement coverage.
Dollar thresholds control coverage
Trade agreement applicability depends on the value of the acquisition. The section provides threshold levels for supply, service, and construction contracts, and those thresholds are subject to periodic revision by the U.S. Trade Representative.
Different agreements have different thresholds
The applicable threshold varies by agreement and by contract type. The table identifies thresholds for the WTO GPA, several FTAs, and the Israeli Trade Act, so the contracting officer must match the acquisition type and dollar value to the correct agreement.
Construction thresholds are higher
Construction contracts generally have much higher thresholds than supply and service contracts under the listed trade agreements. This means many construction acquisitions will fall outside trade agreement coverage even when smaller supply or service buys would be covered.
Responsibilities
Contracting Officer
Determine whether the acquisition is covered by a trade agreement based on contract type and dollar value; identify the correct threshold; determine the country of origin for services based on where the firm is established; and apply the equal-consideration rule for eligible products when coverage exists.
Contractor
Understand whether offered products or services qualify as eligible under a covered trade agreement; provide accurate information about product origin or the country where the service provider is established; and structure offers with awareness that eligible foreign products may be treated the same as domestic offers.
U.S. Trade Representative
Exercise the delegated waiver authority under the Trade Agreements Act and periodically revise the trade agreement thresholds that determine when coverage applies.
Agency
Use the correct trade agreement thresholds and coverage rules in procurement planning and solicitation preparation; ensure acquisition personnel apply the proper agreement framework and updated thresholds.
Practical Implications
Contracting officers must check both the contract type and the dollar value before deciding whether trade agreement rules apply; getting either one wrong can lead to an improper evaluation method.
Because thresholds change periodically, users should not rely on old dollar figures from prior solicitations or templates.
For services, origin is not based on where the work is performed but on where the firm is established, which is a common source of confusion.
Eligible foreign products covered by an applicable trade agreement cannot be excluded simply for being foreign; they must be evaluated on equal footing with domestic offers.
Construction acquisitions often have much higher thresholds, so officers should verify coverage carefully rather than assuming a trade agreement applies to all large-dollar procurements.
Official Regulatory Text
(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 $ 6,683,000 FTAs Australia FTA 105,767 105,767 6,683,000 Bahrain FTA 174,000 174,000 13,749,689 CAFTA-DR (Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua) 105,767 105,767 6,683,000 Chile FTA 105,767 105,767 6,683,000 Colombia FTA 105,767 105,767 6,683,000 Korea FTA 100,000 100,000 6,683,000 Morocco FTA 174,000 174,000 6,683,000 USMCA -Mexico 105,767 105,767 13,749,689 Oman FTA 174,000 174,000 13,749,689 Panama FTA 174,000 174,000 6,683,000 Peru FTA 174,000 174,000 6,683,000 Singapore FTA 105,767 105,767 6,683,000 Israeli Trade Act 50,000 - -