TAA Compliance and How It Can Affect Your Purchases
TAA seems to be a hot topic right now and you might think this is new legislation in the US. What you might not know is that the Trade Agreements Act has been around for decades.
The TAA is an act of 1979 which was built on the back of the 1974 Trade Act, so this isn’t new legislation but in light of recent rises in global tensions, the TAA is being enacted more frequently.
What The TAA Does
Essentially, the TAA is designed to foster trade in the US and with other trade partners by ensuring that products, such as your communications equipment, are substantially transformed in permitted countries.
In short, that means that under the TAA legislation, US Government departments are permitted to restrict their purchases to equipment which has been manufactured or substantially transformed in approved countries.
We’ve just mentioned permitted countries, these are the countries which under the terms of the TAA are allowed to supply products. This list is constantly reviewed and updated with countries added and removed, the best place to get a complete list of currently approved supply countries is to check the FEDShed website’s list.
Manufactured and Substantially Transformed Products
As we mentioned earlier, the TAA restricts US Government departments to purchasing items which have been wholly manufactured or substantially transformed in a permitted country, but what exactly does this mean?
Wholly manufactured is pretty straightforward and means that any product which has been completely manufactured in the US or a TAA-compliant country complies with the requirements of the TAA.
Substantially transformed on the other hand is a little more involved and can be quite subjective. By definition, it means a product where at least half of the manufacturing process has been completed in a TAA-compliant country, and where the product has become new in terms of name, character or use.
A selection of our products, which can be found on our TAA-compliant page, are TAA-compliant having been wholly manufactured in a range of compliant countries.
Why Does the TAA Matter
The Trade Agreements Act matters in different ways to different people, and to the US economy as a whole, it’s a way of stimulating growth by forcing Government suppliers to engage in near-shoring and on-shoring of manufacturing.
For businesses, or rather US Government departments, the TAA impacts their choice of suppliers to those who are compliant with the regulations. The consequence of this is a potential restriction of choice when it comes to procurement, particularly where a final product may comprise parts manufactured across the globe.
For suppliers to the US Government, decisions need to be made about how important any related contracts are. Should these contracts and sales make up a considerable portion of profit then businesses will need to adapt and think about how supply chains can be improved to meet the criteria required.
Ultimately it’s down to companies to decide whether they want to continue to supply this market.
TAA Cost Implications
Whether you work for a US Government affiliated department or a private company, it’s important to understand the potential cost implications of the TAA because if your supplier needs to comply to meet a contract, then any changes are likely to impact you too.
The requirements of the Act for companies to manufacture or substantially change their products in the defined list of countries means that costs across the supply chain are likely to increase.
Primarily this will be a result of higher living and employment standards meaning a higher wage bill for manufacturers, however, other factors such as component costs and the manufacture of parts can also contribute to increased costs.
Of course, your suppliers will endeavour to keep their costs to a minimum and pass on as little impact as possible to the consumer, but ultimately there could be an impact on price.
While increased living and employment standards in TAA-compliant countries can impact costs, we must also consider that these countries may also employ higher standards of quality control.
The outcome of any improved quality standards will be products which work better, last longer and ultimately provide an improved return on investment, something which any company would be keen to see.
So Will The TAA Affect Your Purchases?
Even though the TAA has been around for decades, the ability of the US Government to expand its use and change TAA-compliant countries means that manufacturers are always having to adapt.
While this may impact product cost and quality, prices won’t suddenly jump; that said, it’s still important to know what product you need and consider all your options. So your choices may be impacted but this should be for the better.
TAA Compliant Headsets and Webcams From JPL
If you need to procure TAA-compliant headsets or video conferencing webcams for your business, team or department, JPL is here to help. Get in touch and speak with our team who’ll support you through the whole process to make sure you get the best products at the right price.