MAIL BAG: SELLING NON-TAA COMPONENTS AS PART OF AN INTEGRATED UNIT ON SCHEDULE

Alert reader L. James of Cleveland writes, “My company sells products made in the USA and China.  Sometimes, these products are sold together as part of an integrated technology solution.  How can we ensure we stay Trade Agreements Act compliant?”  An excellent three point question, L.  The best way to answer the question is via an example.  Say your company sells Item 52, an integrated desktop printer that’s substantially transformed in the US.  No problem there.  Now, let’s add a sorter/fax module that’s made in China, a country that is not a “designated end country” for purposes of TAA compliance.  You can’t sell that module as a stand-alone item on your Schedule contract because it hasn’t been substantially transformed.  You likely can, however, sell your sorter/fax module integrated into the basic printer and sell it, say as Item 52A, and likely be compliant. The module can’t function without the basic printer and adding it to the printer changes the form, function, and product name of the basic model.  Such circumstances have frequently been deemed to mean that the new product has been substantially transformed and, as such, can be sold as an integrated unit on Schedule.  So long as your company isn’t cavalier in these decisions, you can live on in a compliant golden state.