What is TAA Compliant Optical Transceiver and What is TAA

When we quote customers, some guys in the U.S. usually ask us: “are your transceiver TAA compliant?”. What is TAA compliant optical transceiver? In this post, we will give a brief introduction to TAA and TAA-compliant optical transceivers.

Table of Contents

TAA Introduction
TAA-Compliant Countries
Certification Types
Documentation
TAA-Compliant Transceivers
Determination
Case Example
General Specifications
Relating Scenarios
Conclusion

TAA Introduction

TAA is an acronym for the Trade Agreement Act that the United States (U.S.) enacted in 1979 under the General Services Administration (GSA) regulation. Under the TAA, the U.S. government can only acquire products and services made in the U.S. or from TAA-compliant countries.

For products or services to be deemed TAA compliant, a certification must be obtained by the Customs and Border Protection (CBP) agency. This certification does not guarantee product or service quality. Instead, the certificate allows products and services from TAA-compliant regions to enter the U.S. One industry that must abide by such regulations is those manufacturing optical transceiver products, as these products must be listed as TAA optics or TAA transceivers.

TAA-Compliant Countries

Optical transceivers that are TAA-compliant are more than likely a country associated with the Word Trade Organization Government Procurement Agreement or Free Trade Agreement or recognized as a Least Developed or Caribbean Basin country. A limited number of Asian countries are TAA complaints, which include Bhutan, Cambodia, Japan, Laos, Nepal, South Korea, and Taiwan. Some Asian countries that do not provide TAA-compliant transceivers are China, India, Malaysia, Russia, and Thailand.

The below table shows the detailed TAA-Compliant country list.

Certification Types

Optical transceivers are categorized as TAA-compliant products (i.e., TAA-compliant SFP). Furthermore, optical transceivers will have one of the following two certification subcategories:

Manufactured: whole final products first assembled with raw products and developed as an end-product in the U.S. or any TAA-compliant country; or,
Substantially transformed: at least 50% of the original product is transformed in the U.S. or any TAA-compliant country in terms of name, characteristics, or product distinctiveness to generate a unique end-product.

Documentation

TAA-compliant products, such as optical transceivers, will be documented and their certifications renewed in specific periods appropriate by industry type. Foreign suppliers will have a trade agreement and contract (i.e., letter of supply agreement) that has to be shared upon request to prove active and valid TAA certifications. Training and other complementary certifications may be vital to maintain TAA compliance.

Correct TAA-compliant documentation will include the country of origin and its associated code (COO), which may be etched onto the product itself. Detailed shipping markers must also be apparent on packages as a sticker (preferred) or within packages as paperwork so that inspectors can efficiently conduct a product match, even if it is a product sample.

TAA-Compliant Transceivers

There have been concerns surrounding importing optical transceivers among U.S. border customs. TAA-compliant transceivers will either contain functional software in which the transceiver is a finished end-product or do not have pre-existing networks associated with them (i.e., a blank transceiver). Yet, blank transceivers will have general proprietary or generic software that will later be transformed after U.S. importation.

However, contractors have difficulties distinguishing between blank and functional transceivers, as blank transceivers are inoperable unless transformed. Additionally, contractors must know that even functional optical transceivers may not complement existing original equipment manufacturer (OEM) products or programs if the transceiver was purchased as a replacement. Nonetheless, blank and functional optic transceivers can be TAA-compliant.

Determination

Unfortunately, no one characteristic or factor determines whether an optical transceiver is TAA-compliant, as their approval is based on a case-by-case determination. Most of the time, an insightful “essence test” on the end product identity and usage might help determine TAA-compliancy if support documentation was not initially provided.

Case Example

Even an essence test can be tricky. For example, a blank transceiver is manufactured in China, and a company in Japan receives that transceiver to download their software onto it to export to the U.S. Downloading software is not considered a significant enough transformation for that transceiver to be TAA-compliant.

Even though Japan is a TAA-compliant country, the transceiver’s country of origin remains China. A company in Japan may easily advertise and export that transceiver to the U.S. under trade agreement impressions that it is TAA-compliant. Still, it will be found that it is not TAA-compliant upon investigation.

General Specifications

In the end, TAA-compliant optic transceivers will fall under one-of-three scenarios:

The firm/software development, downloading, and testing must all occur in the same TAA-compliant country to be the product’s country of origin;
When the firm/software development and downloading occurs in a separate country than that where the product was primarily manufactured and assembled, the country that manufactured and made the product will be the country of origin, in which that country of origin must be TAA-compliant; or,
If a product containing hardware does not have any programming and it is delivered from one country to another, then the receiving country downloads firm/software onto that product, the country that developed the firm/software will act as the country of origin for the product, where the country of firm/software development may not be the receiving or shipping country; i.e. preprogramming firm/software within the receiving country will not change the country of origin to the receiving country but rather reflect the country the reprogrammed firm/software comes from.

Relating Scenarios

Returning to the product shipped from China to Japan, here is a review of how each scenario applies to optical transceivers.

On the one hand, China develops, manufactures and tests the optical transceiver, meaning that the country of origin is China. However, China is not TAA-compliant, and contractors should not purchase that optical transceiver. On the other hand, if Japan were to develop, manufacture, and test the optical transceiver, it is TAA-compliant, and contractors should purchase it.
As seen in the Case Example, since the optical transceiver was mostly created in China, Japan solely downloads firm/software onto it. The country of origin is China, and contractors should not purchase it as it is not TAA-compliant.
In this scenario, China creates the parts and ships them individually to Japan, and then Japan assembles the optics that is now blank and downloads their software onto it. Since Japan now did significant transformation by making the pieces into an entirely functional end-product, the country of origin for that optical transceiver would be Japan, despite the parts coming from China, and would be TAA-compliant for contractors.
Contrarily, even if the optical transceiver was assembled in Japan, then the firm/software downloaded onto it was developed in a particular third country to make the optical transceiver a functional end-product, as the development and download of the programs onto the optical transceiver is what made it a functional end-product. The particular third country will act as the country of origin. Now, that country of origin of the development of the firm/software must be TAA-compliant despite Japan assembling the optical transceiver to be utilized by contractors.

Conclusion

For U.S. contractors that fail to thoroughly communicate with the supplier regarding the country of origin and purchases and utilize an optical transceiver that is not TAA-compliant, that contractor, if audited, can expect hefty fines, suspension, and even contract removal from TAA-compliant agencies.

Otherwise, general U.S. consumers that are not contracted to complete a job with TAA-compliant parameters can still purchase any type, TAA-compliant or not, optic transceivers. However, TAA optics and TAA transceivers should be the preferred market choice.

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