Russia and the United States entered into a trade agreement that provides for compensatory quotas relative to auto parts and other components. The provisional agreement entered into effect on September 10, and the final agreement was reached on October 17, 2013.

The agreement sets up a reimbursement scheme designed to keep auto parts exports from the U.S. to Russia at a certain limit.

The threshold that the bilateral accord established is based on 2010 export data. As such, the figures are USD715.1 million in parts and components and USD13.7 million in auto engines.

In line with the new accord, should exports decline to a level below the threshold, the Russian government will grant compensatory quotas for importing American-produced auto parts with decreased duties and in the volume corresponding to the observed decrease of American imports.

The Russian trade delegation and the American side inked the agreement on July 12, and it has entered into force provisionally 60 days following the signing ceremony. The agreement will continue in effect until its expiration in July 2018.

The Russian government allows foreign investors setting up auto production enterprises within the country to benefit from decreased import tariffs on parts and components. To take advantage of the incentive, the foreign companies also must meet localization obligations. According to industry players, this program will sustain itself past Russia’s accession to the World Trade Organization until 2018.