10:31 AM Feb 6, 1997
NATURAL RUBBER ACCORD'S PROVISIONAL APPLICATION
Geneva, 6 Feb (TWN) -- The major exporters and importers of natural rubber have joined to bring the International Natural Rubber Agreement, into force provisionally for a period of 12 months from today. The agreement was concluded at a UN Conference under the auspices of UNCTAD in 1995, and replaces the earlier 1987 International Natural Rubber Agreement which expired in December of 1995. For definitive entry into force, INRA 1995 required ratification or equivalent instruments from countries accounting for atleast 80% of exports and 80% of imports. Provisional entry into force requires action by countries representing 75% of exports and 75% of imports. So far five exporting countries, including the four main exporters (Thailand, Indonesia, Malaysia and Sri Lanka) and Nigeria -- accounting for 97.3% have deposited the required instruments or have given notifications of their provisional application. On the importing side, the world's leading importers -- USA, the European Union and Japan - have also taken the necessary action. China and Italy (within the EU) which signed the agreement have not however deposited any instruments of ratification or given notification of provisional application. In March last year, the deadline for signature was extended to 31 July 1996 -- to allow governments interested to join time to finalize the necessary procedures. At the instance of the Executive Director of the International Natural Rubber Organization (INRO), 20 signatories (all EU members, except Italy, and the European Community), Indonesia, Japan, Malaysia, Nigeria, Sri Lanka, Thailand, which have ratified or notified provisional application, met in Geneva Thursday and agreed to putting the agreement provisionally into force (as provided in Art. 6 para 4 of the agreement) for a period of one year commencing 6 December. China, which signed the agreement but has not ratified so far, attended the meeting as observer and announced that it would try to follow-up with necessary procedures to become a member. INRO has the power to intervene in the market to stabilize prices. It can do so however only through buffer stock, whose maximum size is set at 550,000 tonnes -- a normal stock of 400,000 tonnes, with authority to establish an additional contingency buffer stock of 150,000 tonnes. Financing of the buffer stock is done by producers and consumers, according to their respective trade shares. The agreement retains the basic structure of the price range set in the earlier accord. The reference price on entry into force was set as that at the time of the expiry of the 1987 accord -- 206.88 Malaysia/Singapore cents per kilo. The lower indicative price was set at 157 M/S cents per kilo (as against 150 in the earlier two accords). The upper indicative price has remained unchanged at 270 M/S cents. But the periodicity of reference price reviews has been shortened from 15 to 12 months, with the extent of automatic adjustment set at five percent, unless the INRO Council decides on a larger adjustment. But at the first session to be held within six months of entry into force, the reference price will be adjusted upwards by four percent -- if the daily market indicator price (DMIP) is above the upper intervention price of 238 M/S cents -- and downwards by a similar percentage if the DMIP is below the lower intervention price of 176 M/S cents. The DMIP on 5 February is 228.6 M/S cents per kilo -- which is above the reference price. As a result, the buffer stock manager is not authorized to buy natural rubber on the market to constitute a buffer stock.