The Secretary-General of UNCTAD, on behalf of the Secretary-General of the United Nations, is convening, on 28 March, a one-day meeting of the United Nations Conference on Natural Rubber for the sole purpose of extending the period of signature of the International Natural Rubber Agreement (INRA), 1995. The previous deadline expired on 28 December 1995.
The Agreement was adopted on 17 February 1995 after less than one year of negotiations in UNCTAD under the presidency of Peter Lai (Malaysia). It is intended to succeed the INRA 1987, which expired on 28 December 1995.
The Conference is being reconvened at the request of Pong Sono, Executive Director of the International Natural Rubber Organization (INRO), which has its headquarters in Kuala Lumpur (Malaysia). It is Mr. Sono´s view, after consultations with the chairman and members of the present International Natural Rubber Council, that the members of the Council want to bring the 1995 Agreement into force in the course of 1996. Certain governments were not able to sign the new Agreement in time because of administrative delays in capitals and have expressed interest in signing the Agreement, if they are given the opportunity to do so.
By 28 December 1995, the Agreement had been signed by the four main exporting countries: Thailand, Indonesia, Malaysia and Sri Lanka. Together they represent about 94% of world exports of natural rubber. On the importers´side, the Agreement had been signed by the European Union and Japan, representing about 48% of world imports. This percentage falls short of the 75% required on the part of the importing countries for the provisional entry into force of the Agreement. The United States of America - the world´s leading importer of natural rubber with a share of 28.8% under the Agreement - is expected to participate in the Conference meeting.
The overriding objective of the INRAs is price stabilization. Another objective is to increase export earnings by expanding the volume of exports. Unlike its predecessor, INRA 1995 contains an environmental objective.
The buffer stock is the sole instrument for reaching the objective of price stabilization. The maximum size of the buffer stock remains 550,000 tonnes. It is composed of the normal buffer stock of 400,000 tonnes with the provision for an additional contingency buffer stock of 150,000 tonnes. Financing of the buffer stock is shared equally by producers and consumers, and according to their respective trade shares within each of the groups.
The 1995 Agreement maintains the basic structure of the price range set in the 1987 Agreement. The reference price on entry into force of the Agreement will be the reference price at the time of the expiry of the 1987 Agreement on 28 December 1995 which was 206.68 Malaysian/Singapore cents per kilo. The lower indicative price on entry into force will be 157 Malaysian/Singapore cents per kilo. It was 150 Malaysian/Singapore cents per kilo under the 1979 and 1987 Agreements. The upper indicative price remains unchanged at 270 Malaysian/Singapore cents per kilo, the level set under both previous Agreements.
The 1995 Agreement retains the "may sell" and "may buy" levels at ± 15% of the reference price mentioned above, as well as "must sell" and "must buy" levels at ± 20%.
Above and below these levels, but not specifically related to the reference price, are the upper and lower indicative prices, which are limits that cannot be breached by the trigger action prices when the reference price is revised.
The periodicity of reference price reviews has been shortened from 15 to 12 months. The extent of automatic adjustment remains the same as under the present Agreement, i.e. 5% unless the International Natural Rubber Council decides on a larger adjustment. However, at its first session to be held within six months after the entry into force of the new Agreement, the Council will automatically adjust the reference price upward by a further 4% if the six-month average of the Daily Market Indicator Price (DMIP) is above the upper intervention price (238 Malaysian/Singapore cents per kilo) at that time, or downward by 4% if the DMIP is below the lower intervention price (176 Malaysian/Singapore cents per kilo).
INRA 1995 has a duration of four years, with the possibility of an extension of up to two years.
More details on the functioning of the Agreement are contained in press release TAD/INF/2507, issued upon the adoption of INRA 1995.