INRO to meet on extending existing pact

INRO to meet on extending existing pact

KUALA LUMPUR (AFP): World rubber producers are next month
expected to endorse a further extension of an expired price pact
after they failed to conclude a new accord at recent talks in
Geneva, officials said yesterday.

The chairman of the UN-sponsored talks, Peter Lai, is to work
out a solution with members of the International Natural Rubber
Organization (INRO) when they gather here from November 28 for
INRO's regular council session, they said.

INRO's six producer members and 20 consumer members are
scheduled to resume negotiations in Geneva on Feb. 6 to try
hammer out a new accord following inconclusive talks Oct. 3 to
Oct. 14 in Geneva.

"The INRO council meeting here next month will have to address
the question of an extension since no conclusion was reached at
the Geneva re-negotiating round," INRO buffer stock manager James
Hegarty told AFP.

Hegarty said the recent talks in Geneva made much progress
although it failed to reach an accord to succeed the 1987 pact
that had expired last year and was extended until the end of the
year.

INRA II would have to be further extended to keep the 14-year-
old arrangement going, officials said. INRA I came into being in
1979.

Industry sources said producers had pressed for a five percent
hike in INRO's current reference price range -- the range that
guides the buffer stock manager in his market interventions to
stabilize rubber prices.

Opposition

Consumer members opposed the rise and the disagreement over
the reference price was the main stumbling block at the talks,
the sources said.

"But I am optimistic both sides will eventually overcome their
differences," Hegarty said.

Primary Industries Minister Lim Keng Yaik, who had earlier
threatened to pull Malaysia out of INRA if consumers remained
intransigent to producers' demands, on Monday blamed the leading
consumers, United States and Japan, for "changing their
positions."

"The U.S. and Japan changed their positions at the last minute
and there was not enough time after that to conclude the
negotiations," Lim said.

Consumers had wanted the current price range to roll-over into
the new agreement, arguing that the existing provisions had
worked well to defend prices, Malaysian delegates to the recent
meeting said.

"Basically, the consumers wanted to roll-over the current
price range package but producers felt that the new agreement
should look at a new price range," said Zubeir Nordin, a
Malaysian delegate at the Geneva talks.

Rubber industry officials said the recent failed talks had not
much impact on prices.

"I don't think that had affected the market. If it had, it
would have been more obvious immediately after news of the failed
talks broke a fortnight ago," Hegarty said.

Traders said talks on the accord had long been discounted as
the industry would have preferred a "free-market."

INRO's five-day moving average Monday eased slightly to 269.69
Malaysian-Singapore cents a kilogram (2.2 pounds) from its recent
peak of 274.76. Comparatively, the indicator price was 179.49
cents in January.