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.