Rubber body out of business

Rubber body out of business

KUALA LUMPUR (Reuters): The International Natural Rubber Organization (INRO), the world's last producer-consumer commodity pact, formally dissolved on Wednesday as Thailand stuck to its decision to quit the rubber body.

INRO's faint hopes of staying alive were extinguished when Thailand, the largest producer, said on Tuesday it would not reconsider its decision of quitting the 19-year-old group.

INRO's governing council last month decided to terminate the current global rubber agreement from Oct. 13 in light of the withdrawal of three exporting members -- Thailand, Malaysia and Sri Lanka.

But the council said it would review the situation if any of the withdrawing members changed their mind before that date.

"Until now, there is no sign of any change in the position of the countries that are withdrawing," INRO acting executive director Gerard Loyen told Reuters.

"Technically, we are in liquidation process as the agreement has been terminated," he said.

Unhappy over rubber prices, currently at 30-year lows, Thailand and Malaysia, the third largest producer of natural rubber, decided to quit the commodity pact. The Kuala Lumpur- based INRO had been accused of not doing enough to support prices.

The rubber accord was originally scheduled to run until February 2001. Key consuming member states of INRO are the United States, the European Union and Japan.

Thailand said it would press on with its bilateral market action plan with Malaysia. Last month, the neighbors agreed to cooperate in rubber trade, pricing and technology as an alternative arrangement to INRO to prop up sagging prices.

Malaysia, the most critical member of INRO, has long complained that the organization tends to favor consumers.

INRO's council will now decide at a special meeting in December on when to liquidate the group's buffer stock of 138,297 tonnes. INRO has up to three years to liquidate the stocks.

The group was set up in 1980 to stabilize volatile world prices under the United Nations Conference on Trade and Development (UNCTAD). It comprised six producer and 17 consumer members.