Thailand withdraws from world rubber group INRO

Thailand withdraws from world rubber group INRO

BANGKOK (Reuters): Thailand, the world's largest natural rubber producer and exporter, decided on Tuesday to withdraw from the global price pact, the International Natural Rubber Organization (INRO).

"INRO is useless for natural rubber producers but more useful for rubber consumers. So I think it is appropriate for us to leave," Deputy Agriculture Minister Newin Chidchob said.

Thailand's move is likely to prove fatal for INRO, which was set up in 1980 to stabilize volatile world rubber prices under the auspices of the United Nations Conference on Trade and Development (UNCTAD).

Thailand is the biggest contributor to INRO on the rubber producer side and its withdrawal follows a similar move by Malaysia at the end of last year.

Newin, speaking to reporters after emerging from a cabinet meeting, said Thailand had decided not to pay contributions worth 401 million baht (US$10.84 million) to INRO's buffer stock account for the new round of intervention.

He said that Thailand by itself had to spend billions of baht per year to shore up rubber prices in the local market but INRO had failed to raise rubber prices in the world market.

INRO's main purpose is to stabilize world rubber prices by buying when the prices drop sharply and selling when prices surge.

It comprises six rubber producers and 16 consumer countries.

The rubber producing members are Thailand, Indonesia, Malaysia, Ivory Coast, Nigeria and Sri Lanka.

The consuming country members are the United States, Japan, China, Germany, France, Austria, Belgium plus Luxembourg, Denmark, Finland, Greece, Ireland, Italy, the Netherlands, Spain, Sweden and Britain.

Each member country has a different number of votes, depending on the size of their exports or imports. Contributions to the organization are based on the number of votes each member carries.

"We will not pay our contribution worth 401 million baht in cash call to INRO," Newin added.

In its latest cash call to Thailand, INRO required payment by Thailand of this sum by Tuesday as its contribution to support intervention in the sagging rubber market.

The minister said Thailand's next step was to send a proposal to the United Nations to confirm its withdrawal and officially announce the decision to INRO.

The world's three top producers -- Thailand, Indonesia and Malaysia -- have all indicated unhappiness with INRO in recent months.

Malaysia has already served notice of withdrawal from INRO effective Oct. 15, 1999. Indonesia has said it will not withdraw from the organization.