EC CONFIDENT PACT WILL BE REACHED IN GLOBAL NEGOTIATIONS ON RUBBER

EC CONFIDENT PACT WILL BE REACHED IN GLOBAL NEGOTIATIONS ON RUBBER

The European Community said it is optimistic a new global rubber accord will be reached, but it may be the last such price-supporting pact as consumers want the market to rule the trade.

"We hope to wrap up the talks in one session in Geneva," Derek Taylor, chief EC delegate to the International Natural Rubber Organization (INRO), told Reuters at an INRO meeting in Kuala Lumpur."We would have been in Geneva if not for a recent dispute with the producers. But we expect INRA (the International Natural Rubber Agreement) to be the last such pact," he said. Mr. Taylor said many consumer countries faced financial constraints at home and could not afford further commitments to such pacts as the 15-year-old INRA, the world's only commodity agreement with economic provisions.

He said consumers want the new INRA, if concluded, to be a transition between INRO's market-supporting role and an eventual free-market system.

"We want the Singapore rubber futures market, as it becomes more active in the coming years, to play a more prominent role in guiding the market," he said.

INRO currently runs a buffer stock scheme that tries to stabilize world rubber prices by using its own financial resources to buy up excess rubber production or by selling rubber from its stockpiles.

"Some members are also keen to see a purely administrative pact as long as it keeps rubber supply and demand in fairly good balance," Mr. Taylor said.

The INRO council extended the five-year INRA by another year beyond Dec. 28 and agreed to talks on a successor agreement. Mr. Taylor said the EC hoped the negotiations, scheduled to take place in Geneva early next year, would yield a complete agreement.

Producers, led by Malaysia, earlier accused consumers of delaying talks on a new pact to replace INRA, which they said had failed to lift prolonged weak prices.

The EC, the United States and Japan, the three biggest consumers, agreed on INRA talks after producers yielded to consumer demands to cut the key INRO buffer stock price by 5 percent.

"The consumers got what they wanted," Malaysia's Primary Industries Minister Lim Keng Yaik said last week. "It is detrimental for us for the time being, with seemingly no relief on the way for current low prices."