MAIN FEATURES OF NEW RUBBER PACT

  The new International Natural Rubber
  Agreement (INRA), like the 1979 pact, will use a buffer stock
  as the sole instrument for market intervention -- excluding
  export quotas or production controls.
      The new INRA was adopted yesterday at a session held under
  the auspices of the United Nations Conference on Trade and
  Development (UNCTAD).
      In many respects the main features in the new pact resemble
  those contained in the present one.
      The reference price, currently 201.66 Malaysian/Singapore
  cts per kilo, will be maintained -- unless between now and
  October 22, when the 1979 INRA expires, the average of the
  daily market indicator price remains above the upper
  intervention ("may sell") price (231 cts) or below the lower
  intervention ("may buy") price (171 cts) for six months.
      If this happened -- but delegates said it was unlikely
  considering that the present indicator price averages 196 cts
  -- the price would be revised under the current accord by five
  pct or by whatever amount the International Natural Rubber
  Council decides.
      The new reference price would then be taken over for the
  new agreement.
      Under the same circumstances in the new pact the reference
  price would be automatically revised by five pct unless the
  Council decides on a higher percentage.
      Similarly, if buffer stock purchases or sales amounting to
  300,000 tonnes have been made since the last revision, the
  reference price will be lowered or raised by three pct unless
  the Council decides on a higher percentage.
      Another change introduced in the new INRA is that price
  reviews will be held at 15-month intervals instead of 18.
      Those changes are intended to make the reference price more
  responsive to market trends.
      As in the present accord the "may buy" and "may sell" levels
  are set at plus or minus 15 pct of the reference price, and the
  "must buy" and "must sell" levels at 20 pct of it.
      The lower and upper indicative prices (floor and ceiling
  prices) will remain fixed at 150 and 270 cents, unless the
  Council decides to revise them at reviews held every 30 months.
      During the negotiations, consumers abandoned a proposal
  that the floor price be adjusted downward if the buffer stock,
  currently 360,000 tonnes, rose to 450,000 tonnes.
      The maximum size of the buffer stock in the new pact is the
  same as under the present one -- 400,000 tonnes, with provision
  for an additional contingency buffer stock of 150,000 tonnes.
      Under the new accord, the contingency buffer stock will be
  brought in at 152 cts to defend the floor price.
      At last Friday's session, Ahmed Farouk, speaking for
  producers, said producing nations considered that the 1979 pact
  had served the purpose for which it had been created.
      Gerard Guillonneau of France, who spoke for consumers,
  agreed that the current agreement had worked "relatively well."
      Asked about the chances of success of the new INRA,
  delegates noted that for nearly its whole life, the 1979 accord
  had maintained the average price above the "must buy" level.
      They said the agreement until now did not appear to have
  encouraged excessive production of rubber.
      In addition, provisions for borrowing to finance the buffer
  stock have now been eliminated, ruling out speculation. "It is a
  sort of middle-of-the-road agreement," one delegate said.
      The new pact will be open for signature at U.N.
  Headquarters in New York from May 1 to December 31 this year.
      To become operational, it will require ratification by
  countries accounting for 75 pct of world exports and 75 pct of
  world imports.
      Delegates estimate that this will take 12 to 14 months from
  now. During the hiatus between the two agreements, the
  International Natural Rubber Council will remain in place.
      The pact will enter into force definitively when
  governments accounting for 80 pct of world exports and 80 pct
  of world imports have ratified it.
  

