International Natural Rubber Agreement, 1979 Message to the Senate Transmitting the Agreement.

To the Senate of the United States:

I transmit herewith, for the advice and consent of the Senate to ratification, the International Natural Rubber Agreement, 1979, adopted at Geneva October 5, 1979. The Agreement was signed on behalf of the United States of America on January 8, 1980. The report of the Department of State is enclosed for the information of the Senate.

The Agreement seeks to stabilize natural rubber prices without disturbing longterm market trends and to foster increased natural rubber supplies at reasonable prices. Natural rubber prices have traditionally displayed considerable instability, with strong rises—notably in 1951, 1955, 1960 and 1973-74—followed by sharp and sudden declines. This instability has not only destabilized producers' incomes and complicated national planning for the developing exporting countries, it has also contributed to inflation in industrial countries. In addition, it has discouraged needed long-term investments in natural rubber production. This is particularly important to the United States, which as the world's largest consumer of natural rubber has a substantial interest in helping to assure adequate future supplies of this commodity.

The Agreement provides for the establishment of an international buffer stock of 550,000 metric tons of natural rubber to be the instrument for price stabilization. The stock will be used to defend a price range and insure consistency with longer term market conditions. The financing of the buffer stock will be shared equally between importing and exporting members. Each government's share will depend upon its votes in the Organization as determined by net exports or imports. The share of the United States will be between 12.5 and 15.5 percent of the total, depending on the number of governments that become parties to the Agreement. To meet the financial obligations arising from our membership, $88 million has been included in the FY 1981 budget, The Agreement is to become effective on or after October 1, 1980, when governments accounting for sufficient net exports and net imports have ratified the Agreement or agreed to apply it provisionally. It will remain in force for five years from the date of the Agreement's provisional or definitive entry into force (whichever occurs first), but may be terminated earlier or extended for up to two more years. In addition, provisional operation of the Agreement without subsequent definitive entry into force is limited to 18 months. Upon termination of the Agreement, the United States' contribution and share of the Agreement's assets will be refunded within a period not to exceed three years.

The Agreement should provide substantial benefits for consumers of natural rubber. The buffer stock is sufficiently large to .provide adequate protection for both the maximum and minimum levels of the price range, thereby providing balanced protection for all members. Exporting members will attempt to ensure continuous availability of natural rubber supplies to consumers, and the Council may make recommendations to members on ways to avert potential shortages. Finally, by moderating price increases during periods of high demand, the buffer stock could also help to reduce inflationary pressure on the prices of manufactured rubber products.

The Agreement is consistent with our broad foreign policy objectives. It demonstrates our willingness to negotiate commodity agreements where practicable and in the interest of industrialized and developing countries. It constitutes a significant achievement in the North-South dialogue. It will also strengthen our relations with ASEAN, since natural rubber is particularly important to four of its members-Malaysia, Indonesia, Thailand and Singapore-which account collectively for nearly 90 percent of the world trade in natural rubber.

For all of these reasons, I urge the Senate to give this Agreement prompt consideration and its advice and consent to ratification.

JIMMY CARTER

The White House,

April 2, 1980.