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Dáil Éireann debate -
Tuesday, 24 Jun 1980

Vol. 322 No. 9

International Natural Rubber Agreement: Motion.

I move: "That Dáil Éireann approves the terms of the International Natural Rubber Agreement, 1979."

Dáil approval of the terms of this agreement is necessary in accordance with Article 29.5.2 of the Constitution which stipulates that "the State shall not be bound by any international agreement involving a charge upon public funds unless the terms of the agreement shall have been approved by Dáil Éireann". An explanatory memorandum on this agreement has been prepared and circulated to Deputies. This gives a detailed account of the provisions of the agreement and covers the question of the costs involved in Irish participation in it. I propose then to confine myself to making some general remarks.

The International Natural Rubber Agreement, 1979, was concluded under the auspices of the United Nations Conference on Trade and Development (UNCTAD) at the United Nations Conference on Natural Rubber held in Geneva in October 1979. It is open for signature at United Nations Headquarters until 30 June 1980 by the Governments invited to the United Nations Conference on Natural Rubber. Instruments of ratification, acceptance or approval must be deposited with the Secretary General of the United Nations not later than 30 September 1980.

The Council of the European Economic Community, on 22 April 1980, decided that the agreement should be signed subject to its being concluded at a later date, on the basis of joint competence by the Community and the member states.

Some 62 countries, including Ireland, representing 13 exporting countries and 49 importing countries, participated in the United Nations Conference on Rubber.

The International Natural Rubber Agreement is the first commodity agreement to be concluded since UNCTAD established its Integrated Programme for Commodities in Nairobi in May 1976. As such, it is a significant development and will make an invaluable contribution to the on-going debate on economic relationships between the developed and the developing countries.

The main objectives of this agreement are to achieve a balanced growth between the supply and demand for natural rubber, to stabilise conditions in the natural rubber trade through avoiding excessive price fluctuations, to ensure adequate supplies at reasonable prices equitable to both producers and consumers and to help stabilise the export earnings of the developing countries from natural rubber, a matter to which these countries quite naturally attach the utmost importance. The agreement establishes the International Natural Rubber Organisation to administer its provisions and supervise its operation. The organisation will function through the International Natural Rubber Council, its executive director and staff and such other bodies as are provided for in the agreement. For the purpose of achieving the objectives of the agreement a buffer stock consisting of a total of 550,000 tonnes will be established. The council of the organisation will appoint a buffer stock manager and he will offer to buy and sell natural rubber in a manner designed to keep its price within an agreed price range.

The financing of the buffer stock will be met by direct Government contributions and/or by Government guarantees. The contributions will be shared equally between the exporting and importing members. Within the importing group each member shall meet an apportionment of the cost based on its number of votes in the council and these shall be allocated relative to its share of net imports of natural rubber averaged over the preceding three years. At this stage it is not possible to assess accurately Ireland's apportionment of these costs because of the variables involved, such as the number of countries likely to adhere to the agreement and the quantity of rubber which may be purchased by the buffer stock manager at various price levels. However, based on a formula suggested for estimate purposes by the UNCTAD conference chairman and assuming a membership by Governments representing at least 80 per cent of total world net imports and net exports, the cost to Ireland would be approximately £330,000 — this would be a once only contribution.

In addition members of the International Natural Rubber Organisation will be required to make an annual contribution to the administrative budget of the organisation and to undertake any travelling expenses which may arise in connection with attendance at its meetings. Ireland's contribution to this budget, will also be in proportion to its number of votes in the council. Again it is not possible at this stage to state accurately the amount of Ireland's contribution under this heading but based on our experience in other commodity organisations it is estimated that at current values it will be in the order of £1,000 per annum.

The agreement will help to stabilise raw material prices for an important segment of Irish industry. The Irish rubber using industry provides employment for approximately 2,800 persons. Ireland imported 7,821 tonnes of natural rubber valued at £5.1 million in 1979. In the same year Ireland exported 27,000 tonnes of tyres and tubes valued £30.8 million.

Membership of the International Natural Rubber Agreement, 1979, will afford Ireland the opportunity to demonstrate its readiness to support international measures to stabilise commodity prices and to reaffirm the importance which it attaches to eliminating the economic imbalance between developed and developing countries.

This agreement has to be looked at from two angles. The first is the commercial and economic aspect in the context of this country being an importing country. The second is the effect of the agreement and the benefit it will bring to those developing countries for whom the export of rubber is a major part of their economy. Certainly, in regard to the commercial aspect, it is clear that it is an advantage to us that such an agreement should be arranged because we have here in Ireland a substantial number of people depending for their employment on the processing of rubber. From that point of view alone, in so far as this agreement ensures the stability of prices and supply, the agreement has to be given a welcome. What is important from that aspect is that there are almost 3,000 Irish people employed in the rubber processing industry and our imports — at £5 million — are converted, with added value, into exports of £30 million. In addition there would, I presume, be a home market aspect of this.

That is right.

Perhaps the Minister might have the figure. It is not very important but would help to show the complete picture from the commercial point of view.

The other aspect of the agreement is the question of its advantage to the developing countries involved in rubber export. I presume that, of the 13 exporting nations, all or virtually all would be included in the Third World category. The Minister, in his reply, might perhaps give a little more information as to what would be the major benefit from their point of view. Have there been slumps in the price of rubber in the past and have these had a major effect on the economies of these countries? On the face of it the agreement must be of advantage to such countries in so far as it helps to stabilise their export earnings.

I have a further question for the Minister in regard to the adequacy of the buffer stock. Could the Minister inform the House of the relationship between the size of this stock and the total annual world exports of rubber? Is it significant in that context or merely a tiny proportion? Will the international buffer stock proposed under the agreement be of sufficient size to provide the necessary buffer in the event of a slump in world prices?

Generally, it appears that the agreement is a significant one. It is the first negotiated between the exporting countries of a raw material which is an important matter for their economy and the importing countries. I can only assume that, since the agreement was organised under the auspices of UNCTAD, a fair and reasonable arrangement was reached to ensure a balance, that there would be no question of prices going beyond all reason because of scarcity and, at the same time, that there would be a fair return to the developing world for which, as I say, the export of rubber may be an important factor.

In regard to the costings, it appears that the amounts involved are reasonable from the point of view of this country: an anticipated contribution of £1,000 per annum towards the administrative expenses and a total once-off contribution of approximately £? million towards the creation of the buffer stock. As I read it, the initial payment in that regard will be very small, perhaps only £21,000, and the balance will be called up at a later stage when required. In general, on behalf of the Opposition I am happy to welcome this agreement and hope that it will be ratified by the necessary number of countries to enable it to come into effect.

The significant thing about this agreement has been mentioned by Deputy O'Keeffe, that it is the first commodity agreement to be concluded since UNCTAD established its integrated programme for commodities in Nairobi in 1976. This is very important because one of the difficult matters regarding commodities causing tension as far as producers were concerned and as far as consumers, purchasers or processors were concerned over the years in many commodity areas have been very substantial fluctuations in price, caused by a number of factors which I shall not go into now.

Here we have an agreement in which some 62 countries are participating, representing 13 exporting countries and 49 importing countries and proposing to bring a degree of organisation into the market of a very basic commodity. I can assure the Deputy that there were very wide and wild fluctuations over the years. It is part of the hazards of commodity trading generally, but particularly in rubber there has been a very long, unfortunate history of fluctuations in price.

As regards the buffer stock size, I have not got the actual relationship asked for. The Deputy asked the relationship between the actual stock size proposed, of 550,000 tonnes, which the United States regard as appropriate and the amount of the rubber trade. The EEC estimate that 400,000 tonnes will be sufficient. But this was increased to 550,000 because of representation from the United States, who felt that that would be a safer buffer stock amount. I take it that, with the combined wisdom of the major purchasers in the world, Western Europe and North America, 550,000 tonnes will suffice. However, if the Deputy wishes I shall get that information for him as it relates to the general volume of trade in rubber.

Another important aspect is that all the exporting countries, except Singapore, are Third World countries in the developing world sense that we have been spending so much time on in the debate earlier and in other debates last week. Here is a practical example of a link being forged between the developed world and the developing world because of mutuality of interest.

Most of the consumer or purchasing countries and practically all the producing exporting countries are Third World developing countries. To have that rational marriage of interests in the form of an agreement of this kind is obviously a satisfying, practical and constructive way forward. It is what we would like to see in the oil and energy area. This is a question which the European Community will be pursuing in the course of talks over the next six months with the various interests concerned, with a view to securing some peace in the Middle East. Part of that arrangement would be, it is hoped, some form of commodity agreement of this type under which the whole sale and distribution of oil would be rationalised in a similar manner. In that way, relations can best be cemented between the Third World and the developed world.

It is not just enough to talk in terms of aid. Aid is desirable as an interim measure to prime the pump, to get things moving but what is more fundamental is to export the technology and expertise that will enable these countries to produce their commodities best, whether they be food commodities, mineral commodities or basic commodities such as rubber and others which these developing countries do best. It is in this whole area of basic raw materials, commodities, food and energy that the Third World has the resources. It is a question of maximising production, to provide for proper balanced outlets that do not give rise to wild fluctuations. There are many other commodity areas like cocoa, coffee, tea and so on to which the remarks I have just made equally apply.

Trade can be just as important as aid. It is tremendously important to remember that the developed world does not apply principles of protectionism to the Third World but seeks to organise trade between them so that the trade is not of the kind of the colonial past, when it was trade of the exploiter on the exploited, but rather trade of mutual interest in which regular, stable production, supply and pricing arrangements can be worked out and negotiated on an overall, comprehensive basis. It is particularly important in regard to rubber that we adopt this attitude because of the very wide fluctuations in rubber production in the past, when one of the consequences was that there was inadequacy of investment in rubber plantations, in experimentation, research and development in the type of tree, soil, production and so on. There was not sufficient confidence in the production side of the industry to allow for that sort of investment.

There is apparently enormous scope for research and investigation into improving the type of rubber production, the type of tree, giving proper attention to safeguarding trees, having proper applications to prevent diseases, the proper training of personnel, a proper plantation system, proper rotation. All of the scientific application I mentioned earlier in regard to food production would apply in a similar way to rubber production and to all the other basic commodities I mentioned.

The confidence involved in an agreement of this kind, involving the major purchasing countries with the major production countries, will lead to a guaranteed underpinning of the production of natural rubber. Equally it will lead to investment in the sort of scientific back-up that should enable far greater and expanding production to take place.

I should like to thank Deputy O'Keeffe in particular for his contribution and to say that it was, as always, constructive.

Question put and agreed to.

I am sorry, Minister, Deputy L'Estrange has gone to seek Deputy Kelly. We will wait a few minutes.

We are running a bit ahead of time anyway. The next business was due to start at 7.45 p.m.

We are half-an-hour ahead.

Business suspended at 7.15 p.m. and resumed at 7.45 p.m.

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