October 20, 1987
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, 1987, adopted at Geneva on March 20, 1987. The Agreement was signed on behalf of the United States of America on August 28, 1987. The report of the Department of State is attached for the information of the Senate.
Like its predecessor, the International Natural Rubber Agreement (1987) seeks to stabilize natural rubber prices without distorting long-term market trends and to foster expanded natural rubber supplies at reasonable prices. It provides for continuation of the buffer stock of not more than 550,000 metric tons established by the 1979 Agreement. The new Agreement incorporates improvements sought by the United States and other consuming countries designed to ensure that it fully reflects market trends and operates in an effective and financially sound manner. The buffer stock is to be used to defend a price range that is adjusted regularly in accordance with market conditions; its financing is to be shared equally between importing and exporting members.
To meet U.S. financial obligations arising from membership, authorization and appropriation legislation will be submitted for congressional approval. The necessary funds will be included in the budget for Fiscal Year 1989. Approval will allow the United States to deposit its instrument of ratification in the fall of 1988. The appropriation will be offset to a substantial degree by assets to be transferred to the United States from the existing Agreement.
The Agreement will have a term of five years that can be extended for two additional years. It should provide substantial benefits for consumers of natural rubber. The buffer stock is of sufficiently large size to provide, over time, adequate protection for both the maximum and minimum levels of the price range, thereby providing balanced protection for all members. Moreover, exporting members undertake to pursue policies to maintain continuous availability of natural rubber supplies to consumers. Finally, by moderating price increases during periods of high demand, the buffer stock also could help avoid inflationary pressure on manufactured rubber product prices.
The Agreement is consistent with our broad foreign policy objectives. It demonstrates our willingness to engage in a continuing dialogue with developing countries on issues of mutual concern and embodies our belief that long-run market forces are the appropriate determinants of prices and resource allocations. It will also strengthen our relations with the ASEAN countries, since three of them -- Malaysia, Indonesia, and Thailand -- account collectively for approximately 80 percent of world production of natural rubber.
For all these reasons, I urge the Senate to give this Agreement prompt consideration and its advice and consent to ratification to enable the United States to join the Agreement on a timely basis.
Ronald Reagan
The White House,
October 20, 1987.