ANNOUNCEMENT 13 Dec 2008In December 2008, the governments of Indonesia, Malaysia, and Thailand announced an altered export quota.
NUMBER OF INTERVENTIONS
In addition to the official source cited above, other relevant sources include:
1. A one page account including information on this case contained in a June 2009 paper from the International Policy Centre for Inclusive Growth, providing information on this case, that can be downloaded here: http://www.ipc-undp.org/pub/IPCOnePager86.pdf
It would appear that the Indonesian, Malaysian, and Thai rubber producers, acting through the International Tripartite Rubber Council (ITRC), have sought to restrict exports of rubber so as to increase world prices. These three countries are the largest exporters of rubber in the world, accounting for 70 percent of total supplies according to one recent estimate.
Numerous news reports include quotes from leading business executives and business associations that are consistent with the above summary. Moreover, a recent report from the United Nations Development Programme makes reference to this alleged scheme. As of July 2009, however, it is not clear that any such concerted action has proved to be successful. One recent commentary stated: "Weakness was visible in Asian rubber futures despite the fact that International Tripartite Rubber Council members Thailand, Indonesia and Malaysia announced a decision to remove 915,000 tons from the market in 2009 to bolster prices. " A reduction of this magnitude has been estimated as being equivalent to a sixth of the total world sales.
According to the following quotation, found on an official Thai website, the alleged cooperation began in the fourth quarter of 2008. "Deputy Minister of Agriculture and Cooperatives Teerachai Saenkaew said that the three countries met at a special meeting between the International Tripartite Rubber Council and International Rubber Consortium on October 29. They discussed ways to improve the rubber situation, which was facing falling prices following the global financial crisis.
"He said that the meeting agreed to implement short-and long-term measures, which were worked out in 2002 to remedy the situation at that time. In the short-term measures, controls must be imposed on rubber exports and marketing strategies must be carried out. The long-term measures involve production management in order to stabilize prices. The meeting urged all members of both the International Tripartite Rubber Council and International Rubber Consortium to monitor the rubber market situation and cooperate more closely in easing rubber problems.
"Thailand, Indonesia, and Malaysia agreed to reduce total rubber production by planting new rubber trees to replace old ones. A target has been set to plant new rubber trees covering 700,000 rai, or 280,000 acres, of land to replace old rubber trees in about one million rai, or more than 420,000 acres. As a result, about 215,000 tons of rubber will not come up in the global market.
Thailand will plant other crops to replace rubber as well, while Indonesia will control the issuance of licenses for planting new rubber trees. The three countries also agreed to encourage rubber growers to reduce their working days for tapping rubber trees and to stop using chemicals to stimulate latex production."
A meeting of the ITRC on 13 December 2008 resulted in an accord, the details of which can be found here: http://www.irco.biz/BlogMoreDetial.php?id=475&ShowContent=editorial+. This accord concerned export levels, export prices, and non-fulfilment of contracts. The parties agreed to reconvene in Jakarta in January 2009.
In February 2009 the Indonesian Agriculture Minister is reported to have called on the three ITRC members to cooperate further to stop rubber prices falling.
The list of affected tariff lines is restricted to the natural rubber HS codes 4001 and 4002.