International Rubber Regulation Agreement

The International Rubber Regulation Agreement was a 1934 accord between the United Kingdom, India, the Netherlands, France and Thailand that formed a cartel of major rubber producing nations to restrict global rubber production and maintain a stable, high price for natural rubber. In 1979 a new agreement was formed - an International Natural Rubber Agreement.

Background

Demand for rubber declined sharply after World War I resulting in the British enacting the Stevenson Plan in 1922 to restrict the supply of rubber to support rubber prices and ensure the profitability of British rubber plantations in the Far East. However, the plan had many flaws and was abandoned in 1928. By 1928 the plan both irritated the United States and lacked apparent purpose. Demand for rubber was robust due to expanded use of the automobile in the United States.

After the stock market crash of 1929 the Great Depression hit the United States and rubber demanded once again softened. It was in this context that the International Rubber Regulation Agreement was implemented.

The Agreement

The Agreement was enacted in 1934 between the United Kingdom, India, the Netherlands, France and Thailand to restrict the rubber supply in accordance with the decline of rubber prices to maintain rubber prices and profitability of rubber producing firms. The agreement both prevented establishment of new rubber plantations and placed production restrictions on existing plantations. The agreement in effect formed a cartel of rubber producing nations. To satisfy the interests of the opposite side, the rubber consuming nations, a new institutional body was established: a “Consumer Advisory Council”. Therein representatives of the three leading rubber consuming nations took place: For the United States this was „The Rubber Manufacturers’ Association of America", for Great Britain „The India Rubber Manufacturers’ Association of the United Kingdom" and for Germany the „Reichsverband der deutschen Kautschukindustrie”.[1] Other countries, e.g. Japan or the Sowjetunion, had got no representation.

Outcome

The United States tried to become independent of the rubber cartel: establishing rubber plantations in territories under its control; conducting research into rubber-producing plants that thrive in the United States' climate; and reinvigorated efforts to replace natural rubber in tires with a synthetic. In the Fordlandia venture, Henry Ford failed in an attempt to produce rubber in Brazil. The Goodyear Tire and Rubber Company developed plantations in the Philippines and Costa Rica and Harvey Firestone developed plantations in Liberia.

Research into synthetic rubber was limited by lack of knowledge of the chemical structure of rubber compounds until after 1945. DuPont had developed neoprene in the 1920s in response to the Stevenson Plan, but neoprene was too costly for making tires. During this period the International Rubber Research & Development Board and the Research Association of British Rubber Manufacturers were founded.

Also other technologically advanced countries like Germany and the Soviet Union developed in the interwar period synthetic rubber (e.g. Buna.[2] But this was always more expensive than natural rubber.

International Natural Rubber Agreement, 1979

The first and only agreement to come from the United Nations Conference on Trade and Development Integrated Programme for Commodities was an International Natural Rubber Agreement.[3] The agreement had similar objectives. It introduced the concept of joint responsibility for financing international stock.[4]

References

• International Rubber Research & Development Board
• History of Natural Rubber (Part 3)
• The Story of Rubber:Supply and Demand
• Paul R. Samuelson, THE U.S. GOVERNMENT SYNTHETIC RUBBER PROGRAM 1941–1955, Working Paper MIT-EL 76-027WP, Energy Laboratory, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139 (November, 1976)
• Chung, Stephanie Po-Yin (2002). "Surviving Economic Crises in Southeast Asia and Southern China: The History of Eu Yan Sang Business Conglomerates in Penang, Singapore and Hong Kong". Modern Asian Studies. 36 (3): 579–617. doi:10.1017/S0026749X02003037.

Notes

1. Lammers, Clemens (1937): Internationale Kartelle. Paris: Internationale Handelskammer, p. 12 (p. 9-18: “Die Organisation des Rohkautschukmarktes” = rubber cartel)
2. Lammers, Clemens (1937): Internationale Kartelle. Paris: Internationale Handelskammer, p. 13.
3. "International Natural Rubber Agreement, 1979 ATS 26 of 1980 ". Australasian Legal Information Institute, Australian Treaties Library. Retrieved on 15 April 2017.
4. Khan, Kabir-Ur-Rahman (1980). "The international natural rubber agreement 1979 - ScienceDirect". Resources Policy. 6 (3): 253–265. doi:10.1016/0301-4207(80)90044-6.