WORLD TRADE
ORGANIZATIONWT/BFA/36
3 July 1998
(98-2712)
Committee on Budget, Finance and Administration
REPORT OF THE MEETING HELD ON 15 JUNE 1998
1. The WTO Committee on Budget, Finance and Administration met on 15 June 1998 under the
chairmanship of Mr. W. Meier of Switzerland.  The terms of reference and composition of the
Committee are set out in document WT/L/44/Re v.1.  The Agenda contained in document
WTO/AIR/857 was adopted with two additions from the Secretariat, under Other Business, regarding
the administrative function of the Appellate Body and expenditure for the WTO Ministerial Conference
and 50th Anniversary Commemoration.
WTO SECRETARIAT
I. ADMINISTRATIVE UP-DATES AND PROGRESS REPORTS AS AT 31 MAY 1998
A. CASH SITUATION AND STATEMENT OF OUTSTANDING CONTRIBUTIONS (CRP(98)12  AND
WT/BFA/SPEC /21)
B. INSTALMENT PAYMENTS FOR COUNTRIES IN ARREARS (CONTRIBUTIONS FROM 1987  AND
EARLIER YEARS ) (CRP(98)13)
C. CONTRIBUTIONS OF OBSERVER COUNTRIES TOWARDS THE COST OF SERVICES PROVIDED BY
THE SECRETARIAT (CRP(98)14)
2. The Secretariat presented reports on the cash situation and statement of outstanding
contributions as at 30 May 1998, the instalment payments for countries in arrears, and the
contributions of Observer countries towards the cost of services provided by the Secretariat.  The total
contributions received amounted to CHF 85,726,084, and the Working Capital Fund stood at
CHF 7,394,252.  Since the last meeting of the Comm ittee Nicaragua had moved from Category IV to
Category III and Peru and Senegal made payments and are no longer under any measures.  In the
context of the instalment payment scheme for countries in arrears (contributions for 1987 and earlier
years), Romania has paid its 1998 instalment.
3. The Committee noted that the reports contained, for the first time, information with regard to
workload indicators and welcomed this innovati on.  A number of Members made suggestions with
regard to other elements and adjustments to be included in the information.
4. The Committee took note of the reports.
II. FINAL POSITION OF THE 1997 BUDGET (WT/BFA/W/25)
5. A member of the Secretariat introduced the report entitled Final Position of the 1997 Budget
(WT/BFA/W/25) and drew the attention of the Committee to the Surplus Account which was a pictureof the financial state of the Organization on 31 December 1997.  He recalled that the final Surplus
Account was largely in line with the estimates which were presented to the Committee earlier in the
year before closure and auditing of the accounts.  Information was provided on all of the elements ofWT/BFA/36
Page 2
the Surplus Account including the increase in the provision for contributions in arrears, write-offs and
use of the 1996 Surplus.  After taking into account the contributions assessed on new Members
subsequent to the approval of the 1997 scale of contributions, the budgetary surplus of
CHF 2.8 million, and the excess of miscellaneous income over estimates, there was an accumulated
deficit of CHF 12.95 million.  This accumulated deficit was partially covered by a transfer of theentirety of the funds available under the Working Capital Fund amounting to CHF 6.97 million,
leaving an uncovered deficit of CHF 5.98 million.  It  was recalled that this amount could be covered
either by utilization of the balance available under the 1996 Surplus or included as a provision in the
1999 budget of the WTO.
6. The 1997 budget expenditure was divided into two parts: (i) the WTO Secretariat and (ii) the
Appellate Body and its Secretariat.  Under the WTO Secretariat, there was a savings of
CHF 2.9 million against a budget of CHF 114.1 million.  The savings could be divided intoCHF 1.7 million for personnel-related costs and 1.2 million under administrative and other costs.  It
was noted that these savings were the result of under and over-expenditures in various sections.
Details, which were included in paragraphs 6 through 23 of the report were further elaborated by the
Secretariat.
7. With regard to the expenditure of the Appellate Body and its Secretariat, it was noted that
there was an over-expenditure of CHF 82,000 under staff-related costs and a savings of CHF 1,000
under administrative and other costs.  The over-expenditure related to unforeseen staff replacement
costs for which no provision had been made due to the small staff population of the Appellate Body
Secretariat.
8. The Secretariat then provided information regarding the Early Payment Encouragement
Scheme and noted that since the inception of the scheme, a total amount of CHF 5 million will have
been returned to WTO Members after taking into account the CHF 543,000 accrued in 1997.  The
attention of the Committee was also drawn to pa ragraphs 57 through 59 containing information
regarding the Appellate Body Operating Fund, the Ministerial Conference Operating Fund and the
provision for an actuarial study.  The Secretariat indicated that complete information on 1997expenditure under the Appellate Body Operating F und would be provided in the Director-General's
Financial Report which would be examined at the next meeting of the Committee.
9. A member of the Secretariat also drew the attention of the Committee to Annex D which
provided information on the functional or divisional budgets.  He indicated that 1997 was the second
year where expenditure information on a divisional basis had been made available and the first year
when expenditure against budget was shown.
10. A number of delegates took the floor to indicate that the costs for postal services needed to be
examined more closely.  While being aware that the volume of documentation had increased
significantly, they requested the Secretariat to prepare a paper which would explain in greater detail
how the system worked and to see if economies might be made in this area.  The Secretariat indicated
that a paper would be prepared for the next meeting of the Committee.
11. Several members of the Committee raised questions regarding the over-expenditure for
official missions, and in particular how the expe nditure was divided between Senior Management and
the Trade Policies Review Division.  The Secretariat referred to the expenditure information which
was available in Annex D under the budget expendit ure reports for Senior Management and the Trade
Policies Review Division.
12. Members of the Committee welcomed the more detailed information of expenditure against
budget on a divisional basis which was provided in Annex D.WT/BFA/36
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13.  The Committee recommends to the General Council to approve the transfers between WTO
budgetary sections as mention in paragra ph 24 of document WT/BFA/W/25 amounting to
CHF 2,930,694 and transfers between Appellate Body budg etary sections as mention in paragraph 43
amounting to CHF 32,397 which are necessary in order to cover excess expenditure over approved
appropriations.
III. ORAL REPORT OF THE CHAIRMAN OF THE WORKING GROUP ON
ASSESSMENTS
14. The Chairman of the working group on assessments brought the Committee up to date on the
discussions regarding this question.
15. He recalled that the General Council approved on 11 July 1995 (WT/GC/M/5) a
recommendation of the Committee on Budget, Finance and Administration (WT/BFA/5, L/7631,
paragraph 4) based on the deliberations of a Working Group on Contributions with regard to a newbasis for the assessment of contributions to the budget of the WTO.  Included in the recommendation,
among others, was the following:  "The Committee further recommends that a full review of the
functioning of the new system shall be undertaken by the WTO Committee on Budget, Finance and
Administration three years after its introduction."
16. On 12 March 1998 the Budget Committee decided to establish a Working Group to carry out
the review mentioned above.
17. On 4 June 1998 after several informal consultations the Working Group met and carried out
the review of the functioning of the system of the assessment of contributions.  There was a general
sense of agreement that the present system of the calculation of Members' contributions was
satisfactory, functioning well and therefore there was no need either for practical or legal reasons tomodify or change it.
18. On that basis the Chairman of the Working Group introduced a draft decision which was the
following:  "Without prejudice to consultations with regard to the minimum contribution, and
pursuant to the recommendation of the Committee on Budget, Finance and Administration
(WT/BFA/5, L/7631) approved by the General Counci l (WT/GC/M/5) with regard to the review of
the functioning of the new system for the assessment of contributions to the WTO budget, the
Committee recommends to the General Council that the present system be continued until such a time
that WTO Members make relevant changes in the areas covered under the Marrakesh Agreement
Establishing the World Trade Organization ."
19. The Chairman of the Working Group indicated that one delegation was not in a position to
join the consensus at the meeting of the Working Group.
20. The Chairman of the Committee then asked whether the delegation which had not been able
to join in the consensus maintained that position.   The delegation indicated that it was still unable to
join the consensus.
21. The Chairman noted that no consensus had been reached and requested the Chairman of the
Working Group to continue his consultations.  The Committee would return to the question at a later
date.
IV. MINIMUM CONTRIBUTION TO THE WTO BUDGET
22. The Chairman presented document CRP(98)11, Assessment of Contributions to the WTO
Budget.  He recalled that in 1997, an item entitled Possible Measures in Favour of Least-DevelopedWT/BFA/36
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Countries was discussed in the Committee which, at that time, agreed "to examine the possibility of
assessing contributions more closely based on Member s' share in trade..." (WT/BFA/33, paragraph 8).
23. He noted that the assessment of contributions more closely based on Members' share in trade
related directly to the level of the minimum contributions.  With the current minimum contribution of
0.03%, Members whose share in the total trade of all WTO Members is less than 0.03% arenevertheless assessed at 0.03%.  He further noted that the United Nations had recently adopted a
minimum contribution of 0.001% and, with regard to least-developed countries, a ceiling of 0.01%.
24. The document CRP(98)11 presented comparative tables based on different hypotheses.  One
presented a hypothetical 1998 scale of contributions with a minimum of 0.01% and another with
0.015%.  Another provided a hypothetical 1998 scale of contributions with a minimum of 0.01% for
least-developed countries and a minimum of 0.03% for all other WTO Members.  The Chairman
indicated that the Secretariat was preparing a nother table which would show a minimum of 0.015%
for least-developed countries and 0.03% for all other WTO Members.  This table would be circulated
shortly.
25. A number of Members of the Committee supported the principle that the assessment of
contributions should be more closely linked to the real share in trade.  One delegation even questioned
the need for a minimum contribution at all.  Another delegation indicated that with the currentminimum of 0.03%, the poorest WTO Members were subsidizing the other Members, as their
contribution was proportionally high er than those whose contributions were based solely on trade
shares.  Still other Members of the Committee said that they did not yet have any instructions on the
question.
26. The Chairman then said that he would continue his consultations and the Committee would
come back to the item at the next meeting.  The Committee took note of the statements by the
Members and the Chairman.
V. ENDORSEMENT OF RECOMMENDATIONS DISCUSSED AT THE INFORMAL
MEETING ON 8 MAY 1998 (CRP(98)16)
27. The Chairman recalled that the recommendations contained in document CRP(98)16 were
dealt with in depth at a previous meeting.  The Committee then formally endorsed the
recommendations.
28. The Committee recommends to the General Council that a maximum of CHF 175,000 from
the 1996 surplus be utilized, as may be necessary, to facilitate LDC participation in the Geneva
Ministerial Conference and 50th Anniversary Commemoration, it being understood that this should in
no way be seen as a precedent. Any part of the total amount made available which is not required for
the intended purpose will revert on a pro rata  basis:
(i) to the respective donors and;
(ii) to the balance of the 1996 surplus, the use of which will be decided at a later date.
29. The Committee,
Recalling the Financial Regulations of the World Trade Organization, and in particular
Regulation 13.2 which states:WT/BFA/36
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"In accordance with Article VII, 4 of the Marrakesh Agreement Establishing the
World Trade Organization, Members have the obligation to contribute promptly to the WTO
their share in the expenses of the WTO.  Contributions shall be considered as due and payable
in full upon receipt of the invoice or on 1 January of the financial period to which they relate,
whichever is later. …"
recommends to the General Council that from the balance available under the 1996 Surplus:
(a) CHF 596,315 be utilized to provide additional resources for the activities planned for
1998 in the context of the Three-Year Plan (1998-2000) of the WTO Programme for
Technical Assistance;
(b) CHF 250,000 be utilized to set up a Reserve Fund which could be used to augment
Secretariat resources in order to assist developing countries requesting the services of
a legal expert under Article 27.2 of the Understanding on Rules and Procedures
Governing the Settlement of Disputes.  The Fund would only be used for those time
periods when the normal resources of the Secretariat were insufficient to meet the
requests of developing countries;
(c) that, without prejudice to any ultimate decision, the use of the balance of not less than
CHF 5,979,141 be decided upon subsequently, but at the latest at the time of making
recommendations with regard to financing the 1999 WTO Budget."
30. One Member of the Committee, whose position was seconded by another Member, requested
that his Government's position against the funding of the participation (travel costs, etc.) ofleast-developed countries at Ministerial Conferences from regular funds be recorded in the report of
the meeting.  In addition, one Member of the Committee recalled that his delegation had agreed to the
recommendations on the understanding that there would be a re-examination of the needs for the
Technical Assistance Programme and for additional legal experts in September.  And another Member
of the Committee requested that the Secretariat ensure that all funds made available under therecommendation be treated in a transparent manner.
31. One Member of the Committee indicated that he could understand the concerns of those
Members who had indicated that they were not in favour of using regular funds to assist
least-developed countries to participate in conferences.  Nevertheless, he said that sometimes the
assistance was used by least-developed countries to send more staff than their finances would
normally permit in view of the complexity of issues which are often dealt with at such meetings and
the necessity to have their experts participate.
VI. OVERHEAD ON TRUST FUNDS (CRP(98)15)
32. A member of the Secretariat introduced document CRP(98)15 and recalled that delegations
had requested that the Secretariat investigate other possibilities of utilizing the revenue from overhead
costs so that they could be of more direct support for the activities undertaken, rather than being
credited as an element in "miscellaneous income" which is used to finance the overall budget.  Hereported that other international organizations use the term "programme support resources" to identify
the 13% charged on trust fund activities and which are referred to as "overhead" in the WTO.  It was
suggested that consideration could be given to programme support funds/overheads being channelled
into areas where a demonstrable relationship exists between the supporting activity (operational or
central administrative functions) and the activities which generated the revenue.
33. One Member of the Committee said that the proposal was entirely in line with the
Committee's recommendation contained in paragraph 8 of document WT/BFA/26 which was
approved by the General Council (WT/GC/M/13).  Other Members requested more details on howWT/BFA/36
Page 6
such a treatment of the 13% would work.  It was agreed that the Secretariat would prepare an
operational paper on the question for the next meeting.
34. In relation to trust fund activity, several Members of the Committee were of the opinion that,
in their experience, there was an increasing number of WTO staff, aside from staff in the Technical
Co-operation and Training Division, who were unde rtaking missions funded from trust funds.  They
thought that trust fund activity was clearly putting an additional strain on human resources.
35. The Chairman indicated that there were two relatively separate issues: (i) the question of the
13% overhead on trust funds and (ii) the volume of technical cooperation activities.  He thought that
in some areas, the WTO staff resources might be reaching its limits as the concerns of Members of the
Committee had indicated.  He suggested that the WT O External Auditors might be asked to look into
the question of organizing and streamlining technical cooperation in the WTO.  He further said that
the various issues related to trust funds would be taken up at the next meeting.
VII. OTHER BUSINESS
A. ADMINISTRATIVE FUNCION OF THE APPELLATE BODY
36. A member of the Secretariat recalled that at the last meeting of the Committee in 1997, it had
been suggested that, in order to have a more systematic discussion with regard to the costs of the
Appellate Body, it would be useful to consider various scenarios.  The Secretariat had been able tocollect some preliminary information from two other international tribunals but was still attempting to
receive information from others.  It was agreed that a paper would be available for the next meeting of
the Committee.
37. The Committee took note of this information.
B. EXPENDITURE OF THE WTO MINISTERIAL CONFERENCE AND 50TH ANNIVERSARY
COMMEMORATION
38. A member of the Secretariat provided preliminary information regarding expenditure with
regard to the Ministerial Conference and 50th Anniversary Commemoration.  He indicated that while
the total expenditure could not be accurately provided at the moment, there were two elements where
expenditure had significantly exceeded the estimates: (i) shuttle service and (ii) overtime.  In view ofthe situation which was anticipated regarding security, the original minimal shuttle service had to be
expanded in order to facilitate the transport of delegates, and particularly those with no representation
in Geneva.  With regard to overtime, it was recognized that the original estimate was based on the
previous experiences when the host country assumed many of the tasks associated with the conference
and which, this time, became the responsibility of the Secretariat.  The Secretariat mentioned that it
would be in a position at the next meeting of the Committee to provide more complete information
with regard to expenditure for the Ministerial Conference and 50
th Anniversary Commemoration.
39. The Committee took note of the information provided by the Secretariat.
INTERNATIONAL TRADE CENTRE UNCTAD/WTO
I. UN/WTO COOPERATION WITH REGARD TO ITC BUDGETARY
ARRANGEMENTS (CRP(98)09)
40. The Chairman presented document CRP(98)09 which contained a short résumé of the history
of the ITC and how the administrative arrangements relating to the Centre have evolved.  The
document was worked out by the WTO and the ITC Secretariats and was included in informationWT/BFA/36
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prepared by the UN Secretariat for the Advisory Committee on Administrative and Budgetary
Questions (ACABQ).
41. He reported that, in view of the mandate to negotiate a new budgetary arrangement with the
UN, a number of contacts had been undertaken.  It appeared at one point that progress had been made
toward the goals set out in the mandate of the General Council.  However, the approach of the UNSecretariat met with resistance from the ACABQ in the latter part of 1997.  At that time, the
Committee on Budget, Finance and Administration noted that the question was no longer a matter
between the Secretariats of the WTO and the UN, but rather an item which should be taken up
between the governing bodies of the two organizations.  Consequently, Ambassador Morjane as
Chairman of the Budget Committee and representatives of the WTO and ITC Secretariats met at the
UN in New York earlier this year, as was reported at the last meeting of the Committee.
42. Informal contacts with the ACABQ were held in Geneva during the second week of June and
the Chairman met subsequently with the Chairman of the ACABQ.  It was emphasized that it would
be unfortunate if, after considering the question, the ACABQ issued its report without prior
consultation.  The Chairman of the ACABQ gave assura nces that this would not be the case.  He also
thought that the matter could be cleared up by the end of the year.
43. The Chairman said that he would keep the Committee informed of developments on this
question and the Committee took note of the information provided.
II. INITIAL INFORMATION ON 1999 PROPOSED BUDGET
44. The Executive Director of the International Trade Centre UNCTAD/WTO made a brief
introduction and mentioned the work which was being done by the Administrative Unit in thedevelopment of a web site relating to the follow-up of the High-Level Meeting on Least-Developed
Countries.  He recalled the contacts which had taken place and were continuing with the United
Nations regarding the ITC budget presentation situation and thanked the present and former Chairmen
of the Budget Committee for their efforts in dealing with the question.  He also indicated that the
funding of activities undertaken by ITC in follow-up to the High-Level Meeting was largely throughbi-lateral funding, but that one element was the Joint Initiative for Africa funded by the Common
Trust Fund.
45. A representative of the ITC introduced document ITC/BUD/23 which presented the budget
outline of the proposed 1999 budget for the ITC.  He recalled that the budget was formulated on the
parameters which were jointly discussed with the WTO and that it was based on a zero vacancy level;
common staff costs accounted for 33% of salaries.  In response to a question, he said that the recurrent
costs involved in the obligation to prepare submissions and reports in two formats were estimated atsome CHF 100,000.
46. Members of the Committee thanked the representatives of the ITC for the presentation.  One
member commented that the administrative reform was, in his opinion, a positive development.  He
also requested information regarding trust fund expenditures similar to that provided by the WTO.
The Committee took note of the information presented.
POINTS FOR DECISION: Paragraph 13
Paragraph 28
Paragraph 29
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