RESTRICTEDWORLD TRADE
ORGANIZATIONWT/BFA/47
26 June 2000
(00-2617)
Committee on Budget, Finance and Administration
REPORT OF THE MEETING HELD ON 25 MAY 2000
1. The WTO Committee on Budget, Finance and Administration met on 25 May 2000 under the
chairmanship of Mr. H. Akil.  The terms of reference and composition of the Committee are set out in
document WT/L/44/Rev.1.  The agenda contained in document WTO/AIR/1309 was adopted with
additional points under Other Business, regarding (i) a communication on performance-based
budgeting and (ii) the employment of consultants.
I. ITC BUDGET FORECAST FOR 2001
2. A representative of the ITC made an introductory statement recalling the revised
administrative arrangements for ITC agreed upon by WTO and the United Nations in 1998, as
outlined in the UN document A/53/7/Add.3, Report of the United Nations Advisory Committee on
Administrative and Budgetary Ques tions (ACABQ).  The new arrangements stipulate that ITC should
submit, in May of the year preceding the United Nations financial period, to the General Assembly,
through the ACABQ its budget outline for the first ye ar of activities for the coming biennium with a
projection of requirements for the second year.  Simultaneously, ITC is to submit its outline in Swiss
francs to the WTO Committee on Budget, Finance and Administration.  Subsequently in autumn, a
full presentation of resource requirements is to be made, taking into account the recommendations ofbudgetary review Committees of both organizations on the outline.  In conformity with these
arrangements, ITC submitted, in 1999, the outline for the biennium 2000-2001 to the United Nations,
which is reflected in the United Nations document A/54/127, Outline of the proposed programme
budget for the biennium 2000-2001 for the In ternational Trade Centre UNCTAD/WTO.  The UN
General Assembly approved these proposals last fall.  Simultaneously, ITC submitted its outline for
the year 2000, as contained in the document ITC/BUD/27, Preliminary Budget Outline for 2000,
which the WTO Committee on Budget, Finance and Administration took note of.  The Budget for theyear 2000, was prepared based on that outline, and subsequently approved by the Committee and the
General Council.
3. Further, the ITC Representative commented on the budget outline for the year 2001, which
amounted to CHF 30,003,400, representing zero real growth compared with the year 2000 approved
budget (document ITC/BUD/32).  After deducting th e miscellaneous income, WTO contribution was
estimated at CHF 14,799,200.  The proposed resource level for the year 2001 was in line with the
biennial outline (2000-2001) approved by the United Nations General Assembly.
4. The estimates in the proposed outline were based on parameters agreed jointly by the WTO
and UN Secretariats.  A general inflation factor of 1.8 per cent had been applied selectively and an
exchange rate of CHF 1.71 to the United States dollar had been used to calculate the effect of thecurrency fluctuation, mainly for professional salaries.  The overall nominal increase was estimated at
1.7 per cent, mainly due to the impact of the stronger dollar.  The ITC would continue to place
emphasis on providing assistance relating to the multilateral trading system as well as on capacity
building in least developed countries in the context of the World
Bank/ITC/UNCTAD/IMF/WTO/UNDP Integrated Framework for Trade Related Assistance toLCD’s.  The ITC would submit, based on the present outline, a detailed programme budget for the
year 2001 in September.WT/BFA/47
Page 2
5. The Committee took note of the report.
II. ADMINISTRATIVE UP-DATES AND PROGRESS REPORTS AS AT 30 APRIL 2000
A. CASH SITUATION AND STATEMENT OF OUTSTANDING CONTRIBUTIONS (CRP(00)05 AND
WTO/BFA/SPEC/45)
B. INSTALMENT PAYMENTS FOR COUNTRIES IN ARREARS (CONTRIBUTIONS FROM 1987
(CRP(00)06)
C. CONTRIBUTIONS OF OBSERVER COUNTRIES TOWARDS THE COST OF SERVICES PROVIDED BY
THE SECRETARIAT (CRP(00)07)
6. The Secretariat presented reports on the cash situation and statement of outstanding
contributions as at 30 April 2000, the instalment payments for countries in arrears, and the
contributions of Observer countries towards the cost of services provided by the Secretariat.  The totalcontributions received from Members amounted to CHF 65,514,739 while contributions received
from Observers amounted to CHF 266,921.  The Working Capital Fund stood at CHF 7,691,473.
Since 30 April 2000 the following Members had made payments: (i) Estonia, (ii) Greece, (iii)
Honduras, (iv) India, (v) Qatar, (vi) Singapore, (vii) Uganda.  As of 30 April  2000, there were four
Members in Category I and five in Category II, while in Category III there were six and inCategory IV, seventeen.  Bangladesh had paid all arrears and was, therefore, no longer listed under
the administrative measures.  In the context of the instalment payment scheme for countries with
contributions in arrears (contributions for 1987 and earlier years).  Romania had liquidated all its
arrears in accordance with its tailor-made repayment scheme proposed in 1991.  Only one Member,
assessed above the minimum in 1988, still had arrears for 1987 and earlier years.  With regard toObservers, (i) Croatia, (ii) Laos, and (iii) Lithuania had made payments after 30 April 2000.
7. The Committee took note of the reports.
III. ASSESSMENT OF ADDITIONAL CONTRIBUTION TO THE 2000 BUDGET AND
ADVANCE TO THE WORKING CAPITAL FUND: ACCCESSION OF THE
HASHEMITE KINGDOM OF JORDAN
8. Consequent to the accession to the WTO of the Government of the Hashemite Kingdom of
Jordan on 11 April 2000 (document WT/BFA/W/38), the Committee recommends to the General
Council that a pro rata contribution to the 2000 budget amounting to CHF 63,548 be assessed
on this Government.  This assessment, calculated as from 11 April 2000, is based on an annual
contribution of 0.069 per cent, taking into accoun t the international trade figures (imports plus
exports in goods, services and intellectual pr operty rights) of Jordan for the years 1995-1997.
Furthermore, on the basis of the level of the Working Capital Fund of CHF 7,691,473, the
Committee recommends to the General Council to assess an amount of CHF 38,457 on the
Government of Jordan as an advance to the Fund .
IV. WORKING GROUP ON METHOD OF CALCULATING ASSESSED
CONTRIBUTIONS TO THE WTO BUDGET
9. The Chairperson recalled that during the meeting on 13 March 2000, the Committee had
discussed the establishment of a working group to examine concerns of Members with regard to the
variations of percentage, from one year to another, which served as basis of calculating the assessed
contributions.  He further indicated that, after informal consultations, Dr. Rénald Clerismé, MinisterCounsellor, of Haiti, had accepted to chair the Wo rking Group.  Members wishing to participate in the
Working Group should also inform the Secretariat.  As of the date of the meeting, the following
Members had indicated their wish to participate in the Working Group: (i) Guatemala,WT/BFA/47
Page 3
(ii) Hong Kong, China, (iii) France (iv) India, (v) Indonesia, (vi) Japan, (vii) Korea, (viii) Mauritius,
(ix) Mexico, (x) Netherlands, (xi) Philippines, (xii) Singapore, (xiii) Thailand, and (xiv) the United
States.  However, it should be recalled that the Working Group is open to all Members.  The Working
Group would meet in the near future and would submit a report to the Committee at its next meeting.
10. The Committee took note of the establishment of the Working Group.
V. PROGRESS REPORT ON THE WTO PENSION PLAN
11. A Member of the Secretariat gave an oral progress report on the WTO Pension Plan.  He
indicated that the Management Board of the WTO Pl an had held 13 meetings since its establishment
at the end of March 1999.  Those meetings had been largely devoted to the establishment of the Plan’s
investment strategy and the selection of a global custodian and fund mangers.  The investment
strategy adopted by the Management Board, on the basis of recommendations from its independentexpert consultant ECOFIN, was based on a mix of passive (index tracking) mandates and active
mandates (where the fund manager was seeking to outperform the index).  Some sixty per cent of the
Plan’s assets had been invested in four separate passive mandates assigned to Barclay’s Global
Investors.  The remaining forty per cent of the Plan ’s assets had been assigned to two active mandates.
The Northern Trust Company had been appointed the global custodian of the Plan and the twoidentical active mandates had been assigned to ING and Wellington.  The Plan’s current account had
been switched from the UBS to the Crédit Suisse.  The next important step was to determine the
appropriate mechanisms for monitoring and adjusting the strategy in the future.
12. At the request of a Member, the report was later communicated to all WTO Members in
document CRP(00)09.
VI. PERSONNEL MATTERS
MERIT PAY
13. The Deputy Director-General responsible for Administration referred to the document
WT/BFA/W/46 which provided the background to the WTO Secretariat’s intended move to a merit-
based pay arrangement.  He recalled that, through informal meetings on 27 January and
11 April 2000, the Members had been kept informed of the progress made in this respect.  Although
Staff Regulation 6.5 directed the WTO to introduce the program, the actual introduction of the
program would require amendment of the staff rules which currently referred to the system of periodic
salary increments or the “step system” (Rule 106.3).  Staff Regulation 13.2 called for the General
Council’s approval of amendments to staff rules “carrying financial implications or creating newrights for staff members.”  He further indicated that, no recommendation was expected at the present
meeting on the issue.  However, at the next meeting, approval of a recommendation to the General
Council in respect of changes to the staff rules would be required.
14. Some Members enquired about the implication of the new system referred to in paragraph 11
of document WT/BFA/W/46 and indicated that the new system required fine-tuning.  The Deputy
Director General responsible for Administration confirmed that the Secretariat’s Joint Advisory
Committee was continuing to work on the issue and that the new system would respect fully the
overall two percent cap on spending.  Further information would be provided to the Members at the
next meeting.
15. The Committee took note of the report and comments of the Members.WT/BFA/47
Page 4
PROMOTION FROM GRADE 7 TO 8
16. The Deputy Director General responsible for Administration introduced the document
WT/BFA/W/40.  He indicated that it had been for several years the Secretariat’s practice to try
wherever possible to fill external vacancies in th e professional stream by hiring at the most junior
level possible – grade 7 in the current system, corresponding to grade P-2 in the UN Common System.
The approach worked well both because it gave the new entrants a relatively long career path.
Grade 7 was seen as an entry-level grade.  Once the individual had demonstrated competence, it was
possible to be considered for a promotion to grade 8.
17. The Secretariat suggested that the movement not be considered as involving a re-grading of
the post in which the individual was serving.  The reasons were: (i) grade 7 should be seen in the same
light as similar entry grades in many national administrations – a grade from which movement tograde 8 was not really a “promotion” in terms of moving up to new or greater responsibilities but
rather an acknowledgement of proof of initial competence in WTO work, (ii) if a promotion ceiling
were continued to be imposed on the Secretariat, the WTO would face difficult recruitment and
retention problems because management would likely focus its limited promotion possibilities mostly
on more senior staff to the detriment of those junior members of the Secretariat.  It was to be notedthat it was not the intention of the Secretariat to make the movement to grade 8 automatic.  No staff
member would move into grade 8 from grade 7 unless he/she demonstrably deserved to be promoted
according to the standard procedure.  The financial implications were marginal as the WTO operated
on standard costs and there were currently 19 posts graded at 7 level.
18. In general, Members had no objection to the proposal made by the Secretariat except for two
Members who expressed reservations, both of which were subsequently able to join the consensus.
The following stipulations were agreed: (i) only promotions from grade 7 were concerned, (ii) the
promotion was granted according to performance criteria of the individual, (iii) there were no
budgetary implications, and (iv) it did not lead to an increase in the budget ceilings for the year 2001.
19. In reply to queries, the Secretariat indicated that as it was the first year that the Committee
had set a fixed promotion ceiling, it was difficult to compare the situation with past years.  The
Secretariat also informed the Committee that a standard classification system was in place.  The
Committee, therefore, recommends to the General Council that entry-level WTO positions in the
professional series should henceforth be considered as Grade 7/8 so that a re-grading of the post
would not be a requirement when an individual is promoted from Grade 7 to Grade 8.
VII. COMMUNICATION FROM THE EXTERNAL AUDITOR
20. The Secretariat recalled that the Netherlands Court of Audit had been appointed as the WTO
External Auditor in July 1996 for a period of three years, i.e. 1997, 1998 and 1999.  At the time of the
appointment, the Members decided that there should be at least a call for competitive tender every 5
years.  As a consequence, after 3 years, if the auditor agreed to continue for 2 more years and if the
Members concurred, there would be an extension of 2 years until a compulsory call for competitivetenders was launched.  The Netherlands Court of Audit was prepared to continue for 2 more years i.e.
2000 and 2001, but under different financial conditions.  As from the audit of 2000, the Netherlands
Court of Audit proposed a cost recovery approach which would entail an additional charge for the
WTO of some CHF 46,000 (document WT/BFA/W/39).  Therefore, the total cost would represent
some CHF 78,000.
21. Members had indicated their satisfaction on the performance of the Netherlands Court of
Audit and, in general, had no objection to the extension of its mandate for another period of 2 years.
Some Members questioned whether it would not be better to give a five-year appointment initially so
as to avoid the possibility of cost increase when the question of extension came up.WT/BFA/47
Page 5
22. Since the process for the appointment of an Auditor was long, the Committee noted that
sufficient time should be given to the launching of the next call for tenders so that a smooth transition
would be ensured.
23. The Committee recommends to the General Council to extend, for a period of 2 years,
the mandate of the Netherlands Court of Audit as the WTO External Auditor for the audit of
the 2000 and 2001 accounts .
VIII. NON-GOVERNMENTAL CONTRIBUTIONS TO THE WTO
24. The Deputy Director-General responsible for Administration recalled the extensive and
constructive discussion of the issue during the informal meeting of the Committee of 11 April 2000.
The Financial Regulation 19 in principle allowed WTO to accept voluntary contributions, gifts or
donations also the private sector.  However, due to the dispute settlement function and the sensitivityof potential conflicts of interests, the WTO had almost never availed itself of the possibility.
However, there was a range of potential activities where Members believe the Organization could
conduct useful activities but where current budgeted funds or voluntary trust funds from governments
were insufficient to make such activities possible.  In these cases, it might be possible to fund these
activities from private sector sources without a risk of conflict of interest.  Some examples of theactivities were: (i) facilitating participation in the WTO Ministerial and other meetings by
representatives of least developed countries and/or press corps representatives from least developed
countries, (ii) funding symposia on topics of general interest to the WTO Members; (iii) maintaining
and expanding our network of the WTO reference centres in developing countries, especially those in
the LDCs; and (iv) special projects, for example facilitating the work of the WTO in the WHO-ledproject on macroeconomics and health.  The documents WT/BFA/W/41 and 45
1 provide draft
guidelines and explanation as well as the experience of other international intergovernmental
organizations in dealing with private sector funds.
25. Most Members did not have, in principle, objections to the acceptance of voluntary
contributions from non-governmental donors while some had doubts on the distinction made betweenprofit and non-profit organizations.  It was recal led that WTO was a Member-driven organization and
that the Members should be involved actively in the matter and that all potential contributions should
be brought to the attention of the Committee on Budget, Finance and Administration for decision.
One Member suggested, and was supported by others, to form a Wise Men Group to take such
decisions.
26. Some Members indicated the difficulties of accepting voluntary contributions as
Miscellaneous Income.  Others expressed the view that it was also the Members’ role to fundactivities such as technical assistance and seminars.
27. Members also indicated that strict rules would be required in accepting such funds.  With
regard to the proposed guidelines WT/BFA/W/41, so me Members requested clarifications with regard
to clauses 2 (b), 4 and 5.  A mechanism on the acceptance of such funds and on how to spend them
would be needed.  The mentioned of a ceiling of acceptance of such funds would be arbitrary and that
the use of WTO logo and the secondment of staff from donors of voluntary contributions, gifts, or
donations to the WTO were in general not accepted.
28. The Committee took note of the remarks of the members and noted that there seemed to be a
more positive attitude on the possibility of accepting voluntary contributions from non-governmental
contributions.  Continued deliberation on the matter would be required in view of the reservationsexpressed by a number of delegations.
                                                     
1 The delegate from Mexico indicated that his authorities would like to clarify that there is now no
monopoly with regard to the telephone system.WT/BFA/47
Page 6
IX. WTO BUDGET PROCEDURE
29. A member of the Secretariat recalled articles 7 and 16 of the WTO Agreement whereby it was
stipulated that an annual budget estimate would be submitted to the Committee on Budget, Finance
and Administration, and that any change to it would require an amendment to the WTO Agreement.In addition, in considering an annual versus a biennium budgeting process, one had to consider the
following (i) the assessed contributions of Members were based on the total trade of the last three
years’ data available of the Members;  therefore with a biennial approval, the basis for contribution
would be more remote from the annual exercise, and (ii) WTO had recently obtained the agreement
from the United Nations that the ITC would submit an  annual budget to the WTO and that it would be
also expressed in Swiss francs.
30. One Member reserved the right to revert to the subject in the future.
X. OTHER BUSINESS
COMMUNICATION FROM THE NETHELANDS
31. A delegate of the Netherlands took the floor to introduce the document CRP(00)08 on the
method of result-based budgeting which was prepared by his delegation.  A result-based budgeting is
a method that links the financial inputs an organization is requesting from its members to the expected
outputs or results.  Key performance indicators, such as number of meetings held, number of dispute
settlement cases, number of documents produced, technical assistance activities, number of pages
translated would show the output of the or ganization in relation to the financial input.
32. The Committee took note of the report.
EMPLOYMENT OF CONSULTANT
33. A Member  referred to the written reply of the Secretariat to the questions raised in the
former’s letter of 22 March 2000.  He made two points, relating to the appointment to the DirectorGeneral’s Office of a consultant on a two-year c ontract: (i) it was not certain that Members’ budgetary
interests were best served by giving the Director-General’s speech-writer a consultant’s contract
rather than a two-year fixed-term contract;  it was the impression that the latter would have worked
out cheaper, as it would appear that the individual concerned did not have any dependants, (ii) it was
the impression that the appointment had not gone unnoticed elsewhere in the Secretariat, and that
reactions to it had not been entirely positive;  for some staff members it calls into question senior
management’s commitment to the principle of equal pay for equal work.  The delegate expressedhope that, in future, recourse to consultancy contracts as a substitute for fixed-term contracts would be
avoided, or, failing that, that recourse to consultancy contracts would be subject to the principle of
equal pay for equal work. Another Member of the Committee indicated that his delegation associated
itself with this position.
34. The Committee took note of the remarks.
POINTS FOR DECISIONS: Paragraphs  8, 19 and 23
__________