RESTRICTEDWORLD TRADE
ORGANIZATIONWT/BFA/65
3 July 2003
(03-3566)
Committee on Budget, Finance and Administration
REPORT OF THE MEETINGS HELD ON 29 JANUARY, 7, 17, AND 27 FEBRUARY,
21 AND 27 MARCH, 15 APRIL, AND 9, 12 AND 14 MAY 2003
1. The WTO Committee on Budget, Finance and Administration met formally and informally on
29 January, 7, 17, and 27 February, 21 and 27 March, 15 April, and 9, 12 and 14 May 2003 under thesuccessive chairmanship of Mr. Neil McMillan fr om the United Kingdom (up to and including
27 February 2003) and Mr. Joshua C.K. Law from Hong Kong, China (as from 21 March 2003).  The
terms of reference and composition of the Committee are set out in document WT/L/44/Rev.1.  The
agendas contained in documents WTO/AIR/2009 and its Add.1-6 and WTO/AIR/2093 were adopted.
I. METHODOLOGY FOR FUTURE SALARY ADJUSTMENTS
2. See report contained in document WT/BFA/64.
II. ADMINISTRATIVE UP-DATES AND PROGRESS REPORTS
3. A member of the Secretariat presented, on 17 February 2003, progress reports on the
Technical Assistance Activities contained in documents CRP(03)04 and 05.  He highlighted that, as
the accounts of the Technical Assistance Activities in 2002 had not been closed, there might be a
small variation in the final figures compared to those indicated in document CRP(03)04 as of
30 December 2002.  The total expenditures of the Technical Assistance activities in 2002 amounted toCHF 17.3 million.  The expenditure of the Doha  Development Agenda Global Trust Fund (DDAGTF)
in 2002 amounted to CHF 10.8 million leaving a balance of CHF 6.6 million.  Commitments for
regional activities planned for implementation at the beginning of 2003 had been undertaken at the
end of 2002 for a total of CHF 1.8 million.  The Secretariat also drew the attention of the Members to
the balance amounting to CHF 644,277 of the Trade Policy Courses in Africa.  These savings weredue to the fact that the personnel initially budgeted for the courses in Kenya and Casablanca were not
recruited and part of the budgeted equipment was not purchased.  Another important positive balance
of CHF 1.2 million could be found in the Programme Support Fund.  This was due to the fact that
some of the L-posts had not yet been filled or had only been filled late in 2002.  When approving the
WTO TA Plan for 2003, it has been decided that all L-posts would be financed in 2003 through thePSF.
4. Further, the Secretariat introduced document CRP(03)05 which showed the situation of
pledges and contributions received as of 31 January 2003 for the DDAGTF.  According to the terms
of reference of the DDAGTF, 25 per cent of the targ et amount for any given year ought to be in the
WTO bank on 1 January of that year.  For 2003, the cash at hand on 1 January 2003 stood atCHF 7 million, which was above the 25 per cent of the target amount (CHF 6 million).
5. Subsequently on 21 March 2003, the Secretariat provided the financial situation of the
Technical Assistance Activity in 2003 and the pledges received from Members as of
28 February 2003 (document WT/BFA/SPEC/90).  The Secretariat highlighted that the number of
Trust Funds had been reduced as the Doha Development Agenda Global Trust Fund (DDAGTF)
regrouped most of them.  He further informed that the new phase of the JITAP in 2003 had not yet
been reflected in the document as no information ha d yet been received.  The Secretariat was stillWT/BFA/65
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awaiting instructions from the various donors concerned with regard to the use of the balance of the
NGO Symposium.
6. The Secretariat also commented on the financial situation of the DDAGTF as of
28 February 2003 (document CRP(03)16).  As at  end February, the pledges received totalled
CHF 17.5 million, taking into account of (i) the pledges made initially in 2002 to cash in 2003, (ii) the
pledges made in 2002 for 2003 and (iii) the pledges made in 2003 for 2003.  Further, with the additionof the earmarked trust funds received to finance activities of the Technical Assistance Plan, the total
of pledges would reach some CHF 20 million as of end February 2003.  Therefore, additional pledges
of approximately CHF 4 million would still be required to reach the 2003 approved target amount of
CHF 24 million.  The cash situation of th e DDAGTF as of end Fe bruary 2003 amounted to
approximately CHF 7 million.  In accordance to th e terms of reference of  the DDAGTF, 75 per cent
of the target amount should be in the bank by end March 2003 i.e. CHF 18 million.  Another
CHF 8 million more would have to be raised in March as the total of the cash balance at the beginningof 2003 and the receipts in January and February amounted to CHF 10 million.  The CTD and the
General Council would be informed about the financial situation.
7. One Member indicated that his Government had already transferred its contribution to the
DDAGTF to the WTO account on 20 March 2003.  Anot her Member indicated that his Government
would increase its contribution to the fund in 2003.  The Secretariat indicated that it would be difficultfor the Secretariat to foresee whether the target amount of March would be met.  He recalled the
establishment of the buffer account of CHF 1 million at the time of the establishment of the
DDAGTF, which could bridge the liquidity shortage should the necessity occur.
8. Subsequently, on 12 May 2003, the Secretariat presented an update on Technical Assistance
Activity in 2003, as well as an update on the DDAGTF as at 30 April 2003.  He drew the attention ofthe Members to the fact that additional pledges of CHF 3 million were still required to reach the target
amount of CHF24 million for the DDAGTF in 2003.  Cash wise, the DDAGTF was in the black with
CHF 13.2 million left from 2002 or received in 2003 and a cash balance at the end of April of more
than CHF 4.3million.
9. A member of the Secretariat presented the cash situation, the statement of outstanding
contributions as at 28 February and 30 April 2003, a progress report of payment by instalments for
countries in arrears (arrears from 1987 and earlier years), and the contributions of Observer countries
towards the cost of services provided by the Secretariat.  As at 30 April 2003, the total contributions
received from Members amounted to CHF 77,634,723 while those from the Observers amounted to
CHF 400,833.  The Capital Working Fund stood at CHF 8,958,026 as at 30 April 2003.  Since30 April 2003, the following Members had made payments: (i) Barbados, (ii) Brunei Darussalam,
(iii) Germany, (iv) Italy, and (v) Qatar.  The Secretariat drew the Members’ attention to document
CRP(03)13 and indicated that the original six Members who benefited the tailor-made repayment
schemes had all liquidated their arrears.
10. Another representative of the Secretariat introduced document CRP(03)15 and subsequently
CRP(03)23.  He reported on the resignation of the Chairman of the Management Board, effective
1 May 2003, and two other resignations of the three members of the Investment Committee.  It washoped that the General Council would be in a position to elect their replacements at the meeting on
15-16 May 2003 so that the Management Board could be in a position to resume its business at the
beginning of June.  A revised performance evaluation form had been prepared in the light of
experience gained during the 2001 performance evaluation exercise.  The 2002 performance
evaluation exercise would be again a “dry run”.  Of the six new posts approved for 2003, one hadbeen filled.  A review on leave arrangements in the case of maternity, paternity and adoption had been
conducted.  The Director-General approved a recommendation by the Joint Advisory Committee on
the succession planning process to be initiated by the Human Resources Section 12 months prior to
the normal retirement age of the staff member concerned.WT/BFA/65
Page 3
11. The Secretariat informed that the difficulties of securing a quorum in the Management Board
was due to the conflicts encountered in the convening of numerous meetings in the WTO.  Also, the
performance of the Pension Plan, like all pension plans, was not spared from recent trends in the
market.  The Secretariat subsequently provided details on the performance of the Plan in document
CRP(03)23.
12. The Committee took note of the various progress reports.
III. CONSOLIDATION OF LONGTERM TEMPORARY ASSISTANCE IN REGULAR
BUDGET
13. A member of the Secretariat introduced the document WT/BFA/W/88 and recalled that the
Committee was apprised of the question of improving the conditions of service for temporary staff
with more than four years of continuous service during the deliberations of the Budget Proposals for
2002.  There were 16 staff holding fixed-term contracts on positions funded by the temporary
assistance budget and a further 8 short-term staff were expected to qualify for fixed-term status in thecourse of 2003.  It was proposed that these positions be converted into regular budget posts; the
consolidation would be cost-neutral.
14. Further, the Secretariat informed that these posts concerned support services such as staff in
the conference services, informatics, and guard etc., and assured the Committee that it would be cost
neutral as the consolidation only meant the change of one budget section to another.  Theconsolidation of these posts would not constitute a “de-facto” transfer of similar cases into regular
budget in the future.
15. Subsequently, the Secretariat provided additional information (document
WT/BFA/W/90.Rev.1) on the number of positions funded by temporary assistance, which would have
been continuously occupied for a period of 4 years in 2004 and 2005.  The vast majority of thosepositions fell in the support category and in the support divisions.
16. Some Members indicated support for the conversion of the 24 temporary posts in 2003 to
regular posts on the understanding that (i) it would be cost-neutral, (ii) those posts were required in
the future, and that (iii) the present decision would be without prejudice for the future.  In a
subsequent meeting, document WT/BFA/W/88/Add.1 was distributed to the Members.
17. After discussion of the proposal, the Committee agreed the following recommendation to the
General Council: The Committee recommends that the General Council approve the transfer of
24 posts subject to fixed term contracts from the temporary assistance line to the regular staff
cost line of the WTO budget.  Bearing in mind that this reallocation of resources is cost-neutral,
the corresponding resources will be transferred between the appropriate budgetary sections in
the 2003 approved WTO budget.  The Committee further recommends that the General
Council direct that future budget proposals from the Director General with respect to
temporary assistance should specify when funding is being requested for temporary positions
that may, or are likely to, involve multi-year needs.
IV. BIENNIAL BUDGET
18. The Secretariat introduced the document CRP(03)02 highlighting that it was a preliminary
paper for discussion.  He presented the possible procedure of a biennial budgeting cycle, the auditingand reporting involved and drew the attention of the Members to the necessity of a revision of the
WTO Financial Regulations as well as that of the procedures for the establishment of the scale of
contributions if the budgeting cycle were to be changed from annual to a biennial one.  Further,
consideration should be given to the level of the Working Capital Fund.WT/BFA/65
Page 4
19. Some Members welcomed the idea of a biennial budget, while others showed hesitation, as
the WTO was still a young organization.  The Members agreed that the pros and cons of a biennial
budgeting had to be studied carefully and questioned whether it would be possible to change the
budgeting cycle the current year given the time limit.
20. In subsequent meeting, the Secretariat provided document WT/BFA/W/92, which provided
additional information on a possible procedure of a biennial budget.  In general, Members indicatedthat they were open to the idea, but would like to ha ve more details with regard to (i) the experiences
and practices of other international organizations in this regard (ii) how the WTO’s budget has
evolved in the past years (iii) how the level of the Working Capital Fund would be affected in the
event of a change in the budgeting cycle, and (iv)  how the adjustment mechanism would work.  Some
Members remarked that the adjustment to the budget in the second year should only be undertaken for
unforeseen activities so as to avoid falling back to an annual budgeting process.  Another Member
indicated that some sort of interim audit function should be operated after the first year.
21. The Committee took note of the comments and would revert to the issue at a future meeting.
V. CONSIDERATION OF A PROPOSED CONTRIBUTION FROM A NON-
GOVERNMENTAL DONOR
22. A member of the Secretariat recalled that, upon the recommendation of the Committee, the
General Council adopted on 15 December 2000, guidelines governing the process of acceptance ofvoluntary contributions, gifts or donations from non-Governmental donors (document WT/L/386).  It
was also recalled that, in 2001, the Committee on Budget, Finance and Administration authorized the
acceptance of a donation in kind from the Friedrich-Eber t-Stiftung (FES) to the WTO to facilitate the
participation of developing countries’ journalists in a series of 2 ½ day seminars designed to
familiarize these journalists with current WTO issues and enhance their capacity to write on WTOtopics (document WT/BFA/53).
23. In compliance with these guidelines, the Secretariat submitted document WT/BFA/W/91,
which described another proposed donation in kind from FES to sponsor three courses in English,
French and Spanish for journalists from developing countries scheduled for March, May and
July 2003, respectively, in preparation of the 5
th WTO Ministerial Conference in Cancun, Mexico.
24. The Secretariat indicated that journalists who had fluency in one of the 3 languages were
eligible, and that it was through the FES, which had excellent media contacts in Africa, Latin America
and Asia, that journalists from developing and leas t-developed countries were selected.  Journalists
from industrialized countries were responsible for their own costs.
25. The Committee decided that the Director-General could therefore accept the donation in kind
from the FES estimated at CHF 150,000 in order to facilitate the participation of developing country
journalists in a series of three 2 ½ day seminars designed to familiarize these journalists with current
WTO issues and build their capacity to write on WTO topics as described in document
WT/BFA/W/91.
VI. RESULT-BASED BUDGETING
26. A representative of the Secretariat recalled that the Results-Based Management in the WTO
had started in 1995.  Since then, the presentation of the budget estimates had expanded the detailsprovided, namely a breakdown of objectives, background, main activities and expected results.  At the
end of each year, the Secretariat also prepared a re port by Division which contained an assessment of
the attainment of objectives for that year.WT/BFA/65
Page 5
27. The Secretariat suggested that, the Committee migh t wish to consider an examination of the
objectives and workplan for 2003 as presented by one operational division and one support division
namely, Agriculture and Commodities Division and the Statistics Division, in order to see whether (i)
the information presented met the expectations of Members and (ii) improvements in the presentation
could be made.  Subsequently, document WT/BFA/W/93 was provided to the Members.
28. One Member indicated that volume 2 of the “Burgundy Book” was useful and provided
transparency on the activities on a divisional level.  However, there was not sufficient link between
the information provided there and the budget estimates.  He further informed that, for discussion at
the next meeting, he would provide written concrete suggestions to the Secretariat on the way to
improve the presentation of the budget estimates.  Two other Members offered their assistance in the
drafting of the concrete suggestions.  Another Member considered that information should (i) report
on the activities undertaken, its assessment and evaluation, (ii) provide quantitative information, and
(iii) secure a feedback mechanism.
29. The Committee took note of the report, the comments from the Members and would revert to
it in the next meeting.
VII. TRUST FUND TO FACILITATE THE PARTICIPATION OF LEAST DEVELOPED
COUNTRIES IN THE MINISTERIAL CONFERENCE AT CANCUN
30. The Chairman introduced document CRP(03)03, which provided the funding situation for the
participation of LDCs in the 5th WTO Ministerial Conference in Cancun. Mexico.  The estimated
requirement amounted to CHF 1,324,000.  An amount of CHF 195,741 was available as at
6 February 2003.
31. The Committee recommends to the General Co uncil that it urge interested donors to
indicate to the Secretariat as soon as possible the level of financial support they are prepared to
provide.
VIII.  INACTIVE MEMBERS
32. Following the recommendation of the Preparatory Committee of the World Trade
Organization on the issue of Members in Category IV of the administrative measures, the Secretariat
prepared a list of Members which have accumulated three or more years of arrears up to and includingthe financial year of 2003 (document WT/BFA/W/89).
33. Consequently, in accordance with paragraph 7(b) of document PC/7, L/7578, the Committee
recommends to the General Council that the following Members be urged to liquidate their
arrears:
Antigua and Barbuda
Burkina Faso
Burundi
Central African Republic
Chad
Congo
Democratic Republic of the Congo
DjiboutiGambia
Guinea
Guinea-BissauKyrgyz Republic
Malawi
Mali
Mauritania
Niger
Rwanda
Sierra Leone
Solomon IslandTogo
ZambiaWT/BFA/65
Page 6
IX. ASSESSMENT OF ADDITIONAL CONTRI BUTION TO THE 2003 BUDGET AND
ADVANCE TO THE WORKING CAPITAL FUND: ACCESSION OF THE REPUBLIC OF
ARMENIA
34. The Chairman introduced document WT/BFA/W/89 concerning the assessment of
contribution on the Republic of Armenia.
35. Consequent to the accession to the WTO of the Republic of Armenia on 5 February 2003
(document WT/BFA/W/89),), the Committee decided to make the following recommendation to the
General Council: the Committee recommends to the General Council that a pro rata
contribution to the 2003 budget amounting to CHF 20,858 be assessed on this Government.
This assessment, calculated as from 5 February 2003, is based on an annual contribution
of 0.015 per cent, taking into account the intern ational trade figures (imports plus exports in
goods, services and intellectual property rights) of the Republic of Armenia for the years 1997-
1999.  Furthermore, on the basis of the level of the Working Capital Fund of CHF 8,905,718 the
Committee recommends to the General Council to assess an amount of CHF 44,529 on the
Government of the Republic of Armenia as an advance to the Fund.
X. ELECTION OF CHAIRPERSON
36. The Chairman recalled that the Chairman of the General Council had carried out informal
consultations on the appointment of Chairpersons to the different WTO standing bodies in accordancewith the established guidelines for such officers.  On the basis of the understanding reached, Mr. Neil
McMillan proposed that the Committee on Budget, Finance and Administration formally elect Mr.
Joshua C.K. Law, of Hong Kong, China, as chairperson of the Committee by acclamation.  The
Committee so agreed.
37. The elected Chairman assumed the Chair on 27 February 2003 and thanked the Committee for
its confidence.  He paid tribute to Mr. McMillan, the outgoing chairman for his excellent
chairmanship of the Committee in 2002.  He then informed the Committee that Mr. McMillan had
kindly agreed to continue as Friend of the Chair to help in the consultation regarding the review of the
pay adjustment methodology.  The Chairman also mentioned the following important issues that
demanded the attention of the Committee in the course of the current year: (i) the review of theorganization’s resources, (ii) follow-ups to the report of the human resources consultant’s
recommendations on management and budgeting, and (iii) a study on the feasibility of switching to a
biennial budgeting cycle.
XI. ASSESSMENT OF ADDITIONAL CONTRI BUTION TO THE 2003 BUDGET AND
ADVANCE TO THE WORKING CAPITAL FUND, ACCESSION OF THE FORMERYUGOSLAV REPUBLIC OF MACEDONIA TO THE WTO
38. The Chairman introduced document WT/BFA/W/94 concerning the assessment of
contribution on the Former Yugoslav Republic of Macedonia.
39. Consequent to the accession to the WTO of the Former Yugoslav Republic of Macedonia to
the WTO on 4 April 2003 (document WT/BFA/W/94),), the Committee decided to make the
following recommendation to the General Council: the Committee recommends to the General
Council that a pro rata contribution to the 2003 budget amounting to CHF 31,919 be assessed
on this Government.  This assessment, calculated as from 4 April 2003, is based on an annual
contribution of 0.025 per cent, taking into accoun t the international trade figures (imports plus
exports in goods, services and intellectual property rights) of the Former Yugoslav Republic of
Macedonia for the years 1998-2000.  Furthermore, on the basis of the level of the Working
Capital Fund of CHF 8,958,026, the Committee recommends to the General Council to assess anWT/BFA/65
Page 7
amount of CHF 44,790 on the Government of the Former Yugoslav Republic of Macedonia as
an advance to the Fund.
XII. REVIEW OF THE GUIDELINES ON VOLUNTARY CONTRIBUTIONS FROM
NON-GOVERNMENTAL DONORS
40. A member of the Secretariat introduced the document WT/BFA/W/95, highlighting the fact
that since the approval of the guidelines, the Committee had only examined and accepted twodonations in kind.  Both of the donations were from the Friedrich-Ebert-Stiftung (FES): one in 2001
estimated at CHF 115,000 and one in 2003 estimated at CHF 150,000.  The Secretariat indicated that
it had not undertaken fund raising activities with the non-Governmental donors, and that if the
Members so wish to pursue the matter, the creation of a fund raising officer post would have to be
considered.
41. The Committee considered that, as there were only two donations presented since the time of
the formulation of the guidelines, it would contin ue to monitor the situation and would revisit the
subject towards the end of the year, and would consider the possibility of enhancing the fund-raising
capacity in the Secretariat.
XIII.  ITC BUDGET FORECAST FOR 2004
42. The Deputy Executive Director introduced the document ITC/BUD/45.  He outlined the
unprecedented support from both donors and beneficiaries at the recent JAG where over 50interventions were made.  He recalled that due to the different budget cycles between the United
Nations and the WTO, it had not been possible for ITC to reflect in the WTO 2003 budget additional
resources for the activities that it is required to perform following the Doha development agenda and
the Monterey Consensus.  He also indicated that in real terms, the ITC budget has remained
practically stable over the past 6 years.  In spite of a stable budget, ITC increased its delivery oftechnical cooperation by 20% in 2001 and 2002.  This was achieved through the collective hard work
of staff and management as well as more focussed programmes, and in particular, to the tools and
services ITC had developed and continues to develop. These can be easily adapted to multiple
countries, and to multi-year, multi-agency interregional programmes which avoid duplications and
enable participating organizations and technical co- operation recipients to benefit from synergies. He
further confirmed ITC’s intention to remain as a highly specialized niche player working closely with
WTO and UNCTAD.  Mr. Smadja then indicated that the proposed 2004 budget outline proposes an
increase of 5.4 per cent over the 2003 budget and a 20 05 budget outline with an increase of 1.35 per
cent over the 2004 proposal.  For comparison, the UN Se cretariat proposed an increase of 5.2% in real
terms for the part of the UN biennial budget relate d to international cooperation for development (the
part that ITC’s budget falls within).
43. Mr Smadja indicated that the ITC’s 2004 budget outline had kept in mind (i) the Doha
development agenda and the Monterrey Consensus, (ii) increased demands by beneficiaries and
donors for ITC’s services, (iii) increased support of/demand for interagency and inter-regional trade
related activities (iv) ever increasing support for the private sector related activities of ITC and (v) the
UN General Assembly’s decision to give priority, for the biennium 2004-2005, to “the promotion of
sustained economic growth and sustainable deve lopment”.  The proposed 2004 budget outline would
strengthen the capacity of ITC in the areas indicated in the document ITC/BUD/45.  Mr. Smadja also
indicated that the presentation of the outline is not meant to force a decision on the part of Members
but is rather an exchange of views and an occasion for clarification of the proposal in order to assist
ITC management to finalize the budget in consultation with the Secretariats of WTO and the UN.
44. Members congratulated the ITC on its excellent work and fiscal responsibility and indicated
that they would study the proposed increase in a positive light.  One Member proposed that delegates
in the Committee coordinate with their capitals and colleagues in the UN in New York in order thatWT/BFA/65
Page 8
ITC receive favourable consideration when its budget is discussed in the General Assembly.  One
Member requested ITC to provide in the future formal presentation of the budget a more quantitative
analysis to substantiate the need for the new posts and a comparison of the ITC labour productivity as
compared to the WTO and UNCTAD.
45. The Committee took note of the report and the positive remarks on the work of the ITC from
the Members.
XIV. REVIEW OF THE SECRETARIAT RESOURCES
46. In view of time constraints, the item will be examined at the next meeting of the Committee.
XV. APPELLATE BODY OPERATING FUND
47. In view of time constraints, the item will be examined at the next meeting of the Committee.
POINTS FOR DECISION : Paragraphs 17, 31, 33, 35, and 39.
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