WORLD TRADE
ORGANIZATIONWT/BFA/W/92/Rev 1
11 July 2003
(03-3743)
Committee on Budget, Finance and Administration
POSSIBLE BIENNIAL BUDGETING IN THE WTO
Revision
1. At it’s meeting on 7 February 2003, the Committee on Budget, Finance and Administration
examined a preliminary discussion paper on Biennial Budgeting and its possible application in the
WTO.  At subsequent formal and informal meetings, this issue was discussed further.
Background
2. In the course of meetings of the Committee in recent years, and in particular in the autumn
of 2002, Members expressed an interest in this question.  It was argued that the introduction of
biennial budgeting in the WTO would allow a better planning and strategic thinking for the
Organization, and would provide both Members and the Secretariat with greater predictability with
regard to the financial requirements of the WTO.
3. In that light, the following recommendation was communicated to the General Council:
“The Committee also recommends that the General Council take note of the Committee’s intention
to study, on the basis of a paper from the Secretariat, the feasibility of a move to a biennial
budgeting and to make recommendation in that respect to the General Council in the first quarter of
2003.” (WT/BFA/62, paragraph 10)
4. In the examination of the first discussion paper (CRP(03)02) on 7 February 2003, some
Members expressed the view that the current annual budgeting process might be better suited to the
needs of the organization.  In subsequent discussions, a number of Members considered that abalance should be maintained between predictability and flexibility.
A Possible Framework for Biennial Budgeting
Application of biennial budgeting
5. An estimated biennial budget proposal in a format consistent with current budget
presentation would be submitted to the Committee on Budget, Finance and Administration fordiscussion in the autumn preceding the first year of the biennium.  The first year estimates  would
be based on a realistic assessment of the needs of the WTO. The second year estimates  would
present the same budget-lines of the first year estimates adjusted for (i) projected inflation, (ii)
projected changes in  staffing requirements, (iii) foreseeable statutory changes, and (iv) any other
expected increases/decreases.WT/BFA/W/92/Rev.1
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6. The amounts necessary to replenish  the Appellate Body Operating Fund would be presented
at the same time of the regular budget estimates for the 1st and 2nd year.1
7. The recommendation on the estimated biennial budget would be submitted to the General
Council for approval as soon as possible, but in any event by the December preceding the start of the
biennium.
Contributions Assessed on Members
8. For the first year of the biennium, Members would be assessed contributions on the basis of
the total approved appropriations (less estimated miscellaneous income) for that first year of the
biennium.
9. For the second year  of the biennium, Members would be assessed contributions based on the
total approved appropriations (either as adjusted up-ward or down-ward) for that second year. In this
context, Members may wish to consider the possibi lity of (i) maintaining the original percentage
share of participation for the entire period of  the biennium, which would have the advantage of
greater predictability, or (ii) to approve a new percentage share for the second year of the biennium.
This second approach would have the advantage of reflecting up-dated trade shares and could also
incorporate more quickly new WTO Members into th e scale of contributions, if accession had taken
place subsequent to the approval of the first scale of contributions.2
Mid-term review: Budgetary Performance Report and Revision
10. To ensure proper monitoring and transparency, in the first year of the biennium, the
Committee on Budget, Finance and Administrati on would examine a Budgetary Performance
Report, prepared by the Secretariat, which would provide information on the rate of expenditure
(implementation) for the first 6-9 months of the biennium and the anticipated situation at the end of
that year.
11. If necessary, on the basis of the Budgetary Performance Report, and taking account of
unexpected changes in inflation rates and other elements (e.g. the levels of translation resources
required to cope with a greater or lesser volume of documentation)  when the biennial budget was
approved (see paragraph 5 above), the Committee could examine the need to recommend a Revision
to the second year of the biennial budget, e ither upward or downward, and communicate any such
                                                     
1 It is strongly recommended that the replenishment of the Appellate Body Operating Fund be
integrated into the regular budget in order to avoid situations (as currently exist) whereby the balance in the fund
will be insufficient to finance the activities until the end of the year.
2 On 28 July 2000, the Committee, desiring to ensure a greater measure of homogeneity in the years for which
statistical data are used for the calculation of contribu tions to the WTO Budget, and to minimize to the extent
possible wide variations in contribution percentages fr om one year to the next, recommended to the General
Council that paragraph (b) of the recommendation of the Committee on Budget, Finance and Administration
(paragraph 33, WT/BFA/6) approved by the General Council on 15 November 1995 (WT/GC/M/8) be amended(document WT/BFA/49).  The General Council approved the recommendations on 10 October 2000 as follows(document WT/GC/M/58):
(b.1) Calculations of assessed contributions for the years 2001, 2002 and 2003 (which are prepared
in the course of the respective previous year) shall be based on international trade statistics for the
years 1996-1998, 1997-1999 and 1998-2000, respectively; or, if these statistics are not available, forthe last three years for which statistics are available.
(b.2) Calculations of assessed contributions for at least the following ten years, i.e. 2004, 2005,
2006 to 2013, (which are prepared in the course of the respective previous year) shall be based oninternational trade statistics: for the years 1997-2001, 1998-2002, 1999-2003, etc. respectively; or, ifthese statistics are not available, for the last five years for which statistics are available.WT/BFA/W/92/Rev.1
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recommendation to the General Council for approval. This flexibility might be particularly
necessary in the first biennium.
12. The possibility for the Director-General to make proposals for a supplementary budget (as
currently provided for in the WTO Financial Regulation 83) would be retained in case of necessity.
Auditing and Reporting of a Biennial Budgeting Cycle
13. An interim audit would be made after the first year of the biennium in order to enssure that
resources earmarked for the second year had not been substantially depleted in the first year.
14. The final accounts for the biennium would be audited in the year immediately following the
biennium.
15. The Director-General’s Budgetary and Financia l Report and Report of the External Auditor
thereon, and the Divisional Reporting on Objectives and Expenditures would be submitted to the
Committee on Budget, Finance and Administration subsequent to the completion of the final audit.
Implications of Changing to a Biennial Budgeting Process
Possible Advantages
16. Aside from the points regarding better planning, strategic thinking and predictability, a
biennial budgeting process could in principle be seen as a more efficient use of time resources for
both Members and the Secretariat.  Rather than examining one complete annual budget proposaleach year, only revisions, should they prove necessary (see paragraph 11 above), would have to be
examined for the second year of the biennium, thereby presumably being a more efficient process in
terms of use of available time.
17. A biennial approach would also reduce the number of financial and budgetary reports which
the Committee would have to examine; such reports would cover the entire two-year period ratherthan each year. An interim audit after the first year would nevertheless be undertaken (see
paragraph 14 above).
18. The external auditors could concentrate on value-for money and management audits in the
course of the second year of the biennium, when an interim audit is undertaken, but final accounts
will not need to be certified.
19. Such an approach could allow the Committee to  conduct an in-depth assessment during the
first year of the biennium when no full budgetar y proposal would be made for consideration on the
programmatic aspects of the WTO, including performance against objectives from the previous
budgetary period.
Possible Disadvantages
20. Possible disadvantages would include questions of (i) transparency (annual budgets might
be seen as being more transparent than biennial budgets), (ii) biennial budgets, while perhaps
                                                     
3 “Regulation 8
1. Supplementary budget proposals for the current financial period may be submitted by the
Director-General whenever necessary.2. The Director-General shall prepare supplementary budget proposals in a form consistent withthe approved budget.  These proposals shall follow the same examination and approval process as forthe annual budget proposals. “WT/BFA/W/92/Rev.1
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providing a greater level of predictability, might be less flexible, and (iii) Members might be
hesitant to approve increases over two years which, had they been presented on an annual basis,
might be more easily accepted.
21. In the United Nations, additional activities and major unforeseen requirements for the
second year of the biennium are the subject of a supplementary budget.  Nevertheless, as indicated
in paragraph 11 above some flexibility could be built into an eventual WTO approach to biennial
budgeting, and especially to the revision process for the second year, while not compromising the
advantages of a biennial approach.
Timing of the beginning of a biennial budget
22. The introduction of any biennial budgeting cycle should ideally be timed to coincide with
the biennial budget cycle of the United Nations (e.g. 2004-2005), in view of the implications for the
ITC, which is obliged to follow the UN biennium cycle.
Extra-Budgetary Funds
23. Given the sourcing of, and procedures specific to extra-budgetary funds, and in particular to
the Technical Assistance Plan, the planning and reporting ought to remain, at least initially, on an
annual basis.  The General Council decided in 2001 that the Planning of Technical Assistance
should move from a three-year cycle to a yearly cycle.  Any decision in this domain would,therefore, also have to take into account the rationale which prevailed in relation to that decision of
the General Council, which Members may wish to consider revisiting at an appropriate juncture.
Financial Regulations
24. The WTO Financial Regulations (document WT/L/156), Chapters II and III, “Preparation of
the Budget Estimates” and the “Adoption of the B udget”, clauses 5-11, provided that “the financial
period of the WTO shall be one calendar year.  Any change in the budgeting cycle would ultimately
necessitate a revision of the Financial Regulations, and perhaps the procedures for the establishment
of the scale of contributions (see paragraph 9 above).  See attachment which indicates a preliminary
assessment of the changes which would be necessary to the Financial Regulations should it be
decided to move to a biennial budgeting process.
Working Capital Fund
25. Having examined an assessment covering previous two-year periods (in order to simulate a
biennial process), the Committee concluded that the current level of the Working Capital Fund was
likely to be adequate to cover needs for a biennial budgeting process.
Legal Implications
26. The Marrakech Agreement Establishing the World Trade Organization refers in Article VII
(Budget and Contributions) to “annual” budgets4, changing the annual budget cycle to a biennial
                                                     
4 “1. The Director-General shall present to the Committee on Budget, Finance and Administration the
annua l budget estimate and financial statement of the WTO.  The Committee on Budget, Finance and
Administration shall review the annual  budget estimate and the financial statement presented by the Director-
General and make recommendations thereon to the General Council.  The annual  budget estimate shall be
subject to approval by the General Council.
 …
3.   The General Council shall adopt the financial regulations and the annual budget estimate by a two-
thirds majority comprising more than half of the Members of the WTO.”  (bold type added for clarity).WT/BFA/W/92/Rev.1
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cycle [would] [could], in principle, require an  amendment to the treaty, following the specific
procedures set out in Article X of the WTO Agreement.  The possibility was raised of a waiver of
Members’ obligation to examine annual budget proposals could be investigated. It was pointed out
that there has never been a waiver discussed which would concern collectively  all Members.  Some
Members  suggested that what is essentially an administrative change would not affect the rights andobligations of one Member against another as foreseen in the waiver arrangements under
Article IX(3). Some Members also recalled the provision in Article IX(2) that vests in the
Membership the exclusive right to interpret the agreements and for the General Council or
Ministerial Conference by a ¾ majority to adopt interpretive decisions.
27. The Legal Division has been asked to provide more detailed analysis on the feasibility of
moving to a biennial budgeting regime without amending the Marrakech Agreement.
28. The legal service explained that, if amendments are proved to be unavoidable, Article X
states that “amendments shall take effect for the Members that have accepted them upon acceptance
by two-thirds of the Members and thereafter for each other Member upon acceptance by it.”  In
addition, the amendment procedure would be subject to the 90-day rules for submitting proposed
amendments.
29. The above-mentioned procedure may make it difficult to move to a biennial budgeting cycle
if not all Members accepted the amendment, as the feasibility of some Members accepting, and
others not accepting, a biennial approach would prove unwieldy, if not to say unworkable.
30. Another factor concerned the 90-day rule. Arguably, the General Council could consider
waiving the 90-day rule if it could be agreed th at a shorter timeframe would substantively comply
with the WTO Agreement. In such a case, the matter could be presented to Ministers at Cancún. Ifsuch an agreement were not reached, respecting the 90-day rule would push the matter past the date
of the Ministerial Conference.  Some Members suggested that any attempt to amend the Marrakech
agreement should best be at the end of the Round, where such amendment could be included with
other amendments to agreements which might prove necessary.
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