RESTRICTEDWORLD TRADE
ORGANIZATIONWT/BFA/63
25 March 2003
(03-1713)
Committee on Budget, Finance and Administration
REPORTS OF THE MEETINGS HELD ON 2, 18 AND 30 OCTOBER,
11, 20, 22 AND 28 NOVEMBER, 3 AND 6 DECEMBER 20021
1. The WTO Committee on Budget, Finance and Administration met formally and informally on
2, 18 and 30 October, 11, 20, 22 and 28 November, 3 and 6 December 2002 under the chairmanship
of Ambassador Mr. Neil McMillan of the United Kingdom.  The terms of reference and compositionof the Committee are set out in document WT/L/44/Rev.1 and 2.  The Agenda contained in
documents WTO/AIR/1907, WTO/ AIR/1925, and WTO/AIR/1925 Add.1 and 2 were adopted.
MEETING OF 2 OCTOBER 2002
I. ADMINISTRATIVE UP-DATES AND PROGRESS REPORTS AS AT
31 AUGUST 2002
A. C
ASH SITUATION AND STATEMENT OF OUTSTANDING CONTRIBUTIONS (CRP(02)22 AND
WT/BFA/SPEC/80)
B. INSTALMENT PAYMENTS FOR COUNTRIES IN ARREARS (CONTRIBUTIONS FROM 1987 AND
EARLIER YEARS ) (CRP(02)23)
C. CONTRIBUTIONS OF OBSERVER COUNTRIES TOWARDS THE COST OF SERVICES PROVIDED BY
THE SECRETARIAT (CRP(02)24)
D. HUMAN RESOURCES (CRP(02)25)
E. EXTRA -BUDGETARY CONTRIBUTIONS :
-S TATUS OF ALL EXTRA -BUDGETARY CONTRIBUTIONS (CRP(02)26)
-S TATUS OF PLEDGES MADE AND FUNDS RECEIVED : DOHA DEVELOPMENT AGENDA TRUST
FUND (WT/BFA/SPEC/81)
2. A member of the Secretariat presented the cash situation, the statement of outstanding
contributions as at 31 August 2002, a progress report of payment by instalments for countries inarrears (arrears from 1987 and earlier years), and the contributions of Observer countries towards the
cost of services provided by the Secretariat.  Since 31 August 2002, the total funds available
decreased from CHF 18.4 million to CHF 13.5 million.  The Secretariat reminded Members of their
arrears and hopefully, by the end of October, the situation would improve as more payments were
expected.  As of 31 August 2002, the 2002 contributions received from Members stood at
approximately 62 per cent while those from the Ob servers stood at approximately 66 per cent.  Since
31 August 2002, the following Members had made payments: (i) Brazil, (ii) Chile, (iii) India,(iv) Maldives, (v) Mexico, (vi) Philippines, (vii) Trinidad Tobago, and (viii) Turkey.
                                                     
1   This report should be read in conjunction with document WT/BFA/62 which contains the
recommendations to this report and was approved by the General Council on 12 December 2002.WT/BFA/63
Page 2
3. Another member of the Secretariat presen ted a progress report, document CRP(02)25 on
human resources.  Further significant progress had been made in the selection process for fast track
posts.  Of the 17 posts advertised, 14 had been filled.  A group of eleven professional staff had
followed a five-day management-training course organized by a consultant.   With the help of an
outside consultant, a salary review had been conducted and the outcome of the review would besubmitted to the Committee at the next meeting for consideration.  A pilot project “Working from
home” had been launched in the Language Services and Documentation Division for a small group of
translators and typists for a six-month trial period.  With regard to the WTO Pension Plan, the
Investment Committee had conducted an in-depth re view of the investment strategy and would be
reporting to the Management Board on its initial findings.
4. Further, the Secretariat explained that the purpose of the salary review was to check on the
adequacy of WTO salary scale to recruit and retain the best quality staff required under theregulations.  The review exercise  would have consequences not only for net salary but also for
pensionable remuneration and dependency allowances.  The two components of the current
adjustment system were: (i) monitoring the movement of Swiss cost of living index and (ii)
monitoring the movement of real net salary in five national civil services with the view to ensuring
that the cost of living adjustment would be granted to the WTO salaries only to the extent thatcompensation was granted for the cost of living movements in those five national civil services’
salaries.
5. A member of the Secretariat introduced documents CRP(02)26 and WT/BFA/SPEC/81.  He
highlighted the over-expenditure of the extra-budg etary fund “Trade Policy Courses in Africa” but
added that additional contributions were expected in the near future, which would then reduceconsiderably if not eliminate the over-expenditu re.  The Committee was also informed that the
“Programme Support Fund” would finance, in addition to the 19 fast-track posts, some 8 posts also
related to the delivery of technical assistance.  With regard to the Doha Development Agenda Global
Trust Fund (DDAGTF), payments had been receiv ed from two Members since 25 September 2002,
which increased the total of the funds received to almost CHF 18 million.  As present expenditureamounted to some CHF 11.5 million, this left a balance available of CHF 6.5 million which should be
sufficient to cover expenditure till the end of the current year.
6. In reply to queries, he indicated that the Secretariat would have to identify additional
resources if a deficit occurred in a particular project like the Trade Policy Courses in Africa.  The
Secretariat would provide the final expenditures on the Trade Policy Courses in Casablanca and
Nairobi once the final accounts were known.  Further, the Secretariat was also in the process of
preparing a specific report on the implementation of the WTO 2002 TA Plan and would present it tothe Committee at the next meeting.  Against th e target amount of CHF 15 million for th e DDAGTF
approved by the General Council in December 2001, an amount of some CHF 21 million was pledged
by donors in the Pledging Conference in March 2002.  Of the pledged CHF 21 million, it was
anticipated that approximately CHF18 million would be used for the implementation of technical
assistance activities in 2002.  Any positive balance at the end of the year would be folded into thesame fund for the following year.
7. One Delegation indicated that his Government had approved the order of payment to the
extra-budgetary fund for technical assistance to Southern Africa; consequently, the WTO would
receive the funds in the near future.
8. The Committee took note of the various progress reports and the comments of Members.WT/BFA/63
Page 3
II. BACKGROUND OF RESULTS-BASED MANAGEMENT PROCEDURES IN THE
WTO
9. A member of the Secretariat introduced the document WT/BFA/W/78 outlining the evolution
of Results-Based Management (RBM) in the WTO since 1995 with the presentation of the budget
proposals, information on “objectives”, “planned activities” and “Divisional Reporting on Objectivesand Expenditure”.
10. One Delegate, on behalf of two other Delegates indicated that the evolutionary approach of
RBM called for feedback from the Members.  Consequently, he proposed a meeting to be held early
in 2003 to discuss on the progress made in RBM based on the document WT/BFA/W/70 and the
Budget Estimates of 2003.  He suggested that, as already proposed in the previous meetings, a
working group might be formed to monitor the progress made in the RBM.  One Member welcomed
the suggestion of discussing the issue in early 2003 and indicated that the integration of technicalassistance activities into the budgetary process should also be discussed on that occasion.
11. The Committee took note of the report and the comments made by the Members.  A meeting
to discuss the issue would be organized early in 2003.
III. AGREED TERMINATION - SUPPLEMENTARY INFORMATION
12. A member of the Secretariat presented document WT/BFA/W/79 which had been prepared in
response to queries from the Members during the previous deliberations on the issue.  He highlighted
the following points of the proposal: (i) the pur pose was to facilitate the restructuring of the
Organization in order to meet changing requirements, (ii) the arrangements were based on the existing
provisions of the Staff Regulations and Rules, i.e.  termination indemnity, pay in lieu of notice, and
special leave, (iii) it was non-discriminatory and open to all staff, though the decision lay at thediscretion of the Director-General, (iv) a contingency reserve be established and be replenished on an
annual basis as required and (v) no net cost to the Pension Plan was expected if all staff members over
age 55 opted for the proposed arrangements and continued to contribute to the Pension Plan for a
period of two years of special leave.
13. Some Members, though open to the principle of the proposal, voiced concerns with regard to
certain points such as the supplementary indemnity of 50 percent, the level of the proposed
contingency reserve, the estimated annual average number of cases, and the actuarial implications.
One Member suggested that all costs of the proposal should be covered by the regular budget.
14. The Secretariat explained that: (i) the proposal served as a tool for the management to
revitalize the organization; the proposal would better serve its purpose with a transparent approach i.e.
all staff would be given the opportunity to apply w ith the clear understanding that the decision rested
solely with the Director-General, (ii) though the 50 percent supplement seemed high, the proposal had
to be attractive and should apply uniformly, (iii) as the proposal was based on the existing provisions
of the Staff Regulations and Rules, no amendments to those provisions were required, (iv) the
budgetary implication of the proposal  amounted to CHF 2 million to be replenished annually as
required; this was calculated for approximately 10 cases, and it was proposed that the contingency
reserve would be replenished annually as required, (v) the purpose of special leave in such cases wasto allow staff to extend their pensionable service , and (vi) if only certain staff members, typically
those with much shorter than average length of service, opted for the proposed arrangements, there
might be a cost to the Pension Plan and might amount to CHF1.5 million.
15. The Committee took note of the report and the various comments from the Members and
decided to leave it to the Secretariat to take th e decision on whether and how to propose the financing
for such a contingency fund in the estimated regular budget proposal for discussion.WT/BFA/63
Page 4
IV. VOLUNTARY CONTRIBUTIONS FROM NON-GOVERNMENTAL DONORS:
REVIEW OF THE GUIDELINES
16. A member of the Secretariat introduced the document WT/BFA/W/77 and highlighted that
there has been only one donation in kind received since the approval of the guidelines.  The donation
in kind was from the Friedrich-Ebert-Stiftung (FES ), estimated at CHF 115,000, aimed at facilitating
the participation of developing countries’ journalists in a series of 2 ½ day seminars designed to
familiarize the journalists with current WTO issues and build their capacity to write on WTO topics.
As stipulated in the Guidelines, a review of these guidelines should be initiated by the Committee not
later than January 2003, and should be completed within twelve months of its initiation.
17. In reply to queries, the Secretariat explained that no donation from a non-governmental donor
was turned down for not fulfilling the criteria set out by the guidelines.  It was recalled that the
guidelines were skilfully drafted and incorporated compromises on the part of Members. TheSecretariat further explained that it had not specifically solicited contributions from non-governmental
donors.  If Members wished that the Secretariat play a more active role and seek out potential
donations, the most efficient manner would be through the creation of posts for fund raising.
18. The Committee took note of the report and comments from the Members and agreed to take
up the issue again in early 2003 to see if there was a need to review the guidelines.
V. DIRECTOR-GENERAL’S CONDITIONS OF SERVICE – ORAL REPORT BY THE
CHAIRMAN
19. The Chairman recalled that in June 1993, the GATT Contracting Parties agreed on a salary
package of the Director-General, and no review of the package had been carried out since then.  Since
March 2002, he had been in contact with a number of delegations and had reached the conclusion thatthe Members were favourable to an adjustment of the salary package of the Director-General with the
following conditions: (i) the base salary and the pension rights attached to it would remain unchanged,
(ii) the package should apply without further change for the full term of the present Director-General,
and would not be reviewed until such time as the Members so decided.
20. The Chairman further proposed that he would report on these consultations to the General
Council, suggesting an increase of CHF 45,680 per annum, equivalent to 10 percent of the overall
salary and benefits package, to be applied from 1 September 2002, while leaving the base salary
element of the package unchanged. The arrangement would also avoid pre-empting the consultations
being carried out by the Chairman of the General Council on conditions of appointment of a future
Director-General.  He would su ggest to the Chairman of the General Council that he invite
delegations to contact him within a reasonable period after the meeting if they had objections to such
an adjustment.
21. The Committee took note of the Chairman’s proposal.
VI. OTHER BUSINESS
22. In reply to a query from a Delegate on a possible biennial budgeting, the Secretariat informed
the Committee that it would prepare a paper on the subject for discussion in the Committee.
23. A Delegate enquired on the possibility of publishing a CD, which would be an annual
compilation of all WTO documents on the Internet.  A member of the Secretariat explained that due to
a lack of resources for the past two years, this idea had not been implemented.  In this respect, the
Secretariat would explain the technicality of the issue bilaterally with the Delegates who so wished.WT/BFA/63
Page 5
MEETINGS OF 18, AND 30 OCTOBER 11, 20, 22, AND 28 NOVEMBER, 3 AND
6 DECEMBER 2002
VII. FINANCIAL MATTERS: DIRECTOR-GENERAL’S BUDGETARY AND
FINANCIAL REPORT FOR 2001 AND REPORT OF THE EXTERNAL AUDITORTHEREON; DIVISIONAL REPORTING ON OBJECTIVES AND EXPENDITURES
FOR 2001 AND REPORT ON EXTRA-BUDGETARY FUNDS FOR 2001
24. A member of the Secretariat presented: (i) the Director-General’s Budgetary and Financial
Report for 2001 and Report of the Auditors Thereon (WT/BFA/W/72), (ii) the Divisional Reporting
on Objectives and Expenditure in 2001 (WT/BFA/W/73), and (iii) Report on Extra-budgetary Funds
for 2001 (WT/BFA/W/74).  He highlighted the accumulated deficit as at 31December 2001 of the
Surplus Account amounting to CHF 5.1 million.  Th e deficit had been absorbed through the transfer
of the Working Capital Fund (WCF) in accordance to the WTO Financial Rules and Regulations.  The
WCF had been replenished by contributions received in 2002.
25. The Secretariat further highlighted the 2001 budgetary deficit of the WTO Secretariat and the
Appellate Body and its Secretariat, and drew the attention of the Members to paragraphs 29 and 42 of
document WT/BFA/W/72 which contained the r ecommendations for transfers between budgetary
sections for the WTO and the Appellate Body respectively, which were necessary to cover excess
expenditures over approved appropriations by savings in the relevant budgetary sections.
26. The Secretariat also drew the attention of the Members to the report of the External Auditor
on the following: (i) losses on sale of publications, (ii) the inclusion of the financial and non-financial
administrative processes in the WTO administrative manual, (iii) the importance of periodic inventorychecks, (iv) internal auditing, (v) the need for further discussion of a time registration system in the
Secretariat, (vi) the need for additional Inform ation Technology audits and (vii) the undertaking of
implementation of activities related to extra-budgetary funds upon receipt of a substantial part of the
funds to finance the activity.
27. With regard to the need of an internal audi tor, the Secretariat recalled that the Committee
agreed, in 2001, to keep the matter pending.  On the losses on sales publications, the Secretariat
recalled the policy of free distribution and informed the Committee that as from next year,
publications would be paid out of the regular budget and the trust fund accordingly.
28. The Secretariat further explained that the Committee was informed of projected under/over-
expenditures through annual budget performance reports.  The over-expenditures were mainly due to
the increase of documents, freelance translations and interpretation, and the Ministerial Meeting of
last year.  With regard to the time registration system, it was recalled that the Committee expressedsome concern whether it would be cost effectiv e and whether it would not impose an additional
bureaucratic burden on the Organization.
29. See Recommendation I paragraphs 1 and 2 of document WT/BFA/62.
VIII.  WTO SECRETARIAT AND THE APPELLATE BODY AND ITS SECRETARIAT
A. P
ERFORMANCE AGAINST BUDGET FOR 2002 AS AT 31 AUGUST 2002.
30. A member of the Secretariat presented the Performance Against Budget Report as at
31 August 2002 (CRP(01)19).  With regard to the WTO performance, it was projected that there
would be a budgetary over-expenditure of CHF 1,859,460.  Excess expenditures were foreseen mainly
under (i) common staff costs, (ii) temporary assistance, and (iii) postal costs.  The Secretariat
indicated that the excess expenditure under common staff costs were due to (i) an increase ineducation grants, (ii) interviews and (iii) unforeseen separations.  The over-expenditure in postal costsWT/BFA/63
Page 6
was due to the increased volume of communications and the fibre-optic connections (telephone and
informatics) with the WTO Annexe in the Rue Rothsch ild.  The increase in postal costs was due to the
increase volume of document produced.  With regard to the Appellate Body, it was projected that
there would be an over-expenditure of CHF 139,400.
31. The Committee took note of the report.
B. DOHA DEVELOPMENT AGENDA GLOBAL TRUST FUND 2003
32. A member of the Secretariat referred to the meeting of the Committee on Trade and
Development (CTD) on 22 November 2002 which authorised the WTO Technical Assistance Plan for
2003 as contained in documents WT/COMTD/W/103, WT/COMTD/W/104/Rev.1, and
WT/COMTD/W/104/ ADD.1/Rev.1, subject to some minor  adjustments which were circulated to the
Committee2.  As shown in document CRP(02)40, the late st estimates of the Secretariat showed a
projected cost for the 2003 Plan of approximately  CHF 32.6 million. After deduction of almost CHF 8
million of costs to be shared with our partners, this gave an estimated net cost to WTO of CHF 24.6
million.  It was anticipated that  the DDAGTF would show a balance of between CHF 2 and 3 million
at the end of 2002.  Taking into account the CHF 1 million available for TA in the regular budget as
well as the CHF 5.7 million already pledged by donors for 2003, this would leave a financing gap of
around CHF 15 million.  The Secretariat drew Members’ attention to the terms of reference of theDDAGTF approved by the General Council on 19- 20 December 2001, which provide that actual
contributions equivalent to 25 per cent of the target amount should be received in the WTO bank
account by 31 December 2002.  According to the Secretariat’s projections, the funds available at the
end of the year would be sufficient to finance the technical assistance activities planned in the first
two months of 2003.  Members were also informed that a financial statement as at 30 November 2002would be issued in the coming w eeks for their various trust funds.
33. In a subsequent meeting, the Committee was informed that, as authorized in the CTD, the
total WTO Technical Assistance Activities Plan for 2003 would cost approximately CHF 29.4 million
to implement.  Of this amount, approximately CH F 4.5 million would be funded through the regular
budget (regular trade policy courses, short trade policy course, Geneva weeks, etc.) while anotherCHF 1 million would come from the technical assistance missions.  Therefore, the target amount of
resources in the DDAGTF in 2003 was set at CHF 24 million.  No pledging conference for the
DDAGTF was planned in 2003 at the present stage.
34. See Recommendation IV, paragraph 8 of document WT/BFA/62.
C. B
UDGET ESTIMATES FOR 2003
35. In his presentation, the Deputy Director-General highlighted that the approach which the
Director-General had adopted in the budget estimates 2003 was moderate but at the same timerealistic with regard to the Organization’s requirements.  The overall proposed increase of the 2003
Budget Estimates amounted to CHF 23 million of wh ich 16.3 million was devoted to extra staff costs
and to temporary assistance.  Of the CHF 16 million, approximately CHF 6.7 million was the result of
the triennial salary pay review to which the Memb ers were committed as a matter of principle. The
extra staff resources included an amount of CHF 1.7 million for 12 new posts calculated on a six-month basis, and CHF 4.6 million for the provision of temporary assistance.  The three principal
elements that contributed to the increase were: (i) review of salary, (ii) staff resources and workload,
and (iii) other increases such as (a) the replenis hment of the Appellate Body Operating Fund, (b) the
long overdue upgrading of the simultaneous interpretation equipment, (c) additional funds to meet the
                                                     
2  These adjustments subsequently resulted in the issuance of documents WT/COMTD/W/104/Rev.2,
WT/COMTD/W/104/ ADD.1/Rev.2, and WT/COMTD/W/104/ ADD.2WT/BFA/63
Page 7
expenses of Cancun, (d) funding the substantially increased activities of the Training Institute, and (e)
the NGO Symposium.
36. Members thanked the Deputy-Director for his presentation and expressed the view that the
increase was ambitious.  One Member indicated that, in considering the increase, the Committee
should look at whether savings could be identified elsewhere in the budget and that evidence of theoutput of each new activity or post that the Secretariat suggested would be directly linked to the
Secretariat’s result-based objectives.  Some Members indicated that their respective national
authorities had adopted a zero growth in budget policy for the international organizations.
37. Subsequently, as requested, the Secretariat provided more information on: (i) estimated
technical assistance work-hours (CRP(02)43), (ii) st affing and organization of the WTO including the
structural changes made after the human resources consultant’s report and the allocation of 2002 and
2003 new posts (WT/BFA/W/82), (iii) requirements on informatics(CRP(02)45), (iv) expenditures ofthe Appellate Body (CRP(02)46), and (v) the Training Institute (WT/BFA/W/83).
38. The Committee then undertook a more detailed line-by-line examination of the 2003 budget
estimates.  It noted the proposed allocation of the new 12 posts in the following Divisions: (i)
Administration and General Services, (ii) Development and Economic Research, (iii) Informatics, (iv)
Information and Media Relations, (v) Intellectual Property, (vi) Legal Affairs, (vii) Market Access,(viii) Statistics, (ix) Trade and Finances, (x) Trade in Services, (xi) Training Institute, and (xii) Trade
Policy Review.  In this respect, the Secretariat indicated that the Director-General had the flexibility
in the final allocation of the eventual approved posts.  Some Members voiced reservations on the need
for all 12 new posts.
39. With regard to the continuing increase in the volume of documentation sent, some Members
suggested the possibility of disseminating documen ts electronically.  The Secretariat informed the
Members that every two years, it verified with th e Members their addresses and their need for the
number of copies.  A verification of the mailing list was planned for next year.  It was suggested that
the General Council urge Members to avail themselves of the possibility to receive the majority of
documents for the meetings electronically in order to make savings for other priorities.
40. Following the discussions, the Chairman presented for purposes of discussion a possible
distribution of resources among activities proposed in the Director-General’s Budget Estimates for
2003 (CRP(02)49/Rev.1).  The discussion paper included (i) a budget increase of 6.75 per cent, (ii)
six additional posts, and (iii) a staged implementation of a salary increase (2 per cent as from
1 January and 2 per cent as from 1 July 2003, the impact of which would be equivalent to an increase
of 3 per cent over the year 2003).
41. Some Members considered the revised distribution of resources insufficient for the WTO to
function in 2003 while others considered it as realistic and a basis for further discussions.
42. Subsequently, the Secretariat submitted the Director-General’s Revised Proposals for 2003
Budget (document WT/BFA/W/85) with an overall increase of 9 per cent over the budget of 2002.
The increase would provide a basic level of services to allow the Organization to function. It would
address the question of staff salaries and allowances in a fair and equitable, albeit provisional mannerby implementing a staged salary increase of 3 per cent in January and 3 per cent in July 2003.
Additional increases would be for: (i) interpretation, translation, security personnel, messengers and
conference usher, replacement of staff on long sick leave, (ii) six additional posts, (iii) full funding of
the WTO contribution to the ITC budget for 2003, (iv) additional resources for the WTO Institute
Training Course, and (v) replacement of simultaneous interpretation software system.
43. The Chairman circulated to the Committee a letter addressed to him by the Deputy General-
Director on 21 November 2002 stating the important relationships between pay on the one hand andWT/BFA/63
Page 8
human resources (new posts and temporary assistance funding) on the other, and that those elements
had to be seen as a whole.
44. Some Members considered the revised 2003 budget with a staged implementation of salary
increase (3 per cent in January and 3 per cent in July, equivalent to a 4.5 per cent increase over the
total 2002 cost for salaries, pensions and common staff costs) high.  They were concerned that thestaged implementation as proposed would bring the WTO salary higher than the UN salary at the end
of 2003.  Some Members preferred to concentrate resources for activities such as (i) an increase of
courses under the Training Institute and (ii) additional posts.
45. At the session of 28 November 2002, the Depu ty Director-General presented a second
revision to the 2003 Budget Estimates taking into account of the concerns of the Members
(CRP(02)53).  The principal elements consisted of: (i) as a provisional solution on the question of
adjustment to salaries by providing an increase of 3 per cent on 1 January and 1 per cent on1 July 2003, (ii) a reduction of CHF 655,000 in various operating costs which would not seriously
undermine the basic functioning of the WTO, and (iii) eight new posts.
46. One Member, on behalf of the African Group, expressed the strong conviction that the WTO
2003 exercise should reflect the awareness of the requisites necessary for the successful achievement
of the goals and objectives for the period in question, including providing the Secretariat withappropriate tools to perform its duties.  The African Group hoped that an acceptable compromise for
all lay between the 15.8 per cent budget rise in the Director-General’s proposals and the 6.75 per cent
of budget increase contained in the discussion paper.  The Group regretted the on-going situation
during such crucial period, which disrupted the proper functioning of the WTO and the fulfilment of
the Doha Work Programme.  It wished to express its appreciation for the quality and professionalismof the work of the Secretariat and its devotion and commitment to the WTO.  It believed the
Organization’s staff members were entitled to receive a significant raise in the present budget exercise
as the result of the review which showed that the WTO staff salary appeared to lag behind all four
comparator organizations and there had been no adjustment since the creation of the Organization.
47. In the context of budgeting exercise, some Members recommended investigating the
introduction of a biennial cycle in order to have a better planning and strategic thinking for the future
of the Organization.  That way, both the Secretariat and the Members would have greater
predictability with regard to the financial require ments of the Organization.  Members also suggested
that the Committee undertake a review of resources available to the Secretariat in the context of the
tasks that would be required, taking into account of the report of the human resources consultant in
2001.  Some Members showed concern that the proposed revised salary increase would not be
sufficient to meet the expectations of WTO staff.
48. After a number of meetings and in the spirit of compromise, the following main elements of
the budget, contained in document CRP(02)54, we re accepted by the Committee: (i) a modified
approach to the question of adjustment to salaries (see paragraph 77), (ii) a reduction from twelve to
six in the number of new posts
3, (iii) a decrease in the amount of funds requested for temporary
assistance, (iv) reducing the funding available for informatics, (v) eliminating provisions forreplenishing the Appellate Body Operating Fund
4 and for increasing the funding for the Ministerial
Conference, (vi) a reallocation to temporary assistance of estimated funding for four Trade Policies
Reviews5,and (vii) various other minor reductions.
                                                     
3 In addition there would be a reallocation of two posts from the TPR Division
4 The needs of the Appellate Body Operating Fund in 2003 would be monitored on a regular basis and, if needed
alternative sources of funding would be investigated.
5 In the opinion of the Committee, the reduction in th e number of Trade Policies Reviews could permit the
temporary reallocation of two Trade Policies Review Division staff members to meet other high priority needs, such as those
which could not be accommodated by the six additional posts for 2003.WT/BFA/63
Page 9
49. See Recommendation V, paragraphs 9 and 10 of document WT/BFA/62.
IX. INTERNATIONAL TRADE CENTRE UNCTAD/WTO
A. PERFORMANCE AGAINST BUDGET AS AT 30 SEPTEMBER  2002
50. The Deputy Executive Director of the International Trade Centre UNCTAD/WTO (ITC)
introduced the document ITC/BUD/43.  He indicated that the projected expenditure amounted toapproximately 98.67 per cent i.e. a projected balance of CHF 406,347 against a total budget of
CHF 30,632,700.  He explained that the balance was mainly due to the standard applied to salaries
and common staff costs.  There were other minor over-expenditures in other sectors such as
communications and missions, which were off set by savings.
51. The Committee took note of the report.
B. 
PROPOSED REGULAR PROGRAMME BUDGET OF THE ITC FOR 2003
52. The Deputy Executive Director of the ITC introduced the document ITC/BUD/44 on the
proposed budget for 2003 amounting to CHF 31,038,000 as compared to CHF 30,733,000 at the time
of the 2003 preliminary estimates presented in the document ITC/BUD/40.  The overall difference of
a CHF 305,000 increase was comprised of the following elements: (i) lower exchange rate foreseen
for the US dollar, (ii) predicted lower rate of general inflation, (iii) recent decision of the International
Civil Service Commission (ICSC) to increase salary scales for general service staff retroactive toJanuary 2002, and (iv) estimated additional requirements related to the proposal to be presented to the
United Nations General Assembly in the fall of 2002 for a system-wide salary increase for
professional staff.
53. The Deputy Executive Director further indicated that the miscellaneous income for 2003 was
estimated at CHF 290,000.  Therefore, the WTO sh are of the 2003 proposed budget of ITC amounted
to CHF 15,374,000.  However, should the proposed increase in professional salaries not be approved
by the United Nations General Assembly, the WTO share of the proposed budget would amount to
CHF 15,074,000.  He further drew the Members’ attention to the fact that the proposal was based on
the assumption that interpretation for the annual Joint Advisory Group (JAG) meeting would be
maintained in the six official UN languages with documentation submitted in four languages (English,French, Russian and Spanish) against six for the UN and three for the WTO.  A proposal had been
made that the official JAG documentation be submitted in two additional languages, Arabic and
Chinese.  Should the proposal be accepted by the UN and the WTO, an estimated additional amount
of CHF 78,300 should be added to the total budget proposal for 2003.
54. The Deputy Executive Director also highlighted some of the activities of the ITC in 2002: (i)
the Executive Forum, which had been funded through a combination of regular and extra-budgetary
resources, (ii) E-trade, and (iii) he also referred to the latest issue of the International Trade Forummagazine which focuses on how business can benefit from the Doha Development Agenda.  In
addition, he informed the Committee that the UN had formulated its 2004-2005 budget outline which
included an overall real growth of 5.8 per cent.  An increase of 5.1% was envisaged for the section
dealing with International Cooperation and Development.  Against this background, ITC had
proposed an increase of 6.5% for its next budget period.
55. Some Members indicated interest in considering an increase in the budget of the ITC in 2004.
One Member supported the proposal of submitting th e official JAG documentation in two additional
languages and considered it a question of principle expressing the need of treating fairly all UN
working languages.  Some Members expressed reservations on the inclusion of additional languages
and a few Members mentioned the use of voluntary funds for the purpose.  In this respect, it wasWT/BFA/63
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recalled that the relationship between the UN and the WTO with regard to the ITC was that of a joint
and equal partnership.
56. The Deputy Executive Director explained that, in accordance to the agreement between the
UN and the WTO, the ITC applied the UN system salary scale.  No extra-posts and no additional
expenditures were requested for 2003.  The two new posts of 2002 were budgeted for 9 months andtheir full financial impact would be in 2003.  Further, he highlighted that 40 per cent of ITC’s
technical cooperation expenditures were in favour of LDCs.  With regard to the inflation rate, it was
to be noted that the ITC adopted the inflation rate agreed upon between the UN and WTO.  The
decision on the increase of professional salary levels would be taken by the UN General Assembly at
the end of the year.
57. See Recommendation II, paragraphs 3 and 4 document WT/BFA/62.
X. OTHER ITEMS
A. 
ADMINISTRATIVE UP -DATES AND PROGRESS REPORTS
58. A member of the Secretariat presented the cash situation, the statement of outstanding
contributions as at 30 September 2002, the progress report of instalments for countries in arrears, the
contributions of Observer countries towards the cost of services provided by the Secretariat, and
report on the scheme to facilitate the payment of pre-1988 arrears.  As of 30 September 2002, the totalcontributions received from Members amounted  to CHF 103,362,522.  One Member had made a
payment since 30 September 2002.  With regard to the contributions received from the Observers to
the WTO towards the cost of services provided by the Secretariat, it stood at CHF 560,778.  The
Working Capital Fund stood at CHF 8,849,619. As at 30 September 2002, there were three Members
in Category I and four in Category II, while in Category III there were three and in Category IV,eighteen.  He drew the attention of the Members to the cash situation as of end September, which
would be sufficient to cover expenses of the Orga nization for the month of October.  The WTO was in
serious need of payment of contributions from Members for its operation for the coming months.  If
no payments were forthcoming, the WTO would be obliged to request authority to have recourse to a
loan from the bank.  The Secretariat urged the Members to make payments as soon as possible.
59. Another member of the Secretariat presented the situation of the Extra-budgetary
contributions.  Since the issuance of docume nt WT/BFA/SPEC/84, one Member had made a
contribution to the Doha Development Agenda Global Trust Fund (DDAGTF), bringing the total
amount of contributions up to CHF 18.5 million.  He highlighted also that document CRP(02)35 was
prepared in response to the request made by the Members during the last meeting.  The document
provided information on the rate of implementation of the Technical Assistance Plan in 2002 with (i)
details on planned activities by region and subject, (ii) ad hoc activities by region and subject, (iii)total of planned and ad hoc activities by region and subject, (iv) relative importance of planned versus
ad hoc activities by subject, and (v) relative importance of national versus regional activities by region
and subject.
60. Members expressed appreciation for the information provided.  One Member showed concern
over the expenditures in the DDAGTF, which alread y reached 15.7 million by the end of October.  As
the rate of implementation of the Technical Assistance Plan in 2002 played an important part in the
formulation of next year’s technical assistance plan, some Members requested more information,
namely on (i) actual expenditures, number of participants, duration of the activity, and per capita cost
on a project by project basis, and (ii) a comparison between planned and implemented activities in
2002.  Further, some Members indicated that there was a need to set up a system whereby ad hoctechnical assistance activities could be screened, approved and managed.WT/BFA/63
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61. The Secretariat explained that the level of spending for the year in the DDAGTF would
remain within the limits of the pledged contributio ns.  The amount of expenditure shown at the end of
October in document WT/BFA/SPEC/84 included both paid and committed expenditure for activities
planned until the end of the year.  The additional activities that could still be planned from October to
December 2002 would only be small-scale technical activities on a national level, which onlyinvolved limited expenses as, on average, they would simply require the travelling of two
professionals.  With regard to the NGO symposium in fund TSP10, the remaining balance was due to
the reduced number of participants in 2001 compared to the original plans.  Part of the balance
amounting to CHF 266,266 was transferred to the DDAGTF according to the instructions received
from certain donors.  The Secretariat had not yet received instruction for the use of the remaining
amount of CHF 51,917.  It was to be noted that the NGO symposium in 2002 had been financed
through the DDAGTF.
62. In addition, the Secretariat explained that the Extra-budgetary funds were audited in the same
manner as the regular budget.  As far as the financing of L-posts was concerned, the Senior
Management had decided to finance 14 of them through the DDAGTF and the rest through the
Programme Support Fund to avoid the creation of a structural deficit in this latter fund.  The L-posts
financed through the DDAGTF were directly involved in the implementation of the TA programme,whereas the 5L-posts financed through  the Prog ramme Support Fund were designed to support the
rest of the Secretariat (administration, etc) but would not be involved in the actual delivery of
technical assistance to beneficiary countries.  In addition, the Programme Support Fund also financed
in 2002 a programme on training of trainers as well as 8 normal support posts.  It was to be noted that
a L-post contract is a one-year contract renewable for 5 years.  The Secretariat had become moreopened to ad hoc technical assistance activities during the second part of the year as the priorities and
the nature of some activities changed with time.
63. Subsequently, the Secretariat provided additional information, as requested (documents
CRP(02)38-41 and 50-51), on the implementation  of technical assistance activities.  Furthermore, the
Secretariat listed in document CRP(02)51  the various reports on technical assistance activities whichthe Committee had received since 1999, highlighting the inflation in overlaping requests in 2002 and,
in this respect, requested guidance from the Member s as to the kind of reporting, the form, content
and periodicity, that the Members would like to receive in the future. One Member indicated that it
would appreciate receiving information on ad hoc technical assistance activities by sources of
funding.
64. With regard to the target amount for the DDAGTF in 2003, the Secret ariat also explained
that, according to the terms of reference of th e DDAGTF approved in December 2001 by the General
Council, the role of the Committee was to formally approve the target amount for the following year,
to monitor the registration of pledges to reach that target amount, and to ensure that the
commitments/pledges received were actually disbursed according to the approved schedule (25% by 1
January, 75% by 31 March and 100% by 30 June).
65. The Committee took note of the reports and of comments of the Members.
B. 
SURVEY OF SALARIES AND ALLOWANCES
66. An informal consultation with the Members was held on 30 October preceding the formal
meeting whereby the consultant who had conducted  the review explained the methodology of the
survey: (i) the definition of the market, (ii) the choice of comparators, (iii) the choice of functions and
grades, (iv) the data collection and analysis, and (v) the establishing a relationship to the market.  Aformal meeting on the issue followed thereafter and the Members expressed concern on the
methodology and the comparators chosen for the survey. They further indicated that they would have
preferred to have been consulted on the methodology before the survey.WT/BFA/63
Page 12
67. Some Members indicated their disagreement on the choice of comparators, suggesting that the
UN should be the primary benchmark for comparison.  Others requested information on staff retention
rates.
68.  Members considered that it would be difficult for the WTO to compete with the private
sector and expressed doubts on the severity of the problem of retention of staff.  Moreover, an averageincrease of 8 percent would not address the problem of retention of some categories of staff.  They
also referred to the downturn of the global econom y and the policy of zero growth adopted by their
respective national authorities.
69. The Secretariat indicated the danger of having a single comparator for the survey and that
with the establishment of the WTO, the Members had consciously moved away from the UN common
system not only in respect of salaries but with different overall conditions of service .  The Secretariat
recalled the adoption of the General Council in 1998 of its decisions on conditions of service,including, in particular, the compensation philosophy, which provided a WTO compensation and
personnel plan that was independent from the UN common system of salaries, allowances and
benefits.  The salary review was to be undertaken every three years, taking into account all relevant
factors.  It was also recalled that the paramount objective in the determination of conditions of service
should be to secure staff members of the highest standards of competence, integrity and efficiency andto meet the requirements of WTO Members, taking into account the needs and aspirations of the staff
members while seeking to ensure the broadest possible diversification of the Secretariat.
70. Further the Secretariat highlighted the proposal to introduce a new interim adjustment method
that would keep the salary on track over the three-year period between reviews and ensure a gradual
transition towards a much more performance-based type of adjustment procedure.
71. The Staff Council addressed the Committee three times in meetings expressing their support
for the Director-General’s budget proposals for (i) 12 new posts and no cuts in temporary assistance,
(ii) an 8 per cent pay adjustment to salaries and allowances and (iii) a methodology for future pay
adjustments to ensure competitive work conditions.
72. Subsequently, a “Non-Paper” on review of the WTO salaries and allowances was distributed
to the Members in order to address some of the issues.  The non-paper showed that the WTO salaries
and pensions currently lagged behind UN salaries both for support staff and for professional staff.
The adjustment of salary could be introduced in two slices of 2 per cent on 1 January 2003 and 2 per
cent on 1 July 2003, thus limiting the annual cost increase in 2003 to 3 per cent.  The Committee
could also look into the methodology and possible replacement of the current interim adjustment
mechanism.  The final annual adjustment could also take account of the impact on WTO salary levels
of the introduction of performance-related pay.  This mechanism could provide for a smoothermovement in WTO salary levels, rather than creating large jumps every 3 years.
73. A number of Members expressed their support for the possibility of introducing the
adjustment in two stages as mentioned in the non-paper on condition that it was regarded as
provisional increase, and that the Committee would look into the establishment of a sound and
meaningful methodology in early 2003, thus ensuring a holistic approach to the matter.
74. Within the context of a revised 2003 budget proposal, a staged implementation increase of 3
per cent in January and 3 per cent in July 2003 (equivalent to a 4.5 per cent increase) in salaries,
pensions and common staff costs was proposed by the Director-General (see paragraph 42).
75. After further deliberations, an outline alternative approach with regard to the Director-
General’s Revised 2003 Budget Proposals was presented (document CRP(02)54) which provided fora modified adjustment to salaries of 3 per cent on 1 January and 1 per cent on 1 July 2003.  A
methodology for future adjustments to salaries and allowances would be decided early in 2003 with aWT/BFA/63
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view to implementing it in the context of the budget proposals for 2004.  Also, given that certain
decisions would be taken on salaries and allowances in the UN common system for 2003, parity for
the WTO as from 1 July 2003 should be ensured.
76. Some Members considered the modified adjustment to salaries reasonable and could be a
provisional solution pending a full examination of the methodology for future salary determinationsand a revised annual adjustment mechanism.  Members also expressed the view that WTO salaries
should not lag behind those of the UN common system .  Others showed concern over the uncertainty
of a decision on a salary rise in the UN common system in 2003.
77. See Recommendation III, paragraphs 5 and 6 of document WT/BFA/62.
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