RESTRICTEDWORLD TRADE
ORGANIZATIONWT/BFA/68
20 October 2003
(03-5531)
Committee on Budget, Finance and Administration
REPORT OF THE MEETING H ELD ON 11 JULY, 14 AUGUST
AND 25 SEPTEMBER 20031
1. The WTO Committee on Budget, Finance and Administration met on 11 July, 14 August and
25 September 2003 under the chairmanship of Mr. Joshua C.K. Law from Hong Kong, China.  The
terms of reference and composition of the Committee are set out in document WT/L/44/Rev.1.  The
agenda contained in document s WTO/AIR/2142 and WTO/AIR/2142.Add.1,
WTO/AIR/2142/Add. 1/Corr.1 and WTO/ AIR/2158 were adopted with one additional point regarding
the letter from the Chairman of the Working Party on Domestic Regulation.
I. ADMINISTRATIVE UP-DATES AND PROGRESS REPORTS
A. CASH SITUATION AND STATEMENT OF OUTSTANDING CONTRIBUTIONS
B. INSTALMENT PAYMENTS FOR COUNTRIES IN ARREARS (CONTRIBUTIONS FROM 1987 AND
EARLIER YEARS )
C. CONTRIBUTIONS OF OBSERVER COUNTRIES TOWARDS THE COST OF SERVICES PROVIDED BY
THE SECRETARIAT
D. HUMAN RESOURCES
E. EXTRA -BUDGETARY CONTRIBUTIONS :
- TECHNICAL ASSISTANCE ACTIVITIY IN 2003
- DOHA DEVELOPMENT AGENDA GLOBAL TRUST FUND
2. A member of the Secretariat presented the cash situation, the statements of outstanding
contributions as at 30 June, and 31August 2003, the progress reports 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 31 August 2003, the total contributions
received from Members amounted to CHF 112,893,368 while those from the Observers amounted toCHF 474,634.  The Capital Working Fund stood at CHF 9,009,540 as at 31 August 2003.  Since
31 August 2003, the following Members had made payments:  (i) Bangladesh, (ii) Chile,
(iii) Costa-Rica, (iv) Gabon, (v) Oman, (vi) Sierra Leone, (vii) St-Vincent & Grenadines, and
(viii) USA.  In addition, one Observer, Azerbaïjan, had paid it contribution in the month of
September.
                                                     
1 This report should be read in conjunction with document WT/BFA/67 which contains part of the
recommendations to this report and was approved by the General Council on 26 August 2003.WT/BFA/68
Page 2
3. The Secretariat informed the Members that, twice a year, reminder letters were sent to the
Members as well as Observers requesting for payments of their respective arrears.  Members and
Observers with arrears, nevertheless, still receive one copy of all documents.
4. A member of the Secretariat introduced documents CRP(03)29 and 35.  He reported that the
Management Board of the Pension Plan had interviewed the four short-listed firms for the position of
investment analyst/consultant and had mandated a small group to negotiate a contract with thepreferred candidate.  With regard to internship, some 60 students had taken up regular budget
internships, of whom 49 per cent had come from developed countries and 51 per cent from developing
countries, LDCs and economies in transition.
5. Another member of the Secretariat presen ted, on 11 July 2003, documents WT/BFA/SPEC/96
and CRP(03)30.  He drew the attention of the Memb ers to the trust fund on the Trade Policy Courses
in Africa, which recorded a substantial savings.  The donors of the fund would have to consider the
use of the balance.  With regard to the Doha  Development Agenda Global Trust Fund (DDAGTF), the
total pledges registered as at end of June 2003 totalled CHF 20.2 million.  Taking into account part of
the earmarked funds to the extent they could finance activities included in the 2003 TA Plan, the
pledges would reach approximately CHF 22 million.  Therefore, additional pledges of some
CHF 2 million were required to reach the target amount of CHF 24 millio n for the DDAG TF in 2003.
The cash balance as at end of June stood at CHF 2.2 million.
6. With regard to the Trust Fund to facilitate the participation of the Least Developed Countries
(LDCs) in the Ministerial Conference at Cancun, the Secretariat had received written confirmation of
pledges from several Members.  Information on all contributions received under this fund will be
made available at the next meeting of the Committee.
7. Subsequently, the Secretariat presented, on 25 September 2003, documents
WT/BFA/SPEC/99 and CRP(03)36 giving an update on the situation of the extra-budgetary funds
financing WTO Technical Assistance Activit ies in 2003 and the upd ate on the DDAGTF as at
31 August 2003.  He drew the attention of the Members to the expenditures of the Programme
Support Fund (PSF) and indicated that the fund, based on the year's expenditure rate, may be
overspent by the end of the year.  With regard to the DDAGTF, the total pledges registered as at endof August amounted to CHF 23.4 million.  Taking into account part of the earmarked funds to the
extent they could finance activities included in the 2003 TA Plan, the pledges would exceed the target
amount of CHF 24 million.  Cash wise, significant payments had been received after the end of June.
8. One Member considered that the Technical Assistance activities should be re-evaluated
further to the Cancun Ministerial Conference in order to see whether the activities initially plannedfor 2003 should still be fully implemented.  The evaluation is needed prior to the discussion on the
WTO technical assistance plan for 2004.
9. The Committee took note of the various progress reports and the comments from the
Members and requested the Secretariat as well as the Member in question to convey the view of the
need to re-evaluate Technical Assistance to the CTD.
II. FINANCIAL MATTERS:  DIRECTOR-GENERAL'S BUDGETARY AND
FINANCIAL REPORT FOR 2002 AND REPORT OF THE EXTERNAL AUDITORTHEREON; DIVISIONAL REPORTING ON OBJECTIVES AND EXPENDITURES
FOR 2002 AND REPORT ON EXTRA-BUDGETARY FUNDS FOR 2002
10. A member of the Secretariat gave a preliminary presentation on:  (i) the Director-General's
Budgetary and Financial Report for 2002 and Report of the External Auditor thereon
(WT/BFA/W/97), (ii) the Divisional Reporting on Objectives and Expenditure in 2002WT/BFA/68
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(WT/BFA/W/98), and (iii) Report on Extra-budgetary Funds for 2002 (WT/BFA/W/99).  He
highlighted the accumulated deficit in the Surplus Account of CHF 1 million, which was covered by a
transfer from the Working Capital Fund, in accordance with Financial Regulation 26, paragraph 4.
With regard to the budgetary situation, there was an over-expenditure on personnel-related costs
amounting to CHF 3.3 million, and budgetary savings totalling CHF 2.1 million on administrative and
other cost.  Therefore, the overall budgetary over-expenditure amounted to CHF 1.1 million.  Withregard to the Appellate Body and its Secretariat, there was an overall budgetary savings of
CHF 49,000.
11. Further, the Secretariat drew the Members' attention to the report of the External Auditors'
comments and recommendations regarding (i) maintaining and expanding information in the WTO
Administrative Manual, (ii) the inventory system, (i ii) extra-budgetary funds, and (iv) internal control.
He indicated that the reporting on extra-budgetary funds would be further discussed with the External
Auditors in order to see in specific terms th e areas where the former recommend elaboration.
12. The Secretariat also indicated that document WT/BFA/W/98 provided, on a divisional basis,
information regarding allocations and expenditures, and assessment of the attainment of the
objectives.  The information could provide a valuable tool for both Members and the Secretariat to
assess performance, and for Members to provide valuable input and advice with regard to priorities
and activities on a divisional basis.
13. With regard to the Extra-budgetary funds, the report WT/BFA/W/99 provided detailed
information on all extra-budgetary funds in the WT O, both in aggregated and on a fund-by-fund basis.
14. In reply to query, the Secretariat informed the Committee, that the home leave entitlement of
an internationally recruited staff member was once every two years.  In accordance with
Administrative memorandum No. 937, a staff member was provided with an option of a lump sum
payment for home leave in lieu of the entitlement to the payments of air fare, terminal expenses, travel
subsistence allowance, miscellaneous travel expenses, excess baggage and unaccompanied shipment
of personal effects in connection with home leave.  The lump sum is based on 80 per cent of the full
economy-class return airfare for the authorized travel by the most direct route, taking into account the
age of any dependent children at the time of travel.
15. The Committee took note of the reports and recommends to the General Council to
approve the transfer between WTO budgetary sections as mentioned in paragraph 32 of
document WT/BFA/W/97 amounting to CHF 5,388,701, and between Appellate Body budgetary
sections as mentioned in paragraph 45 amounting to CHF 44,258 which are necessary in order
to cover excess expenditures over approved appropriations.
16. The Committee further recommends that the General Council approves the audited
accounts for 2002 and conveys to the external a uditor their thanks for the valuable assistance
provided in the audit of these accounts.
III. RESULTS-BASED BUDGETING
17. The Delegate of Belgium, speaking on behalf of the Netherlands, the United Kingdom and
Canada presented the document CRP(03)31 on the Resu lts-Based Budgeting.  He highlighted that the
document served to take the Results-Based Budgeting process implemented by the Secretariat onestep further that would allow the organization as a whole to identify real priorities and to gain an
accurate impression at the end of the year in question whether those targets and objectives had been
met.  He further referred to the concept that achievements should be "specific, measurable,
achievable, relevant and time-bound" (SMART) as in dicated in the report of the human resources
consultant WT/BFA/W/70.  In addition, a concise description of how a division intended to organiseWT/BFA/68
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the work needed to achieve these targets, and the activities would allow the divisions to explain the
specific context of their work.
18. Members thanked the delegates who prepared the document.  Some Members questioned the
extent to which the targets for the Organization are measurable and quantifiable.  Some Members
considered that the Results-Based Budgeting was a process and that the best way to go about it was to
learn through implementation.
19. The Committee took note of the paper CRP(03)31 and the comments form the Members, and
requested that the Secretariat take into consideration the suggestions presented in preparing the
Budget Estimates for the next budgetary period.
IV. WTO SALARIES:  CALCULATION OF ALPHA ADJUSTMENT TO NET
SALARIES, AND ADJUSTMENT TO DEPENDENCY ALLLOWANCES
20. A member of the Secretariat presented the documents WT/BFA/W/101 and 102.  He recalled
the decision of the General Council in December 2002 on the review of the salary methodology, inparticular the "alpha" adjustment from 1 July 2003 to restore parity with equivalent grades in the UN
for all WTO employees in light of the results of the review of UN professional staff salaries, which
was underway at that time.  Document WT/BFA/W /101 was prepared for information purposes and
showed the grades that required the alpha adjust ment in order to bring the WTO to a comparable
position with the UN.
21. Document WT/BFA/W/102 provided informati on on the proposed adjustment to the WTO
dependency allowances to reflect the new salary levels as of 1 July 2003.  The adjustment would
require an amendment to Annex 2 of the WTO Staff Rules.
22. See Recommendation I, paragra ph 1 of document WT/BFA/67.
V. BIENNIAL BUDGET
23. A representative of the Secretariat presented document WT/BFA/W/92/Rev.1, which had
been prepared taking into consideration of the comments from the Members on the subject during the
previous meetings.  He highlighted the possible advantages and disadvantages of biennium budget
and the possibility of a revision to the second year of the biennial budget.  The Secretariat further
drew the attention of the Members to the legal implications of a move to a biennial budget.  Thedelegate of the United Kingdom distributed a Non-paper on the view of his country on the possible
biennial budgeting in the WTO.
24. Subsequently, the Secretariat prepared document WT/BFA/W/104 addressing different
possible legal approaches to moving from annual to biennial budgeting in the WTO.  In addition, the
Secretariat also prepared documents WT/BFA/W/1 05 and WT/BFA/W/105.Rev.1 in response to the
various considerations expressed by the Members.
25. See Recommendation II, paragraph 2 of document WT/BFA/67.
VI. REVIEW OF THE SECRETARIAT RESOURCES
26. A member of the Secretariat introduced the document CRP(03)37 recalling that, at the request
of the Committee in 2001, an external consultant had been requested to undertake a review on the
structure, staffing resources and other processes of the WTO Secretariat.  Recommendations, which
were within the control of the Secretariat, have been implemented, namely (i) the reduction ofdivisions, (ii) the provision of equipment for vide o conferencing, (iii) the use of CD-ROMs to provideWT/BFA/68
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information on the WTO, (iv) the use of e-mail for internal circulation of information, and (v) the
move from annual to a biennial approach in the budgeting process.  It was noted that the evolution of
the organizational structure of the WTO was an on-going process.
27. It was also agreed that informal consultations with the Deputy Directors-General on the
resources of the WTO Secretariat would be organized prior to the discussions on the budget estimates.
28. The Committee took note of the report.
VII. APPELLATE BODY OPERATING FUND
29. A member of the Secretariat introduced document WT/BFA/W/106, recalling that the
replenishment of the Appellate Operating Fund (ABO F) which had been included in the originally
proposals, had not been retained in the 2003 budget. The Committee indicated at the time of finalizing
the budget for 2003 that it would monitor on a regular basis the needs of the Appellate Body
Operating Fund, and if needed, investigate altern ative sources of funding.  In March 2003, the
Committee was informed that the balance of the ABOF would be insufficient to finance the activitiesuntil the year's end.  It was suggested that, at the appropriate time and closer to the end of 2003, the
Committee could consider the following options:  (i) should the budgetary situation so permit, the
deficit could be covered by an extra-ordinary expenditure under the 2003 regular budget, or (ii) the
use of the Working Capital Fund in accordance with WTO Financial Regulation 30 would be
considered.
30. One Member suggested studying the possibility of integrating the expenditures into the
regular budget.  Another delegate indicated her preference to option (i) (above), while another
delegate considered that one option would not exclude the other, and that one could consider
combining both options for a solution if necessary.
31. The Committee took note of the report and the comments of the Members.
VIII.  REVIEW OF THE GUIDELINES ON VOLUNTARY CONTRIBUTIONS FROM
NON-GOVERNMENTAL DONORS
32. A member of the Secretariat recalled that the Committee discussed the matter earlier this year
based on the document WT/BFA/W/95.  There were only two donations presented since the time of
the formulation of the guidelines.
33. Some Members suggested that the process of  accepting voluntary contributions could be
streamlined and that the Committee could look into the criteria for accepting voluntary donations.
34. The Committee took note of the comments from the Members and requested that the
Secretariat prepare a document for discussion at a future meeting.
IX. OTHER BUSINESS
35. The Chairman referred to the letter dated 10 July 2003 addressed to him by the Chairman of
the Working Party on Domestic Regulation (WPDR) requesting the financing of the participation of
two representatives from each developing country WTO Member to the Workshop on Domestic
Regulation, scheduled to be held in Geneva from 6-7 October 2003.  The event could not be included
in the current Technical Assistance Plan due to the very long lead times required, and therefore had to
be regarded as an ad hoc activity.  The estimated cost for the event was CHF 1.8 million, assuming all
invitees would participate; responding to the question of a Member, the Secretariat indicated that theWT/BFA/68
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final cost would most probably be much closer to  CHF 1 million, if past experience was of any
guidance.
36. Members did not object to the holding of the workshop, provided its financing could be
accommodated within the global envelope of CHF 24 million approved for the DDAGTF in 2003,
taking into account any dedicated funding that would have been identified for the event.  They felt,
however, that the CTD should look into the matter, as it had responsibility for monitoring theimplementation of the WTO technical assistance plan.
37. The Committee noted that the request of the Chairman of the WPDR was presented according
to a decision of the General Council of 15 November 1995 which read:  "When considering any
decision which may have financial implications for the WTO, WTO Bodies shall, before a decision is
taken, so inform the Chairman of the CBFA, identifyin g, in so far as possible, areas in their sphere of
competence where compensatory savings could be achieved."  This decision pre-dated the creation of
the DDAGTF and the move to annual t echnical assistance plans.  As a result, some Members felt that
it might be necessary to re-examine the 1995 decision of the General Council in the light of this new
context.  It could be more appropriate to consult the CBFA only if a decision would have financial
implications exceeding the funds av ailable in the DDAGTF.  Within the limits of the funds available
in the DDAGTF, the CTD should be responsible for setting priorities.
POINTS FOR DECISION:  Paragraphs 15 and 16
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