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WT/BFA/ 178 
 
11 April 2019 
(19-2255) Page: 1/7 
Committee on Budget, Finance and Administration    
 
REPORT OF THE MEETIN G HELD ON 20 MARCH 2019  
The Committee on Budget, Finance and Administration (CBFA) met on 20 March 2 019.   
 
1  APPOINTMENT OF THE C BFA CHAIRPERSON  
1.1.  His Excellency Ambassador Peter Brňo (Slovak Republic) , whose tenure as Chair person  of 
the CBFA was in 2017, chaired the meeting at the beginning. After welcoming the Members, he 
informed them that he was stepping in for the immediate former Chair person  of the CBFA, 
Ambassador Juan Esteban Aguirre Martínez , the former Ambassador and Perm anent 
Representative of Paraguay to the WTO,  as he had left Geneva in late 2018.   
1.2.  He recalled that the General Council had approved the appointment of Chairpersons for the 
different WTO standing bodies , in February 2019. He then proposed that the CBFA formally 
appoint His Excellency  Ambassador Sørli, the Permanent Representative of Norway to the WTO 
and EFTA, as Chairperson of the CBFA.  
1.3.  The Members  confirmed the appointment of the Chairperson of the CBFA, by acclamation.  
1.4.  In his opening remarks, Ambassador Dagfinn  Sørli thanked Ambassador Peter Brňo, for 
having taken time to revisit his previous function as Chairperson  of the CBFA . He expressed his 
appreciation for the trust that the Members ha ve bestowed upon him . Turning to the role, he 
expressed his readiness and willingness  to work with Members and the WTO S ecretariat in the 
governance and follow -up of the budget, finances and administration of th e Organization . He 
noted that the overarching  aim is to best serve  the Members, tax -payers and the employees of 
the Organization . He stated that he will be available to anyone who wished to bring issues to his 
attention.  
1.5.   Ambassador Sørli noted that the year will be a  busy one, with two of the most prominent 
tasks being the  development of the Budget Proposal for the next two years and the review  of the 
Financial Regulations. He then introduced the agenda for the day, bearing the reference  
WTO/AIR/BFA/30 .  
1.6.   The Committee adopted the agenda.  
2  2019 DRAFT WORK PLAN  FOR THE COMMIT TEE ON BUDGET, FINAN CE AND 
ADMINISTRATION – WT/BFA/W/470  
2.1.  An Official from the WTO Secretariat introduced the draft work plan for 2019 , saying that it 
is an outline of anticipated meetings and topics for 2019 and that there may be alterations during 
the co urse of the year. She notified the Committee that the meeting date in June will change from 
24th June to 17th June.  
2.2.  The Members took note of the proposed 2019 Work Plan.  
 
3  SPECIAL ACTIVITIES: INTR ODUCTORY PAPER  ON THE REVISION OF T HE FINANCIAL 
REGULATIONS OF THE W ORLD TRADE ORGANIZAT ION – WT/BFA/W/ 476 
 
3.1.  An Official from the WTO Secretariat referred to Financial Regulation 4, which stipulates that 
the Financial Regulations should  be reviewed at least every 4 years . The paper tabled is premised 
on the fact given that the last review was in 2015. She said that there were some Financial WT/BFA/ 178 
 
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  Regulations that needed clarification and that these were proposed for revision, as detailed in the 
table within the paper that was su bmitted before the Committee meeting.  
3.2.  A Member said that several  of the Financial Regulations  on the table have a linkage to the 
Working Capital Fund and the aspect of budgetary surplus. He requested clarification of the 
relationship between these two ele ments.   
3.3.  An Official from the Secretariat explained that the budgetary surplus relates to the difference 
between the budgeted expenditure relative to the actual expenditure and that the financial deficit 
comes at the next tier , after adjusting for long term liabili ties. 
3.4.  A Member expressed his delegation's congratulations to the Chair person  and their readiness 
to participate, in a constructive manner, in the Committee. He stated that his delegation is 
supportive of the approach suggested by the WTO Secretariat. He no ted that there had been 
discussions  related to  Financial Regulations 28, 29 and  23 in 2018 , and said that he anticipates 
that the proposed revisions to these would take account of the spirit and letter of those 
discussions. Noting  that there had been intensive discussions relating to Financial Regulation 19 , 
in 2018, he mooted that even though this Financial Regulation is not currently topical, it may 
benefit from a preliminary review to see if slight modifications may be warranted.   
3.5.  A Member commented on Financial Regulation 21, stating that it should be read in 
conjunction with Financial Regul ation 20 . He said that Financial Regulation 20 authorizes the 
Director General to spe nd according to the allocated budget and that Financial Regulation 21 is 
an adjustment clause to the authorization in Financial Regulation 20 . He expressed the view  that 
ex post facto approval by the General Council should not be precluded. The Member  expressed 
the view that Financial Regulations 23 and 26(a) ought to  be reviewed in tandem , as they are 
interrelated . On Financial Regulation 37, the Member  said that he sympat hizes with the 
perspective that quarterly Output reporting is too laborious. Nonetheless,  he suggested that it is 
still important to have a mid -year Output Report after 6 months and another Output Report at 
the end of the year.  
3.6.  An Official from the WTO Sec retariat thanked Members for their constructive comments .   
3.7.  The Chairperson stated that the Secretariat will propose text reflecting amendments to the 
Financial Regulations that had been identified, and, tak e the comments that have been made by 
Members int o consideration.  
3.8.  The Committee took note of the re port. 
 
4  SPECIAL ACTIVITIES:  SELECTION PROCESS F OR EXTERNAL AUDITORS  
4.1.  An Official from the Secretariat notified the Committee that the mandate for External 
Auditors is 6 years and that the term of the current Board of Auditors (Germany) will end when 
they conclude the audit of the 2020 Financial Statements . He informed the Committee that there 
are no pre -defined guidelines for the sel ection of External Auditors.  
4.2.  He suggested  that the procedure that could be followed for selecting the next External 
Auditors could be  based on that which was followed in the last selection process. Bearing this in 
mind, h e identified timelines and steps a s follows:  
o April/May 2019 – Composition of the Working Group for the Selection of the next External 
Auditors;  
o June/July 2019 – Publication of the Invitation to Bid;  
o September 2019 – Deadline for responses to the Invitation to Bid;  
o November/December 2019 – Report of the Working Group, to the CBFA;  
o November/December 2019 – Recommendation by the CBFA to the General Council;  WT/BFA/ 178 
 
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  o June 2020 – Last report of the current External Auditor presented at the CBFA; and  
o October 2020 – Assumption of duty by the new External A uditors.  
4.3.  Following on from comments by Members, the Official of the Secretariat said that documents 
from the previous process, including the Invitation to Bid, the Working Group Report and the 
Recommendation to the General Council, will be circulated to Me mbers.   
4.4.  The Chairperson requested delegations interested in being part of the working group that 
will be tasked with assessing expressions of interest in the external audit mandate to 
communicate their interest to the Secretariat before the next meeting o f the CBFA.   
5  2019 WTO SALARY SURV EY (WT/BFA/ W/471) 
5.1.  An Official from the Secretariat introduced the document, stating the methodology and the 
weights for the comparator for the WTO salary scale (70% United Nations Office in Geneva, and 
30% Coordinated Organizations). The effective change in the WTO salary s cale for 2019 is 1.78%.  
5.2.   The Official from the Secretariat informed the Committee that, since the 2019 salary scale 
would overtake the frozen salary scale applicable for staff hired in 2016 and 2017, this frozen 
scale would be removed. Three frozen salary scales will remain in ef fect. Staff hired since 2016 
will be paid against the 2019 salary scale.  
5.3.  The Official from the Secretariat also informed the Committee of the cumulative movement 
of the WTO salary scale in 2018 and 2019 in relation to the adjustment of the dependency 
allowances following the introduction of a new adjustment methodology in 2018. With this 
methodology, the allowances will be adjusted in line with the cumulative movement of the WTO 
salary scale every three years, subject to a 2% threshold being reached. The fi rst such adjustment 
will take place in 2021 based on the cumulative movement of the salary scale in 2018 to 2020.  
5.4.  A Member enquired why the Coordinated Organizations are included in the comparator and 
about the trend of salaries in other international org anizations.  
5.5.  Another member requested for more information related to the frozen salary scales and how 
the decision to remove them was arrived at.  
5.6.  An Official from the Secretariat gave a detailed explanation, covering the fact that the 
movements in the sa lary scales of Coordinated Organizations is based on the Paris scales, which 
are in turn converted to a Geneva base taking into account Purchasing Power Parity and Nominal 
Exchange Rates. He pointed out that the salaries for the General Service category of  staff in the 
United Nations Office in Geneva are reviewed periodically and established on the basis of the 
salary levels in the local area. For UN staff in the professional category, salary levels are 
determined on the basis of US civil service pay levels  and adjusted for each duty station based 
on a cost of living differential between New York and respective duty station, which for the 
purpose of the WTO salary adjustment is Geneva. Regarding the frozen salary scales in place, he 
stated that in 2012, when  the salary scale was reduced by 3.4%, it was decided to retain the 
scale then in place for staff that were already in the employ of the WTO Secretariat, while new 
staff are hired against the lower official salary scale. Frozen scales had since been introd uced on 
three further occasions.  
5.7.  The Committee took note of the 2019 salary survey.  
6  ORAL UPDATE FROM THE  CHAIR PERSON  OF THE WTO PENSION PLAN MANAGEMENT 
BOARD  
6.1.  The Chair person  of the WTO Pension Plan Management Board present ed a brief update o f 
the activit ies of the WTO Pension Plan in 2018. He notifie d the Committee that WTOPP 2018 
Annual Report  will be available in mid -2019.  
6.2.  On investments, the Chairperson noted  that 2018 was a challenging year for financial 
markets , with the WTO Pension Plan obtaining a  real return of -6.5% for the year. While WT/BFA/ 178 
 
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  recognizing that this was lower  than the target rate of return used in the actuarial assumptions , 
he said that  it is normal that in some years the return will be above the expected level and in 
others it will be be low. He informed the Committee that, s ince 2012 , there ha d only been one 
year (2018) with negative returns and only two years where the return was less than the target 
long-term expected return for the portfolio.  On the positive  side, he advised the Committee  that 
since the start of 2019 almost all th e negative returns  from 2018 had been erased as the 
estimated return for the year , as at 28 February  2019, is 6.0%.  He cautioned that  current 
economic circumstances remain challenging for investors and ar e likely to remain so for some 
time.  
6.3.  The Chairperson  told the Committee that t he WTO Pension Plan Management Board had 
concluded a procurement exercise for the provision of Actuarial Services to the Pension Plan.  The 
incumbent actuary (Mercer) was selecte d as the successful bidder and reappointed .  
6.4.  The Chairperson informed the Committee that three working groups had been deliberating 
on the following topics: t he process of reviewing disabilit y cases;  Environmental, Social and 
Governance (ESG) aspects of in vestment ; and the formalization of a risk management system 
for the  WTO Pension Plan. The recommendations stemming from these working groups are 
expected to be implemented during 2019.  
6.5.  In closing, the Chair person  announce d a vacancy for a Management Board  Member to be 
selected by the General Council. He stated that, c onsistent with the agreed guidelines for the 
selection of new Management Board M embers , a call for expressions of interest will be circulated 
shortly.  
6.6.  The Committee took note of the report.  
7  OFFICE OF INTERNAL OV ERSIGHT – STATUS OF INTERNAL AUDIT 
RECOMMENDATION S – WT/BFA/W/472  
7.1.  The Head of the Office of Internal Oversight  (OIO)  informed the Committee that there had 
been notable progress in the implementation of audit recommendations  for the WTO Secretariat , 
with 83% of these recommendations implemented, 14% in progress and only 3% still open.  
7.2.  This year, the OIO also included in  its report the status of implementation of 
recommendations made in the Trade -related Technical Assistance evaluation report, proposed by 
an external evaluation company (Sanaa  Consulting ) in 2016. The OIO highlighted that 75% of 
these recommendations have been implemented.  He commended the Director of the Institute of 
Training and Technical Cooperation ( ITTC) and the Chief of the Strategic Planning, Monitoring and 
Evaluation Section , for their good work.  
7.3.  The Head of the OIO  invited the Committee Members to take a copy of a brochure  containing  
key information on  the Office of Internal Oversight, which was available in the meeting room.  
7.4.  Responding to a question on the scope of audits, the Head of the OIO  said that the mandate 
of the office covered any area and  that, given the limited resources, a risk -based approach was 
used to prioritize the areas of focus. He said that Procurement is part of the focus for 2019 and 
has been included in the audit plan for this year . He further mention ed that a large part of 201 8-
2019 had been focused on investigations.  
7.5.  A Member stated that her delegation attaches great importance to the oversight function at 
the WTO.  
7.6.  A Member asked a question pertaining to recommendation 26  (Sick Leave management) , 
to which the Head of the OIO  said he would set up a meeting with the delegation to have a 
detailed discussion.  
7.7.  A Member congratulated the Trade -related Technical Assistance team and their Director for 
their work. He expressed his delegation's gratitu de, as a beneficiary  of technical as sistance,  and 
said that his delegation is available to help in any way.  WT/BFA/ 178 
 
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  7.8.  Another Member thanked the ITTC team for their hard work and contributions. He said that 
his delegation wanted to see Trade -related Technical Assistance continue to succeed.  
7.9.  The Commi ttee took note of the report.  
8  STATUS OF IMPLEMENTATIO N OF THE EXTERNAL AU DIT RECOMMENDATIONS - 
WT/BFA/W/47 7 
8.1.  An Official from the WTO Secretariat update d the Committee on the status of 
implementation of external audit recommendations, as at 28  February 2019, noting that a full 
report would be prepared by the External Auditors in time for the meeting of the Committee in 
June 2019. He stated  that 85% of the recommendations were closed and 15% were in progress. 
He highlighted that , of the audit re commendations for 2017 and prior years, 98% were closed.  
8.2.  The Committee took note of the report.   
9  OUTSTANDING CONTRIBU TIONS FROM MEMBERS AN D OBSERVERS  - 
WT/BFA/W/473  
9.1.  An Official from the WTO Secretariat introduced the subject by stating that the contributio ns 
received from Members for 2018 were higher than those that had been received in 2017 and were 
in line with the 2016 receipts.   
9.2.  Turning to contributions from Observers, the Official from the WTO Secretariat indicated 
that the level  of contributions  for 2018 was more or less the same as that in 2017.  She said that  
there  were 1 3 Members under administrative measures as at 31 December 2018 , with a total 
amount outstanding of CHF 7.9 million . The details are as follows : 
o Four Members were under Category I: Belize, Congo, Suriname and Uganda.  
o Three  Members were under Category II: Antigua and Barbuda, Cameroon and Guinea.  
o Six Members were under Category III: Burundi, Chad, Guinea -Bissau, Niger, Sierra 
Leone and the Bolivarian Re public of Venezuela .  
 
9.3.  Three Observers were under administrative measures as at 31 December 2018 , with a total 
amount outstanding approximating CHF 646,000 . They are:   
o Somalia under Category I; and  
o Libya and Sao Tomé and Principe under Category III.  
 
9.4.  The s tatus of Members and Observers under administrative measures as at 20 March 2019 
was such that there were more under Category I compared to as at 31 December 2018, as is the 
norm for the first quarter of any year. Notable changes  for Members  were: 
o the remo val of the administrative measures for Belize ;  
o the migration of Guinea from Category II to Category II I; and  
o the reinstatement of Djibouti and The Gambia under Category III.   
 
9.5.  The changes for Observers were : 
o the addition of Comoros, South Sudan and Uzbekistan to Category I; and  
o the move of Somalia from Category I to Category II.  
 
9.6.  The Committee on Budget, Finance and Administration makes the following recommendation 
to the General Council:  
9.7.  The Committee invites the General Council to urge Members and Observers under 
Administrative Measures to liquidate their arrears.  WT/BFA/ 178 
 
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  10  Q4 2018 EXTRA -BUDGET ARY FUNDS REPORT – PROVISIONAL - WT/BFA/ W/475  
10.1.   An Official from the WTO Secretariat explained that this report is provisional, as is the case 
with the reports for all other quarters. He indicated that the final report for the year ended 31 
December 2018 would be audited and submitted in June  2019. He noted that there is possible 
variation in some of the figures that will be in the final report, compared to the provi sional ones.  
10.2.   The Official thanked the Members that had contributed to the various Trust Funds. He 
indicated that contributions to the Global Trust Fund have been declining over the past few years 
and that for four of the last five years, annual expenditure  was higher than annual contributions. 
He informed the Committee that the ITTC is working on the new Technical Assistance Plan. He 
said that it is desirable that the Global Trust Fund revert to a positive annual cashflow situation.  
10.3.   The Official fr om the S ecretariat observed that , of late, there has been a change as there 
have been newer Trust Funds with a defined scope, and thus outside the Global Trust Fund. He 
made mention of the WTO Secretariat's Guidelines for the Receipt and Notification of Voluntary 
Fund Contributions, which had recently been circulated to Members, for their information. He 
closed by saying that new voluntary contributions are expected in the coming months.  
10.4.   The Committee took note of th e report.  
11  DRAFT POLICY FOR THE  MANAGEMENT OF THE WORKING CAPITAL FUND  - 
WT/BFA/W/47 4 
11.1.   An Officia l from the WTO Secretariat introduced the updated draft policy, saying that it 
took the comments that had been received from several delegations at the end of 2018,  into 
account . She stated  that the purpose of the policy is to describe the process to be followed in the 
management of the Working Capital Fund, the asset allocation metrics, and governance. She said 
that the key considerations are capital preservation, liquidity of capital and the expected return 
(taking the portfolio  structure  into account). She presented a highly tentative asset allocation 
range, noting that the actual asset allocation would be determined in consultation with an 
Investment Advisor, since the WTO Secretariat does not have the required skills and systems in -
house.  
11.2.   On governance, the Official of the Secretariat said that the CBFA would be the body 
responsible for financial oversight and that there would be regular audits by the internal and 
external auditors.  
11.3.   The Official of the WTO Secretariat outlined  the proposed next steps , which are : the 
selection process for an Investment Advisory firm; the constitution of a working group of the 
CBFA to oversee the  selection  process  and the finalization  of the policy ; the submission of an 
asset allocation proposal to a future meeting of the CBFA; and a recommendation of the policy 
and asset allocation to the General Council.  
11.4.   A Member expressed a concern that the costs of external service providers may be  high 
and wondered how they could be kept under control.  
11.5.   A Member asked whether the sequence was logical, saying that the approval of the policy 
by the General Council could come before the selection of an Investment Advisory firm . An Official 
from the Se cretariat indicated that the Investment Advisory firm may come up with suggestions 
to modify some parts of the policy, specifically those related to the target asset allocation.   
11.6.   Another Member suggested that the policy should take account of the long-term liabilities 
of the organization. She also asked why the credit rating of the b onds that could be invested in 
is also including relatively  lower graded bonds.   
11.7.   An Official from the Secretariat responded by saying that under the current market 
conditions , characterized by  low interest rates and negative interest on cash in Swiss Francs, 
bonds with a high credit rating offer very low interest  rates. In view of this, positive returns could 
realistically only be found in bonds of a lower credit rating. She fur ther said that negative interest WT/BFA/ 178 
 
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  in itself should  not be the  key measure and that of more importance is the difference between 
interest rate and inflation.  
11.8.   Referring to paragraph 5.2, a Member observed that the suggested service providers are  
many  (consultants, investment managers, investment advisors etc.).  He further asked what kind 
of consultants are referred to in paragraph 5.2 and how these are different from investment 
advisory firms as mentioned in paragraph 5.3. The Member further said that  international laws 
should be followed when managing the Working Capital Fund and asked if Environmental, Social 
and Governance (ESG) will be considered when services are outsourced to an Investment 
Advisory firm . 
11.9.   In response, an Official from the WTO Secr etariat clarified  that the word "consultants" 
encompasses investment advisory firms. She said  the intent was to show that there are several 
services that would have to be outsourced , as they require specialized skills.  As examples, she 
cited Investment Advisors and Investment Managers. On ESG, another Official of the WTO 
Secretariat 's respon se was that ESG in investments is a relatively new area and that it has to be 
considered taking other elements into account. He said this would be discusse d with the 
Investment Advisory firm.   
11.10.   A Member expressed the view that the policy  for the Management of the Working Capital 
Fund sound s like a contradiction in terms. He asked what the linkage between the Working Capital 
Fund and the financial deficit is. He expressed  a concern that if funds are locked in, this may have 
an impact on the budgetary needs of the organization.  
11.11.   In responding, an Official from the Secretariat said that the asset allocation would take 
anticipated cashflows and needs  into account , striking a balance between asset classes that can 
be readily liquidated and those that , generally , have a longer term.  Another Official of the WTO 
Secretariat said that the budgetary surplus is derived from the difference between the total 
budget and total  expenditure, whereas the financial deficit is driven by long term liabilities.  
11.12.   A delegat e made reference to paragraph 5.3 and asked whether ESG screening was 
foreseen and how it would likely be included in the specifications for the procurement process. 
The delegate also stated that transparency is of great importance, and as such, queried whether 
there would be a requirement for the investment manager to disclose how much of the assets 
are invested in ESG . She cited the UN Principles for Responsible Inve stment (UNPRI), stating that 
this has a framework for disclosure.  
11.13.   Several Members added that there should be cost containment and that alternative 
approaches should be considered during the considerations on outsourcing some of the services.  
11.14.   A Member said that there is a need for a well -established governance structure. Referring 
to paragraph 5.6 of the document, he wondered whether the frequency of review proposed (6 
months) is sufficient.  
11.15.   A Member asked for a further extension of the prohib ited investments in paragraph 2.4, 
to include other investments such as Bitcoins.  
11.16.   Following on from the round of comments, questions and answers, the Chair person  said 
that it is evident that discussion in a smaller format is needed. He asked those Members that are 
interested in participating in a working group on this topic to convey this to the WTO Secretariat  
and stated that a revised version of the document would be presented at a future meeting of the 
CBFA.   
11.17.   The Chair person  announced that the next CBFA  meeting will be on 30 April  2019. He then 
thanked the participants and closed the meeting.  
 
 
 
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