RESTRICTED  
  
WT/BFA/ 197 
 
3 August 2021  
(21-5965) Page: 1/19 
Committee on Budget, Finance and Administration    
 
REPORT OF THE MEETING HELD ON 12 JULY 2021  
The Committee on Budget, Finance and Administration (CBFA) met on 12 July 2021. Her Excellency 
Ambassador Bettina Waldmann  (German  Ambassador  to the WTO ), welcomed Members to the 
meeting.  
1  ADOPTION OF THE AGENDA  
1.1.  The Chair welcomed Members to the meeting and indicated that, in view of the lengthy agenda, 
which together with an annotated agenda was issued on 2 July, the meeting would continue in the 
afternoon. The Chair added that a revised ag enda had subsequently been released on 6 July, with 
the reference WT O/AIR/BFA/46/Rev 1, together with a revised annotated agenda bearing the 
reference JOB/BFA/54/Rev 1.  The revised agenda included an item which had been inadvertently 
omitted from the initi al agenda, specifically, "Proposed Revision of the Financial Regulations of the 
World Trade Organization."  
1.2.  The Chair proposed the addition of an oral update, by the Secretariat, regarding structural 
review under "Other Business". She said this is an import ant issue for Members. She added that the 
results are expected to be submitted to the Director General in early August. The agenda, as set out 
in document WT O/AIR/BFA/46/Rev 1, and including the item proposed for  "Other Business" was 
adopted.  
2  ORAL REPOR T FROM THE CHAIR OF THE CBFA ON ONGOING WORK  
2.1.  The Chair updated the Committee on recent and ongoing activities. She mentioned that the 
Working Group on Trust Funds had met on 6 July and that Ms. Goujon  would provide further details 
regarding the progress that has been made under the next agenda item.  
2.2.  The Chair reminded th at she had offered delegations the opportunity to consult with her 
regarding the possibility of locking in the Financial Regulations that had been ag reed in 2019 , 
specifically, 4, 17, 26, 27, 29, 37, 38 and 42. She noted that this topic was on the agenda of the 
meeting.  
2.3.  The Chair noted that India has proposed changes to Financial Regulation 19, which proposal 
would be discussed under agenda item L. She  added that an agreement could be within reach. She 
added that if agreement is reached on the revision to Financial Regulation 19, it could be included 
in the package of Financial Regulations that will be presented to the General Council for approval in 
October.  
2.4.  The Chair said that there is the question of a possible revision of Financial Regulation 23 and 
that her impression is that such a revision may require more time for discussions.  
2.5.  The Chair informed the Committee that she had met with Mr. Metzger, fr om the French Cour 
des comptes, in the previous week and had a constructive discussion regarding governance, the role 
of Member States and the Secretariat in the context of external audits. She added that Mr. Metzger 
has offered to return to Geneva to cont inue the exchange and said if Members have a specific 
questions or comments that they would like to direct to the Cour des comptes, she can forward them 
to Mr. Metzger. She added that, in the interest of transparency, she will relay any questions and 
answe rs to the Committee. She noted that the External Auditors would present a report under 
agenda item E.  WT/BFA/ 197 
 
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  2.6.  Before moving to the next agenda item, the Chair said she is always available and would 
appreciate hearing Members' views regarding the priorities going f orward as well as any concerns 
they may have.  
3  ORAL REPORT FROM THE CHAIR OF THE WORKING GROUP ON COHERENCE IN THE 
ESTABLISHMENT AND MANAGEMENT OF WTO TRUST FUNDS  
3.1.  The Chair of the Working Group on Trust Funds said it had been just a little over a week since 
her last update to the Committee. She said during this time the working group had one meeting in 
which they discussed possible outcomes of their work.  
3.2.  She said she had continued to hold consultations with Officials of the Secretariat and bilateral 
meetings with members of the working group who had further comments and questions. She planned 
to circulate a draft outline and preliminary text, by 19 July, as a basis for further discussion and will 
further circulate a timeline to give structure to the com ing work.  
3.3.  She concluded by saying her aim is to submit a progress report to the CBFA by 30 July.  
3.4.  The Committee took note of the comments and the Chair said the matter would be returned to 
at the next meeting of the CBFA.  
4  WTO 2020 FINANCIAL PERFORMANCE REPO RT – WT/BFA/W/5 60 
4.1.  In presenting the budget part of the 2020 Financial Performance Report, an Official of the 
Secretariat noted that 99% of the income of the WTO was constituted of Member contributions and 
1% from miscellaneous income. At the end of 2020, t he received miscellaneous income surpassed 
the projected amount by CHF 3 .3 million,  mainly due to the reimbursement of surplus from ITC for 
the biennia 2014 -2015 and 2016 -2017 and the release of provisions for invalidity.  
4.2.  The loss on foreign exchange is du e to the evolution of the US Dollar, Euro and Pound Sterling 
against the Swiss Franc in 2020. The receipts under "Other" mainly comprise of reimbursements 
from the loss of earnings , insurance for staff on long -term sick leave and the contribution to the 
administrative costs of the WTO  by the EIF.  
4.3.  The Official of the Secretariat further stated that the overall expenditure rate for 2020 was 
94% of the budget. The budgetary savings were mainly from staffing resources, with a compensatory 
effect between undersp end on staff expenditure and overspend on temporary staff. Driven by the 
pandemic restrictions, budgetary savings were also realized from general services due to a decrease 
in the overall building maintenance expenses such as security , cleaning costs , travel and hospitality.  
4.4.  The budget for financial  expenditure was exceeded due to the negative interest charged by 
banks, whereas the overspend of the implementing partners was due to more than forecast  sessions 
at the ILO Administrative Tribunal and provision for legal damages. The budget for Contributions to 
ITC & Special Reserves was exceeded due to an allocation to the Building Renovation Fund.  
4.5.  Another  Official of the Secretariat presented the WTO F inancial Statements for 2020, focusing 
on the Statement of F inancial Position and the Statement of Financial Performance. Noting that the 
overall budgetary savings for 2020 were CHF  11.8 million, she emphasized that this was only a 
budgetary result and that, after taking elements mandated by IPSAS such as the actua rial costs of 
After Service Health Insurance (ASHI) and pension into account, the financial result for 2020 was a 
deficit of CHF  37.1 million.  
4.6.  Presenting the Statement of Financial Performance, the Official of the Secretariat explained 
that the decrease in total revenue was mainly derived from the lower activity in technical assistance. 
She also explained that whilst the total expenses remained stable when compared to prior year s, 
the 2020 figure is the net result of a significant reduction in tr avel expenses countered by an increase 
in actuarial costs.  
4.7.  Presenting the Statement of Financial Position, the Official of the Secretariat explained that the 
growth of assets is mainly driven by the growth in the pension assets due to  positive market retur ns. 
She added that the significant growth in liabilities is mainly driven by the pension and ASHI benefits WT/BFA/ 197 
 
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  projected for the long-term in compliance with IPSAS accounting treatment which in 2020 increased 
mainly due to the discount rate chang ing from 1.8% to 1.7%.  
4.8.  The Official of the Secretariat further explained that in accordance with IPSAS, the receivables 
from assessed contributions from both Members and Observers are reduced by a provision for 
contributions in arrears. She further explained that whilst  voluntary contributions in 2020 decreased 
slightly year on year, the expenses incurred from Trust Fund activities significantly decreased 
because  of the pandemic.  
4.9.  A Member thanked the Secretariat for presenting the 2020 Financial Performance Report and 
inquired whether the increasing long -term liabilities for pension and ASHI ought to be a concern for 
the Members. Several other Members echoed the concern on this matter and whilst acknowledging 
discussions on this topic were held in the past, it was suggest ed dialogue be restarted.  
4.10.  Responding to the questions and comments, an Official of the Secretariat noted that the 
deepening of the financial deficit is a reality and that it will continue to worsen if no actions are 
taken. The Official further added that t his had also been a finding by the E xternal Auditor s several 
years before and had been taken off as an open recommendation, in 2017 , when working groups 
were set up in a bid to address the issues raised by the External Auditors. However, a  proposal to 
set aside a portion of the accumulated surplus to cover the ASHI deficit was not favored by all 
Members , and with no other results from the working groups, the External Auditor finding remained 
effectively unaddressed . She urged the French  Cour des comptes  to consider the matter in a future  
audit exercise. 
4.11.  Another Official of the Secretariat clarified that  the WTO Pension Plan  Management Board is 
monitoring the long -term assets and liabilities  and that  a different actuarial valuation is used relative 
to that used for  the financial statements. He further added that no similar monitoring mechanism is 
in place for the ASHI liability, nor is there an asset base created to offset the long -term ASHI liability . 
4.12.  A Member raised the following points: highlighted her delegation's support for maintaining a 
Zero Nominal Growth budget; inquired if the 2020 was the  10th or 11th year of this budget approach; 
regarding  over-expenditure on the short -term staff said that it would be prudent to align budget 
estimates with historical data ; inquired if the expenditure under the Panellists ' & Appellate Body 
Members ’ Fees budget line includes only the  monthly retainer fees  for expenses associated with 
Appellate Body members,  and added that the use of the term "Panellists " is misleading ; requested 
an additional explanation for the over -expenditure on the implementation partners budget line and 
made the observation that despite the same budget line being overspent in 2019, the proposed 
2022-2023 budget line does not incorporate the over -expenditures ; and inquired of the accounting 
rationale for the unspent portion of Appellate Body Operating Fund of CHF 2,000,000 being recorded 
as miscellaneous income for 2020.  
4.13.  Responding to the questions, an Official of the Secretariat made the following r emarks: 
confirmed that 2020 is the 11th year of Zero Nominal Growth  of the budget;  added that the over -
expenditure on the implementation partners budget line in 2020 was driven by the unforeseen 
provision of several legal cases that were brought to the ILO  Administrative Tribunal ; confirmed that 
the expenditure under Panellists ' & Appellate Body Members ' Fees budget line refers to the monthly 
retainer fees.  
4.14.  Another Official of the Secretariat added that Financial Regulation 18 stipulates that all income 
other than contributions payable by Members, interest earned by investing contributions received 
by the Secretariat and income derived from investments of the Working Capital Fund shall be classed 
as miscellaneous income. It is for this reason that the unspen t balance in the Appellate Body 
Operating Fund is recorded as miscellaneous income.  
4.15.  A Member raised the following points: inquired if the receipts from Trust Funds under 
miscellaneous income related to 10% out of the 13% overhead fee charged on direct expe nditure 
incurred by Trust Funds; inquired about the approval procedures for transfers between budget 
sections ; asked if commitments in para. 2.26 were made on an annual basis or if they could extend 
to several years; inquired about the reason behind the around 10% expenditure increase in 2020 
compared with 2019  in the Administering Agreed WTO Rules Output Chapter ; registered the 
longstanding concern regarding the over -expenditure on short -term staff and reiterated the concern WT/BFA/ 197 
 
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  over the repeated factual mistake made by the Secretariat to present the two projects  under China 
Development Cooperation Research Initiative  as Trust Funds, which should be avoided and might 
mislead other Members. The Member reiterated that China Development Cooperation Research 
Initiative was one Trust Fund, while the nature of the projects under the  Initiative  were purely 
projects, which shou ld not be regarded as Trust Funds. The Member requested a revision of session 
3.1.2.11 of the document WT/BFA/W/560 to reflect the true nature of the projects  under the 
Initiative. To  clarify, the Member added that the word 'project' should be added to the  name of the 
two projects  shown under the China Development Cooperation Research Initiative on Table 9 . 
4.16.  An Official of the Secretariat responded as follows: the commitments are paid on a yearly 
basis, but future periods are disclosed as per t he Financial Regulations ; and that the over -
expenditure in Administering Agreed WTO Rules was driven by increased activity in several 
negotiations areas such as trade in goods, agriculture, import licensing and intellectual property.  
4.17.  With reference to the budget transf er question, an Official of the Secretariat noted that 
Financial Regulation 21 allows the Director General to transfer funds between sections on the 
condition that there is no express statement in the budget document that precludes  any given  
transfers.  
4.18.  Another Official of the Secretariat clarified that the miscellaneous income derived from Trust 
Funds relates to the 10%  of expenditure in the Programme Support Fund that is reimbursed to the 
regular budget , on an annual basis . He added that the concern s and s uggestions  regarding the China 
Development Cooperation Research Initiative reference s in the Financial Performance Report  will be 
addressed  and apologized for the errors made . 
4.19.  An Official of the Secretariat said that the structural review would hopefully c over 
recommendations for addressing the over-expenditure on temporary assistance.  
4.20.  With regards to the COVID -19 expenditure and savings, a Member inquired whether there is 
clarity over which expenditure will become permanent post COVID -19 and which expendit ure will 
return to pre COVID -19 amounts, naming Interprefy costs as an example. An Official of the 
Secretariat noted that COVID -19 implications would  be better noticed in future years. Taking the 
example of virtual platforms, for which a tender is to be un dertaken, the increased number of 
meetings requires a recurrent and increased need for interpretation. Travel cost implications remain 
too uncertain to be assessed for the time being.  
4.21.  A Member highlighted that , whilst from an accounting perspective the bud getary savings may 
be seen as positive, from a strategic perspective it may mean that not all objectives of the 
Organization have been met. He also commented on the increasing amount of outstanding 
contributions in past years and said the Committee ought to address  them. Another Member shared 
the concern with regards to the outstanding contributions and referred to the Chair of the Committee 
for dialogue to be started on the topic. The Chair acknowledged the request and agreed to revert  to 
the Committee on how dialogue between the Members can proceed further.  
4.22.  A Member requested additional time before the agenda item can be closed so that the answers 
to the questions discussed in the meeting can be communicated back to their capital.  
5  REPORT OF THE INDEPENDENT EXTERNAL AUDITORS ON THE AUDIT OF THE FINANCIAL 
STATEMENTS OF THE WORLD TRADE ORGANIZATION FOR 2020 – WT/BFA/W/561  
5.1.  The Chair said the auditors would present their report and recommendations. She drew 
attention to the part of the r eport regarding the reimbursement of taxes paid by staff subject to 
taxation in the United States. She added that the item would be substantively covered under agenda 
item I.  
5.2.  Mr. Hervé -Adrien Metzger, the Director of the External Auditor of the WTO Externa l Audit, from  
the French Cour des comptes, and Director of the external audit of the WTO, expressed a sense of 
honour to be presenting the results of his entity's first financial audit of the WTO, in accordance with 
the mandate that was given by the Genera l Council on 10 December 2019 the Engagement Letter 
that was signed by the French Cour de comptes and the WTO.  WT/BFA/ 197 
 
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  5.3.  He apologized for the fact that Mr. Moscovici, First President of the Cour des comptes, who had 
initially planned to present the Auditors' Report , had been taken up by other obligations.  
5.4.  At the outset, Mr. Metzger informed the Committee of the great difficulty with which the audit 
team and the WTO Secretariat teams were confronted in executing this mandate under the 
conditions created by the pandem ic. He added that the constraints imposed on travel ha d required 
that the audit be conducted remotely. He emphasized that this was generally less efficient and that 
provision of access to documents through secure virtual and electronic means had been facil itated 
by the WTO Secretariat.  
5.5.  Finally, after immense effort from both parties, the audit was done in unusual circumstances , 
which had not significantly affected the provision of reasonable assurances that support the delivery 
of an opinion on the Organiza tion's financial statements.  
5.6.  He concluded by saying that the French Cour des comptes provides an unqualified opinion on 
the financial statements for the year ended 31 December 2020.  
5.7.  Mr. Metzger presented the broad lines of their audit approach and the way they will be making 
reports to Members. He noted that their approach did not depart much from that employed by their 
predecessors, the German Board of Auditors. He said the transition between the two entities had 
been harmonious and effective.  
5.8.  Mr. Metzger said their audit reports are more streamlined and that they used a risk -based audit 
approach. Only essential points touching on the quality of financial reporting or the management of 
accounting are included in the Auditors' Report. He added that they focu s principally on verifying 
that the financial statements submitted for the Committee's examination and the General Council's 
approval comply with IPSAS in terms of pertinence, faithfulness, comprehensibility, comparability 
and verifiability. Mr. Metzger sa id these aspects informed the first three recommendations which 
relate to the presentation of the financial statements.  
5.9.  Mr. Metzger said the French Cours de comptes' mandate does not include the expression of an 
opinion the budgetary performance as this wa s not a formal part of the financial statements. He said 
that only the CBFA can decide to include this aspect.  
5.10.  Regarding the system of internal controls, Mr. Metzger said informal customary practices 
cannot effectively respond to the need of the Organizati on to assure faithfulness and reliability of 
the internal control system. He said the WTO has taken steps in the right direction but said more 
has to be done to first formalize the internal control framework, which has been a work -in-progress 
for four year s, as well as structures and procedures and their regular evaluation as well as that of 
the responsible Divisions. He called for the most senior people in the Organization, including 
Directors, to give impetus to the process and assure the implementation o f the internal control 
framework once complete.  
5.11.  He said that each year the Director General must provide the External Auditors with a letter 
of attest ation that there is an efficient internal control system in place.  
5.12.  Mr. Metzger said their follow up on aud it recommendations showed a satisfactory 
implementation rate of 70%, though this could be improved to be in line with current norms. 
However, he noted that all the recommendations that are still open concern the management and 
assessment of risks pertainin g to disability  thus requiring a global approach.  
5.13.  The performance audit implementation rate of 71% is more satisfactory considering that such 
implementation is often complex and touches on changes that sometimes require more time.  
5.14.  Mr. Metzger drew the Comm ittee's attention to paragraph 7 of the Auditors' Report, stating 
that the External Auditors fundamentally report to the governing organs and that, even  though 
implementation thereof is intended for the Secretariat, it is for these organs ensure this is do ne and 
determine if a recommendation can be adopted or not. He added that it is understood that before 
any recommendation is finalized, there is open dialogue between the Secretariat and the External 
Auditors and relevant comments are factored in. Where, s ubsequently, the Secretariat contends any WT/BFA/ 197 
 
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  recommendation, it is for the Secretariat to present its objections to the Committee, which will make 
a call on the matter.  
5.15.  The regulations of the WTO Pension Plan do not foresee the Committee playing any role in 
the review of the financial statements. The governing organs, in this regard, are the WTO Pension 
Plan Management Board and the General Council.  
5.16.  Insofar as the WTO Pension Plan's commitments appear in the WTO financial statements, in 
accordance with IPSAS, and considering that the WTO guarantees the sustainability of the pension 
plan, there seems to be an inconsistency in the financial governance. The question of the expertise 
of the CBFA prior to the examination of the WTO Pension Plan's financial statement s by the General 
Council ought to at least be raised. Without making any recommendation, the External A uditors 
present this perspective for the CBFA's consideration . 
5.17.  Mr. Metzger said the only formal aspect that was deemed mentionable regarding the audit of 
the WTO Pension Plan was that, since the creation of the WTO Pension Plan in 1990 , the accounting 
framework on which its financial statements are prepared is based on its internal regulations. These 
are very succinct and do not subscribe to any kn own accounting standards. While they may have 
been sufficient 30 years ago, they have progressively been surpassed by the times both conceptually 
and in terms of their methodology, in view of the normalization of national and international 
accounting stand ards. If the officials and accountants of the pension plan have, over  time, developed 
a practice, this has remained largely customary and repeated each year without clear, exhaustive 
and explicit principles and methods being adopted for the rendering of th ese accounts.  
5.18.  Even in the absence of accounting norms applicable at an entity, financial statements must 
systematically detail the methods and generally accepted principles and methods. As a fundamental 
point, the standards used must be expressly approved by the governing body (in this case the WTO 
Pension Plan Management Board).  
5.19.  While the audit of the WTO Pension Plan's financial statements could be conducted with 
reference to customary accounting principles and did not lead to any observations, due to the  lack 
of an explicit reference to an accounting framework officially endorsed by the WTO Pension Plan 
Management Board, the External Auditors initially considered refusing to deliver an opinion because 
an audit opinion has to refer to the accounting framew ork supporting the preparation of financial 
statements.  
5.20.  It was emphasize d that the officials of the pension plan showed a degree of cooperation. In 
the end, various elements of practices and methods were consolidated into a single document to be 
submitted for approval by the WTO Pension Plan Management Board. In view of this, and focussed 
on substance over form, the External Auditors agreed to deliver an unqualified opinion on the 
financial statements.  
5.21.  Before concluding, Mr. Metzger said it is undoubtedly n ecessary that  soon the most recent 
developments in accounting standards applicable to pension schemes  must be taken into account . 
The WTOPP can, in line with the adoption of IPSAS by the WTO, consider adopting the planned 
standards for pension schemes, whi ch are still under consideration by the IPSAS Board.  
5.22.  A Member asked whether the deviations from IPSAS 1 regarding the presentation of the 
financial statements, as indicated in the first recommendation with a priority of 1, pose a risk to the 
organization a nd if they are typical. The Member inquired whether it was a normal situation for an 
international organization not hav ing a formal report on its internal control performance.  
5.23.  Mr. Metzger responded that this is common amongst other international organizati ons and 
not unique to the WTO. He added that Internal Control Framework has never been approved.  
5.24.  The Member asked for more elaboration regarding the recommendation for regular testing of 
IT systems to assess the business continuity aspects  and whether this  regular testing will be 
conducted  by regular staff or outsourced to eligible IT companies . The response from Mr. Metzger 
was that it is good practice to test systems to ensure their readiness should a  need for their triggering 
arise.  WT/BFA/ 197 
 
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  5.25.  The Member expressed appreciation for the text related to staff members chargeable to US 
taxes, adding that the report tried to give a clear background on the matter. The Member added 
that her delegation would make further comments later as the topic was to be discussed later  in the 
agenda. At this stage, the Member asked, with reference to paragraph 81, what the External 
Auditor's meant when stating that it would be advisable that the Secretariat requests a formal 
decision from the Member States in order not to indefinitely de fer the disputed amounts. The Member 
also asked what paragraph 82 implied in stating that since the transactions in question are not 
significant , the opinion of the External Auditors is unlikely to change.  
5.26.  A Member noted that the External Auditors have given an unqualified opinion and 
congratulated the Secretariat on its hard work and efforts to achieve this result. Referring to 
paragraph 30, the Member said their delegation is concerned at the increase of ov er 16%, over last 
year, in pension fund and after service healthcare expenses and the significant deficit resulting from 
this. The Member also cited the related 9% increase in net liabilities to over CHF 830 million in 
paragraph 34 and the long -term trend of this as being unsustainable. The Member urged the 
Secretariat's management to take note of the deteriorating long -term financial situation of the 
Organization as part of any structural review evaluation and consider how to address this. The 
Member added  that any expansion of the Secretariat would further exacerbate this financing 
problem.  
5.27.  A Member said the comment that Mr. Metzger had made regarding oversight of the WTO 
Pension Plan as being more for the General Council rather than the CBFA 's requires  reflection . This 
would  ensure that there is coherence, particularly the issue of long -term liabilities, amongst others.  
5.28.  Mr. Metzger said that the budgetary performance could either be subject to a distinct set of 
financial statements that would be annexed or that a comparator of actual and budget be 
incorporated into the financial statements. H e added that, were this to be the case, the External 
Auditors would be fully prepared to audit the Financial Performance Report to ensure that it is 
transparent, reliable and comprehensive. He added that the current approach does not present any 
particular  risk to the Organization.  
5.29.  Mr. Metzger said it would be advisable to request the formal decision from Members on the 
options suggested by the External Auditor s regarding the variance in US taxes. He said Members 
would have to deal with this from a purely a ccounting perspective. He further indicated that any 
amount lower than a given threshold is seen as insignificant from an audit point of view. He said, 
considering that the annual budget of the WTO approximates CHF 200 million, the amount related 
to US tax es is not material.  
5.30.  A Member referred to Mr. Metzger's statement that the WTO Pension Plan financial statements 
are based on obsolete accounting standards and that the need for these to be updated. The Member 
said, however, the recommendations that the Ext ernal Auditors had made are basically procedural 
in nature. The Member enquired whether the External Auditors will be making a procedural 
recommendation regarding the updating of the accounting standards for WTO Pension Plan 
statements and be presenting th is to the CBFA in , say,  2022; and something more substantial on 
whether reporting ought to be first to the CBFA or directly to the General Council. The Member noted 
that in either case the reporting is to Members.  
5.31.  Mr. Metzger responded that the External Au ditors have made an explicit recommendation 
regarding an accounting framework for the WTO Pension Plan. He said that the External Auditors 
could not premise the obsolescence as fact but rather how the concepts and the structure can be 
improved. In fact, th e framework had not been considered by International Boards before, but it 
was something that was now being considered and by the IPSAS Board which would focus on it in 
2022, with a view to releasing a specific standard of reviewing pension scheme accounts . He added 
that the work done by the WTO Pension Plan Secretariat is very similar to the concepts pursued in 
the Swiss Pension scheme standard or the international pensions scheme standard and asserted that 
the approach needed to be updated to internationa l norms.  
5.32.  Responding to the latter question, Mr. Metzger said the External Auditors do not have a 
mandate for assessing the relevance or wisdom of the decisions made by the WTO Pension Plan 
Management Board. What the External Auditors can do is to raise awareness or alert the WTO 
Management Board to problems concerning business sustainability, and there are a lot of problems WT/BFA/ 197 
 
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  of this nature that pension schemes in the public sector face. He cited the example of entities often 
not having enough resources to fi nance the pension schemes in the long term. What also happens 
often in national pension schemes is that there is a guarantor and the guarantor is the State and for 
the WTO Pension Plan , the guarantors are the countries that are Members of the WTO. What thi s 
means is that if one day at once everyone retires at the same time and the Organization were closed 
down, pensions would have to continue being paid. What ought to be of interest to Members is the 
annual financing of the liabilities of the WTO Pension Pl an. Mr. Metzger said the External Auditors 
will probably look at this next year, from the perspective of the sustainability of the WTO Pension 
Plan. 
5.33.  On most recommendations being procedural, Mr. Metzger said the first year of the audit has 
been difficult d ue to the pandemic and travel restriction s and that it was very important for the 
External Auditors to take stock of conformity.  
5.34.  In view of comments made earlier on by a Member regarding the need to provide responses 
to her capital, the Chair proposed that  the topic be returned to at a subsequent meeting after the 
Summer break.  
6  SECRETARIAT'S RESPONSES TO THE EXTERNAL AUDITORS' RECOMMENDATIONS – 
WT/BFA/W/563  
6.1.  An Official of the Secretariat stated that the Secretariat has accepted all the recommendations 
and h as started working on their implementation.  
6.2.  The Official of the Secretariat emphasized that the budgetary performance is, in fact, a major 
section of the Financial Performance Report and that the Secretariat would assess how best to 
incorporate relevant el ements into the financial statements. She highlighted that the financial 
statements are the only part of the Financial Performance Report that is audited.  
6.3.  The Chair encouraged the Secretariat to implement the recommendations as laid out in the 
Auditors' Re port, within a reasonable time frame and said the Committee will receive regular updates 
from the Secretariat.  
7  REPORT OF THE INDEPENDENT EXTERNAL AUDITORS ON THE FOLLOW -UP OF 
PREVIOUS EXTERNAL AUDITORS' RECOMMENDATIONS – WT/BFA/W/562  
7.1.  Mr Hervé -Adrien Metzge r, a representative of the External Auditors, presented the essence of 
the External Auditors' Report on the follow up of previous External Auditors' recommendations.  
7.2.  With regards to the implementation of the External Auditors ' recommendations from previous 
financial audits, he noted the implementation rate of 70% and sa id that though this was lower than 
the norm, it was understandable  given that the open recommendations relate to the management 
and accounting of disability risk  which can be aggregated into one topic.  
7.3.  With regards to the implementation of the External Auditor s' recommendations from previous 
performance audits, he informed the Committee  that the implementation rate of 71% is satisfactory 
given the implementation o f performance audits recommendations is often more complex and 
involves changes that can be structural in nature and therefore requiring more time.  
7.4.  He noted that as the audit recommendations are intended for the benefit of the governing 
bodies, the Secreta riat should present its objections to the CBFA before it takes a final decision on 
the rejection of a recommendation from the External Auditor. He further added that objections 
remain rare given the open and transparent communication between the Secretaria t and the 
External Auditors.  
8  STATUS OF PREVIOUS EXTERNAL AUDITORS' RECOMMENDATIONS AS OF JUNE 2021 – 
WT/BFA/W/566  
8.1.  An Official of the Secretariat noted the implementation of the External Auditors' 
recommendations are in progress , adding that they are well -articulated and justified.  WT/BFA/ 197 
 
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  9  COSTS INCURRED BY THE WTO ON REIMBURSING STAFF MEMBERS CHARGEABLE TO 
U.S. INCOME TAXES – WT/BFA/W/567  
9.1.  The Chair introduced the item by stating that it was included on the agenda at the request of 
the Chinese delegation. She recall ed the Committee had had brief exchange s on this matter at 
previous meetings  and that, pursuant to questions posed by the Chinese delegation, the Secretariat 
indicated that it would prepare a separate note to respond.  
9.2.  The Chair drew the Committee's attenti on to the fact that the subject is discussed in para graph  
4.5 of document WT/BFA/W/56 1 (the External A uditors ' Report)  and document WT/BFA/W/563 (the 
Secretariat's response s to the External A uditors ' recommendations).  
9.3.  An Official of the Secretariat gave  a summary of the relevant legal provisions relating to the 
reimbur sement by the WTO to staff members in relation to US taxes paid on WTO income.  The 
summary is reflected in document WT/BFA/W/567. The Official of the Secretariat recalled that Article  
VIII.4 of the Marrakesh Agreement provides that the privileges and immunities of WTO staff 
members include a tax exemption in relation to their WTO salaries and emoluments ; Staff Rule 
106.11 , which was adopted by WTO Members in 1998 , provides that "national inc ome tax on salaries, 
allowances  or grants paid by the WTO shall be refunded to the staff member by the WTO" ; and t he 
WTO Staff Regulations and Staff Rules do not stipulate any specific calculation method for tax 
reimbursement.  
9.4.  In December 2000, the WTO and  the United States entered into a Tax Reimbursement 
Agreement . Paragraph 2 of that Agreement provides that: "the United States shall reimburse the 
WTO, for each taxpayer , an amount not to exceed the tax that would be due if the specified 
categories of WTO income were the taxpayer's only income."  This reimbursement calculation method 
considers WTO income as the only income of the staff member. This method is referred to as "first -
income" method. This means that the amount of tax reimbursed is calculated as i f the WTO staff 
member received only the WTO income.  
9.5.  The Official of the Secretariat said that, f rom 2001 to 2003, the Administrative Tribunal of the 
International Labour Organization issued certain rulings on the method to calculate tax 
reimbursements. Th ese rulings refer  specifically  to other International Organizations , and not to the 
WTO. The ILO Tribunal considered that another reimbursement calculation method , referred to as 
the "last -income" method, should be used. Under this method, the reimbursemen t amount is the 
difference between the tax payable on the staff member's total income which includes exempt and 
taxable income and the tax payable on taxable income only. When compared to the "first -income" 
method, the "last -income" method results in a hig her reimbursement if a staff member has a certain 
amount of outside, non -WTO taxable income.  
9.6.  Since the 2004 fiscal year, the WTO Secretariat began to apply this "last -income" method in 
the reimbursement of US taxes paid by WTO staff members on their WTO in come. The Secretariat 
did so because Staff Regulation 1.1 provides that the WTO shall at all times act in full respect of the 
Staff Regulations and the applicable jurisprudence of the ILO Tribunal in its relations with staff 
members. The CBFA was informed of this action in 2006 through document WT/BFA/W/142.  
9.7.  A Member thanked  the Secretariat for having  prepare d the paper and  for introducing it.  The 
Member then posed the following questions: with regard to paragraph 2 of the document, reference  
is made to the Marrakesh Agreement and the privilege s and immunities to be accorded by a Member 
to WTO officials , which include exemptions from taxation in respect of the salaries, etc. The Member 
asked how "[t]he privileges and immunities to be accorded b y a Member to … WTO … officials … shall 
be similar to the privileges and immunities stipulated in the Convention on the Privileges and 
Immunities of the Specialized Agencies, approved by the General Assembly of the United Nations on 
21 November 1947." can be interpreted from a legal perspective ; with regard to the last sentence 
of paragraph 3, although the Staff Regulations and Staff Rules do not specify any calculation method 
for tax reimbursement , it is clear that only income from the WTO should be refund ed and  there is  
no language that could have any other interpretation regarding the  inclusion of  income from outside 
the WTO ; please indicate what approach was used before the signature of the Tax  Reimbursement 
Agreement;  and please indicate  what was the fo llow up on the recommendations from the External 
Auditors  in paragraph 111 of WT/BFA/W/142 . WT/BFA/ 197 
 
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  9.8.  A Member expressed appreciation to the delegation of China  for its  efforts to seek a resolution 
to this long -standing issue and note d that the External Auditor s' Report also raised this issue. The 
Member said i t is important to reiterate that the only body competent to determine US tax liability 
is the United States Department of Treasury Internal Revenue Service. The Member said, i f the WTO 
chooses to reimburse empl oyees beyond what the US Treasury determines to be their actual tax 
liability on WTO income, it may do that but the US Government's responsibility regarding  
reimbursements is clear and set out in the agreement with the WTO.  
9.9.  An Official of the Secretariat r esponded as follows . Regarding paragraph 2  of the document, 
Article VIII .4 of the Marrakesh Agreement, from a legal perspective, is a provision that stipulates an 
obligation of WTO Members vis -à-vis the WTO, its officials and delegates . It concerns  privileges and 
immunities granted to these groups for purpose of their functions and refers  to the 1947 UN 
Convention . Article 6 of that Convention , on officials, sets out the tax exemption on income received 
from the Organization is stated; Regarding the  question relating to paragraph 3, the Staff Rule is 
very clear ; it refers to reimbursement of taxes paid on WTO income only ; there is no reimbursement 
of taxes paid on non -WTO income. The difference between the method s to calculate that 
reimbursement is whether WTO income  is considered in  isolat ion from any other income or whether 
WTO income  is considere d together with other income to then specify a percentage that is applied 
on WTO income which is then reimbursed. To clarify, there is no reimbursement of taxes paid on 
non-WTO income.  
9.10.  A Member asked a follow -up question about  the tax reimbursed by the WTO . Does that include 
all the income of the US staff, both inside the WTO and outside of the WTO, or only the WTO income? 
Because they have outside income, maybe the rate has changed which leads to the increase of the 
actual tax paid to the US Government.  
9.11.  An Official of the Secretariat agreed that the issue is the rate. He clarified that,  if a WTO staff 
member has no outside income, the two methods arrive at  the same amount  of tax reimbursement . 
The difference only occurs when the WTO staff member has a certain amount of outside , non-WTO 
income.  
9.12.  The Chair propose d that the Committee take note of the paper prepared by the Secretariat 
and the comments made by the delegations as well as the additional e xplanation the Secretariat 
gave. She said the Committee  will return to this matter after the Summer break to give the 
Secretariat the opportunity to describe to the membership how the CBFA proceeded in 2004.  
10  WTO 2022 -2023 BUDGET PROPOSAL – WT/BFA/W/556  
10.1.  DDG Ellard addressed the Committee in reply to a question from a Member with respect to 
the real effect of the standstill in the budget since 2011. She explained that the Swiss  Trimmed 
Mean  inflation rate of 1.1% only partially explained the decrease . She als o pointed out that several 
other factors specifically influencing the WTO budget over the last 10 years had to be taken into 
account. These were the price increases in cleaning services, IT services, energy, food services and 
travel expenditure amongst oth ers. In addition, the WTO had taken ownership of the building in this 
timeframe and had to take over the maintenance which it had never had to pay before. This was a 
significant factor with respect to the additional costs to be assumed by the WTO. This cou ld only be 
done by realizing significant savings in other areas, especially reducing staff costs by hiring junior 
level staff when replacing senior level staff and by limiting promotions. She added that it was not 
clear if that was a sustainable path for t he future.  
10.2.  A Member thanked DDG Ellard  for the explanation and pointed out that the Zero Nominal  
Growth in fact represented a decline and that this had only been realized by substantive efficiencies 
and re -allocations within the budget of the WTO. He expressed concern that Members were going 
through the budget process a bit too easily assuming that it had to be Zero Nominal Growth , but 
that the re were consequences for all to see . 
10.3.  The Member suggested that the recommendation  for the budget to be approved be tabled  
right away.  In response, some Members asked for more time to continue the discussion.  WT/BFA/ 197 
 
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  10.4.  A Member enquired a bout the details of the figures for staff expenditure, about the increase d 
budget  of the computing software and projects to be funded from the expansion of  software, and 
about clear guidelines for research , including the selection of research topics . 
10.5.  An Official of the Secretariat replied that the figure for staff cost s included the funding of 
645.5  posts minus 38 posts for 2022 and minus 40 posts for 2023. The allocation for software had 
been increased by CHF 300,000, but even this increase could not fully cover all the  new projects. 
Therefore, projects would need to be prioritized and split over two  years , where possible.  
10.6.  In response to a Member question about the research outputs, DDG Ellard replied that it is 
difficult to respond to that question in this forum as it was of more horizontal nature and that the 
Secretariat would look into how it can a nswer and in what context. The Member mentioned the 
difficulties in getting replies for cross -cutting or horizontal issues in the WTO and hoped this could 
be address ed through the external review  of the Secretariat . Another Member pointed out the need 
for flexibility in research outputs.  
11  PROPOSED UTILIZATION OF THE 2020 BUDGETARY SURPLUS – WT/BFA/W/565  
11.1.  DDG Ellard referred to Financial Regulation 23 , which  states that the Director -General should 
make proposals to the CBFA on the use of the budgetary surplus . She cited the options as being: 
application as income against the budget ; transfer to the Working Capital Fund ; or any other purpose 
decided upon by the General Council.  
11.2.  DDG Ellard said, given that  this is an unusual year because of the pandemic, the proposal 
being made at this time for the Members' consideration is for the  budgetary surplus as of 31st 
December 2020, which totals nearly CHF 12 million , be utilized as follows: CHF 9.8 million to be 
applied against Members' contributions for 2022; and nearly CHF 2 million to be transferred to the 
Working Capital Fund.  She stress ed that this proposal reflects a on ce-off, good faith effort to respond 
to the  financial difficulties that Members are facing in light of the pandemic and in view of some  
Members ' having made it quite clear to the Secretariat how they feel about this. She said the idea 
was to try to respond to this particular concern  and added that 2020 saw extraordinary savings, 
mainly driven by reduced travel during the pandemic.  
11.3.  DDG Ellard said the  proposal is not meant to be a precedent for the future , as clearly stated 
in the document laying out the pro posal. She expressed the Secretariat 's sincere wish to obtain 
Members' views on this topic and to be guided by those views  and said that Secretariat is  prepared 
to either proceed with the proposal , or not , based on the views expressed by Members . 
11.4.  A Member thanked DDG Ellard  for clearly explaining the proposal. He said their delegation  
supports the proposal by the Director -General to pass on the savings realised during 2020 to the 
Members , by way of their reduced contributions for the next year.  He noted that t his proposal is in 
alignment with their delegation' s suggestion for a voluntary cut in the WTO's budget , in late 2020,  
in solidarity with Members battling the grave economic situation due to the ongoing pandemic.  
11.5.  The Member said t he proposal by the Secretariat to pass on the 2020 savings to Memb ers is 
a win -win for everyone  and laid out the following points in support of this view: t hese savings were 
realized without the Secretariat having to cut corners ; passing on that benefit to Members to reduce 
their burden, even though it may not be a signi ficant amount, sends a positive message to the 
membership and to the world that the WTO is sensitive to the Members' current economic situation 
brought on by the pandemic ; and t his is precisely what his delegation's  intention was when they 
made the proposa l to cut the budget . 
11.6.  The Member said t he WTO certainly deserves credit for this gesture  and added that, s ince the 
proposed amount meets the 5% voluntary cut suggestion that their delegation  had made, and if the 
proposal is implemented, their delegation would be happy to support the Zero Nominal Growth 
budget proposal for 2022-23. He expressed the hope that the rest of the Members  would  also support 
this proposal so that the matter can be settle d and progress be made to discussing other substantive 
issues in the budget.  
11.7.  A Member said their delegation ta kes note of the comments made by the previous speaker 
and that there are significant fiscal challenges faced by many Members resulting from  the very WT/BFA/ 197 
 
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  negative econom ic impacts of the pandemic . He added that this is particularly acute for developing 
Members.  However, in the past, Members, including their delegation , had agreed to allocate 
accumulated budget ary surpluses to cover the WTO's After Service Health Insurance  liability, to hold 
part of the surplus in cash to cover cash flow needs for operational expenditures and to continue to 
augment the Working Capital Fund. This was in recognition that the pressures on the WTO budget 
would likely increase in the near future  and that the Zero Nominal Growth policy of a large number 
of Members would not allow for budgetary increases in the future to alleviate and respond to these 
risks.  
11.8.  The Member said their delegation notes a particular area of risk which was also cited by th e 
External  Auditor s, which is  the increase in Pension Fund and After Service Health Insurance expenses 
and liabilities. He said the WTO has a net liability well over CHF 800 million as at the end of 2020 
and said  it might be better financial management to prepare for the future rather than provide a 
once-off rebate. Nonetheless, the Member said their delegation recognize s the fiscal pressures on 
many Members and the seriousness of this . In this regard there is need for more time for Members 
to consider this proposal and to consult amongst themse lves. 
11.9.  A Member said their country  is observing a very strict austerity policy and that paying less in 
2022 will not be a problem at all . However, justifying what will be registered as an increase in 2023 
will most likely be problematic  as their country does not have a mechanism to explain differences in 
regular ongoing contributions to international organizations. The Member said that during the last 
couple of budget cycles  some had made calls for a rev ision of the Zero Nominal Growth in the budget 
as it is becoming increasingly unsustainable . She said, in view of the fact that the D irector -General 
had indicated that she will be assessing the needs of the organization and may come back to 
Members with a varied budget , why not use the surplus when it is needed to keep the contributions 
around the same level for at least another year instead of lowering it now ? The Member said applying  
the surplus against contributions is returning money to Members and said this would be  
understand able when the Organization has no need . The Member noted that there are needs as the 
WTO has liabilities.  
11.10.   A Member asked whether  all Members would  obtain a rebate of their contribution for 2022 , 
proportionate to their contributions . 
11.11.   A Member stated that  Members ought to  distinguish two elements. The first element is to 
recognize the intention to respond to the economic effects on Member States due to COVID -19. The 
second element is about prudent financial management of th e Organizat ion. The Member said there 
is an overall increasing deficit due to increasing long -term liabilities  and as such it would be 
appropriate for Members to  bear this in mind  in considering th e proposal.  
11.12.   A Member said, from their delegation's perspective, a  surplus is an unfortunate under -
investment. He said a reflection could be made regarding  setting it aside to be able to compensate 
for activities that had not been able to be achieved in 2020 , at a later stage, since the pandemic  is 
still on going . For example, more invest ment could be made  more in video systems or for distance 
learning . He said there could be additional short-term needs for funding as the Director -General 
herself ha d notified the Committee  that she might come up with addition al elements for work 
following the structural review. He also reiterated a comment he had made previously that MC12 
would perhaps result in more work for the Secretariat in some areas. The Member said their 
delegation will be open  to discuss ing the current  proposal  in conjunction with the proposals of the 
Director -General next year  and added that there may even be two consecutive years of budgetary 
surplus es. The Member said the  assess ed contributions could be left unchanged and a separate  
discuss ion held a s to whether to have a rebate or not, and if there is a rebate , then deal with that 
separately administratively.  
11.13.   A Member said the key question is whether Members ca n afford to give themselves the 
refund . He thanked DDG Ellard for the clarification that this would be an extraordinary on ce-off event 
and that it would not create a precedent for succeeding years. However, at the same time  and in 
the same vein as other Members have said, there is more than  CHF 800 million which is owed. He 
said the latest comments from the External Auditor would seem to be relatively reassuring that this 
is not too serious in the short term but if the Members ask themselves if they can literally afford a 
reduction in assessed contributions , the answer would not be  positive.  He said the budgetary surplus 
could be used to slow down the debt accumulation . WT/BFA/ 197 
 
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  11.14.   Several Members suggested that the proposal be considered at later Committee meetings.  
11.15.   A Member said, considering the relative amounts involved at the individual Member level, 
that there is a  need to look at the relative cost and benefits of Financial Regulations 23(a) and 23(b) 
and added that the option foreseen by Financial Regulation 23( c) is very open and rather unkno wn 
in this context, but may be also be worth exploring. He said from their delegation's perspective , the 
best outcome would be to use the budgetary surplus for optimal collective benefit . He said the 
Committee may conclude that a rebate is the way to deliv er that, but it may not be . He said there 
is time for the conversation to be had . 
11.16.   A Member made the following points: It  is entirely right and proper that the Members take 
the decision based on the proposal from the Secretariat  and thanked the delegation t hat has 
motivated this; it  has been a turbulent year and that is what has led to savings as the DDG 
mentioned ; there are changes within the WTO itself  – there is  a new Director -General who has said 
she may come back to Members  with some proposals . In light  of this, Members ought to  pause and 
use this  opportunity to stand back and think about not just this amount of money and how it might 
relate to other spending lines but, in fact, with the y agree the budget itself. He said in addition to 
having a bottom -up line -by-line approach to budget discussions, Members  also need to have a top -
down overview.  
11.17.   The Member that had suggested a budget cut responded to several questions as follows: 
When their delegation  had suggested a budget cut , it was very clear to the delegation that the 
pandemic is an exceptional situation  and that  the impact of that has been more severely felt by 
developing countries and LDC s; currently, many delegations  - mainly developed countries assert 
that t hey do not really see the need for such a cu t. He said their delegation can understand because 
the pandemic has had an uneven impact on countries, with the impact being  more severe on 
developing and LDC Members. Therefore , this feedback from the developed country Members is 
natural to expect . Possibly , those countries who do not need or would not feel the need to accept a 
reduction in their contributions for 2022 can be exempted and the sum can actually be divided 
among the developing countries and LDC Memb ers, which would further increase the share of 
reduction for those countries , and this generosity on part of the developed country Members would 
be appreciated by everyone . The Member said the question is whether  Members feel that  a reduction 
in assessed c ontributions is not the way to proceed , then their delegation will go back to its initial 
demand for a reduction in the budget for 2022 - 23 by 5% or 10% . He said their delegation is open 
to both proposals depending  and, depending on how the Members decide on th e current proposal, 
their delegation will be taking a position on the approach of the budget.  
11.18.   DDG Ellard thanked Members for their comments, bringing different perspectives to bear. In 
response to questions posed and comments made, the DDG stated the following: The  determination  
of the reduced assessed contributions per Member, under the current proposal, would be 
proportional ; this, like any other aspect of this proposal , is up to the Members to determin e; the 
CHF 9.8 million represents about 5% of the budget, but th is too , is a question that is subject to 
discussion and to how the Members would like to resolve it ; as to comments about the difficulty in 
going back to Capitals next year, if the amount that would be requested from Members would go 
back to the old number or even increase, the Secretariat would  be prepared to discuss how it will  
actually present this to try to avoid those problems . She added that she recognize s the comment 
and the difficulty , having spent a lot of time working for a legis lative branch of Government and that 
sometimes how these things are interpreted can be fairly static.  
11.19.   DDG Ellard conclude d by saying that she appreciate s the comments that have been made 
about the pension liability and other liabilities  and the need for ot her investments within the WTO. 
She said these  are very valid concern s. She said that the a mount of the pension liability is large, 
and the amount proposed to be  return to Members is relatively small in proportion. She reiterated 
that thi s is really a good  faith gesture to respond to some of the comments that we have been 
hearing, particularly from Developing Countries , about their needs during this extraordinary time 
and the particular and very  unusual fact that the Secretariat has not been able to spend, for example, 
on travel due to the pandemic. There is a balance here that definitely needs to be achieved, and 
there are other options that are on the table . Certainly , Financial Regulation 23 makes that clear , 
and the Secretariat is  prepared to continue th is discussion with Members and to take their views 
into account . WT/BFA/ 197 
 
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  11.20.   The Chair requested that the Committee take note of the proposal made by the Secretariat 
and the comments made by Members and that the Committees revert to this matter after the 
Summer.  
12  PROPO SED CHANGES TO THE TEXT OF FINANCIAL REGULATIONS 19 THAT WAS 
AGREED IN JUNE 2019 – BY INDIA – WT/BFA/W/564  
12.1.  The delegate from India thanked the Chair for giving him the opportunity to introduce the 
revised proposal contained in the document WT/BFA/W/564.  He thanked the Chair  and the 
Secretariat for bringing back discussions on the amendments to the Financial Regulations. He said 
that this issue was discussed last time in this Committee in November 2019 , and since then we have 
not had the oppo rtunity to discuss it again.  
12.2.  He said their delegation understands  the need to comply with Financial Regulation 4 and , 
therefore , the urgency to close the discussions on the pending amendment s to some Financial 
Regulations that could not be finalized in 201 9. He said that it is with this in mind their delegation 
had decided to table a revised proposal in view of their November 2019 proposal. He added that, 
though it appears that it has been more than a year since this topic was discussed , it is only the 
second time in the last year and a half that it has come up for discussion and only within these two 
meetings that India has brought a revised proposal . He emphasized their delegation's sharing of the 
same  urgency as other Members to close discussion on this m atter.  
12.3.  He presented the key  elements of the revised proposal  as: it is a compromise , after having 
heard Members' views on the earlier proposa l; the proposal has been  changed in a way that is able 
to gather the consensus of Members , as per the way of workin g for the Organization; changes in the 
draft are limited  and apply to two elements, with the rest of the changes intended to bring 
consistency in the tex t; anomalies in the earlier draft have been corrected without altering the 
substance ; the proposal does  not fundamentally alter the manner in which the Trust Funds are 
approved. The decision -making authority to receive voluntary contributions will still be with the 
Director -General when such contributions do not create direct or indirect financial costs to WTO 
regular budget ; only when such voluntary contributions create additional costs to the WTO regular 
budget is there the need to br ing them to the Committee for consideration ; it is only fair that when 
the Trust Fund activities involve use of regular budget resources, which are p aid for by all Members , 
the Committee's consent would be required . 
12.4.  The Member said their delegation has tried to clarify what indirect costs and liabilit ies mean. 
He said Members should be aware that , in the past, resources paid for from the WTO regular budget 
had been diverted and used for Trust Fund activities and that Members have raised concern with 
that practice in the past. He said the response to co ncerns raised was that it would be  difficult and 
complicated to separate the expenses between the regular budget and Trust Fund activities.  He said 
that their delegation  has discussed this matter with people who handle accounts in many other 
international organization s and were informed that this it is a straightforward process. He said g iving 
justifications for continuation of the status quo, where Members resources are diverted for Trust 
Fund activities without their knowledge , does not meet the transpare ncy and inclusive standards 
and should cease . He said that, i n an organization whe re trust is already a prime  issue among 
Members, the Secretariat bears unique responsibility to ensure that its action s do not widen the 
mistrust between Members.  
12.5.  The Member said that if any voluntary contribution does not entail costs to the regular budget, 
then their delegation is  seeking  only clear information about such contributions and the opportunity 
for Members to flag any concerns. This does not mean that any Member o r the Committee can block 
receipt  of any voluntary contributions. He added that  Members had expressed concern about the 
politicization of voluntary contributions, hence the change  in his delegation's  approach in the current 
proposal . 
12.6.  The Member said their delegation's proposal is even -handed  as it stipulates 60 days for both 
the Secretariat to notify the voluntary contributions and also fixes the same number of days for the 
Committee to approve or giv e its views on the proposals that come before it. The Member said their 
delegation is a voice of the developing country Members in this Organization and understand s the 
importance of technical assistance to developing and LDC Members. It will always suppor t the need WT/BFA/ 197 
 
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  for technical assistance to Members who need it, be it through the regular budget or through 
voluntary contributions.  
12.7.  A Member announce d that their delegation  will co -sponsor the document WT/BFA/W/564. The 
delegation said the proposal addresses the concern that the  existing version of Regulation 19 lacks 
clarity with respect to the criteria used by the Director -General to evaluate a Trust Fund's potential 
impact on the WTO regular budget. The  Member said their delegation  has repeatedly expressed its 
disappointment with the implementation of transparency obligations concerning the establishment 
of new Trust Funds and the significant time lag between the creation of a new Trust Fund and 
notification provided to Members.  The Member said the  proposal makes clear that the Secretariat 
should have an obligation to notify Members prior to the establishment of a new Trust Fund so that 
Members have adequate opportunity to express views or concerns. The Member said their delegation 
agree s to continue working on revisions to Financial Regulation 19 , as this is an important issue , 
and said they support the moving of the revisions in document WT/BFA/ W/529 to the General 
Council.  
12.8.  A Member thank ed India for their engagement on this topic . The Member said their delegation 
considers it important to understand Members' concerns and to have an honest discussion about 
them. The Member said they are open to engaging with India and the US , as co-sponsor , and invite d 
them to bring their ideas to the Working Group on Trust Funds.  
12.9.  A Member w elcome d the proposal and said their delegation is  willing to consider it, underlining 
that it does not anticipate the intensive discussions that ought to be had  in the Working Group on 
Trust Funds.  
12.10.   A Member said their delegation is  one of the major donors to the various Trust Funds at the 
WTO and wishes for transparency in the work of the Organization , in general , as well as regarding 
Trust Funds. The Member said the proposed changes to Financial Regulation 19 do  not change much 
regarding  the substantive aspects and that it makes  sense to have put the 60 -day timeline regarding 
a notification. The Member said their delegation was concerned about the proposals on Annex C  and 
said it would be good to discuss  this in the Working Group on Trust Funds.  
12.11.   A Member reiterate d their delegation’s support to enhance the transparency of Trust Funds 
and encourage the proposal to be discussed under the Working Group on Trust Funds. The Member 
also made the following comments on Financial Regulation  19: on cost and liability , document  
WT/BFA/W/456, circulated in 2018 gave  a clear explanation on lia bility; Paragraph 7 of the document 
states  that financial liability is a technical accounting term that would imply a change in what would 
be reported as liabilities in the Statement of Financial Position of the Organization ; there is a note 
that a liabili ty is defined as a present obligation of the entity arising from past events, the settlement 
of which is expected to result in an outflow from the entity.  
12.12.   The Member said in view of this , everyone understood what liability  mean s. The Member 
said the delega tion of India had tried to give the definition in their document. A footnote in the 
document from India states  that indirect costs and liability comprise utilization , either in part or full , 
of the Secretariat's  human, physical and technological assets cre ated, serviced or paid out of the 
regular budget.  
12.13.   The Member said the delegate from India had  mentioned that their delegation  agree s that 
the Secretariat could work on Trust Funds, but if resources are used from the regular budget, then 
that means there is  cost or financial liabilit y. The Member asked whether use o f a compute r, for 
example, by a staff member whose salary is paid for out of the regular budget could be regarded as 
a cost . The Member further asked whether, for example, the  activities of  ITTC r egular staff who work 
a lot on the Trust Funds could be regarded as a cost of the regular budget. The Member sought  
clarity on the new definition of “cost” or “liability”. With regard to the 60 days ' notice , the Member 
said their delegation is  open to discuss ing this and agree that there is a need to give the Members 
of the CBFA time to reflect, to respond and give the ir views on the establishment of new Trust Funds.  
12.14.   The Member said for Trust Funds that can be  established in this Organization, they are  
consistent with the objectives of this Organization . The Member  added that, Trust Funds complement 
the regular budget to help developing Members, especially LDCs, carry out the technical assistance 
to build their capacities. The  Member expressed t he concern that the new rules developed on Trust WT/BFA/ 197 
 
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  Funds might not be in consistent with the objectives of the establishment of Trust Funds to help 
developing Members better integrate into the multilateral system, if Trust Funds were put in a 
competitive pos ition with the regular budget.  
12.15.   A Member said the proposed changes to Financial Regulation 19 include several  new rules 
aiming to enhance  transparen cy whilst at the same time being a stricter. The Member said their 
delegation is uncomfortable with making these moves at the same time. The Member said Members 
could trust each other a bit more  and that proposals be brought to the attention of the Committee 
in a transparent manner , in due time, and that the guidance of the Committee be taken seriously 
first by the Secretariat, and also by the interested provider of financial resources . The Member said 
their delegation cannot imagine that any donor would like to overrule or set aside clear guidanc e 
from one of the 164 Members when a Trust Fund is to be established.  
12.16.   The Member said their delegation share s some of the concerns expressed by others. The 
Member said there is a move from financial liability, which is perhaps a bit too vague , to cost  as well 
as a sort of definition of costs, which is becoming increasingly  precise . The Member said that before 
a Trust Fund is established , the Secretariat already puts in some  work to contact the donor  and that 
this is also regular budget work. The Member said  the proposed amendments to Financial Regulation 
19 could mean  that is not allowed because then the preparatory work has also to be paid by the 
donor whereas the donor expects the proposal. Another example is that Trust Fund for  LDC 
ministerial participati on as the  Secretariat obviously must guide Ministers diplomatically. In his 
regard, one could also say this is additional cost brought to the Organization.  
12.17.   The Member said, a dministratively, a clear line must be drawn. The Member said, politically, 
their delegation would argue that the Trust Fund activity should be following already ongoing work 
in the Secretariat , as much as feasible , and this could be guided, for example, by the Biennial 
Technical Assistance Plan or perhaps by a strate gic plan at a later stage. The Member said their 
delegation wants  to consider taking out the footnote  on costs  and said 60 days is quite long  as it 
takes much  time for a proposal to be prepared between the Secretariat and the Donor and if this is 
then exte nded with another 60 days, whereas the conclusion is not clear because of the  need, for 
the next CBFA  meeting the delay would be extended. He said Members have the habit of postponing 
things to the next session , resulting in proposal s being kept as pending  for year . The Member said 
such delays could result in donations being impacted as some Donors only allow voluntary 
contributions to be plotted into a certain fiscal year. He said the timeline could be modified from 60 
days to 30 days or less. 
12.18.   The Member s aid, in principle , the starting point for programme support costs for the 
European Union is 13%, and they look into the specific situation of the proposal at stake . When 
there is relatively little work to be done by the Secretariat , one might argue whether  13% is realistic. 
For instance, if a fund is meant to offset travel costs, it is relatively easy administration on the side 
of the Secretariat , and thus 1 3% might be a bit too high. With this context, the Member said the 
proposed text of Financial Regulation 19 ought to retain the phrase "up to  13%" to allow for some 
flexibility . 
12.19.   Citing part of the proposed amendments in Financial Regulation 19, as well as in Annex C, a 
Member said th e reference  "involve additional costs or financial liability for the WTO regular budget"  
links the ordinary budget and costs to financial liabilities . The Member said there must be a 
conceptual issue here because liabilities do not appear in the budget but  in the balance sheet . 
Therefore, it would be more correct to say additional costs for the WTO regular budget or financial 
liability for the Organisation.  
12.20.   A Member said their delegation endorse s the idea that Members  would be able to discuss a 
Trust Fund in the CBFA  before the final decision of the D irector -General  is made formal. The Member 
said, in so far as programme support costs are concerned, the European Union has a different 
number in their F inancial Regulatio ns which is lower  than 13% . He, therefore, asked for flexibility in 
the wording. The Member said any costs whose amount is higher than the applicable programme 
support costs can be listed and possibly paid for directly from the Trust Fund resources . 
12.21.   The Re presentative of India thank ed the United States for co -sponsoring the proposal and 
other d elegations that had participated in the discussions on the revised proposal . He gave the 
following responses to questions that had been posed: appreciation for the su pport of the effort WT/BFA/ 197 
 
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  towards enhancing transparency; this is one of the rare  occasions in the WTO where Members from 
the developing and developed world are standing on the same side, in support of a proposal ; their 
delegation is open to discussing the point s raised about the definition of costs  in order to arrive at a 
common understanding which is acceptable to everybody ; their delegation is  not proposing that no 
Trust Fund activities can be carried out without using resources of from the regular WTO budget, 
the context of discussion of the cost is in terms of who approves them; i f there is any Trust Fund 
which draws on the resources from the regular budget, it is only fa ir that the Members should have 
prior information about it and also endorse that  it; the wording regarding the programme support 
costs will be retained as "up to 13%", though flexibility already exists in the next sentence; open to 
discussing the definitio n of costs and financial liability; their delegation does not want to bring the 
discussion into the Working Group on Trust Funds as this is a very informal mechanism that has 
been set up to facilitate discussions on a number of issues relating to Trust Funds; Financial 
Regulation 19 is one of the means through which transparency can be brough t with respect to the 
setting up  and management of Trust Funds and , unfortunately , that discussion can only happen in 
a formal C BFA meeting.  
12.22.   The co-sponsor  thank ed the Members who took the floor and said their delegation looks 
forward to engaging with all Members on this very important issue.  
12.23.   The Chair thanked the Representative of India for the proposal and the comments and the 
additional explanations. She further thank ed Members for their active participation in the discussion. 
She said she had also heard the comments regarding  the Working Group  and suggest ed that the 
Committee  continue discussions regarding Financial R egulation 19 and possible amendments at the 
next me eting of the CB FA after the Summer break.  
13  PROPOSED FULL TEXT OF THE REVISED FINANCIAL REGULATIONS OF THE WORLD 
TRADE ORGANIZATION – WT/BFA/W/568  
13.1.  The Chair recall ed that, at the meeting of the CBFA on 1 July, the Committee had discussed 
document WT/BFA/W/559, regarding the request by the Secretariat for  the endorsement of the 
revisions to Financial Regulations 4, 17, 26, 27, 29, 37, 38 and 42 that were agreed in 2019. The 
document envision ed that a complete set of revised Financial Regulations would be submitted to the 
CBFA at its meeting on 12 July 2021 and subsequently be tabled for approval by the General Council 
on 6 and 7 October 2021. The Chair said in paragraph 2.7 of the aforementioned document, the 
Secretariat further proposes continuing d iscussion s on Financial Regulations 19 and 23.  
13.2.  An Official of the Secretariat explain ed that document WT/BFA/W/568 is the full set of 
Financial Regulations, comprising of those that are unchanged and the eight  for which M embers had 
agreed the revised text. 
13.3.  A Member request ed postponement of adoption of this agenda and state the following : this 
was only the first time that this issue has come back for detailed discussion after the November 
2019 discussion ; the Member has now submitted a revised proposal on  the amendment of  Financial 
Regulation 19. 
13.4.  The Member said their delegation understand s the need to comply with Financial Regulation 
4 and therefore the urgency to close the discussions.  He said they have brought in the revised 
proposal with the same urgency  and that the discussion s on this under an earlier agenda item was  
constructive had received support from many Members  and was thus  not too far away from getting 
an understanding which is acceptable to Members.  As a result, the Member asked that this item be 
brought back for discussion at the next CBA meeting. He said their delegation's intention is for 
Financial Regulation 1 9 to be included in the revised set of Financial Regulations for adoption by the 
General Council in October.  
13.5.  A Member said that their delegation does not think it  is a good idea to link  these regulation s 
as, at the previous CBFA meeting, it had been  discussed that they were not to be taken as  a package.  
13.6.  A Member said there are only 8 revised Financial regulations and that the versi on of Financial 
Regulation 23, though had been  a good discussion on it in late 2019, remained unchanged . The 
Member said their delegation's understanding at the last meeting  was that the new version of 
Financial Regulation 23 would be discussed. She asked for clarification as to the version of Financial WT/BFA/ 197 
 
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  Regulation 23 that was to be discussed and said though their delegation can live with the old version, 
it is of the v iew that discussion ought to  continue from the version that had already been revised in 
November 2019.  
13.7.  A Member said their delegation, as indicated in the previous meeting, had been the only  one 
that had  said no to the version of amendments to Financial Regulation  23 in 2019. The Member 
stated that their delegation had, in the last meeting of 2 019, indicated flexibility from the Capital 
that, in the spirit of cooperation, it would join other  Members  in agree ing on the text of this Financial 
Regulation. In that case, it seems that there is no objection on the amended language of Financial 
Regulat ion 23. The Member said another Member had indicated that they would like to have further 
discussion with their delegation and said they are open to this  though , to date , they had not yet 
been approached. To the Secretariat’s suggestion of bilateral discus sions, the  Member reiterated 
their very clear position on Financial Regulation 23 . Their delegation is ready to accept either the 
current or  the revised version of this Financial Regulation and suggested those who have problems 
to hold discussions.  
13.8.  A Member said their delegation is flexible and would support advancing  the rest of the package 
to the General Council, leaving Financial Regulations 19 and 23 aside for the moment. The Member 
asked if waiting until after Summer to take a decis ion and to see if Financial Regulation 19 could be 
agreed would still be in time to recommend the package of regulations to the October General 
Council meeting.  The Member asked if Financial Regulation 29  includes all commitments entered 
into at that time , even if they pertain to  the future.  
13.9.  On Financial Regulation 23, an Official of the Secretariat said it had not been agreed 
beforehand  and thus the Secretariat had not  included it in the set . The Official of the Secretariat 
said if it is the Members' will that Financial Regulation 23 be included, it deserves to be presented 
to Members,  as had been done with  the eight Financial Regulations in the previous  meeting . In this 
regard, the Official said the Secretariat will table this specific Financial Regulation  at the next CBFA 
meeting.  
13.10.   The Official of the Secretariat said there had been a suggestion by a Member to have a 
bilateral discussion with another Member of Financial Regulation 23 and said the Secretariat is willing 
to participate , if called upon to do s o, be it through providing the text or whatever else.  
13.11.   The Official of the Secretariat said the Secretariat would go with Members' guidance 
regarding how to proceed with Financial Regulations 19 and 23.  
13.12.   Responding to an earlier question, the Official of the  Secretariat said if the text to Financial 
Regulations 19 and 23 were agreed by the Committee on 23 September, then these two Financial 
Regulations could be included in the package to be submitted for approval by the General Conference 
at its meeting in Oc tober. The Official of the Secretariat said, h owever, if such decision is  prolonged 
beyond 23 September, the timeline for the General Council of October would be missed and thus 
the Financial Regulations would have to be submitted at the General Council me eting of November. 
She said  this is a concern because a lot of administrative decisions have been deferr ed; nonetheless, 
the Secretariat would be guided by Members' preference . 
13.13.   With regard to the question on Financial Regulation 29, the Official of the Secretariat said 
the suggestion is that the liabilities that are attributable to any Member that is seeking to leave 
would be the present value of any future liabilities that are perceive d at the time of calculation . 
13.14.   A Member thanked the Secretariat for it s responses and said, b earing them in mind, it would 
be good for the Committee to commit to taking a decision at the 23 September meeting with regard 
to the eight Financial Regulations that have been agreed upon , or more as well if the Committee  
manage s to agree them in the meantime.  
13.15.   The Chair summarized the points as follows: she thanked Member for their  active 
participation  and for having shown flexibility ; she expressed that she underst ood there to be  no 
disagreement with respect to the revisions to Fina ncial Regulations 4, 17, 26, 27, 29, 37, 38 and 42 
as set out in document WT/BFA/W/568 ; a resolution to Financial R egulation 19 could be reached  
and maybe also with regard to Financial Regulation 23; she encouraged  Members to continue WT/BFA/ 197 
 
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  showing flexibility  and to use the Summer break to reflect and finally come to a conclusion on all 
agreed Financial Regulations.  
14  OTHER BUSINESS  
14.1.  The Chair  recall ed that Members had had an opportunity to meet with McKinsey  Consultants  
in the previous  week and that Members also h ave the option of requesting a bilateral meeting with 
the Consultants  as part of the process for structural review . She then gave the floor to DDG Ellard 
to provide Members with an update on the state of play.  
14.2.  DDG Ellard said  the McKinsey review is well un der way  and encourage d Member s to continue 
their engagement to ensure that the Secretariat can better serve  their needs. DDG Ellard added that 
the Director -General invite s Members to participate in the Focus Groups and to provide comments 
to Mc Kinsey, if they have not already done so . She expressed appreciation to Members that have 
already done so. DDG Ellard said  that to accommodate this participation, the McKinsey Report will 
be sent to the D irector -General  a little bit later than expected, around Au gust 6th or so, instead of 
at the end of July . She emphasized that the specific date was not yet crystallized . She said  that at 
that point, the Secretariat's senior management  will review and analyse the report  and determine 
whether there are further quest ions to address. She underlined that the Director -General  is 
committed to a full and transparent discussion with the Members.  
15  CLOSING REMARKS  
15.1.  The Chair thanked the Committee for their active participation in the meeting  and announced 
that t he next formal m eeting of the CBA will take place on 23 September . She closed by wishing 
everyone a good Summer.  
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