WORLD TRADE  
ORGANIZATION  RESTRICTED 
WT/BFA/W/279 
14 August 2012  
 
(12-4447) 
  
  
 
     
 
   
REPORT ON THE FINANCIAL STATEMENTS FOR THE 
FINANCIAL YEAR ENDED 31 DECEMBER 2011 
AND PERFORMANCE AUDIT WT/BFA/W/279 
Page 2  
 
  TABLE OF CONTENTS 
 
 
I.  INTRODUCTION .................................................................................................................. .. 3 
II.  CERTIFIED ACCOUNTS FOR 2011 .................................................................................... 3  
A.  M
AIN FINDINGS  ........................................................................................................................... 3  
B.  RECOMMENDATIONS  ................................................................................................................... 4  
C.  FINANCIAL STATEMENTS  ............................................................................................................ 5  
1.  Preparation for the WTO's transition to IPSAS .................................................................... 5  
2.  Improving the notes to the financial statements .................................................................... 6  
3.  Overview of the financial situation .......................................................................................... 7 
D.  INCOME  .............................................................................................................................. ......... 8 
1.  Statutory contributions  by Member States ............................................................................ 9  
2.  Plans for absorption of the de bt of certain Member States ................................................ 10  
3.  Contributions by Observers ................................................................................................... 11 
4.  Refund of tax by the Unit ed States of America .................................................................... 11  
5.  Recording income in the accounts ......................................................................................... 12  
E.  EXPENDITURE  ........................................................................................................................... 13  
1.  Levy on expenditure by trust funds ...................................................................................... 13  
2.  Cash flow management .......................................................................................................... . 14 
3.  Staff costs ................................................................................................................... .............. 16  
4.  Control of certain staff costs request ed by the Budget Committee .................................... 18  
F.  ASSETS  .............................................................................................................................. ........ 23 
1.  Management of the inventory of WTO publications and souvenirs ................................... 23  
G.  PLANNED EXTENSION TO WTO  HEADQUARTERS  ..................................................................... 24  
1.  Partial recording of expenditure on the project in the accounts ........................................ 26  
2.  Presentation of the project's financing in the notes to the financial statements ............... 27  
III. PERFORMANCE AUDIT ..................................................................................................... 29  
1.  Main findings ................................................................................................................. .......... 30 
2.  Recommenda tions ............................................................................................................... .... 30 
3.  Independence of the dispute se ttlement system's actors ...................................................... 31  
4.  Observance of the confidentiality of procedures .................................................................. 35  
5.  Observance of procedural deadlines ..................................................................................... 36  
6.  Cost of the dispute se ttlement mechanism ............................................................................ 43  
7.  Total amounts and the trend .................................................................................................. 45 
IV.  ACKNOWLEDGEMENTS ................................................................................................... 49  
V.  CONCLUSION .................................................................................................................... ... 49 
ANNEX I FOLLOW UP TO RECOMMENDATIONS ................................................................... 50 
ANNEX II - SIMPLIFIED PRESENTATION OF DISPUTE SETTLEMENT 
PROCEDURES .................................................................................................................... ................ 55 
1.  The rules ap plicable .......................................................................................................... ...... 55 
2.  The main actors in the proceedings ....................................................................................... 55  
3.  The Dispute Settlement Body ................................................................................................. 5 6  WT/BFA/W/279 
 Page 3 
 
 
  I. INTRODUCTION 
1. A team of six auditors conducted an audit in the services of the WTO (World Trade 
Organization) from 16 to 28 April 2012.  The purpose of this audit was to prepare the certification of the financial statements for the 2011 financial year.  The first part of this report presents the findings 
of this audit, which focused mainly on: 
(a) The presentation of the financial statements , maintenance of the WTO's accounts and 
linking of operations to the financial year; 
(b) collection of the Organization's income, especially statutory and voluntary 
contributions; 
(c) human resource management; 
(d) cash and cash equivalents; 
(e) procurement, especially expenditure indicated by the Budget Committee; 
(f) outstanding commitments;  and 
(g) provisions. 
2. The audit was conducted in compliance with international auditing rules (International 
Standards on Auditing-ISA), and the WTO's Fi nancial Regulations and Financial Rules. 
3. The auditors confirm that they had access to the accounts, supporting doc uments and all other 
relevant documentation. 
4. Each comment and recommendation was discussed w ith the officials concerned.  The audit's 
closing meeting took place on 27 April 2012. 
5. Our opinion on the financial statements is give n unreservedly.  The second part of the report 
resumes and updates the findings of the performance  audit of the WTO's dispute settlement system, 
conducted by three auditors from 3 to 15 October 2012. 
II. CERTIFIED ACCOUNTS FOR 2011 
A. M
AIN FINDINGS  
(a) The presentation of the notes to the fina ncial statements is generally quite clear but 
needs to be completed, particularly to obtain  a better idea of developments in the project 
for the renovation-extension of the WT O's headquarters and its financing. 
(b) The gradual introduction of IPSAS is going ahead according to the schedule.  It should 
be completed by drawing up a road map show ing in detail the amendments to be made 
to numerous accounts operations. 
(c) The internal mechanism for monitoring  expenditure needs to be strengthened. 
(d) The headquarters renovation-extension proj ect should be completed in 2012, with a 
slight delay but within the planned budgets.  The cost of the common facilities, not 
originally planned, exceeds the budget foreseen at the end of 2011, but additional work 
has been done.  WT/BFA/W/279 
Page 4  
 
  B. R
ECOMMENDATIONS  
6. Recommendation No. 1.  The Secretariat s hould make plans for the accounts services 
transition to IPSAS1 by drawing up a road map indicating the amendments to be made when 
calculating each item in the statements on the fi nancial situation and th e financial performance. 
7. Recommendation No. 2.  Note 12 to the financia l statements should include a table showing 
the total amount of the provision for employee benefits required by the transition to IPSAS. 
8. Recommendation No. 3.  A note to the financia l statements should provide information by 
sector for the statement of financial performance s howing the regular budget' s contribution to other 
activities. 
9. Recommendation No. 4.  The Secretariat should make special efforts to send reminders to 
Members which fail to comply with their commitment s in the plans to absorb  their arrears to the 
WTO. 
10.  Recommendation No. 5.  The Secretariat should pursue its efforts (i) to accelerate refund by 
the United States of the taxes of WTO staff who reside d there;  and (ii) to obtain this refund according 
to the method advocated by the Administrative Tr ibunal of the International Labour Organization 
(renewal of a previous recommendation). 
11. Recommendation No. 6.  The Secretariat shoul d reclassify the excess sum of CHF 1,461,6462 
paid to the International Trade Centre (ITC) am ong the charges paid in advance and should reduce 
receivables by the same amount in the 2011 financial statements. 
12. Recommendation No. 7.  The Secretariat should en sure strict compliance with the deadlines 
for regularizing WTO advances on voluntary contributions. 
13. Recommendation No. 8.  The percentage of the levy  on trust funds used to finance Secretariat 
expenditure should be increased (renewal of a previous recommendation). 
14. Recommendation No. 9.  The Secretariat shoul d monitor the remuneration of its bank 
accounts more closely. 
15. Recommendation No. 10.  The internal mechanis m for controlling payment of expenditure 
should be strengthened. 
16. Recommendation No. 11.  The Secretariat shoul d ensure that it keeps all the supporting 
documents for the indemnities paid. 
17. Recommendation No. 12.  The Secretariat should (i) keep an updated list of those holding 
credit cards and mobile telephones belonging to the Organization;  (ii) issue directives on the use of taxis and mobile telephones;  ( iii) monitor expenditure on taxis and telephones more closely;  
(iv) envisage cancelling the contract with the taxi company;  and (v) show mobile telephone costs in 
the accounts. 
18. Recommendation No. 13.  The Secretariat should finalize preparations for 
IPSAS 12-compliant management of its i nventory of publications and souvenirs. 
                                                      
1 International Public Sector Accounting Standards.  
2 CHF:  Swiss francs.  WT/BFA/W/279 
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  19. Recommendation No. 14.  The complex method for recording investment made in connection 
with the WTO headquarters renovation-extension pr oject in the accounts should be explained in a 
note to the financial statements. 
20. Recommendation No. 15.  The grant of CHF 10 million from the Swiss Confederation should 
be treated differently to its interest-free loan of CHF 60 million in the financial statements. 
21. Recommendation No. 16.  To improve the presentation of the financing for the 
WTO headquarters renovation-extension project, the notes to the financial statements should:  
(i) indicate the total amount of the Federal funds available to the WTO;  (ii) explain the nature 
of FIPOI's3 payment of some of the costs of the intra-muros  project and draw the consequences for 
the accounts;  and (iii) provide a table summarizi ng the financing of the project, specifying the 
contributions from the regular budget and from the MTOF, respectively.4 
C. FINANCIAL STATEMENTS  
1. Preparation for the WTO's transition to IPSAS 
22. In May 2009, the WTO Council adopted a plan fo r the gradual implementation of IPSAS, to 
be completed at the beginning of 2013 with th e presentation of financial statements for 
the 2012 financial year consistent with these standards. 
23. The plan is going ahead in accordance with the schedule adopted.  The WTO adopted the 
presentation of financial statements consistent with IPSAS 1 for the 2009 accounts, calculated 
its commitments for the pension and sickness insurance plans in accordance with IPSAS 25, 
and prepared the recording of WTO's assets in 2011. 
24. In the 2011 financial statements, audited in th e present report, it increased the provision for 
employee benefits by CHF 5.9 million to include th e totality of staff entitlement to untaken annual 
leave (there was only provision for 41.75 per cent of this entitlement in the 2010 accounts), 
in response to recommendation No. 5 in our  report on the 2009 financial statements. 
25. The WTO still has to take the following measures: 
 Include in the aforementioned provision empl oyee benefits that have been calculated 
and are mentioned in Note 12 but which do no t yet appear (entitlement to installation 
grants, home leave, separation grant and, above all, pension and sickness insurance 
entitlement); 
 formally adopt the amendments to the Or ganization's Financial Regulations required 
to bring them into line with IPSAS and update them; 
 prepare the accounts services for changes in book-keeping methods at the beginning 
of 2013 in order to bring th em into line with IPSAS. 
26. The experience of other international organizati ons which are preparing to make the transition 
to IPSAS shows in fact that it is a complex te chnical task and requires considerable work in 
identifying the new accounting entries to be made an d in training staff.  A list has to be drawn up of 
all the entries in the financial statements and th e statement of financial performance affected by 
IPSAS, a road map prepared, together with a guide  showing the new methods to be used for each of 
                                                      
3 FIPOI:  Building Foundation for International Organisations.  
4 MTOF:  Members Tran sition Operating Fund. WT/BFA/W/279 
Page 6  
 
  these entries, and each member of the accounts staff h as to be given training.  The external auditors 
will verify this road map and the guide  during their audit in October 2012. 
Recommendation No. 1.  The Secretariat should ma ke plans for the accounts services transition 
to IPSAS by drawing up a road map indicating the amendments to be made when calculating 
each item in the statements on the financ ial situation and the financial performance. 
 
 In accordance with this recommendation, the S ecretariat indicated that it would prepare a 
road map for the transition to IPSAS. 
 
2. Improving the notes to the financial statements 
27. As the auditors noted last year, the notes to th e financial statements are drafted very clearly 
and show the desire to explain the trends noted to  Member States so as to enable them to have the 
fullest possible information on which to base thei r decisions, in conformity with IPSAS 1.  
Nonetheless some improvements are suggested below. 
(a) The provision for employee benefits 
28. The amount of the provision for employee bene fits increased from CHF 6.37 million in 2010 
to CHF 12.84 million5 in 2011 by incorporating all the staff entitlement for untaken leave 
(i.e. CHF 5.87 million more than in 2011) and the totality of dependency allowances 
(i.e. CHF 50,000).  
29. Note 12 "Employee benefits" also shows the est imated amount of the employee benefits not 
yet taken into account in this provision, i.e.  CHF 3.06 million for installation grants and 
CHF 12.90 million for separation grants. 
30. It is suggested that note 12 should include a table showing the total provision for employee 
benefits, including the aforementioned elements. 
Table 1.  Estimate of the tota l provision for employee benefits 
(in Swiss francs) 
 
Entitlement for which provision 
has to be made Total entitlement for which 
provision has to be made Provision for entitlement already 
made in 2011 
Untaken annual leave 9,932,280 9,932,280 
Education grant 1,179,100 1,179,100 
Home leave 1,145,400 1,145,400 
Dependency allowance 50,000 50,000 
Installation grant 3,068,043 0 
Separation grant 13,512,195 541,869 
Total 28,887,018 12,848,649 
Source:  Court of Audit, based on the data in  Note 12 to the financial statements. 
Recommendation No. 2.  Note 12 to the financia l statements should include a table showing the 
total amount of the provision for staff bene fits required by the transition to IPSAS. 
 
                                                      
5 Only applies to the French text.  WT/BFA/W/279 
 Page 7 
 
 
  The Secretariat accepted this  recommendation immediately and amended Note 12 to the 
financial statements accordingly, including the table requested. 
 
31. The amount for pension commitments and sickness insurance commitments for the 
Organization's retirees were transmitted to the WT O in two reports from the firm of actuaries 
dated 20 April 2012.  These commitments were estimated to amount to CHF 845.012 million for 
pensions and CHF 243.055 million for sickness insura nce for retirees, an increase of 1.54 per cent 
and 1.52 per cent, respectively, in comparison with the previous 12 months.6 
(b) Presentation of information on the statement of financial performance by sector 
32. It would be useful if a note to the financia l statements entitled "Information on the statement 
of financial performance by sector" showed the br eakdown of the profit and loss account by activity, 
giving a breakdown of the composition of profit and loss for the regular budget, the Appellate Body 
(AB) and trust fund budgets. 
33. Such a note would enable the charges borne by the regular budget to be reattributed to the 
trust funds in at least two instances:  the Minist erial Conference costs not covered by the fund set up 
for this purpose (MOF7), amounting to CHF 606,626, and the co st of the renovation-construction not 
covered by the MTOF8, CHF 1,990,555. 
Recommendation No. 3.  A note to the financ ial statements should provide information by 
sector for the statement of financial performan ce showing the regular budget's contribution to 
other activities. 
 
The Secretariat supplemented the notes to the 2011 financial statements in order to present 
the information mentioned by the auditors [the co sts of the Ministerial Conference not covered by the 
Fund set up for this purpose (MOF), amounting to CHF 606,626, and the cost of the renovation 
construction operations not covered by the MTOF, amounting to CHF 1,990,555].  
As part of the transition to IPSAS, the Secret ariat will submit information by sector in 
the 2012 financial statements. 
 
3. Overview of the financial situation 
34. The 2011 statement of financial performance shows a surplus (CHF 0.73 million), which 
only amounts to 7 per cent of that in 2010 (CHF 10.52 million) because the WTO's income fell by 2.89 per cent while its costs increased by 1.53 per cent.  This drop in income can be attributed to 
the one-quarter decrease (CHF -7.23 million) in th e amount of voluntary contributions used by the 
WTO in 2011
9 and to two changes of negligible economi c importance.  Thus, a change in accounting 
methods, as part of the preparation for the transiti on to IPSAS, led to a reduction of over 50 per cent 
in the provision carried over for outstanding commi tments at the end of the year.  The 80 per cent 
                                                      
6 The reports of April 2011 from the firm of  actuaries estimated these commitments at 
CHF 832.171 million and CHF 239.405 million, respectively, at 1 January 2011. 
7 Ministerial Operating Fund (MOF). 
8 Members' Transition Operating Fund (MTOF). 
9 The total of voluntary contributions received in 20 11 increased slightly in  comparison with 2010 
(CHF 25.97 million against CHF 25.67 million), but the amount of voluntary contributions utilized in 2011 (and 
recorded in the statement of financ ial performance) fell sharply (from CH F 29.42 million to CHF 22.19 million) 
as the programmes financed through these voluntary contributions showed a marked decrease in 2011 
(from CHF 29.48 million to CHF 22.24 million). WT/BFA/W/279 
Page 8  
 
  reduction in the refund of prior year's expenditure can be explained by the exceptionally large amount 
for this item in the 2010 accounts.
10 
35. Despite a reduced surplus in 2011, the cash  flow situation showed an increase of 
CHF 7.62 million in the amount of cash available, ma inly attributable to developments in the trust 
funds, which provided CHF 7.12 million in cash, whereas they had consumed CHF 5.50 million 
in 2010.  In fact, these funds recorded expenditu re amounting to CHF 7.24 million less than in 2010 
and the total amount of voluntary contributions fo r their financing received in 2011 nevertheless 
showed an increase of CHF 0.30 million. 
36. The financial statements at 31 December 2011 show a decrease of 8.33 per cent in net 
assets (from CHF 30.23 million to CHF 27.71 million) as liabilities increased more than assets 
(67.25 per cent as against 44.26 per cent), notab ly because of the increased amount of statutory 
contributions paid by Members in advance, the provision for employee benefits (see the comments 
above relating to this provision) and the amount of the "trust funds due to donors", in other words, 
deferred revenue corresponding to the surplus in voluntary contributions received compared to 
expenditure on programmes financed through such contributions in 2011. 
37. For the most part, the increase in assets can be attributed to the "work in progress" 
(CHF 39.64 million in 2011 compared to CH F 6.81 million 2010) for the WTO headquarters 
renovation-extension project.  This increase would have  been even larger if all the work had been 
taken into account.  However, the work fi nanced by WTO's own funds, amounting to 
CHF 3.75 million, was not recorded (see the co mments below on the renovation-extension project). 
38. As emphasized in the external auditor's previ ous reports, the transition to IPSAS will see the 
WTO's financial situation deteriorate because  it will mean recording in the accounts the 
Organization's long-term commitments under the pension11 and sickness insurance plans, whose 
amount will probably exceed that of the Organization's financial assets, land, buildings12 and 
equipment.  Nevertheless, pens ion commitments are implicitly covered by Member States under 
Article 21 of the Pension Plan's Regulations:  "In the event of dissolution of the WTO, the General 
Council shall take the necessary steps to guarantee the benefits acquired under these Regulations by 
participants and beneficiaries at the date of disso lution."  The probable deficit in the statement of 
financial position will therefore in no way be comparable to that of a private company. 
D. INCOME  
39. The WTO has managed to reduce arrears in payment of statutory contributions by certain 
Member States by means of the debt absorption plans it has negotiated with them and it has made a 
more realistic estimate for the relevant provisi on.  On the other hand, although there is now a 
provision for arrears in contributions by Observers, these continue to increase. 
                                                      
10 The refund of the prior year's expenditure had been exceptionally high in 2010 because of the refund 
during this financial year of two years of surpluses fr om the International Calculating Centre and refund of 
CHF 1 million from the International Trade Centre. 
11 The aforementioned reports of 20 April 2012 of the firm of actuaries estimate the WTO'S pension 
fund commitments to be CHF 845.012 million and those of its sickness insurance scheme to be CHF 243.055 million. 
12 The value of the WTO headquarters should be es timated at its "fair value", pursuant to IPSAS 17.  WT/BFA/W/279 
 Page 9 
 
 
  1. Statutory contributions by Member States 
40. Pursuant to Regulation 12 of the Financ ial Regulations, the contributions of 
the 155 Member States13 of the WTO are determined as a percen tage of the value of each country's 
international trade (imports plus exports) in rela tion to the total international trade of all WTO 
Members, according to a scale that is revised by the General Council each year.  The minimum 
contribution is set at 0.015 per cent of this valu e.  Five reference years are taken into account, 
for example, 2004-2008 for the 2011 contributions. 
41. In practice, each year the Organization calls for the contributions determined in the scale 
minus, where applicable, each State's share of th e distribution of the Organization's budget surpluses 
at the end of the preceding financial year (prescrib ed by Regulation 26 of the Financial Regulations) 
and the amount of interest credited under the Early Payment Encouragement Scheme. 
42. The list below shows that in 2011 there was a sli ght drop in the percentage of contributions 
paid in relation to assessed contributions as compared  to 2010, and an increase in contributions in 
arrears (+ 34.90 per cent) and in accumulated arrears (+ 9.11 per cent) for 2011.  These latter arrears 
account for 13.31 per cent of the amount of statutory contributions in 2011, as against 12.32 per cent 
in 2010.  At 31 December 2011, 58 Member States out of 155 had payment arrears;  for 20 of these, 
they exceeded CHF 100,000.  The following were the highest amounts (not taking into account former Yugoslavia): 
 United States of America:  this debt only concerns 2011, the United States regularly 
pays part of its annual contribution the following year (CHF 7,240,158); 
 Spain (CHF 2,540,706); 
 Venezuela (CHF 1,884,758); 
 Sierra Leone (CHF 1,229,604); 
 Chad (CHF 1,215,780); 
 Central African Republic (CHF 1,099,324); 
 Mauritania (CHF 1,094,443); 
 Côte d'Ivoire (CHF 941,272); 
 Democratic Republic of the Congo (CHF 820,030); 
 Burundi (CHF 770,467). 
43. To encourage countries to pay their contributio ns rapidly, which are due on 1 January each 
year, pursuant to Regulation 13 of the Financial Re gulations, the WTO pays them interest calculated 
between the date on which each one pays its contribution for the current financial year 
and 31 December.  This interest is deducted fro m the amount of the assessed contributions with a 
two-year interval:  interest in 2009 lowered c ontributions for 2011.  The WTO places countries in 
arrears into four categories, depriving them of a certain number of rights depending on the amount of 
their debt. 
                                                      
13 Former Yugoslavia still counts as a Member of the WTO because of its contribution arrears 
amounting to CHF 830,439. WT/BFA/W/279 
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  Table 2.  Contributions by Member Stat es assessed and paid in 2010 and 2011 
(in Swiss francs) 
 
  2010 2011 2011/2010 
A. Statutory contributions by existing Member States 192,200,000 194,300,000 +1.09% 
B. Statutory contributions by new Member States 0 0 - 
C. Distribution of the surplus among Member States 2,800,000 0 -100.00% 
D. Interest earned and paid out to Member States with 
a two-year interval 1,327,420 183,949 -86.14% 
E. Total contributions assessed (E=A+B-C-D) 188,072,580 194,116,051 +3.21% 
F. Total contributions paid for the financial year 178,209,649 180,810,606 +1.45% 
G. Arrears of contributions for the financial year 
(G=E-F) 9,862,731 13,305,445 +34.90% 
H. Accumulated arrears of contributions 23,697,202 25,856,798 +9.11% 
Source : Court of Audit, based on WTO data. 
2. Plans for absorption of the debt of certain Member States 
44. In accordance with the external  auditor's recommendation in relation to the financial 
statements for 2010, the Organization is seeking to  make arrangements with countries in arrears for 
absorption of their debts:  the Director General has proposed negotiations on such arrangements to all 
countries in category 4 and they have received propo sals with specific plans.  By 31 December 2011, 
ten countries had signed such arrangements.  In 2011, there was only very limited compliance with 
the undertakings made, contrary to what had happe ned previously, which means that the Secretariat 
will have to make special efforts to reactivat e the countries concerned (see the table below). 
45. Negotiation of these plans resulted in writing o ff part of the pre-1988 debts, in accordance 
with a decision by the Council in 1994.  The debts written off represent 22.84 per cent of the original 
debt of the countries concerned. 
Table 3.  Plans for absorption of the debt of certain Member States being implemented 
(in Swiss francs) 
 
Member State 
 
Date of approval 
of the plan by the 
Council Duration 
of the 
plan in 
years Date of 
termination 
of the plan Total 
arrears 
prior to the 
plan Arrears 
written offAmount 
of the 
absorption 
plan Amount 
of each 
annuity 
payable Amount 
not paid, 
in 
violation 
of the plan
Burundi 
03/05/11 20 31/12/30 1,189,888 297,141 892,747 36,460 14,344 
Central African 
Republic 
29/07/10 30 31/12/39 1,096,836 297,141 799,695 26,657 55,802 
Congo 
29/07/10 5 31/12/14 1,112,836 297,141 815,695 163,140 73,832 
Côte d'Ivoire 
04/05/10 10 31/12/19 828,578  828,578 82,858 195,552 
Democratic 
Republic of the 
Congo 
03/05/11 5 31/12/15 757,854 296,941 460,913 92,183 154,359  WT/BFA/W/279 
 Page 11 
 
 
  Member State 
 
Date of approval 
of the plan by the 
Council Duration 
of the 
plan in 
years Date of 
termination 
of the plan Total 
arrears 
prior to the 
plan Arrears 
written offAmount 
of the 
absorption 
plan Amount 
of each 
annuity 
payable Amount 
not paid, 
in 
violation 
of the plan
Gabon 
26/05/09 3 31/12/12 352,245  352,245 117,415 12,260 
Gambia 
21/10/10 10 31/12/19 995,455 297,141 698,314 69,831 19,261 
Mauritania 
30/11/11 25 31/12/34 1,237,988 297,141 940,847 37,634 36,009 
Niger 
14/12/10 15 31/12/24 899,452 194,652 704,800 46,990  
Togo 
21/12/10 5 31/12/14 506,436 73,153 433,283 86,657 14 
Total   8,997,568 2,050,451 6,927,117 759,825 561,433 
Source :  Court of Audit, based on WTO data. 
Recommendation No. 4.  The Secretariat shou ld make special efforts to send reminders to 
Members which fail to comply with their commitm ents in the plans to absorb their arrears to 
the WTO. 
 
The Secretariat has made further efforts to fo llow up payment arrangements and provides the 
Committee on Budget, Finance and Administration with information quarterly . 
 3. Contributions by Observers 
46. The 31 Observer States pay a contribution corresponding to the minimum contribution 
by Member States (CHF 29,145 in 2011).  Th e amount of assessed contributions increased 
by 2.20 per cent (from CHF 884,015 to CHF 903,495) and contributions paid rose by 42.65 per cent 
(from CHF 633,349 to CHF 903,495), some States ha ving paid off their arrears, leading to 
a 7.63 per cent decrease in payment arrear s (from CHF 1,156,018 to CHF 1,067,818). 
47. The largest amounts concern the following coun tries, which have long outstanding debts: 
 Sudan (CHF 337,926, as against CHF 308,781 in 2010); 
 São Tome and Principe (CHF 277,384, as against CHF 248,239 in 2010);  and 
 Equatorial Guinea (CHF 139,890, as against CHF 110,745 in 2010). 
4. Refund of tax by the United States of America 
48. Staff members of the Organization are exempt from income tax.  In the case of the 
United States of America, whose residents are oblig ed to pay income tax, the WTO pays it in their 
place, as do other international organizations, and is then reimbursed by the American Government, 
pursuant to an agreement of 22 December 2000. WT/BFA/W/279 
Page 12  
 
  49. In 2011, receivables for United States taxes amounted to CHF 2,272,012, a 43 per cent 
decrease in comparison with 2010, despite new advances of US$1,000,823
14 on behalf of 
United States citizens working at the WTO, follo wing three refunds from the American authorities 
in 2011, amounting to a total of US$2,617,290, and the trend in the US$/CHF rate, which reduced the 
amount of the WTO's receivables by some CHF 548,000. 
50. The WTO also continues to bear the additi onal costs because the United States refunds 
according to the "first income method", contrary  to the method advocated by the Administrative 
Tribunal of the International Labour Organization.  This practice generates additional costs that 
cannot be recovered and these are shared among all Me mber States:  the additional costs recorded in 
the accounts under staff costs amounted to CHF 160,101 in 2011, as against CHF 85,150 in 2010. 
Recommendation No. 5.  The Secretariat should pursue its efforts (i) to accelerate refund by the 
United States of the taxes of WTO staff who resided there;  and (ii) to obtain this refund 
according to the method advocated by the Admini strative Tribunal of the International Labour 
Organization (renewal of a previous recommendation. 
 
The Secretariat indicated that it would pursue its  efforts.  In 2011, the United States refunded 
tax for the previous two years and more, allowi ng part of the arrears to be absorbed. 
 
5. Recording income in the accounts 
(a) The WTO's contribution to the budget of the ITC15 
51. Over payment of CHF 1,461,646 in the WTO's contribution to the budget of the ITC was 
noted at the end of 2011.  This excess paym ent was deducted from the WTO's contribution in 
January 2012, according to a letter fro m the Centre dated 5 January 2012. 
52. The WTO recorded this amount among th e receivables in the accounts closed 
on 31 December 2011, instead of record ing it as charges paid in advance. 
Recommendation No. 6.  The Secretariat should reclassify the excess sum of CHF 1,461,646 paid 
to the International Trade Centre (ITC) among the charges paid in advance and should reduce 
receivables by the same amount in the 2011 financial statements. 
 
The Secretariat accepted this recommenda tion immediately and amended the financial 
statements accordingly by reclassi fying the entries in the accounts.  
 
(b) Advances on voluntary contributions 
53. The statement of financial position and Note 6 to  the financial statements "Other receivables" 
show WTO's advances on voluntary contributi ons in favour of partners responsible for 
implementing training projects in an amount of CHF 1, 571,795, as part of the Organization's technical 
cooperation policy. 
54. The agreements signed with these partners spec ify that these advances must be regularized on 
the basis of documents substantiating the expenditur e, at the latest two months after the training 
                                                      
14 US$ = United States dollars. 
15 International Trade Centre.  WT/BFA/W/279 
 Page 13 
 
 
  has ended.  The supporting documents and the fina l report on the activity must therefore reach the 
WTO during the month following the training. 
55. Contrary to these agreements, advances tota lling CHF 373,749 relating to training completed 
between May and October 2011, i.e. at least three mo nths before the end of the financial year, were 
not regularized in 2011.  Despite the various steps taken by the WTO, the two-month deadline for 
regularization was thus largely exceeded. 
56. Two other advances for a total amount of CHF 88,512 were regularized in March 2012, 
with delays of four and eight months, respectively,  in comparison with the terms of the agreement. 
Recommendation No. 7.  The Secretariat should ensure strict compliance with the deadlines for 
regularizing WTO advances on voluntary contributions. 
 
The Secretariat indicated that it would continue  to ensure that its partners close the accounts 
for activities more rapidly.  Regularization of advances is based on supp orting documents and the 
reports on the activity sent in by beneficiary partners.  The Secret ariat accordingly continues to 
request its partners to submit information within  the deadlines.  Despite regular and repeated 
reminders, the information is often only sent in la te.  As a last resort, in order to obtain these 
financial reports, the Secretariat refuses to  disburse any funds for future activities. 
E. EXPENDITURE  
1. Levy on expenditure by trust funds 
57. The WTO trust funds are replenished through vo luntary contributions by Member States.  
They finance special programmes decided upon by some of the latter.  A 13 per cent levy that is not 
envisaged in the WTO's Financial Regulations or Financial Rules but was decided by the General 
Council in 1996 and 1999 is imposed on expenditure by trust funds and is paid into the Programme 
Support Fund (which is one of the trust funds bu t is purely financial).  This Fund covers to a 
minimum extent16 certain costs in the Organization's17 regular budget in support of policies that are 
the subject of trust funds. 
58. In accordance with Recommendation No. 4 in the external auditor's report on the 2009 
financial statements, how this 13 per cent levy is used is explained in Schedule H to the financial 
statements for the 2011 financial year.  The figur es given in this Schedule, however, show that 
the amount of the transfers actually made from trust funds to the regular budget has fallen 
by 8.71 per cent, contrary to our recommendation on  the 2010 accounts that "The percentage of the 
levy on trust funds to finance Secretar iat expenditure should be increased." 
Table 4.  Trend in the Programme Support Fund from 2010 to 2011 
(in Swiss francs) 
 
 2010 2011 
Opening balance 1,158,577 1,219,071 
Income during the financial year (13% levy) 3,399,602 2,543,161 
Total income 4,558,179 3,762,232 
                                                      
16 The Fund only covers implementing staff who work full time for this programme, but not the salaries 
of the members of Finance Division which generate these co sts or those of the Director of the Training Institute. 
17 These costs are listed in the external audito r's report on the 2009 financial statements. WT/BFA/W/279 
Page 14  
 
   2010 2011 
Retrocession to other Organizations (A) 749,127 320,863 
Costs for 22 officials (B) 
(22 in 2011 as against 23 in 2010) 2,294,182 2,092,416 
Payment of various overheads for trust funds (C) 36,800 56,937 
Share of certain Secretariat costs (previous retrocession of 10% 
to the regular budget) (D) 258,998 214,935 
Total costs (E) 3,339,107 2,685,150 
of which costs lowering Secretariat charges (= E-A) 2,589,980 2,364,467 
Closing balance 1,219,071 1,077,081 
Source :  Court of Audit, based on Schedule H to the financial statements for 2010. 
59. This trend occurred despite the sharp drop (-57. 17 per cent) in reimbursement of costs to 
other international organizations following the re duction in spending on training and technical 
assistance in 2011 already mentioned. 
60. It would appear important to increase the percentage of the 13 per cent levy on trust funds 
actually used to lower the Secretariat's charges so that these funds, financed through voluntary 
contributions by some Member States, are not subsidized by the statutory contributions paid by all Member States. 
Recommendation No. 8.  The percentage of the levy on trust funds used to finance Secretariat 
expenditure should be increased (renewal of a previous recommendation. 
 
The WTO indicated that it would review the percentage of the levy on trust funds used to 
finance Secretariat expenditure when revising the Financial Regulations. 
 
2. Cash flow management 
61. The WTO's cash situation increased by 13.10 per cent between 31 December 2010 
and 31 December 2011 (from CHF 58, 164,091 to CH F 65,786,941). 
62. An agreement on remuneration of the WTO's cu rrent accounts was signed with the UBS bank 
on 12 February 2010.  Annex 1 to this agreement provides a list of the relevant current accounts, 
which include the United States dollar account.  This agreement specifies, inter alia , that a 
minimum rate of 0.20 per cent on capital amounting to at least CHF 20 million applied up to 30 September 2010, after which the rate would be revised depending on co nditions in the money 
market at that time. 
63. In practice, remuneration on the United States dollar account was only 0.125 per cent during 
the first three quarters of 2010 because the amount in  the account was below the threshold, and then 
no interest was paid by the bank, which neverthe less levied CHF 1,541 in bank charges in 2011. 
64. The WTO entered into negotiations with UBS fo r remuneration of this account in January and 
August 2011, but no agreement was reached.  Negot iations only resumed on 24 April 2012 and led to 
an agreement on 26 April (on a rate of 0.25 per cent). 
Recommendation No. 9.  The Secretariat should  monitor the remuneration of its bank accounts 
more closely.  WT/BFA/W/279 
 Page 15 
 
 
  The Secretariat indicated in response that it would introduce closer monitoring of the terms 
of remuneration of its bank accounts.  
 
65. Verification of bank reconciliation statements show s errors that were subsequently corrected 
for the accounts used for payments and delays in recording the following operations: 
 An amount of CHF 1,829.94 was paid by mistake into a Working Capital Fund 
account, an operation that was corrected subse quently by a transfer from this account 
to the correct account (UBS euros); 
 an amount of CHF 1,431.40 was paid by mistake into the "independent entity" 
account in January 2011 and not corrected until March 2011; 
 discrepancies between the dates when banks and the Secretariat's Oracle program 
record operations were noted.  These discrep ancies can be explained by delays in 
notifications from the banks, in the case of income, but are attributable to lack 
of follow up in the case of expenditure  because all payments (whether manual 
or electronic) are initiated and ordered by the WTO.  The examples below show the operations recorded by the WTO w ith delays relating to a "UBS cash 
management" account. 
Table 5:  Examples of operations recorded in the accounts with delays 
 
Date when the operation 
was recorded by the bank Amount of the 
payment (CHF) Type of operation Date when the 
operation was 
recorded in Oracle 
11 April 2011 1,000.00 Payment of supplier 01 May 2011 
20 April 2011 164,331.55 UBS Card Center 01 May 2011 
03 June 2011 7,338.50 Payment of supplier 01 July 2011 
10 June 2011 1,069.20 Payment of supplier 01 July 2011 
21 June 2011 3,122.55 Payment of supplier 01 July 2011 
23 December 2011 4,600.00 Paymen t of supplier 02 January 2012 
Source : Court of Audit, based on WTO data. 
66. Moreover, the bank reconciliation statement of  April 2011 showed a US$70,227 difference 
between the amounts recorded by the bank and by  the WTO in the Oracle program in the case of 
two cheques (for US$22,427 and US$47,800) in payment of United States taxes. 
67. This difference stems from a mistake by the bank, which debited the amounts of these 
two cheques to the WTO's account twice.  Th e WTO immediately noticed the bank's mistake, 
but nevertheless recorded it in the debit account in stead of dealing with it as a difference in the 
bank reconciliation. 
68. The WTO then recorded the reimbursement by the bank and cancelled the debt in return.  
The incorrect way in which the bank's mistake w as entered in the accounts led to recording of 
notional exchange rate losses amounting to CH F 4,002.94, which reduced the surplus for the 2011 
financial year by a negligible amount. 
Recommendation No. 10.  The internal mech anism for controlling payment of expenditure 
should be strengthened. 
 WT/BFA/W/279 
Page 16  
 
  The Secretariat indicated that it would reinforce the internal control mechanism by ensuring 
in particular that manual payments are recorded in  the accounts within ten working days of payment 
and by making the accounts teams aware of the opera tions to be carried out if there are mistakes or 
inconsistencies with the operations by the banks. 
 
3. Staff costs 
(a) Advances to staff 
69. Advances to staff account for 30 per cent of "o ther receivables".  Advances for education 
grants make up the major part of these advan ces and for the 2011 financial year amounted to 
CHF 2,358,205. 
70. A sample of 21 advances for education grants, out of the 117 granted in 2011 (almost 18 per 
cent of the cases), was checked, corresponding to CHF 674,609 (or 29 per cent of the total amount of 
such advances).  The documents relating to paymen t of advances for the previous school year were 
also checked. 
71. These checks allowed the actual situation regard ing these advances to be verified, together 
with their conformity to the staff rules, the accur acy of the calculations and their attribution to the 
correct financial year. 
72. It was noted, however, that in at least one qua rter of these cases, the advance was authorized 
on the basis of a simple advance payment of school  fees for the following year and not on the basis 
of an official certificate proving the student's en rolment in the educational establishment covered by 
the regulations.
18 
73. The Human Resources Division requires an official  certificate for the first year in which a 
student is enrolled in a new school.  For subsequent  years at the same school, only proof of payment 
of the advance is required.  The Secretariat should require the submission of proof of a student's 
enrolment in an educational establishmen t in support of education grant advances.  
The Secretariat indicated in response that it would revise its Administrative Memorandum to 
state that an official certificate proving the studen t's enrolment is not required when a student 
continues at the same school. 
 
(b) Other benefits 
74. Three other benefits were reviewed:  separa tion grants (for a total amount of CHF 824,109 
in 2011), installation grants (CHF 283,401) and rent al subsidies (CHF 271,839).  The latter benefits 
do not call for any remarks. 
75. Five cases of separation grants were examined.  In four instances, the check showed strict 
observance of the regulations19, which distinguish in particular between: 
 Internationally recruited staff members who provide proof of relocation outside 
Switzerland after separation from service at the WTO; 
                                                      
18 See Administrative Memorandum No. 961/Rev.5 of 31 May 2011. 
19 See Rule 111.9 of the Staff Rules, which refers b ack to Regulation 10.7 of the Staff Regulations for 
the method of calculation.  WT/BFA/W/279 
 Page 17 
 
 
   other staff members who separate from th e WTO upon completion of a minimum of 
ten years of service;  they receive 50 per cent of the aforementioned grant. 
76. The last case concerns a staff member who in 2008 requested early retirement at the age of 55 
as of 31 January 2011, preceded by 21 months of un paid leave to look after elderly parents.  
In September 2008, the HRD sent a note to the Dir ector-General, for the attention of his chef de 
cabinet, proposing that the staff member should be  given unpaid leave and a termination indemnity 
based on Regulation 10.3(c) and 10.6 of the Staff Re gulations, which deal with termination decided 
by the Director-General.  Subparagraph (c) of Re gulation 10.3 applied in this case provides that 
"if such action is desirable in view of the need s of the WTO, on terms mutually agreed with the 
staff member".  In this case, and in this case alone, Regulation 10.6 allows the granting of an 
indemnity 50 per cent above the usual indemnity defined in Annex 4 to the Staff Rules, which 
contains a scale according to which a staff member w ith a regular contract and more than 15 years of 
service has the right to 12 months net salary.  B earing in mind this supplement, the person concerned 
received 18 months net salary, which was pa id in 2009 before the unpaid leave. 
77. No regulation specifically exclud es the possibility of combining a termination indemnity paid 
in 2009 with a separation grant paid in 2011, a nd the person concerned also received a separation 
grant corresponding to one month's average salary in  the Organization when he officially retired 
on 31 January 2011. 
78. The Secretariat should ensure that it obtains formal authorization from the 
Director-General in all instances where action by hi m is required by the regulations and that it 
keeps the authorizations given by him.  
79. Rule 112.8 of the WTO Staff Rules defines th e rules applicable to installation grants: 
 When staff members and their eligible fam ily members travel at WTO expense to the 
duty station on initial appointment, they shall be paid an installation grant. 
 the Director-General may, in appropriate cases, authorize payment of all or part of the 
installation grant where the WTO has not been required to pay travel expenses upon the initial appointment of a staff member w ho otherwise would have been so entitled. 
80.  The three cases verified were dealt with corr ectly.  The examination showed, however, that 
no authoritative document proving that travel had act ually occurred was kept in the files, but these are 
kept by the travel office. 
81. The Human Resources Division should keep copies of the supporting documents for the 
indemnities paid.  
Recommendation No. 11.  The Secretariat shou ld ensure that it keeps all the supporting 
documents for the indemnities paid. 
 
The Secretariat indicated in response that it was currently introducing a policy for the filing 
of documents.  This policy will, among other th ings, avoid having to keep numerous copies of 
supporting documents in the Or ganization's various services.  In agreement with the Human 
Resources Division and the administrative division,  supporting documents showing that travel 
actually took place are kept by the travel office. 
 WT/BFA/W/279 
Page 18  
 
  (c) Follow-up to previous recommendations on staff management 
82. Our final letter of comments in September 2008 set out the following recommendations 
concerning staff management at the WTO: 
 The minimum time for moving from one gr ade to the next should be extended; 
 professional mobility should be given greater importance among the criteria taken 
into account for promotion; 
 a database should be established showing th e career and professional skills of staff 
members; 
 the awards scheme should be revised as it is not sufficiently motivating; 
 a multi-year training plan should be developed; 
 all temporary contracts for over 11 months should be reviewed; 
 evaluation interview reports should be systematically utilized; 
 a proper social assessment report should be established, together with regular updates 
on human resources. 
83. The auditors noted that the Secretariat had made major efforts to modernize its human 
resources management policy along the lines of these recommendations. 
84. These considerations were summarized, in par ticular, in the Administrative Memorandum of 
November 2011 on the staff promotion policy. 
4. Control of certain staff costs requested by the Budget Committee 
85. At its meeting held on 13 March, the Budget Comm ittee asked the external  auditors to verify 
expenditure by staff using the Organization's cred it cards and taxi, mob ile telephone and mission 
expenses.  A rapid verification of these costs duri ng the certification of accounts audit in 2011 led to 
the findings below.  It will be completed by a perfo rmance audit by the internal  audit office at the end 
of 2012, and some points raised here will be followed up in the course of subsequent controls. 
(a) Taxi expenses 
86. In accordance with the recommendations made by  the Austrian, and subsequently French, 
external auditors concerning the large amount of ove rtime by drivers for the Organization's directors, 
on 3 November 2008, the Secretariat advised directors to use taxis rather than WTO drivers outside 
working hours ("before 8.30 a.m. and after 5.30 p.m.") and set up a taxi service, following an 
agreement reached with a taxi firm in Geneva.  The agreement of 14 October 2008 provided that a 
telephone call would be made to this firm, with a voucher being given to the driver of each taxi, and 
that the firm's costs would be reimbursed each month. 
87. This policy has been highly successful and en abled drivers' overtime to be reduced 
by 75 per cent in exchange for a modest amount of taxi costs
20, most of the directors in practice using 
their own vehicles rather than a taxi if meetings run late. 
                                                      
20 The annual costs amounted to CHF 142 in 2008 (for two months), CHF 2,167 in 2009, CHF 8,662 in 
2010 and CHF 7,829 in 2011.  WT/BFA/W/279 
 Page 19 
 
 
  Table 6.  Trend in drivers' overtime (in number of hours) 
2008 2009 2010 2011 
113,846  36,396  18,426  28,429  
Source :  Court of Audit, based on WTO data. 
 
88. Verification of all taxi costs in 2010 and 2011 shows that: 
 The supporting documents for these costs are clear and kept properly by the accounts 
services;  they show the name of the pers on using the taxi, the taxi number, the time 
and destination, and the cost of the journey; 
 in accordance with the agreement, th e taxi service operates "on credit"21, the cost is 
not paid by the person using the service but is reimbursed to the taxi firm, to which 
the director in question must hand over a voucher; 
 a few people make frequent use of taxis:   over the four years from 2008 to 2011, 
four of them accounted for 74.29 per cent of taxi costs;  three of these were women, who use taxis for safety reasons; 
 we have obtained convincing replies showing that the taxis have been properly used 
for professional reasons, after having questione d the persons who had costly journeys 
by taxi and their superior officers; 
 it is unfortunate that the aforementioned persons were not questioned earlier by the 
administrative division, which would have avoided having to request the external 
auditor to undertake additional verificati on and would have ensured that services 
were better adapted to the Organization's needs
22; 
 some allegations made to  us were unjustified; 
 taxi costs will probably decrease more in 2012 than in 2011 (when they fell 
by 9.61 per cent) because some of their main users have fewer needs. 
89. To lessen the concerns of delegations and in future regulate the use of taxis without the 
Budget Committee and the external auditors having  to deal frequently with such modest sums, 
we suggest the following: 
 Simple directives on using taxis should be issued, specifying for example that the 
least costly method of transport should be used; 
 regular discussions between the director of  administration and the main users of 
taxis in order to verify compliance with the aforementioned directives and the correct functioning of the service; 
                                                      
21 The vouchers indicate "tax i journeys on credit". 
22 For long journeys that cannot be made on public transport, it would be more appropriate and less 
costly to use a WTO driver rather than a taxi, contrary to the tenor of the overly brief message sent to directors 
by the Secretariat on 8 November 2008. WT/BFA/W/279 
Page 20  
 
   elimination of the taxi service, for example, when the current arrangement 
expires, and its replacement by a straigh tforward system of reimbursement of 
the taxi expenses of directors, who should pay them in advance. 
90. This reform would be similar to that successf ully implemented by the Secretariat for credit 
cards (see below). 
(b) Mission expenses 
91. We have verified mission expenses (travel costs and per diem ) for 2011 and the beginning 
of 2012, examining the supporting documents give n to the accounts services for the following 
missions: 
 Missions to the country of origin of the WTO staff member concerned; 
 missions by those officials who travel the most; 
 missions to countries that are tourist destinations. 
92. We have noted that all the missions were author ized by the superior officer of the official 
concerned
23 and were justified for professional reasons, in greater or lesser detail depending on the 
case.  Moreover, the accounts services, in accordance w ith the request by external auditors and the 
internal auditor, require the following documents  proving that the mission actually took place and 
how long it lasted:  boarding cards for air travel (or tr ain tickets) and hotel bills.  We did not verify the 
actual transmission of back-to-office reports to the directors concerned, as recommended by the 
internal auditor, because these are not intended fo r the accounts services, but we did find that the 
back-to-office reports were in fact transmitted to the officials responsible for training and technical 
assistance when we looked at the Doha Fund. 
93. We did not find any discrepancies or any "abusive travel" that had been indicated to us in 
connection with the missions we examined. 
(c) Telephone costs 
94. In 2005, the WTO introduced a system of codes to  enable each staff member to declare, when 
using a fixed telephone in the Organization, whethe r the call was work-related or private.  In the 
former case, the Organization pays and in the la tter the cost is deducted from the staff member's 
salary.  This system was also adopted for mobile  telephones when the WTO made these available to 
certain staff members from 2009 onwards. 
95. In addition, the Organization introduced a system of validation through the WTO intranet and 
a posteriori control of work-related communications.  Sta ff members must look at the monthly list of 
professional communications on the intranet and validate it.  If they consider that some communications classified as professional are in fact pr ivate, they must reclassify them and they are 
deducted from their salaries.  The validated list of their professional communications is verified by the 
officials designated for this purpose in each divi sion, which may validate them or automatically 
reclassify certain professional calls as private calls. 
96. This system has enabled telephone costs to be reduced, although they are increasing again 
since mobile telephones were introduced by th e Organization (numbering 138 at the end of 
                                                      
23 And by his chef de cabinet in the case of the Director-General.  WT/BFA/W/279 
 Page 21 
 
 
  April 2012).  Despite this increase, the overall co st of telephone communications was still below that 
in 2004, before the aforementioned reform. 
Table 7.  Trend in the Organization's telephone costs (in Swiss francs) 
 
 2004 2008 2009 2010 2011 
Communications 417,643 329,768 350,469 391,626 386,116 
Subscriptions 265,689 225,347 227,268 207,770 246,335 
Total 683,331 555,115 577,757 599,396 632,450 
Source :  Court of Audit, based on WTO data, 
97. Random verifications show that mobile tele phone costs are extremely high when a staff 
member travels away from Geneva:  calls to and from Geneva (which are also billed) are very 
expensive and involve costs of se veral hundred Swiss francs each month.  In the cases examined, 
however, travel by all the staff members involved was justified. 
98. We consider nevertheless that several reforms need to be made in order to monitor 
telephone costs more closely:  
 Issuing of directives on the use of mobile telephones, requesting staff members to 
give preference to texting (SMS) rather than telephoning while travelling away from Geneva;  
 preparing and updating a list of persons or divisions
24 using the Organization's 
mobile telephones, which would facilitate co ntrol of the use of mobile telephones 
by the Organization and by the internal and external auditors;  
 highlighting mobile telephone costs in th e accounts as they are not currently 
separated from fixed telephone costs,  but probably account for around half25; 
 modification of the current system of validating professional communications 
monthly, usually entrusted to secretari es, who are reluctant to rectify any 
mistakes in separating the professional and private communications of their superior officers;  telephone communicat ions should periodically be reviewed 
by a higher official in each division and by the administrative division, 
which should make enquiries of officials who appear to make unjustified and exaggerated use of communications and measures should be taken if there 
is abuse.
26 
                                                      
24 We have noted that, in a given division, the same mobile telephone was used by several members of 
its staff during their successive missions abroad.  
25 According to the WTO's specialized service, mobile telephone costs amounted to CHF 370,406 in 
2011 (CHF 77,411 for subscriptions and CHF 292,995 for consumption) or 46.32 per cent of total telephone 
costs. 
26 It is technically very simple to put a ceiling on the amount of monthly communications on a 
particular mobile telephone. WT/BFA/W/279 
Page 22  
 
  (d) Use of WTO credit cards 
99. A small number of credit cards
27 are made available to the Organization's officials.  They 
were initially debited to the WTO's accounts.  Follo wing abuse by one single official, the system was 
changed and cards are now debited to the account  of the person concerned, who can then seek 
reimbursement of work-related expe nditure paid with those cards. 
100. We have checked all the expenditure paid usi ng credit cards in 2011 and examined the case of 
the aforementioned official.  These verifications showed that: 
 Expenses paid using credit cards are tran smitted to the WTO in detail by the banks 
(the name of each person concerned, the amount, date and the payee for each item of 
 xpenditure); 
 the division between work-related and private expenditure indicated by each 
card holder (in order to obtain reimbur sement of work-related expenditure) 
appears valid28; 
 in the case of the official who made excessive use of his credit card, the Secretariat 
deducted from his salary an amount larger th an that of the personal expenses paid 
with the card, after the bank had transmitte d all the expenditure and the Secretariat 
had separated personal and work-related costs;  however, as a result of a mistake by the bank, the Secretariat did not take into account in the aforementioned deduction 
an amount which the bank communicated to  it by mistake too late and it is 
seeking reimbursement of this amount by the person concerned
29, who has since left 
the Organization. 
101. The auditors will follow up the Secretariat's e fforts to recover this debt.  The reform 
implemented appears likely to avoid an y repetition of the abuse committed.  We recommend, 
however, that a list of credit card holders be  drawn up and updated in order to facilitate 
internal and external controls . 
Recommendation No. 12.  The Secretariat should (i ) keep an updated list of those holding credit 
cards and mobile telephones belonging to the Organ ization;  (ii) issue directives on the use of 
taxis and mobile telephones;  (iii) monitor expe nditure on taxis and telephones more closely;  
(iv) envisage cancelling the contract with the taxi  company;  and (v) show mobile telephone costs 
in the accounts. 
 
The Secretariat indicated in response that it was compiling lists of credit card holders and 
staff members given mobile telephones and was introducing directives on the use of these two 
services, as well as measures to follow up such expenditure more closely, particularly mobile 
                                                      
27 Fourteen at the end of April 2012.  
28 In practice, credit cards are mostly used on mi ssion to pay hotel bills and hospitality for important 
persons.  The card holders sometimes use them to pay additional personal costs for a modest amount, but do not 
request their reimbursement.  Credit cards are also used to order books for the library, computer equipment on 
line and for the cost of organizing training sessions outside Geneva. 
29 The bank first indicated expenditure of CHF 8,597.25 by the person concerned;  the Secretariat, as a 
precaution, deducted CHF 10,000 from his salary, i.e. some CHF 1,420.75 too much.  The bank notified a new series of expenditure amounting to CHF 11,232.40.  Almost all the expenditure communicated by the bank was 
private.  WT/BFA/W/279 
 Page 23 
 
 
  telephone costs.  The Secretariat was also setting up a system to facilitate the use of public transport 
and to limit the use of taxis. 
 
F. ASSETS  
1. Management of the inventory of WTO publications and souvenirs 
102. In 2011, the trend in the value of the invent ory of publications and souvenirs was as follows: 
Table 8.  Trend in the value of the inventory of publications and souvenirs in 2011 
(in Swiss francs) 
 
Inventory  2010 2011 
WTO publications and joint publications 224,142 372,126 
Other publications 94,598 74,685 
Souvenirs 47,523 32,774 
Sub-total of inventory (including 
adjustments and profit and loss write-off) 366,262 479,585
Adjustments  -6,004 8,717 
Profit and loss write-off -132,197 -48,147 
Total adjustments and profit and loss 
write-off -138,201 -39,430
Source :  Court of Audit, based on WTO data. 
103. Unlike previous years, a check of the inventory in the Bookshop and the print shop did not 
detect any discrepancies.  There has been a net im provement in the management of the inventory with 
a view to the transition to IPSAS. 
104. In addition, the Secretariat is getting read y to estimate the inventory in accordance 
with IPSAS 12, by calculating the variable costs of  printing the publications it itself produces, which 
are not taken into account at present. 
105. The Secretariat will encounter one particular problem in estimating the inventory inasmuch 
as this is managed in three different places;  the Bookshop in the Centre William Rappard, 
the publications service in the chemin des Mines a nd the warehouse belonging to the firm Turpin in 
the United Kingdom, which manages CHF 179,092 of the inventory, or 37 per cent of the total value 
of the WTO's inventory. 
106. From the accounting point of view, these three inventories are all part of the 
WTO's inventory, but they are managed in different ways and this is a problem for strict application of the weighted average cost method of estimati on, chosen by the Secretariat from the methods 
authorized in IPSAS 12. 
107. It is therefore recommended that the two inventories now managed separately in Geneva 
should be combined, as soon as the print shop has moved, thus doing away with internal invoices 
between the two sites in Geneva , which is making accounting more complicated, and that a stock 
management program should be introduced for si multaneous management of the future single 
inventory in Geneva and that of Turpin. 
108. Furthermore, the transport costs for Turpin's warehouses should be included in the valuation 
of the inventory. WT/BFA/W/279 
Page 24  
 
  109. Lastly, the Secretariat should define its policy for verifying the physical inventory held 
by Turpin:  regular checks, the choice between annual comprehensive inventories or "rotating" 
inventories through random checks, preparati on of an accounts service note to make these 
choices official. 
Recommendation No. 13.  The Secretariat should  finalize preparations for IPSAS 12-compliant 
management of its inventory of publications and souvenirs. 
 The Secretariat indicated in response that it w ould study the possibility of combining the 
inventories managed in Geneva and perfecting its me thod of estimating the inventories of publications 
in order to comply with IPSAS. 
 
G. P
LANNED EXTENSION TO WTO  HEADQUARTERS  
Table 9.  Commissioning and financing of the project (in millions of Swiss francs) 
 
Project Financing by the Swiss authorities WTO 
financing Commissioning 
organization Grant Loan Total 
Renovation  of the CWR30 
building 45  45 0 FIPOI31 
Security perimeter (estimate) 8   0 FIPOI 
Intra-muros  (extension of 
the CWR)  20 20 0 WTO 
Extra-muros  (and car park) 10 (Car park) 40 (Building) 50 0 WTO 
Common facilities 0 0 0 21.3 WTO 
Making offices available  15  15 0  
Total 78 60 138 21.3  
FIPOI = Building Foundation for International Organisations. 
 
                                                      
30 Centre William Rappard. 
31 Building Foundation for International Organisations.  WT/BFA/W/279 
 Page 25 
 
 
  
 
Source :  WTO . 
 110. The WTO headquarters renovation and extension project comprises three major overlapping 
stages: 
 Renovation of the headquarters (Centre William Rappard or CWR), from 
January 2009 to autumn 2012 (excluding renova tion of the restaurant area, which will 
be from March 2013 onwards), for which th e Building Foundation for International 
Organisations (FIPOI) is the commissioning organization; 
 the intra-muros  extension of the headquarters (roofing over and equipping 
two internal courtyards), from July 2010 to March 2012, for which the WTO is the 
commissioning organization;  and 
 the extra-muros  extension (construction of a new building and underground car park 
next to the CWR) from March 2011 to December 2012, also commissioned by the WTO. 
111. Two additional projects have been added to these major stages: 
 The building of an external security  perimeter, commissioned by FIPOI; 
 the provision of common facilities for the whole project, for which the WTO is the 
commissioning organization;  the external a uditor's previous report recommended that 
the estimate and financing for these common facilities should be finalized. 
112. In accordance with our previous recommendations, the, supervision of the project has been 
reinforced and outsourced under the following conditions: 
 An overall supervisor within the WTO is following up the project as a whole; WT/BFA/W/279 
Page 26  
 
   supervision of the project has been outsourced and entrusted to a Swiss firm 
Pom+Consulting , which is directly responsible for overseeing the building sites, 
including the provision of the common facilities; 
 two design architects have been given responsibility for the intra-muros project and 
the related common facilities ( Group 8 ) and for the extra-muros project and its 
common facilities ( Wittfoht Plannung ); 
 the work has been entrusted to general building firms:  HRS for the intra-muros , 
Implenia for the extra-muros and DEGW for the conference rooms (which are part of 
the common facilities).  
113. The FIPOI informs the WTO of the renovation operations for which it is the commissioning 
organization through a steering committee;  it has subcontracted the direction of the work to a specialized outside agency, the firm Tech Data . 
114. Contracts for overseeing the operation call for three remarks: 
 The contract with the general construction firm HRS for the intra-muros project is 
very reassuring for the WTO because it imputes  to this firm most of the over-run 
caused by differences between the actual building and the architectural design; 
 the contract with Group 8 for the intra-muros project was signed with FIPOI at the 
pre-project stage, just before the "Message to Parliament", which approved the loan to 
the WTO.  Although the WTO is not formally party to this contract, it is nevertheless bound by it because it has taken over from FIPOI the commissioning of all the 
components of stages 3 and 4 defined in the model contracts of the Swiss Society of 
Engineers and Architects (SIA). 
 as to the common facilities, WTO gave res ponsibility for architectural control to 
Group 8 for the intra-muros -related projects (for example, the conference room and 
the coffee shop atrium) and to Wittfoht for the extra-muros -related projects 
(restoration of the new building). 
115. The WTO has taken over the role of commissi oning organization since Parliament's approval 
of the "Message" and is thus de facto contractually bound to the firm Group 8 , which it pays on the 
basis of a ceiling authorized by the SIA's model cont racts.  It does not appear necessary to reproach 
the Secretariat with failure to place Group 8 in competition with other architects in this particular 
case, taking over FIPOI's architect to terminate th e work it had commenced was obviously the most 
reasonable solution.  But it is surprising that, at the time of the audit, the WTO did not have a 
copy of the contract between the firm Group 8 and FIPOI or of any written agreement with this 
firm . 
The Secretariat received a copy of this document on 30 April 2012 . 
 
1. Partial recording of expenditure on the project in the accounts 
116. Because of its mode of financing and not its nature, expenditure  on the renovation and 
extension of the WTO's headquarters is record ed differently in the accounts.  In fact: 
 Costs financed by loans and grants from th e Swiss Federal Government are recorded 
as work in progress on the basis of their invoicing;  WT/BFA/W/279 
 Page 27 
 
 
   costs financed by the Members' Trans ition Operating Fund (MTOF) are directly 
deducted from this Fund on the basis of commitments; 
 investment costs financed from the WTO' s regular budget are recorded as current 
expenditure, on the basis of commitments, without being recorded as assets in the accounts. 
117. The method adopted does not permit an overall view of the project in the financial statements.  
Furthermore, the accounting entries consisting of  directly deducting from the MTOF the costs 
financed by it are not in accordance with IPSAS because they lead to under-estimation of the 
Organization's assets.  The Secretariat should show  a carryover from the MTOF so that the balance 
sheet shows income that allows the charges for the year financed by th e Fund to be offset, with these 
being recorded in the accounts during the transition to IPSAS. 
118. Despite this lacuna and taking into account the transitional nature of this mechanism, 
which will end when IPSAS are adopted, it is pr oposed that the method applied be accepted as 
an exception, provided that it is explained in a note to the financial statements . 
Recommendation No. 14.  The complex method for recording investment made in connection 
with the WTO headquarters renovation-extension pr oject in the accounts should be explained 
in a note to the financial statements. 
 
The Secretariat accepted this recommendation immediately and added a paragraph to Note 2 
to the financial statements on the method of reco rding investment connected with the renovation 
extension project in the accounts. 
 
2. Presentation of the project's financing in  the notes to the financial statements 
119. To enable the project to be completed su ccessfully, the Swiss authorities granted an 
interest-free loan of CHF 60 million over 50 years, of which CHF 40 million were for the extra-muros 
extension and CHF 20 million for the intra-muros operation.  In addition, the Swiss authorities gave a 
grant of CHF 10 million to build a car park on the site and temporarily made available to the 
Organization the premises in the chemin des Mines, valued at CHF 15 million.32 
120. The funds are disbursed in tranches as needed  upon presentation of the lists of expenditure 
to be made.  Nevertheless "if the building permit is not granted by the Genevan authorities […], 
the Swiss authorities would take over the expenditu re committed and the Organization would not have 
to reimburse the loan ".  In accordance with this provision in th e agreement, all the expenditure made 
before the building permit was granted was directly  and entirely prefinanced by FIPOI.  When the 
building permit was granted, FIPOI's operations on behalf of the WTO were recorded in the accounts 
without any transfer of cash. 
121. The financial statements record in the same  line, without differentiating between them, 
the CHF 10 million grant and the interest-free loans for a cumulative amount of CHF 60 million from 
the Swiss Federal Government as and when they ar e mobilized.  The grant should be separated as it 
does not have the same liability status.  Furthermor e, in accordance with IPSAS, this grant should be 
amortized over the lifetime of the asset it financ ed, whereas only the saving in financial costs 
achieved as a result of the Federal interest-free loans could be.  It is therefore recommended that the 
CHF 10 million grant from the Swiss Confederation be treated differently to its interest-free loan of 
CHF 60 million in the financial statements. 
                                                      
32 The Canton also makes available free of ch arge 400 spaces in the Sécheron car park. WT/BFA/W/279 
Page 28  
 
  Recommendation No. 15.  The grant of CHF 10 m illion from the Swiss Confederation should be 
treated differently to its interest-free loan of  CHF 60 million in the financial statements. 
 
The Secretariat accepted this recommendation immediately.  The financial statements were 
amended to differentiate between the am ounts received as a loan and as a grant. 
 
122. The table concerning the renovation-extension proj ect in Note 1 to the financial statements 
does not mention all the loans and grants from the Swiss Confederation, which makes it difficult to 
relate it to Note 8 on the work in progress.  Two items are missing: 
 The transfer from FIPOI for the car park, amounting to CHF 3,770,000; 
 in the renovation budget, FIPOI's payment of CHF 979,000 for work originally part 
of the intra-muros project. 
123. The nature of this latter payment by FIPOI is  not obvious.  If it is a grant given to the 
Organization, it should be entered in the accounts as such in the liabilities colu mn to offset the work 
recorded, but if the facilities belong to FIPOI, the corresponding operations should not be recorded 
under work in progress.  It is therefore recommended that Note 1 to the financial statements 
mention all the Federal funds given to the WTO, specify the nature of FIPOI's payment of part 
of the intra-muros project and draw the consequences for the accounts . 
124. Lastly, it was noted that the information gi ven in Notes 11, 15 and 26 to the financial 
statements is inconsistent.  In order to provide comprehensive info rmation on the financing of the 
project, it is suggested that the following table summarizing the project's financing be presented, 
specifying the respective contributions from  the regular budget and from the MTOF . 
Table 10:  Methods of financing the project through the WTO's own funds 
 in CHF 2010 2011 
Regular 
budget 
A Invoicing 0 1,786,230 
Provision for outstanding obligations 1,990,555  
Provision for outstanding obligations at 31 December  1,990,555 204,325 
MTOF 
B Invoicing 0  1,968,405  
Provision for outstanding obligations  1,809,445   
Provision for outstanding obligations at 31 December  1,809 445   1,848,843  
Total own 
funds 
C=A+B Invoicing 0 3,754,635 
Provision for outstanding obligations  3,800,000  
Provision for outstanding obligations at 31 December  3,800,000   
Source :  Court of Audit, based on WTO data. 
Explanation:  a sum of CHF 1,990,555 was allocate d to the provision for outstanding obligations in 
the regular budget in 2010;  this amount was not used in 2010 and provision remained 
CHF 1,990,555 at 31 December 2010;  CHF 1,786,230 of this amount was used in 2011 so the 
provision was CHF 204,325 at 31 December 2010 . 
  WT/BFA/W/279 
 Page 29 
 
 
  Recommendation No. 16.  To improve the presentation of the financing for the 
WTO headquarters renovation-extension project, the notes to the financial statements should:  
(i) indicate the total amount of the Federal funds  available to the WTO;  (ii) explain the nature 
of FIPOI's payment of some of the costs of the intra-muros project and draw the consequences for the accounts;  and (iii) provide a table summarizing the financing of the project, specifying the contributions from the regular budget and from the MTOF, respectively.  
 
The Secretariat accepted this recommendation immediately and the items of information 
mentioned above have been added to the notes to th e financial statements.  As the renovation and 
intra-muros works are closely lin ked, the common works carried out were shared (fences, drainage, 
enclosures, access roads) resulting in a transfer of fu nds of CHF 979,000 from  the renovation project 
to the intra-muros project. 
 
III. PERFORMANCE AUDIT 
OBJECTIVES AND SCOPE OF THE AUDIT 
 
125. In accordance with our notification letter of 26 Ap ril 2011, a team of four external auditors 
conducted an audit within the WTO, mainly to exam ine the procedures for the settlement of disputes 
before panels ( groupes spéciaux )33 and the WTO's Appellate Body (AB).  The purpose of this audit 
was to examine dispute settlement procedures from the point of view of the independence of the 
bodies concerned vis-à-vis the parties, observance of confidentiality standards and of the time-limits 
and cost of proceedings.  
126. The closing meeting for the audit was held with  Mr Tristan Bauswein, Head of the Budget 
and Finance Section, on 14 October 2011.  The letter containing our provisional comments, 
dated 15 October 2011, gave rise to a number of re marks, which have all been taken into account.  
The revised version of this letter was sent to the persons concerned on 3 May 2012 so that they could 
again express their views. 
                                                      
33 WTO's official documents in French use the term " groupe spécial ".  This  report uses the word 
"panel" in both in the English and French versions as it is most often used verbally within the Organization. WT/BFA/W/279 
Page 30  
 
  SUMMARY OF FINDINGS AND RECOMMENDATIONS 
 
1. Main findings 
(a) Dispute settlement at the WTO is designed to ensure the independence of all its actors, 
in particular through a very  comprehensive system for declaring an interest that is 
effectively put into practice. 
(b) Observance of the confidentiality of procedures, which is one of the factors in the 
independence of dispute settlement bodies, is properly guaranteed.  In addition, special precautions are taken, in delicate cases, to protect economically sensitive information 
considered by members of panels and the A ppellate Body and by representatives of the 
Secretariat assisting them. 
(c) The time-limits for settling disputes at th e WTO are much shorter than those to be 
found in the major international courts.  They  are, however, longer than those provided 
in the Understanding on Rules and Procedur es Governing the Settlement of Disputes, 
both as regards the duration of panels and of appeals proceedings:  for appeals, the 
average length of time taken to settle a dis pute is 18 months, including the appeal and 
translations, whereas it should not exceed 12 months. 
(d) A number of technical measures are recomm ended below to shorten these periods and 
amendments to the Understanding are also the subject of negotiations among WTO Members, although all the measures envisaged could only be of limited scope because the growing complexity of the dispute cases brought before the WTO and increasing recourse to the appeals proce dure constantly increases the Organization's 
work load in this respect. 
(e) The amount of direct expenditure on di spute settlement accounted for 6.8% of 
WTO's expenditure in 2010.  The total amount  of expenditure on dispute settlement, 
including indirect costs, can be estimated at CHF 23.1 million in 2010, or 10.7% of the Organization's expenditure. 
(f) When drawing up a budget by activity, as init iated in 2012, it is important to calculate 
precisely the amount of these indirect costs so as  to be able to estimate the total cost of 
dealing with each case by a panel or the Appellate Body. 
 
2. Recommendations 
 Recommendation No. 1.  The Secretariat s hould (i) seek a new method for presenting 
panellists to parties for selection;  and (ii)  systematically present to parties panellists 
already familiar with the cases in disput es dealing with the implementation of 
previous recommendations.  
 Recommendation No. 2.  It is a useful pr actice to consult parties before choosing 
experts and preparing questions to be put to them, but it is not necessary to wait until 
agreement has been obtained from parti es before appointing experts and putting 
questions to them;  this is a discretionary power of panels.  
 Recommendation No. 3.  In order to speed up panel proceedings (i) the organization 
of a single substantive meeting with the pa rties should be encouraged whenever the 
nature of the case so permits;  and (ii) it should be proposed to Members that only the 
actual reports of panels and the AB should be translated into the three official 
languages before they are transmitted to th e Dispute Settlement Body.  The annexes  WT/BFA/W/279 
 Page 31 
 
 
  would be posted on line immediately in the working language and translated 
subsequently.  
 Recommendation No. 4.  The Secretariat of the Appellate Body needs to be 
reinforced so that the time-limits for a ppeals comply with those defined in the 
Understanding.  
 Recommendation No. 5.  (i) The forms of pa yment for members of panels and experts 
should be determined officially, in accordan ce with the WTO's regulations;  and (ii) 
at the same time, panellists' fees should be r ecalculated and the criteria for their travel 
costs should be defined.  
 Recommendation No. 6.  When preparing the budget by activity, initiated as of 
January 2012, the Secretariat should calculate the total cost (including indirect costs) for consideration of each case by a panel or the Appellate Body. 
COMMENTS AND RECOMMENDATIONS 
 
127. The settlement of disputes is one of the WTO's main tasks, together with the negotiation of 
international trade agreements and monitoring th eir implementation, and technical assistance to 
developing countries to build their trade capacity. 
128. The present report examines the WTO's dispute se ttlement system from th e point of view of 
the independence of the actors, the confidentiality of proceedings, their duration and cost.  The role of 
the actors in the system and the procedur es envisaged are described in Annex II. 
3. Independence of the dispute settlement system's actors 
129. The WTO's dispute settlement system is desi gned to guarantee the independence of all the 
actors.  These are subject to the obligation to present declarations of interest and to avoid "any direct 
or indirect conflicts of interest in respect of the subject matter of the proceedings".34  Various methods 
are provided to guarantee the independence of memb ers of the AB, panels and the Secretariat. 
(a) The obligation on actors to present declarations of interest 
130. The Rules of Conduct for the Understanding on Rules and Procedures Governing the 
Settlement of Disputes (hereinafter called the Rul es of Conduct) are contained in Annex II to the 
Working Procedures.  They make declarations of interest mandatory for members of the AB and its 
Secretariat, and for panels, as well as experts, arb itrators and representatives of the Secretariat "called 
upon to assist the panel" (Paragraph IV.1) at the tim e when they are invited to take up their posts.35 
131. These declarations are extremely comprehens ive and are intended to cover "financial 
interests … professional interests …other active in terests (e.g. active participation in public 
interest groups or other organisations which may ha ve a declared agenda relevant to the dispute 
in question)… considered statements of persona l opinion … employment or family interests".36  
                                                      
34 Paragraph III.1 of the Rules of Conduct. 
35 In practice, members of AB must make a general declaration of potential conflict of interest when 
their governments put them forward for this post, and then another declaration each time they are chosen in rotation to deal with a new case in a three-member appe als division.  Members of the Secretariat must make a 
declaration each time they collaborate in a new case.  Panellists, arbitrators and experts must declare their 
interests "prior to confirmation of their appointment"  to a new case (Paragraph VI.4(a)). 
36 Extract from the "Illustrative list of information to be disclosed", which is Annex 2 to the Rules 
of Conduct. WT/BFA/W/279 
Page 32  
 
  Those concerning members of panels, arbitrators an d experts are, in principle, transmitted to the 
DSB's Chair "for consideration by the parties to the dispute" (Paragraph VI.4(a) of the Rules of 
Conduct).  Those concerning members of the Secret ariat are, in principle, transmitted to the 
Director-General. 
132. "Any party to a dispute, … who possesses … evidence of a material violation of the 
obligations of independence, impar tiality or confidentiality or the avoidance of direct or indirect 
conflicts of interest shall … submit such evidence to  the Chair of the DSB, the Director-General or 
the Standing Appellate Body" (Paragraph VIII.1 of th e Rules of Conduct) to enable them to inform 
the parties and take the appropriate measures. 
133. It is provided, for example, that if there is a serious violation of the rules by a panellist, 
arbitrator or expert, the Chair of the DSB will take  the necessary measures to ensure that the person 
concerned is revoked or replaced (Paragraph VIII.10 of  the Rules of Conduct).  For members of the 
Secretariat, it is for the Director-General to appl y the procedures and sanctions provided in the Staff 
Regulations (Paragraph VIII.12).  For members of the AB  and of its Secretariat, it is up to the AB in 
plenary session (except for the AB member concerne d, where applicable) "to take any appropriate 
action after having provided a reasonable opportunity  for the views of the person concerned and the 
parties to the dispute to be heard" and to inform  the Chair of the DSB accordingly (Paragraph VIII.16 
and 17). 
134. In practice, only two cases of potential conflict of  interest involving panellists have arisen for 
all the actors in dispute settlement proceedings.  In the US – Gasoline case in 1995, the Venezuelan 
party declared to the AB's Chair that one member of the appeals division dealing with the case had for 
four years been a consultant (at a modest fee)
37 for a law firm that advised the Venezuelan 
Government.  The AB member concerned indicated that he had not mentioned this fact because he 
was not aware that the law firm advised Venezuel a and proposed to withdraw from the case, which 
the AB rejected and explained to the parties because it did not consider that there was any real risk of 
a conflict of interest in this case. 
135. In the 1998 Turkey – Textiles case, a proposed panellist refused the appointment when 
Venezuela and the European Unio n (third party) indicated that he had written an article on 
regionalism, a subject related to the case inasmuch as regional agreements were at issue. 
136. Moreover, in the US – Continued Suspension case, one Member managed to contest the 
independence and impartiality of tw o experts who had advised the panel, by taking the matter up at 
the AB. 
137. The mechanism intended to avoid conflicts of interest as a whole is extremely comprehensive 
and is effectively implemented.  It can be seen, however, that the official procedures have been made more flexible in two respects, which do not appear essential, by the Legal Affairs and Rules Divisions.  On the one hand, all declarations of interest concerning members of panels, experts and 
arbitrators are not sent to the Chair of the DSB, but  only those declarations of particular importance 
are sent not to the Chair of the DSB but directly to th e parties.  On the other, declarations by members 
of the two aforementioned Divisions stating that there is a potential conflict of interest in a particular 
                                                      
37 His role as a consultant was confined to arranging contacts between the law firm and official and 
business circles in his own country and had nothing to do with the case addressed, or with the legal or trade 
problems at issue.  WT/BFA/W/279 
 Page 33 
 
 
  case are transmitted to their respective Directors by e-mail38, who take them into account when 
allocating responsibilities for assisting panels. 
(b) Measures specific to the Appellate Body 
138. Unlike panel members, members of the AB may participate in cases involving their 
own country.  The multiple declarations of inter est they have to complete are therefore of 
particular importance in their case.  There are a number of other means intended to guarantee 
their independence: 
 The procedure for selecting members, preceded by interviews by the selection 
committee and "confession" sessions at which Members' ambassadors question the candidates before giving their opinions to the selection committee; 
 absence of any affiliation to their national authorities (Article 17.3 of the 
Understanding); 
 ban on accepting any employment or pursuing any professional activity that 
is inconsistent with his/her duties and responsibilities (Article 2.2 of the 
Working Procedures); 
 ban on belonging to an appeals division if there is a potential conflict of interest; 
 geographical distribution of members, which must reflect that of the WTO; 
 system of rotation of members, appointed by drawing lots for each case, which avoids 
any specialization by country or by type of case; 
 the practice of collegiality, implem ented in particular through: 
 the aforementioned system of rotation, whic h obliges members to work with all their 
colleagues; 
 systematic consultation of the other members of the AB by the three-member 
divisions before each case is concluded; 
 the organization of seminars when new me mbers are appointed so as to make them 
acquainted with the institution's case law; 
 mutual control by members, which is one  of the consequences of collegiality;  
a member who defended his country's position would not be supported by his colleagues and would be criticized by them. 
139. This method of protecting the independence of th e AB is a success, as can be seen from the 
fact that the independence of the institution and of  each of its members has not been questioned.  
Such independence is not, however, automatic inas much as the appointment of the AB's members 
                                                      
38 The mails sent by Secretariat officials are not comp leted declarations of interest but explanations of 
the precise risk of conflict of intere st which they consider they face in a given new case.  The Rules Division 
transmits all these declarations to the Director-General, who has them ex amined by a jurist  in his office. WT/BFA/W/279 
Page 34  
 
  depends on the WTO's Members and it may be consid ered that they would not choose persons hostile 
to their own positions.
39 
140. Indeed, collegiality is conducive to consistency and predictability of case law.  Its effect is 
that individual opinions are rare and dissenting opinions are absent40 in the AB, although the latter are 
not prohibited41, unlike the case in the European  Union's Court of Justice. 
141. This collegial practice and the predictability of  the case law are consistent with the objectives 
in the Understanding, whose Article 3.2 recalls that  "The dispute settlement system of the WTO is a 
central element in providing security and pred ictability to the multilateral trading system." 
142. Several proposals to reform the AB put forwar d by WTO Members are intended to reinforce 
still further the institution's independence and stabilit y, in particular, to avoid the risk that a 
simultaneous changeover of several members42 might affect its coherence.  The reforms proposed 
would consist of the following, inter alia : 
 Members of the AB would sit permanently in Geneva; 
 the number of members would not be limited so as to be able to increase it if there 
were a large number of appeals or some members were not available (if several of them had potential conflicts of interest and did not take part simultaneously in appeals 
divisions, for example); 
 an extension of members' terms (from four to seven years, for example) 
without renewal, which would prevent interruptions in the rhythm of members' renewal and would shield them from the thr eat of non-renewal of their appointment 
by their country of origin or by other Members during their first term. 
143. An increase in the number of members could be useful, giving the institution greater 
flexibility, but might also be harmful to collegiality.   In addition, the delays  noted in certain appeals 
cannot be imputed to the small number of members but rather to the complexity and growing number 
of cases, as well as the limited numbers in the AB Secretariat (see below). 
144. Permanent attendance by members would obvi ously enhance their availability and their 
knowledge of international trade pr oblems at the origin of disputes.  Such a reform would be 
beneficial to collegiality and would avoid potential conf licts of interest with members' other activities.  
It would, however, undoubtedly make the role less attr active to high-level jurists.  The cost of such a 
change would depend on the salaries for members of the AB:  a priori higher salaries and retirement 
                                                      
39 See in this connection the paper presented at the 4th Annual Conference on the Political Economy of 
International Organizations, held in Zurich from 27 to 29 June 2011:  "Agents, Trustees and International 
Courts:  Nomination and Appointment of Judicial Candidates in the WTO Appellate Body"  by Manfred Elsig 
and Mark A.  Pollack. 
40 A note dated 20 May 2011 from the Legal Affairs Division (" Background note:  Individual Opinions 
in WTO Dispute Settlement Proceedings" ) indicates that there were only 21 individual opinions in all 
(two of them from the GATT era) expressed at all stages of dispute settlement proceedings, in connection 
with 17 cases, 11 individual opinions (of which five were  dissenting opinions) concerned panels;  six concerned 
the AB (including three dissenting opinions);  and two concerned arbitrations.  
41 Article 14.3 of the Understanding  provides that individual opinions must be anonymous.  Article 3(2) 
of the AB's Working Procedures recommends, however, that the AB take decisions by consensus. 
42 The appointment of members is in principle staggered over time, the first terms were not for the same 
duration when the AB was created, but non-renewal of some members may acce lerate the pace of change in the 
institution's composition.  WT/BFA/W/279 
 Page 35 
 
 
  pensions for members would offset the savings made  on attendance fees and perhaps on travel costs if 
members were obliged to reside in Geneva.43 
145. Increasing the terms of members from four  to seven years without renewal and 
replacing one member each year would reinforce  the independence of members and collegiality 
without modifying the special features of the cu rrent institution and without affecting its budget 
and its pension plan.  
146. The auditors  consider that they are not competent to make recommendations on the status of 
the AB, which is the subject of negotiations among Members, in which the Secretariat refrains from 
taking a position, the WTO being an international organization guided by its Members.  The foregoing 
paragraph therefore only expresses the personal opinion of the auditors . 
(c) Measures specific to panels and divisions 
147. Article 8.2 of the Understanding underlines the need for the independence of panels, which 
"should be selected with a view to ensuring the in dependence of the members, a sufficiently diverse 
background and a wide spectrum of experience". 
148. Such independence is protected in three ways: 
 Ban on taking part if there is a potentia l conflict of interest, dealt with above; 
 the impossibility for citizens of Members who se government is party to a dispute or a 
"third party" to participate, unless the parties to the dispute agree otherwise (Article 8.3);  and 
 in practice, vigilant monitoring by parties, which would not fail to denounce any 
conflict of interest, as indeed the Ru les of Conduct invite them to do. 
149. These methods are effective and the independe nce of panels has not been questioned. 
150. The independence of the Legal Affairs and Rules Divisions, which assist the panels (helped 
by the technical divisions) and of the AB Secretariat is protected through the sy stem of declarations of 
interest examined above.  This independence is not contested. 
4. Observance of the confidentiality of procedures 
151. Articles 14 and 17 of the Understanding  provide that the deliberations of panels and the AB 
shall be confidential, that their reports shall be prepared without the presence of the parties to the 
dispute, and that the opinions expressed in their reports shall be anonymous. 
152. These Articles are complemented by the aforementioned provisions in Paragraph VII.1 of the 
Rules of Conduct because observance of the confiden tiality of debates is one of the factors in the 
independence of dispute settlement bodies:  failure to observe the rules of confidentiality may give 
rise to denunciations by the parties and to sanctions, like failure to observe the rules of independence. 
                                                      
43 The permanent judges of an inte rnational court are not necessarily obliged to reside where the court 
is sitting.  In the case of the International Court of Ju stice in The Hague, for exampl e, the judges are permanent 
but may choose to live in The Hague or in another country.  If they opt for the latter, they do not receive certain 
financial benefits.  The obligation to reside in Geneva would nevertheless facilitate the protection of sensitive 
data specific to certain cases (see the following chapter on the confiden tiality of proceedings). WT/BFA/W/279 
Page 36  
 
  153. The virtual absence of any discussion on observance of the rules of confidentiality shows that 
they are respected.  One single inst ance of criticism was cited to the external auditors:  a number of 
delegations to the WTO expressed concern at  an article in the Wall Street Journal  of 17 February 2011 
indicating that jurists specializing in internati onal trade were the origin of the disclosure of 
confidential information on the interim report of the panel in the " China – Exports of raw materials " 
case.  They were told that the journalist acknowledg ed that he had not obtained the information from 
Secretariat officials.  In an e-mail, the journalist sai d that he never had the inte ntion to suggest that he 
had been informed by WTO staff.  As a furthe r precaution, the Secretariat undertook an internal 
investigation, which showed that there had been no leak, and the delegations involved in this case 
were informed accordingly. 
154. Observance of confidentiality does not only concer n the work of the panels and the AB but 
also economically sensitive data.  In delicate ca ses, the Secretariat takes special precautions, 
for example, the following measures: 
 Access to all the sensitive data is restricted  to members of the relevant panel and to 
the AB, as well as to Secretariat staff assi sting them in the particular case, and none 
of them have the right to disclose the data; 
 data are stored in special premises;  se nsitive documents are only sent to members of 
the AB and panellists by express courier services or by securitized e-mails; 
 all documents containing sensitive informa tion are identified by a special mark and 
the copies are numbered; 
 highly sensitive data are stored in safes clo sed with a combination lock;  computers 
installed in rooms where there are such safes must not be linked to the network; 
 documents and electronic files containing sen sitive data are destroyed after reports 
have been adopted, except for one  copy kept in a sealed box. 
155. These precautions are in addition to the physical and computer security measures for 
WTO headquarters as a whole, already mentioned by the external auditors;  these measures are sound, 
but our report on the 2010 financial statements a nd the performance audit of WTO's IT system show 
that the Organization is not immune from an attack by hackers using multiple servers, which justifies 
the special precautions for informatics networks mentioned above. 
5. Observance of procedural deadlines 
156. The time taken for dispute settlement at the WTO is much shorter than that observed in other 
international courts
44 (two years at the European Court of Justice in Luxembourg, four years at the 
International Court of Justice in The Hague, six or  nine years, depending on the type of case, at the 
court of the North American Free Trade Agreement45) and a large number of disputes are settled. 
                                                      
44 According to the indications given by the AB Secretariat.  All the figures mentioned are at 
31 December 2011.  By the end of  March 2012, 436 consultations or  complaints had been recorded. 
45 North American Free Trade Agreement (NAFTA).  WT/BFA/W/279 
 Page 37 
 
 
  (a) Quantitative assessment of the dispute settlement system 
157. Since the WTO was established and up to 31 December 2011, 427 consultations or 
"complaints" by parties46 had been recorded.  Not all of these le d to the establishment of a panel.  In 
fact, 186 panels were established, 96 of them comp osed following a proposal by the Director-General 
at the request of one or the other party. 
158. As far as panel reports are concerned, 135 were adopted by the DSB by "negative 
consensus".47 
159. The number of appeals (122) is growing:  at the end of 2011, they concerned 67 per cent of 
the disputes and 84 AB reports were adopted.48 
160. The number of panels dealing with im plementation-related disputes, called 
"Article 21.5 panels", is incr easing and 27 of their 29 reports have been adopted, together 
with 18 implementation-re lated appeals reports. 
161. Almost half of the disputes deal with trade remedies concerning anti-dumping, safeguards or 
countervailing measures or subsidies. 
162. The Understanding  has no provision for Secretariat verification of the implementation of 
DSB recommendations by the parties concerned.  Par ties that are not satisfied must take the initiative 
of complaining to the DSB or requesting the establish ment of a panel to review the implementation of 
recommendations by the Member they consider to be in non-compliance or even requesting the right 
to apply counter-measures to this Member.  Partie s appear to be satisfied with the outcome of the 
action taken by panels and the AB because, at 30 April 2012, there had only been 11 complaints of 
failure to implement DSB recommendations (but  all recommendations not implemented are not 
necessarily the subject of complaints by the party that is not satisfied). 
163. The large number of cases dealt with can be explained by the fact that many Members 
make use of the system;  this shows their conf idence in the dispute settlement system, which is 
globally satisfactory. 
(b) Duration of proceedings 
164. The WTO is seeking to speed up proceedings becau se rapidity is one of the basic objectives 
in the Understanding49 and the time-limits determined therei n are not observed.  It is, however, 
essential to point out that the parties may agree to extend these time-limits as they wish, which clearly 
puts into perspective the concept of a maximu m time-limit in dispute settlement proceedings. 
                                                      
46 By way of comparison, between 1948 and 1995, GATT officially heard 306 complaints under the 
General Agreement and several Tokyo Round instruments. 
47 Under the "negative consensus or reverse" rule, the party found by the panel to be in the right can be 
sure that this report will be adopted (unless the other pa rty lodges an appeal within 60 days), because agreement 
by all the DSB's members would be required, including the winning party, for the report not to be adopted. 
48 Eighty-one per cent of the AB's reports amend panel reports, 15 per cent confirm the panel's ruling 
and only 4 per cent wholly reject the panel's ruling. 
49 Article 3 therefore provides that:  "The prompt settlement of situations in which a Member considers 
that any benefits accruing to it dir ectly or indirectly under the covere d agreements are being impaired by 
measures taken by another Member is essential to the effective functioning of the WTO and the maintenance of 
a proper balance between the rights and obligations of Members." WT/BFA/W/279 
Page 38  
 
  165. Although the average duration of panels is in principle set at six months, which may 
be extended to nine months at the request of their members, in reality the average duration 
was 14 months from 1995 to 2011, compared to 12 months from 1995 to 2006. 
166. Appeals proceedings, set at 60 days, may be extended to 90 days at the request of the AB, but 
lasted for 95 days from 1995 to 2011, compared to 86 days from 1995 to 2006, although these 
statistics are misleading because, in recent years, as the AB was overloaded, it negotiated with the 
parties to postpone initiating their appeals by sev eral weeks (in addition to the aforementioned 
extension from 60 to 90 days for the duration of the appeals procedure). 
167. In all, the average length of time taken to settle  a dispute is 18 months, including appeal and 
translation, whereas it should not exceed 12 months for appeals. 
168. The following statistics show at what stage of the proceedings there are delays.  These figures 
include the most complex cases and so increase the average duration for dealing with cases. 
Table 11.  Duration of each  stage of the proceedings 
Stage Relevant 
Article in the 
UnderstandingDuration 
prescribed in 
the 
Understanding Actual average 
duration for 83 
dispute cases 
from 1995 to 
2006 Actual average 
duration for all 
dispute cases 
from 1995 to 2011
From the establishment of the panel 
to the composition of the panel Art. 8.7 No duration 
prescribed 62 days 74 days 
From the composition of the panel 
to the last meeting with the parties Appendix 3 10-16 weeks 19 weeks 24 weeks 
From the interim report to 
submission of the final report to 
the parties Appendix 3 5 weeks 5 weeks 6 weeks 
From the final report to its 
circulation to Members  Appendix 3 3 weeks 5 weeks 7 weeks 
From the composition of the panel 
to the final report sent to the parties Art. 12.8 6 months 8 months 10 months  
From the establishment of the 
panel to circulation of the report 
to Members Art. 12.9 9 months 12 months 14 months 
From circulation of the report to 
appeal or adoption Art. 16.4 60 days 42 days 45 days 
From formal notification of the 
appeal to circulation of the 
AB's report Art. 17.5 60-90 days 86 days 95 days 
From circulation of the AB's report 
to Members to its adoption by the DSB Art. 17.14 30 days 38 days 23 days 
From establishment of the panel 
to consideration of the report by 
the DSB. Art. 20 9 months 
12 months 
(appeal) 14 months 
17 months 
(appeal) 18 months 
From the date of establishment of 
the panel to the date of determination of a reasonable period 
for implementation of the 
recommendations Art. 21.4 15-18 months 20 months 21 months 
Source :  Court of Audit, based on WTO data.  WT/BFA/W/279 
 Page 39 
 
 
  169. Extension of the time-limits is found at virtually all stages of dispute settlement proceedings.  
Some of the delays can be imputed to the complexi ty of certain cases, which cannot be dealt with by 
panels within the prescribed time-limits, and to the attitude of the parties, including the complainant, 
which request additional time in the course of the pro ceedings in order to prepare their cases.  It is 
virtually impossible to prevent delays caused by these factors.  Nevertheless, remedies can be 
envisaged to limit certain other causes of delays. 
(c) Causes of delays that could be limited 
(i) Delays in appointing members of the panels 
170. The time needed to set up a panel is increasing to a considerable extent.  It rose from 62 days 
up to 2006 to 74 days in 2011.  This delay could be curtailed if one of the parties asked the 
Director-General to decide on the composition of th e panel, but the parties are not obliged to make 
such a request:  responsibility for this delay does not lie with the Secretariat. 
(ii) Non availability of panellists 
171. Panellists make their plans according to the wo rk schedule adopted at the beginning of the 
proceedings, after panel members have been appointed.50 
172. This timetable is often overturned when parti es ask panels for extra time to forward their 
submissions.51  In such cases, a panellist might no longer be available on the new dates fixed for the 
meeting, which means postponing the date of the pa nel's meeting even beyond the delay requested by 
the parties. 
173. To resolve the two related problems mentione d above, Members made several suggestions 
during initial discussions on reform of the Understanding: 
 The establishment of a permanent body of panellists, which would make sure that 
members were available and could speed up the appointment of the panel because 
parties would be obliged to choose from a limited list of persons (some of whom might already be involved with other panels); 
 systematic presentation by the Division con cerned of a list of 10 to 20 panellists, 
for example, obliging parties to choose from this list or to propose other names by common agreement; 
 the latter solution could be supplemented by asking each party to select names from 
this list, independently of the other party,  and then automatically choosing the same 
names that had been selected by both parties; 
 the divisions concerned should ensure th at each panellist is actually available 
throughout the probable duration of th e case before drawing up such a list
52; 
 in the special case of panels dealing with implementation of recommendations by the 
AB or by previous panels, it would be usef ul systematically to appoint the original 
                                                      
50 See Article 12.3 of the Understanding.  However, working procedures allow for a certain degree of 
flexibility.  The panel may follow other procedures, after having consulted the parties. 
51 One party was recently given over 16 weeks to fo rward its first written submission instead of the two 
to three weeks recommended. 
52 As is the case for the list of arbitrat ors at the International Trade Tribunal. WT/BFA/W/279 
Page 40  
 
  panellists, who are already familiar with  the case and work more quickly (although 
these panellists may no longer be available). 
174. A simpler solution would be to oblige the parties to ask the Director-General to decide on the 
panel's composition, if they fail to agree at the end of a certain period (for example, six weeks), but such a solution would be totally contrary to th e spirit of free negotiations between the parties in 
the Understanding.  It might also perpetuate the dispute each time a party requests the establishment 
of a panel, whereas parties which cannot agree on th e composition of the panel sometimes settle their 
dispute amicably. 
175. Most of the aforementioned solutions require  amendment of the Understanding and are 
therefore the subject of negotiations among WTO Me mbers in the course of its revision and these 
negotiations are not within the competence of the audito rs.  In the first instance, it would be useful if 
the Secretariat could seek to improve the procedures for selecting panellists, taking as a basis the aforementioned solutions that could be applied without amending the te xt:  presentation of lists of 10 
to 20 panellists and presentation to the parties of pa nellists who are already familiar with the case for 
disputes concerning the implementation of recomme ndations, but it is generally agreed that such 
reforms would only ha ve limited scope. 
Recommendation No. 1.  The Secretariat should  (i) seek a new method for presenting panellists 
to parties for selection;  and (ii) systematically  present to parties panellis ts already familiar with 
the cases in disputes dealing with the impl ementation of previous recommendations. 
 
(d) Methods for appointing experts 
176. A panel may consult experts in order to obtain their opinion on certain aspects of the matter.53  
This practice is frequently followed in disput es involving sanitary and phytosanitary measures.54 
177. It has become customary to seek  the agreement of parties regarding the choice of each expert 
and the content of the questions put to them, wh ich may take several months.  The Understanding, 
however, does not provide for agreement by the par ties on these two aspects.  It is both useful and 
desirable to consult the parties on the choice of experts, with whom they are sometimes better acquainted than the Secretariat, but it is not necessar y for the panel to await agreement by the parties 
before appointing and questioning th em.  Panels should, nevertheless ensure that the case law already 
mentioned in US/Canada – Continued Suspension is observed, which provides for due process when 
choosing experts. 
Recommendation No. 2.  It is a useful practi ce to consult parties before choosing experts and 
preparing questions to be put to them, but it is not necessary to wait until agreement has been 
obtained from parties before appointing expert s and putting questions to them;  this is a 
discretionary power of panels. 
 (e) The second substantive meeting with the parties 
178. Pursuant to Appendix 3 to the Understanding, a first substantive meeting with the parties is 
held two to six weeks after receipt of the first written submissions by the parties.  In practice, this first 
                                                      
53 Article 13.2 of the Understanding. 
54 In the case " European Communities - Measures Affecting the Approval and Marketing of Biotech 
Products ", more commonly known as the " GMO " case, 70 experts were designated by the parties.  A period of 
three to four months was needed before agreement could be reached on the appointment of experts.  WT/BFA/W/279 
 Page 41 
 
 
  substantive meeting becomes a straightforward prelim inary formal meeting at which the parties to the 
dispute and third parties take stock of each other and refine their arguments in fact and in law.55 
179. A second substantive meeting with the parties is  held three to five weeks after the first 
meeting and the receipt of written rebuttals from the parties.56 
180. These two meetings could become one meet ing when disputes are straightforward, 
particularly as Article 12.1 of the Understanding  provides that panels may waive the provisions of 
Appendix 3, which provides for three meetings, after the parties have been consulted.  Organizing a 
single substantive meeting is in fact the rule in implementation-related disputes heard by Article 21.5 
panels or for the agreements on subsidies.57 
(i) Translation of reports 
181. According to the WTO's rules, reports by pane ls and the AB are confidential until they have 
been translated into the Organi zation's three official languages58 and are only circulated to the DSB 
for adoption after they have been translated. 
182. The Secretariat is making efforts to rationalize and computerize documents for dispute 
proceedings and savings in time and cost have alre ady been made, with the average time taken for 
translation falling from ten to seven weeks: 
 The executive summaries by each party attach ed to the reports must no longer exceed 
a certain number of pages agreed in advance; 
 some technical documents transmitted by experts are no longer systematically 
attached to the report but are put on the website; 
 the formatting and page numbering of all the relevant documents submitted by the 
parties to the dispute are no longer systematically revised by the Secretariat. 
183. A panel report, however, cannot be circulated to Members, thereby losing its confidential 
nature, until it has been translated into  the WTO's three official languages. 
184. The procedural deadlines could be shortene d (and further savings made) if the report 
alone was translated, without its annexes, before  it goes to the DSB for adoption.  The annexes 
(especially the expert reports that are sometimes a ttached) could be translated  subsequently and put on 
line for the public in the working language  before they are translated in full. 
185. It would seem that the reforms suggested here could be adopted by Members by consensus, 
without formal revision of the Understanding. 
                                                      
55 The submission of new evidence after the first substantive meeting is allowed by case law.  On the 
other hand, new evidence after the second substantive meeting is not authorized;  see Canada – Measures 
Affecting the Export of Civilian Aircraft , Panel report of 14 April 1999, paragraphs 9.77 and 9.78. 
56 It should be noted that the th ird additional meeting with the parties after they have received the 
interim report, as provided in the timetable, has only very rarely taken place. 
57 See Article 4.6 of the Agreement on Subsidies and Countervailing Measures. 
58 English, French and Spanish. WT/BFA/W/279 
Page 42  
 
  Recommendation No. 3.  In order to speed up pa nel proceedings (i) the organization of a single 
substantive meeting with the parties should be  encouraged whenever the nature of the case so 
permits;  and (ii) it should be proposed to Me mbers that only the actual reports of panels and 
the AB should be translated into the three offici al languages before they are transmitted to the 
Dispute Settlement Body.  The annexes would be posted on line immediately in the working 
language and translated subsequently. 
 
(ii) Extension of deadlines for appeals 
186. Appeals proceedings are in practice extended in two ways:  by deferring presentation of the 
case to the AB and by postponing the date of issue of its report. 
187. The first procedure consists of extending the gi ven period of 60 days for adoption of a panel 
report by the DSB, unless a party notifies the DSB of its decision to appeal (Article 16.4):  when the 
AB knows that, because of its work programme, it w ill be unable to hear a case within the maximum 
period of 90 days, its Secretariat suggests to the part ies that the DSB should be requested not to adopt 
the panel's report within the 60 days prescribed. 
188. This request is notified to the DSB in writing and is signed by the parties.59  Such a decision is 
usually adopted by positive consensus.  The extens ion thus negotiated may be for several months.  
The date for adoption of the panel's report by the DSB, which is indicated on the request, shows parties when the dispute will be heard by the AB and they then know the exact date of issue of 
the appeals report (unless the date of issue of the AB's report is delayed).  This practice is not 
consistent with the spirit of the text. 
189. The other procedure followed is to extend the time-limit for completing the appeals 
proceedings beyond the deadlines set in Article 17.5.  In fact, in almost all cases (84 out of 86), 
the AB informs the DSB that it will exceed the time -limit of 60 days and indicates the date on which 
it will submit its report, within the 90-day period .  Moreover, in a growing number of recent cases
60, 
the AB needed more than 90 days and developed a procedure for this purpose. 
190. The parties sometimes contact each other and send the DSB a letter explaining that the report 
submitted within a period exceeding 90 days w ill be "considered as an Appellate Body report 
circulated in accordance with Article 17.5 of the Understanding ".61  This formula is written down in 
order to prevent any risk, perhaps invoked by a losing party, of adoption of the AB report by the DSB 
being blocked because the time-limit of 90 days was exceeded in the case in question.  This also 
appears to be inconsistent with the spirit of the text. 
191. The AB defines in a communication62 the date on which it will submit its report and gives more 
or less detailed reasons for the delay.63 
192. These different practices underline the structural  problems encountered by the AB in dealing 
with the ever-increasing number of appeals and, above  all, their growing complexity:  hearings of 
parties, in particular, are more numerous, last longer and require more time for members and the 
AB Secretariat to prepare, for example, in the important cases of aircraft subsidies. 
                                                      
59 See document WT/DS397/6 of 13 January 2011.  
60 Since the establishment of the WTO, out of 15 disput es subject to appeal for which the time-limit for 
circulation exceeded 90 days, six were in 2010 and 2011. 
61 See document WT/379/7 of 8 February 2011. 
62 The "deeming letter". 
63 See for example the communication WT/DS399/8 of 5 September 2011.  WT/BFA/W/279 
 Page 43 
 
 
  193. New solutions are envisaged, for example, cal culating the 90-day maximum only taking into 
consideration working days (this w ould gain 24 or sometimes 25 days). 
194. The solution best adapted to th e problem posed would be to increase staff numbers in the 
AB's Secretariat, under consideration at the time of the auditors' enquiries in October 201164:  
over two-thirds of panel re ports are in fact the subject of appeals, whereas the number of staff in the 
AB Secretariat is only one third of the total number in the Rules and Legal Affairs Divisions;  
consequently, the appeals stage is a bottleneck  for the many proceedings dealt with by the 
WTO dispute settlement system. 
Recommendation No. 4.  The Secretariat of the Appellate Body needs to be reinforced so that 
the time-limits for appeals comply with  those defined in the Understanding. 
 
6. Cost of the dispute settlement mechanism 
(a) Type of costs 
195. Different systems of payment are in force for members of the AB, panels and for the experts 
assisting them. 
196. Payment for panellists and experts comprises fees set at CHF 600 per day of work by the 
GATT since 199365, to which are added travel costs and "p er diem" (daily subsistence allowance) 
plus 15 per cent, corresponding to CHF 447 in 2011, in accordance with  the rules in effect on mission 
expenses.  Members of panels and experts r eceiving salaries from the authorities in their own 
countries do not receive fees, however, and are only reimbursed for their travel costs and "per diem", 
unless they reside in Geneva. 
197. Members of the AB are paid a monthly retainer fee, set at CHF 7,780 per month following a 
proposal by the Budget Committee in December 2004,  supplemented by an administrative allowance 
of CHF 330 per month and fees of CHF 670 for each day of attendance.  The per diem paid to 
AB members is increased by 40 per cent, as is the case for WTO's Deputy Directors-General. 
198. Because of the unfavourable comparison between the regime applied by the WTO and that in 
effect in other international institutions, in December 2007 the Budget Committee proposed to the 
General Council that the amounts for 2004 (for re tainers and fees) be increased by 10 per cent 
on 1 January 2008, and then again by 5 per cent on 1 January 2009, an annual increase at the level of 
inflation in Geneva for the preceding year being app licable as of 1 January 2010.  In 2011, therefore, 
the fees paid to AB members were CHF 9,085 for the retainer and CHF 783 for fees, with the amount 
of the monthly administrative allowance remaining unchanged at CHF 330. 
199. The undated document entitled "Administra tive guidelines, establishment of SSAs 
(special service agreements) for panellists", whic h is the basis for the aforementioned payments, 
does not meet the "criteria (to be adopted) by the General Council based on the recommendations of 
the Committee on Budget, Finance and Administration" pursuant to Articles 8.11 and 17.8 of Annex 2 
to the 1995 Agreements, which preceded the establishment of the WTO.  A document should 
                                                      
64 The AB would like to recruit more  experienced legal officers to re vise the work of younger legal 
officers.  It would also like a speci al grade to be created for legal s ecretaries, who are responsible for 
transmitting documents to and from parties, reforma tting reports and communications to comply with the 
stylistic rules in force, and checking all the quotations. 
65 Days spent in preparation may also covered by th e contract, within the limit of one to three days, 
which may be increased if the special nature of the case so requires.  WT/BFA/W/279 
Page 44  
 
  therefore be prepared describing all the forms of pa yment of the fees payable to those taking part in 
dispute settlement proceedings. 
200. This would be the opportunity to recalculate  panellists' fees, unchanged since 1993, and to 
envisage reasonable rules for covering their travel  costs, taking into account the needs of their 
missions;  panellists, who come to Geneva for short pe riods of intensive work, should be able to work 
as soon as they arrive.
66  If the Organization wishes to ensure that panellists are available as much as 
possible in order to shorten the time taken for the proceedings, it is logical to update their fees and 
provide proper travel conditions. 
Recommendation No. 5.  (i) The forms of paymen t for members of panels and experts should be 
determined officially, in accordance with the WTO' s regulations;  and (ii) on the same occasion, 
the fees for panellists should be re-assessed and the criteria for their travel costs should 
be defined. 
 201. In addition, 55 members of the Secretariat of the WTO and the AB provide support for the 
activities of the AB and the panels in  dealing with dispute proceedings: 
 Rules Division:  21 posts; 
 Legal Affairs Division:  19 posts; 
 AB Secretariat:  15 posts. 
Table 12.  Breakdown of Secretariat posts dealing with dispute settlement 
 
 Director  Legal 
officers  Economists and 
other specialists  Support 
posts  Total  
Legal Affairs Division 1 13 367 2 19 
Rules Division  1 12 4 4 21 
AB Secretariat 1 10  4 15 
Total 3 34 7 10 55 
Source :  Court of Audit, based on WTO data. 
202. In the two Divisions mentioned in the table above , not all the time is devoted to dealing with 
proceedings.  The Legal Affairs Division estimates that in 2010-2011, taki ng into account a very 
heavy work schedule, 85 per cent of the team's work  was taken up by panels on the basis of 60 hours 
of work for legal officers and 45-50 hours for non- legal officers, which means for both of them that 
they in fact work on dispute settlement matters for all of their regular working hours.  This Division, 
however, says that it cannot quantify precisely the am ount of time devoted to each case and it does not 
keep a breakdown of its activities.  Most of the sta ff in the Rules Division also take part in trade 
negotiations activities and/or the operational work of the committees assisted by this Division, 
                                                      
66 Panellists coming from Australia or New Zealand would like the flights chosen to allow them to start 
working as soon as they arrive in Geneva, whereas the cheapest flights proposed to them sometimes involve 
travel at impractical times. 
67 Two posts are shared, one between the Legal Affairs Division and the Rules Division and the other 
between the Legal Affairs Division and the other WTO divisions.  WT/BFA/W/279 
 Page 45 
 
 
  in addition to dealing with disputes before panels.  The Division estimates that 60 per cent of its staff's 
working time is taken up by panels. 
203. The AB Secretariat estimates that around 95 per cent of its work is taken up by appeals 
(the remaining 5 per cent by technical cooperation activities, a percentage that has been falling in 
recent years because of the heavy work load caused by appeals).  During the 90-day time-limit for 
appeals, authorized overtime is very common because the staff often meet with AB members during 
their working hours and draft the documents requested  by its members in the evenings or at the 
weekend.  Furthermore, the first three weeks of the 90-day period are also used by the parties to draw 
up the procedural acts ("counter appeals" on the 5th day, submissions by the respondent on the 18
th day, and submissions by third parties on the 21st day) and the last three weeks are for 
translation of the AB's reports into the other offici al languages.  The AB Secretariat points out that it 
is thus impossible to respect the rule of 40 working hours per week stipulated in the Staff Regulations 
and its staff do many unpaid hours of work. 
204. The Languages Division is currently consideri ng more precise financial monitoring, taking 
into account the cost of 1,000 words translated rath er than the cost of CH F 369 per page customarily 
used.  The cost of 1,000 words is estimated to be CHF 550.  It also explains that it is considering 
proposing a decrease in the volume of documents to be  translated, giving preference to publishing less 
voluminous documents and making cer tain documents chosen by delegates available rather than 
systematically circulating all documents.  These pr oposals should make it easier to identify in more 
detail how much this sector spends on dispute settlement activities in 2012. 
7. Total amounts and the trend 
(a) The indications currently given in the accounts 
205. It is not possible currently to calculate the precise amount of expenditure on the 
WTO's dispute settlement system alone.  The Organization's accounts show in fact the amount of direct expenditure for the AB and the Legal Affair s and Rules Divisions, but do not distinguish in the 
latter case between panel-related costs and those for the divisions' other activities and do not take into 
account indirect costs (see below). 
206. Lastly, the percentage of working hours a nd, consequently, of the costs of other 
WTO divisions' panel-related work is not known.  Furthermore, the Secretariat records all panel costs 
in expenditure on the Legal Affairs Division, even  where these panels have been assisted by the 
Rules Division;  this method does not alter the fina l balance, but makes it impossible to see the real 
breakdown of costs between the two Legal Divisions. 
207. The following table shows a 20.35 per cent increase  in total direct costs for the AB and the 
WTO's two Legal Divisions, a 13.40 per cent increase for the AB alone, 24.37 per cent for the two Legal Divisions and 145.69 per cent for panels.
68 
208. The amount of these direct costs accounted for 6.8 per cent of the WTO's total costs in 2010, 
as shown in the 2010 financial statements (C HF 214,446,218), and the total operating costs for 
dispute settlement can very roughly be estimat ed at CHF 23,125,000, or 10.7 per cent of the 
WTO's expenditure69 in 2010. 
                                                      
68 The costs for panels mentioned here are, essentially, the various payments to panellists. 
69 This calculation was made as follows:  by taking into account 100 per cent of the direct costs for the 
AB, the panels and experts, 60 per cent of the direct costs for the Rules Division, 85 per cent of the direct costs 
for the Legal Affairs Division, excluding costs for panels and experts, and estimating that the cost of WT/BFA/W/279 
Page 46  
 
  Table 13.  Global trend in the direct costs of the Appellate Body and the two Legal Divisions 
(2006-2010) 
 
 2006 2009 2010 2010/2005 trend 
Appellate 
Body 
 
including staff 2,357,802 
 
 
2,272,382 2,905,772 
 
 
2,848,000 3,102,555 
 
 
3,034,839 +31.58% 
 
 
+33.55% 
Retainer fees for members of 
the Appellate 
Body 1,057,773 718,880 759,174 -28.22% 
Cost of the ABOF
70 
reserve  
 
1,060,588  
 
1,190,790  
 
1,214,329  
 
+14.49% 
Total 
Appellate 
Body 4,476,163 4,815,442 5,076,058 +13.40% 
Legal Affairs Division 
 
including staff 
and experts 
 
Total panels  
3,739,349 
 
3,031,224 
655,592 
20,977 
646,569  
3,870,241 
 
3,164,288 
558,998 
116,444 
675,442  
5,018,763 
 
3,907,691 1,088,544 
50,000 
1,588,544  
+34.21% 
 
  
 
+145.69% 
Rules Division 
 
including staff 3,952,400 
 
3,932,535 4,598,564 
 
4,576,652 4,547,510 
 
4,529,372 +15.06% 
Total for the 
two Legal 
Divisions 7,691,749 8,468,805 9,566,805 +24.37% 
Overall total  12,167,912 13,284,247  14,644,331 + 20.35% 
Source :  Court of Audit, based on WTO data. 
209. This increased expenditure has occurred desp ite a very small increase in the number of 
permanent staff:  only two new permanent staff members have been recruited since 2006 (by the 
Rules Division).  It can be explained by a 41.6 per cent rise in salaries over five years and by increased reliance on temporary staff;  th e costs for the Legal Affairs Division increased 
by 135 per cent (from CHF 317,820 to CHF 746,757)  in 2010 and those for the Rules Division 
by 94.2 per cent from 2006 to 2009 (from CHF 237, 396 to CHF 461,011), be fore declining to 
CHF 411,613 in 2010. 
210. The higher costs for temporary staff are the result of the very large increase in the 
responsibilities of the Legal Divisions because of the larger number of panels to be assisted simultaneously and their greater complexity (pan els dealing with the important cases of aircraft 
                                                                                                                                                                     
participation by staff from other divisions in panels represented 10 per cent of the cost of the staff from the 
two Legal Divisions dealing with panels.  Eighty per cent of indirect costs were added to the total direct costs 
calculated in this way.  The latter figure is subjective a nd should be replaced by the figure calculated as part of 
the accounts by activity based on actual costs. 
70 The costs of the so-called "ABOF" ("Appellate Body Operating Function ") are mainly for fees, travel 
expenses and other general administrative costs for AB members during sessions and when preparing appeals.  WT/BFA/W/279 
 Page 47 
 
 
  subsidies are assisted by a dozen members of the di visions and not simply by one or two, as happens 
with more straightforward cases). 
 Total number of staff by section: 
 2006:  Appellate Body:  15;  Rules:  19;  Legal Affairs:  16.8 - Total:  50.8; 
 2009:  Appellate Body:  15;  Rules:  21;  Legal Affairs:  16.8 - Total:  52.8; 
 2010:  Appellate Body:  15;  Rules:  21;  Legal Affairs:  16 - Total:  52. 
Table 14.  Trend in the number of panel reports adopted and in appeals 
 
Year Reports adopted Reports subject 
of an appeal Percentage of reports 
subject of an appeal 
2005 20 12 60% 
2006 7 6 86% 
2007 10 5 50% 
2008 11 9 82% 
2009 8 6 75% 
2010 5 3 40% 
2011 8 6 75%71 
Source :  Court of Audit, based on the 2010 annual report of the Appellate Body.72 
(i) Calculation of the total amount of dispute settlement costs alone 
211. To calculate the total amount of dispute settleme nt costs alone, the figures in table 13 have to 
be adjusted as follows: 
 By deducting the costs not related to assistan ce to panels from the direct costs of the 
two legal divisions; 
 by adding the costs of other substantive divisions (the Agriculture and Services 
divisions, for example) related to assistance to panels; 
 by adding as well the indirect costs mentioned below. 
212. The latter costs are currently la rgely under-estimated;  for ex ample, the AB's accounts only 
show CHF 1,479.73 for reproduction costs in 2010, a sum that is clearly below the true figure and the 
estimated budget of CHF 30,000.  Likewise, the working hours of the WTO's permanent interpreters specifically devoted to dispute-related work are not at present taken into account (the Languages 
Services Division estimates the amount to have been  CHF 130,000 in 2010);  only the cost of paying 
free-lance interpreters is record ed in the AB's accounts (this amounted to CHF 17,010 in 2006 and 
CHF 17,125 in 2009).  The translation of dispute-re lated documents is identified exactly, but there is 
                                                      
71 In 2011, as in 2010, panel reports adopted and not followed by an appeal accounted for less than 
5 per cent of the total pages of panel reports.  In othe r words, in all complex and voluminous cases, panel reports 
were the subject of an appeal. 
72 From January to October 2011, eight panel reports were adopted and six were the subject of appeals. WT/BFA/W/279 
Page 48  
 
  no financial estimation.  The Language Services Division estimates that it translated 7,132,000 words, 
corresponding to over CHF 3.9 million, for disput e-settlement related activities, which are not 
currently recorded as disput e settlement-related costs. 
213. A report dated 7 March 2011 intended for the Committee on Budget, Finance and 
Administration attempted to estimate the indirect cost s of dispute settlement.  It takes into account the 
financing of security measures, missions by staff from the two divisions and the AB Secretariat, 
publications and general overheads (office supplies,  postal costs, training and special software). 
214. It notes that, in the absence of any breakdown, it is not possible to estimate all the indirect 
Secretariat costs, in particular "costs … such as  translation, document reproduction, interpretation, 
conferences, infrastructure, building, IT and general administrative support".  It indicates, however, 
that "In the absence of a defined and detailed methodol ogy to allocate these indirect costs, it can be 
roughly estimated, based on the overall budget of the WTO,  that for every franc of direct cost, there is 
at least one franc of indirect cost s." 
215. The report estimates the WTO's total costs for dispute settlement in 2010 at CHF 15 million 
of direct costs and CHF 30 million taking into account indirect costs. 
216. These figures appear high inasmuch as the costs of the legal divisions not related to panels 
have to be deducted from the CHF 14.6 million me ntioned above and the costs incurred by other 
divisions for panels (to be added to the total) ar e probably limited.  Furthermore, the percentage of 
indirect costs mentioned (100 per cent of direct costs) seems high. 
217. In any event, the new budgetary approach proposed  by the Secretariat in order to construct a 
WTO budget by activity and no longer by type of e xpenditure should enable all dispute settlement 
costs to be calculated. 
218. It is important to calculate the total costs (i ncluding indirect costs and expenditure by the 
non-legal divisions) for each panel and each appeals procedure for the following reasons: 
 For the sake of transparency:  the WTO mu st know the cost of each of its tasks; 
 to be able to compare the various cases and thus assess the cost impact of extending 
proceedings, which would show the benefits of measures to encourage more rapid proceedings; 
 to facilitate administration of the AB Secr etariat and the legal divisions, which would 
be able to plan their staff and financial needs better depending on the burden of work 
involved in new cases; 
 to show Members the cost of the service provided by the dispute settlement system, 
without asking them to finance the judicial costs by supplementing their contributions to the WTO. 
219. The main problem in this analytical accountin g exercise will be calculating the time devoted 
by each member of the Secretariat to dispute settle ment cases, which may meet with resistance, staff 
members not being used to calculate the time devoted to each client, as lawyers do;  the easiest solution would be to ask each legal officer to estimate the time taken up by each case over the 
preceding month and to divide administrative staff costs among the panels or appeals according to a scale to be determined on the basis of these divisions' experience.  WT/BFA/W/279 
 Page 49 
 
 
  Recommendation No. 6.  When preparing the budget  by activity, initiated as of January 2012, 
the Secretariat should calculate the total cost (including indirect costs) for consideration of 
each case by a panel or the Appellate Body. 
 
IV. ACKNOWLEDGEMENTS 
220. We sincerely thank the members of senior management and staff of the WTO for their 
welcome and for the precise information that they su pplied to us in the context of our enquiries. 
V. CONCLUSION 
221. On the basis of the audit conducted, the extern al auditors certify that, in their view, the 
accounts for the financial year 2011 present fairly the financial position of the WTO as at 31 December 2011. 
End of audit comments WT/BFA/W/279 
Page 50  
 
  ANNEX I - FOLLOW UP TO RECOMMENDATIONS 
 
 222. Of the 14 recommendations concerning certification of the 2010 accounts, eight have been 
implemented, five are being impl emented, and one has been accept ed but not yet implemented or 
being implemented. 
223. The nine recommendations in our performance audit of the WTO's IT system were all 
accepted and are being implemented by the ne w Director of the Informatics Division. 
Table 15.  Follow-up to the recommendati ons of the external auditors on the 
2010 financial statements  
 Recommendation Response of the 
Secretariat Comments of 
the auditors 
1 The text of the financial statements 
should be completed as follows: 
(i) By indicating specifically in the 
liabilities column of the financial situation that the amounts due 
to donors correspond to 
deferred revenue; 
(ii) by explaining in more detail in 
Note 4, "Receivables from Members and Observers", the year-by-year trend in these 
receivables and the provision for 
arrears in contributions; 
(iii) by indicating in Note 12, 
"Employee benefits", the updated amount of separation grants for 
which provision has to be made;  
and 
(iv) by explaining the origin of the 
differences between Note 13, 
"Trust fund balance due to donors", and the other financial statements . The recommendation was 
immediately implemented. Recommendation 
implemented. 
2 The WTO should adopt a plan to absorb 
arrears in contributions by Observers. The Working Group on 
Administrative Measures is 
continuing to examine the question and will report to the Committee on Budget, Finance and 
Administration. Recommendation 
accepted and being 
implemented.  WT/BFA/W/279 
 Page 51 
 
 
   Recommendation Response of the 
Secretariat Comments of 
the auditors 
3 The WTO should pursue its efforts: 
(i) to accelerate refund by the 
United States of the taxes of WTO 
staff who resided there;  and 
(ii) to obtain this refund according to 
the method advocated by the 
Administrative Tribunal of the International Labour Organization. In 2011, the United States 
refunded taxes for the two 
previous years and more, thus paying off their 
arrears. Recommendation 
accepted and being 
implemented, but confirmed. 
4 The percentage of the levy on trust funds 
to finance Secretariat expenditure should be increased. The WTO will review the 
percentage of the levy on trust funds used to finance 
Secretariat expenditure as 
part of the review of the financial regulations.  Recommendation 
accepted but not yet implemented and 
confirmed. 
5 The WTO should: 
(i) Reorganize the procedure for 
certifying services provided; 
(ii) update annually the list of 
"suppliers" in the accounts management system; 
(iii) limit the rights of buyers in the 
system;  and 
(iv) use the procurement module in 
the programme. The procedure for 
certifying services will 
henceforward be carried out directly in the Oracle 
program by the services with the introduction of the 
Oracle iProcurement 
module.  This module 
will start to be used on 7 May 2012. 
In 2011, the suppliers 
database was reviewed and 
a project is under way with the Procurement Section to 
make improvements to this 
database. 
The rights of buyers in 
Oracle were revised 
in 2011.   Recommendation 
implemented. 
6 The WTO should: 
(i) Continue regular analyses of 
movements in exchange gains and 
losses;  and 
(ii) include in the internal control 
mechanism some tests for transactions in currencies for which the exchange rates are entered manually . An analysis was carried out 
in the middle and end of 
the year in order to verify 
the consistency of the 
amount of exchange gains/losses.  Recommendation 
implemented. WT/BFA/W/279 
Page 52  
 
   Recommendation Response of the 
Secretariat Comments of 
the auditors 
7 The criteria for taking unpaid leave into 
account when calculating rental subsidy 
should be clarified. A new directive on 
calculating rental subsidy 
taking into account this recommendation has been 
issued by the Human 
Resources Division. Recommendation 
implemented. 
8 The WTO should formally adopt the 
necessary procedures for introducing 
IPSAS 12 for the management 
of inventories. As of 2012, the calculation 
of the cost of inventories 
has taken into account the full cost.  It includes in 
particular labour costs. Recommendation 
accepted, being 
implemented. 
9 The WTO should close the "suppliers" 
accounts for which the debts have 
been settled. The suppliers database has 
been reconciled.  The 
additional suppliers balance 
is reviewed every quarter. Recommendation 
implemented. 
10 The WTO should: 
(i) Formally adopt in an internal note 
the procedures for making 
accounting entries concerning 
charges paid in advance;  and 
(ii)  introduce an internal control 
system to detect inconsistencies in accounting balances, analyse them and make the necessary 
adjustments in the accounts. The charges paid in 
advance accounts were the 
subject of detailed revision at 31 December 2011.  Recommendation 
implemented. 
11 The WTO should indicate the change in 
the method of accounting for advances 
relating to extra-budgetary funds in note 2 
to the financial statements.  The recommendation was 
implemented immediately.  Recommendation 
implemented. 
12 During the transition to IPSAS, the WTO 
should adjust its budgetary and 
accounting practices for expenditure 
commitments and provisions for 
expenditure committed but not paid, and should adapt its Financial Regulations to be consistent with IPSAS 1 (paragraph 6), which provides that entries should be 
linked to the financial year concerned. In order to comply with 
IPSAS, the charges will be 
recorded in the accounts on 
the basis of the service 
provided/goods received.  Recommendation 
being implemented. 
13 The WTO should make a comprehensive 
estimate of the cost of equipping the new 
installations being completed and propose 
a financing plan for these costs. This estimate has 
been made.  Recommendation 
implemented. 
14 Before the end of the work the WTO 
should define more clearly the costs to 
be recorded as property plant and 
equipment and those to be left in the 
charges account. During the transition to 
IPSAS, this evaluation will 
be made. Recommendation 
accepted, being 
implemented.  WT/BFA/W/279 
 Page 53 
 
 
   
Table 16.  Follow-up to the recommen dations on the WTO's IT system 
(second part of the report on the 2010 financial statements) 
 Recommendation Response of the 
Secretariat Comments of the 
auditors 
1 With the assistance of an outside 
consultant, the study on the possible 
outsourcing of some of the Informatics Division's activities included in this Division's "IT Strategy" for 2007-2009 and then postponed should be resumed. Accepted Recommendation 
accepted, being 
implemented. 
2 Temporary staff for the Informatics 
Division should only be recruited as and 
when needed, in accordance with the 
rules in force in the Organization, and consideration should be given to social 
measures for temporary staff who have 
been working in the Division for a 
long time. Accepted Recommendation 
accepted, being 
implemented. 
3 There needs to be proper strategic 
consideration to enable the list of the new 
services to be provided by the IT system and the advances expected in IT systems to be determined. Accepted Recommendation 
accepted, being 
implemented. 
4 Before deciding on any new application, 
there should systematically be a 
comparison of the principal internal and external solutions possible, taking into account all the costs which the 
Organization will have to face in 
the future. Accepted Recommendation 
accepted, being 
implemented. 
5 As soon as possible, a comparison of the 
integrated management system (IMS) 
software packages available on the 
market should be undertaken. Accepted Recommendation 
accepted, being 
implemented. 
6 All documents relating to bids should 
systematically be dated. Accepted Recommendation 
accepted, being 
implemented. 
7 The action plan proposed by a consultant 
in 2006 in order to improve the quality 
of the WTO's IT services, in accordance with the ITIL standard, should be 
fully implemented. Accepted Recommendation 
accepted, being 
implemented. 
8 Basic training in the WTO's IT systems 
should be made compulsory for all new 
staff members. Accepted Recommendation 
accepted, being 
implemented. WT/BFA/W/279 
Page 54  
 
   Recommendation Response of the 
Secretariat Comments of the 
auditors 
9 A policy for protecting personal data 
should be defined a nd controls for its 
proper implementation introduced. Accepted Recommendation 
accepted, being 
implemented. 
  WT/BFA/W/279 
 Page 55 
 
 
  ANNEX II - SIMPLIFIED PRESENTATION OF DISPUTE SETTLEMENT PROCEDURES 
 
 
1. The rules applicable 
224. The Understanding on Rules and Procedur es Governing the Settlement of Disputes  
(hereinafter called the Understanding) determines the rules to be observed in this respect.  The dispute 
settlement system only applies to Members of the WTO73, for disputes that occur in relation to 
the 1994 Marrakesh Agreement, which includes the following international agreements covered by 
Appendix 1 to the Understanding : 
 The Agreement Establishing the World Trade Organization; 
 the Multilateral Agreements on Trade in  Goods, Services and Trade-Related 
Intellectual Property Rights, which are Annexes 1A74, 1B and 1C to the 
aforementioned Agreement; 
 the Plurilateral Agreement on Government  Procurement, the only plurilateral 
agreement to which the rules in the Unde rstanding apply by decision of the parties75;  
and 
 the Understanding  itself, which is Annex 2. 
225. The rules and procedures defined in the Understanding  apply subject to the special or 
additional rules and procedures concerning th e settlement of disputes contained in the 
agreements listed in Appe ndix 2 to the Understanding76, which take precedence over those in the 
aforementioned Understanding. 
226. If there is any conflict between the special or additional rules and procedures in several 
agreements relating to the same dispute and if th e parties to the dispute are unable to agree on the 
rules and procedures within a period of 20 days as of the establishment of the panel, the Chair of the 
Dispute Settlement Body (DSB) determines the rules and procedures to be followed, in consultation 
with the parties. 
2. The main actors in the proceedings 
227. The following main actors play a role in th e proceedings:  the DSB, the panels, and the 
Appellate Body (AB)77, the latter's Secretariat and the Legal A ffairs and Rules divisions.  In addition, 
the Director-General of the WTO and the Chair of the DSB have special powers and other WTO 
divisions provide panels with expertise. 
                                                      
73 The WTO also includes some Members which are not States but customs territories such as the 
European Union or Hong Kong China. 
74 Annex 1A on Multilateral Agreements on Trade in Goods includes the GATT Agreements of 1947 
together with their legal developments, commonly called "GATT 1994". 
75 For the other plurilateral agreements, the panels decide on the rules and procedures applicable. 
76 Appendix 2 covers certain technical agreements included in the multilateral agreements comprising 
Annex 2 to the Agreement Establishing the WTO.  Th ese technical agreements co ncern the application of 
sanitary and phytosanitary measures, textiles, technical  barriers to trade, implementation of Articles VI 
(anti-dumping measures) and VII (customs valuation rules) of the GATT, subsidies and countervailing 
measures. 
77 The members of the AB also act individually as ar bitrators, in implementation of Article 21.3(c) of 
the Understanding, in order to determine the reasonable period of time for implementation of the DSB's 
recommendations and rulings adopted after hear ing the reports of the panels and the AB. WT/BFA/W/279 
Page 56  
 
  3. The Dispute Settlement Body 
228. The DSB comprises all 155 Members of the WTO.  Its composition is thus the same as that of 
the WTO's General Council.  Members are represented at ambassadorial level or , more frequently, by 
jurists.  The DSB plays a vital legal role in asmuch as it endorses all procedural decisions. 
229. The DSB has the authority "… to establish pa nels, adopt panel and A ppellate Body reports, 
maintain surveillance
78 of implementation of rulings and recommendations, and authorize suspension 
of concessions and other obligations under the covered agreements" (Article 2.1 of the 
Understanding). 
230. It is assisted in its task by the Council Division. 
231. DSB rulings are made by consensus, whether positive in non-contentious cases (it suffices for 
one single Member to oppose a ruling for it not to be adopted), or negative (a ruling concerning a 
dispute can only be blocked by all the Members) .  The general rule set by Article 2.4 of the 
Understanding is that of positive consensus but, for the majority of important rulings in dispute 
settlement proceedings79, the negative consensus system appli es, pursuant to the provisions in the 
relevant articles in the Understanding. 
232. These latter provisions are one of the most important innovations in the agreements 
establishing the WTO in comparison with the GATT ru les.  They prevent one Member (which has 
been requested to comply more strictly with th e provisions in an international agreement, for 
example) from blocking dispute settlement proceedi ngs so these have become much more effective 
since the WTO was created. 
(a) Panels 
233. Panels are in principle composed of three80 to five "well-qualified81 governmental and/or 
non-governmental individuals".  They must be sel ected "with a view to en suring the independence of 
the members" of the panel and must make declarations  indicating that there is no conflict of interest.  
They are subject to the WTO's Rules of Conduct re garding conflict of interest.  No citizen of a 
Member82 whose government is party to a dispute ma y serve on a panel, unless the parties to the 
dispute agree otherwise. 
234. Article 8.4 specifies that the Secretariat shall maintain an indicative list of persons possessing 
the necessary qualifications:  this indicative list includes some 400 names proposed by Members and 
is constantly updated.  The Secretaria t also has a database that includes, inter alia , former panellists or 
other qualified persons who have put forward their candidatures to the WTO. 
235. Panellists are therefore not WTO officials.83  They only work for the Organization on a 
temporary basis.  They serve on panels part tim e, pursuing their own professional activities at the 
same time, unless they have retired.  They receive expenses (reimbursement of their travel costs and 
                                                      
78 As part of its surveillance of the implementa tion of rulings and recommendations, the DSB hears 
reports presented by Members which have lost a case, six months after the rulings by a panel or the AB requesting them to comply with the trade agreements. 
79 For example, Articles 6.2, 16.4, 17.14, 22.2 and 22.6 of the Understanding. 
80 In practice, they are always composed of three persons. 
81 Article 8 of the Understanding  specifies the qualifications required. 
82 No citizen of any member State of the European  Union may serve on a panel dealing with a case 
concerning any of its member States, unless the parties to the dispute agree otherwise. 
83 Although Article 8.1 of the Understanding  explicitly provides that former members of the Secretariat 
may take part.  WT/BFA/W/279 
 Page 57 
 
 
  subsistence allowance), unless they live in Gene va, as well as fees that have remained unchanged 
since 1993, amounting to CHF 600 per day.  Panellists who are also officials in Member States or in 
other international organizations do not receive these fees.84 
236. Each panel is given terms of reference, whic h are in principle either the model terms of 
reference defined in Article  7.1 of the Understanding85, or special terms of reference defined by the 
Chair of the DSB in consultation with the parties, at the latters' request.  In practice, the terms of 
reference are neither the model terms nor special terms drawn up following a consultation procedure, 
but the complaint by the complainant Member , to which the panel is required to respond.86 
237. The Understanding  emphasizes (Article 11) the need to "make an objective assessment of the 
matter before it [the panel], including an objective assessment of the facts of the case and the 
applicability of and conformity with the relevant c overed agreements …".  Panels work mainly on the 
basis of the documents submitted by the parties.   Pursuant to Article 27 of the Understanding , the 
Secretariat assists them in their task, especially in  relation to the legal, historical and procedural 
aspects of the matters dealt with.  This task essentially falls on two divisions, Legal Affairs and Rules, which are involved depending on the matters dealt with (see paragraph 244 below).  Panels are also 
assisted, as needed, by other WTO divisions (the Agriculture or Services divisions, for example), 
when the disputes concern trade agre ements within their competence.  The final reports of panels are 
drawn up by the panellists, with help from the Secr etariat (usually the Legal Affairs or Rules 
divisions).  All Secretariat officials assisting pa nels are bound by the WTO's Rules of Conduct dealing 
with conflict of interest. 
(b) Appellate Body 
238. The existence of a system for appealing rulings by panels is one of the major innovations in 
the agreements establishing the WTO in comparison w ith the GATT rules.  The AB is composed of 
seven members, three of whom compose a division to hear a particular case:  the criteria for rotation 
of members are set out in the Work ing Procedures for Appellate Review
87, taking into account the 
provision that members "shall not participate in the consideration of any disputes that would create a 
direct or indirect conflict of interest" (Artic le 17.3 of the Understanding).  The three members 
appointed to hear a particular case nevertheless syst ematically consult their co lleagues (unless there is 
a risk of conflict of interest) before issuing a ruling. 
239. Members are appointed by the DSB for a four-y ear term, renewable once.  When a member's 
term expires, his/her replacement is propo sed by a selection committee composed of the 
Director-General and the Chairs of the General Coun cil, the Councils for Trade in Goods, for Trade in 
Services, for Trade-Related Aspects of Intellect ual Property Rights, and the DSB, which makes a 
selection from among the candidates put forward by Memb ers.  In practice, th e dates of renewal of 
terms are staggered in order to ensure a degree of stability in the AB's composition. 
240. The members must be selected from among pe rsons "of recognized authority, with 
demonstrated expertise in law, international trad e and the subject matter of the covered agreements 
                                                      
84 The consideration currently being given to possible ch anges to the status of panellists is referred to in 
paragraphs 195 et seq . 
85 The model terms of reference are as follows:  "To ex amine, in the light of the relevant provisions in 
(name of the covered agreement(s) cited by the parties to  the dispute), the matter referred to the DSB by (name 
of party) in document … and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in that/those agreement(s)." 
86 This custom has a twofold origin:  the occasionally imprecise wording of Article 7 on the terms of 
reference for panels in the Understanding and, abov e all, the problem of r eaching a consensus between 
the parties. 
87 Document WTO/AB/WP/6, the latest version of which is dated 16 August 2010. WT/BFA/W/279 
Page 58  
 
  generally".  They must be "unaffiliated with any government".  This provision does not prevent the 
appointment of officials or members of a government , but they have to resign before being appointed. 
241. "The Appellate Body membership shall be br oadly representative of membership in the 
WTO" (Article 17.3 of the Understanding):  in prac tice, the AB has always been composed of one 
representative from Africa, one from Latin America, three representatives from Asia and the Pacific, 
one from the United States of America and one from Europe. 
242. Members "shall be available at all times and on short notice, and shall stay abreast of dispute 
settlement activities and other relevant activities of  the WTO" (Article 17.3 mentioned above).  
In practice, members are not in permanent attendance,  they continue to reside in their own countries 
and many of them are engaged part time in profes sional activities, but they must be able to make 
themselves available at short notice.  In return for this commitment, they receive a permanent fee 
(see below), to which are added fees and reim bursement of their expenses (travel costs and 
subsistence allowance) when they attend the AB. 
243. Members of the AB and officials in its Secretar iat must comply with the Rules of Conduct for 
the Understanding (hereinafter called the Rules of Conduct), which determine th e rules to be observed 
in order to guarantee the independence of the AB and prevent conflicts of interest. 
(c) WTO Secretariat 
244. The three Divisions mentioned above participate directly in dispute settlement proceedings:  
the AB's Secretariat
88 assists the AB, the Legal Affairs and Rules Divisions share the task of assisting 
panels depending on the cases dealt with.  The Rules Division has responsibility for disputes concerning trade remedies (anti-dumping, counter vailing and safeguard m easures), subsidies and 
disputes concerning the Agreement on Trade-Related Investment Measures, State-trading 
enterprises
89, as well as the Plurilateral Agreement on Trad e in Civil Aircraft;  the Legal Affairs 
Division is responsible for all other cases. 
245. The burden of work on the AB Secretariat (see paragraph 246 below) and on the Legal 
Affairs and Rules Divisions is heavy and is increasing  substantially.  The two Di visions help panels to 
examine the problems raised and to find a solution to  the disputes at issue, an d furnish them with the 
necessary information.  Their staff then help panels to draft their reports, based on detailed 
instructions given by the panels.  Dispute settleme nt-related work is taking up an increasing amount 
of time because of the growing complexity of th e cases brought before the WTO.  The two Divisions 
also have responsibilities other than their role in dispute settlement.  The Legal Affairs Division gives 
legal advice to the Director-General's Office and ot her Secretariat divisions and takes part in the 
negotiations on amending the Understanding.  The Rules Division provides the Secretariat for 
committees dealing with anti-dumping measures, subs idies, countervailing and safeguard measures, 
trade in civil aircraft and negotiations on trade-re lated investment, as well as the Secretariat for the 
Working Group on State-Trading Enterprises and the Negotiating Group on Rules.  The three divisions also do a considerable amount of techni cal assistance work in their respective areas. 
246. These three Divisions are composed of 55 members of staff.  The AB Secretariat has 15 staff 
members:  the Director (at grade 11), three Co unsellors at grade 10, a Counsellor at grade 9, 
five Legal Officers at grade 8, two temporary staff, an Administrative Assistant at grade 7, and three Secretaries at grades 4, 5 and 6, and four trainees. 
                                                      
88 The AB's Secretariat is operationally  separate from the WTO Secretariat. 
89 See Article XVII of the GATT and its interpretation in the Understanding.  WT/BFA/W/279 
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  247. The Legal Affairs Division comprises 19 staff members:  the Director (at grade 11), 
eight Counsellors (four at grade 10 and four at grad e 9), five Legal Affairs Officers (two at grade 8 
and three at grade 6), a Clerk (at grade 6), two Assistants (at grades 6 and 7) specializing in the registration of documents for the proceedings and th e revision and correction of documents issued by 
the panels, who also act as the panels' secretariat,  an Administrative Assistant at grade 7 and a 
Secretary at grade 5.  There are also three trainees.  The functions of the Clerk and one of the 
specialized Assistants
90 are common to the two Divisions dealing with panels. 
248. There are 21 staff members in the Rules Division.91  They all have several tasks;  almost all of 
them play a role in dispute settlement to a greater or lesser degree;  they also assist the committees for 
which the Division is responsible and the Negotia ting Group on Rules, as well as providing technical 
assistance.  In addition to the Director (grade 11) and Deputy Director (grade 10), the Division 
employs 11 Legal Affairs Officers  and three Economists.  The Lega l Affairs Officers comprise the 
Chief Legal Affairs Officer and his deputy (bot h at grade 10) and nine other Legal Affairs 
Officers (one at grade 10, three at grade 9, three at grade 8 and two at grade 7).  The Division's economists (one at grade 10 and two at grade 9) are all involved in dispute settlement, as advisers 
to panels, secretaries of panels, experts in their com position, etc., in addition to their other tasks.  
Lastly, the Division has a Technical Assistant at gr ade 7, who is not involved in dispute settlement, 
an Administrative Assistant (at grade 7) and three secretaries (grades 6, 4 and 3). 
(d) First instance proceedings 
249. A Member of the WTO may initiate dispute settle ment proceedings if it "considers that any 
benefits accruing to it directly or  indirectly under the covered ag reements are being impaired by 
measures taken by another Member …" (Article 3.3 of the Understandi ng).  It must first request the 
Member that is the subject of the complaint to hold consultations in or der to settle the dispute 
amicably.  If it is unable to do so or if the consu ltations held do not conclude within the time-limits 
laid down in Article 4.3 of the Understanding , it may request the DSB to establish a panel. 
250. The panel must be established "at the latest at  the DSB meeting following that at which the 
request first appears as an item on the DSB's age nda …", the DSB meeting in practice each month 
(additional meetings are organized when necessary).  The panel's composition is determined after it 
has been set up:  the Division concerned proposes nam es of panellists to the parties, depending on the 
criteria they have put forward, and in principle they  have 20 days in which to reach mutual agreement, 
a time-limit that is often extended.  After this peri od, each party may request that the Director-General 
appoint the panel, and he has ten days in which to  take a decision after consulting the Chair of the 
DSB, the Chair of the relevant Committee or Council, a nd the parties.  In practi ce, the parties turn to 
the Director-General well after the ten-day pe riod mentioned above and are increasingly requesting 
him to appoint the panellists. 
251. Any WTO Member having a substantial interest  in a matter and having informed the DSB 
accordingly may ask to be heard by the panel and make  written submissions to it.  The participation of 
such "third parties" is very frequent. 
252. The panel presents the timetable for its work a nd the deadlines for replies to its questions by 
the parties within eight days following agreement on its composition and terms of reference.  It then 
has six months in which to submit its report to th e parties, although this may be reduced to three 
months in cases of urgency or be extended.  "I n no case should the period from the establishment of 
                                                      
90 The function of Assistant specializing in the registration of documentation is for the WTO as a whole 
and not only for dispute settlement proceedings. 
91 One of these was on maternity  leave (up to Novemb er 2011) at the tim e of the audit.  WT/BFA/W/279 
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  the panel to the circulation of the report to the Me mbers exceed nine months." (Article 12.9 of the 
Understanding). 
253. Appendix 3 to the Understanding determines the working procedures.  According to these, 
the panel must hold two substantiv e meetings with the parties, unless decided otherwise following 
consultation with the parties.  The first meeting is  to hear the parties and the second to hear their 
"rebuttals" of the opposing positions.  In both cases, of course, the panel questions the parties.  It must 
submit its report to the parties in three stages:  fi rstly "the descriptive part" (factual elements and 
arguments), followed by an interim report containing  the descriptive part and all the findings, analyses 
and conclusions of the panel, and lastly the fina l report.  The timetable proposed in Appendix 3 
indicates the deadlines to be met for the exchange of  documents (see below).  This timetable specifies 
that the panel may hold a third meeting with the pa rties, after having sent them its interim report, 
during the period of review of the report by the parties. 
254. Panels have the right to consult: 
 Any individual or body, informing the authorities of the Member in which they are 
located, pursuant to Article 13.1 of the Understanding; 
 individual experts, without the agreement of the parties (although in practice the 
parties are often consulted), pur suant to Article 13.2;  and 
 to request a report on scientific or techni cal matters from an "expert review group", 
pursuant to the same Article;  they cannot ask citizens of parties to the dispute to 
serve on an expert review group without the agreement of the parties to the dispute, 
"except in exceptional circumstances when the panel considers that the need for 
specialized scientific expertise cannot be fulfilled otherwise" (paragraph 4 of Appendix 4 to the Understanding. 
(e) Appeals proceedings 
255. Only the parties to the dispute (and not third par ties) may appeal against a report by a panel.  
Appeals are limited to issues of law and legal interp retations developed by th e panel (Article 17.6 of 
the Understanding).  The duration of the procedure, from notification of appeal to circulation of the 
AB's report, must not exceed 60 days.  If the AB cons iders that this period is too short, it must inform 
the DSB accordingly in writing, together with an es timate of the period required, but "In no case shall 
the proceedings exceed 90 days" (Ar ticle 17.5 of the Understanding). 
256. Third parties which have informed the DSB that th ey have a substantial interest in the matter 
may not appeal but may make written submis sions to the AB and be heard by it. 
257. Parties only exchange one written submission be fore the AB and there is usually only one 
hearing at which the parties (and third parties) are questioned, inter alia, by the three AB members 
responsible for the case. 
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