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WT/BFA/175  
 
12 October 2018  
(18-6176) Page: 1/6 
Committee on Budget, Finance and Administration    
 
 
REPORT OF THE MEETIN G HELD ON 13 SEPTEMBER  2018  
 
The Committee on Budget, Finance and Administration (CBFA) met on 13 September 2018 under 
the Chairmanship of Ambassador Juan Esteban Aguirre Martínez (Paraguay ). The Terms of Reference 
and composition of the Committee are set out in document WT/L/44/REV.1. The Agenda is contained 
in the document WTO/AIR/BFA/ 28.  
 
1  PROPOS ED UTILIZATION OF THE ACCUMULATED BUDGET ARY SURPLUS – 
WT/BFA/W/4 53/REV.1  
1.1.  The Chairman cited the earlier presentation by the Secretariat  of document WT/BFA/W/453 , 
during the CBFA meeting in June 2018,  on the Proposed Utilization of the Accumulated Budgetary 
Surplus.  
1.2.  In introducing the paper, a n official  from the Secretariat highlighted the fact that the WTO had 
a negative equity position as at 31st December 2017, amounting to CHF -514.86 million.  The official 
recalled that the cash flow patterns of the Organization fluctuated throughout the year, with so me 
months registering expenditure amounts that exceed the receipts for the said month. She noted that 
during such terms, the Organization used cash pertaining to the accumulated budgetary surplus  to 
cover expenditure, pending receipt of more contributions . The official  emphasized that i f the 
budgetary surplus had not been available, there would have been periods  of uncovered expenses . 
She highlighted  the importance of a cash buffer to ensure cover for monthly expenditure . 
1.3.  Another official from the Secretari at provided an explanation for the adoption of the IPSAS 
framework for financial reporting in 2012. The purpose of adoption being towards optimized 
transparency, accountability, fair representation and integrity of the WTO Financial S tatements. He 
stated that the adoption of the IPSAS framework brought about recognition of provisions for long 
term assets and liabilities within the financial statements .  
1.4.  An official of the Secretariat  called attention to  the three options prescribed by Financial 
Regulation  23 on allocation of budget surplus as being:  to reduce M embers' contribution s; transfer 
to the Working Capital Fund; or a use for any purpose decided upon by the General Council . 
1.5.  An official f rom the Secretariat  intimated  that, under the current circumstances,  it was not 
advisable  to use the budgetary surplus to reduce M embers' contributions  because within the 
framework of IPSAS , the financial statements report  an accumulated Financial Deficit  of CHF -837 
million . He pointed out that the  budgetary surplus is only an  intermediate step in the determination 
of the overall financial results and that financial result included entries related to various provisions 
and other adjustments .  
1.6.   Before presenting the proposed allocation of the accumul ated budgetary surplus, a nother 
official  from the S ecretariat provided information on the W orking Capital Fund , including the areas 
for which such funds  can be put to. She explained that following M embers' comments in the previous 
sessions, it had been dee med appropriate to not ring -fence assets for the After-Service  Health 
Insurance (ASHI), exclusively, and that instead it could  be more appropriate to allocate funds to all 
underfunded long -term liabilities.   
1.7.  The specific recommendation was that the accumu lated budgetary surplus of CHF 52.026 
million should be distributed as follows:  WT/BFA/175  
 
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  a)  50% (i.e. CHF 26.012 million) to fund long term assets  to bridge the funding gap be tween 
long term assets and long -term liabilities of the Organization;  
b)  CHF 19 million  held as a cash reserve  to cover cash flow needs during  the year ; and  
c)  CHF 7.014 million to augment the Working C apital Fund.  
1.8.  A Member welcomed the continued the update  on allocation of the budget surplus and called 
for careful  examination of t he facts. The M ember stated that her delegation was more inclined to 
have surpluses in international organizations returned to Member  States. The Member said issues 
that her delegation had previously raised had not yet been addressed. Therefore, she said h er 
delegation were not in a position to support the current proposal.   
1.9.  The M ember also enquired whether there was a ny plan being developed to protect the 
Organization from of negative interest  levied by banks .  
1.10.   A Member thanked the Secretariat for the subsequent work on the proposal and stated that 
it was important that certain aspects relating to the assets should be considered e.g. investment of 
the assets and their governance. The M ember expressed support , in principle , for recommendations 
(b) and (c) . He enquired  how the long -term asset s and cash reserve s will be managed , taking 
account low interest rates . He also asked whether any of the accumulated budgetary surplus could 
be used to fund capital expenditure tha t had been covered by the budget.   
1.11.   A Member thanked the Secretariat for the continued efforts on the important initiative of 
allocating accumulated surpluses. He expressed his delegation's support of the proposed 
recommendations.  
1.12.   With respect to r ecommend ation (a), another M ember welcomed the revised alloc ation of the 
funds towards overall  long-term liabilities. The M ember stated that recommendation (b) was risky 
because it may lead to an unrealistic reliance on future budget surpluses to support ongoing 
operations. He noted that the norm was to have the equivalent of 1 -2 months cover for operating 
expenses. He sugges ted that the funds suggested for recommendation (b) be transferred to 
recommendation ( c) instead. He explained that the cash in the Working Capital Fund can be used to 
fund ongoing operations , should the need arise.  
1.13.   One M ember requested a clarification on the reassignment of budget surpluses to Members 
and an explanation on why it was not possible to implement under  IPSAS.  In response to the question 
an official  of the Secretariat said  that where there is a real surplus  at the level of the financial result , 
the distribution of the accumulated f unds to M ember countries would be permissible.  
1.14.   One M ember supported the notion to protect th e accumulated resources of the O rganization 
from being used to systematically finance short -term liabilities. He explained that the viability of the 
Organization c ould be vulnerable  to unforeseen risks in the lo ng-term whic h will then require 
increasing M ember s' contributions or reducing expenditure.  
1.15.   Another  Member thanked the Secretariat for the revised background paper and reiterated 
that her delegation preferred the original version which explicitly proposed to set aside funds for 
ASHI assets, given the  importance of a sustainable solution to the long -term financing needs for 
ASHI. She said this remained a priority for her delegation.  An additional  Member supported this .  
1.16.   A Member expressed her delegation's support for the new proposal and the suggestion for 
funds that were earmarked for recommendation (b) to be allocated to  recommendation (c). She 
stated that her delegation is not sup portive of the return of funds to Capitals  since this  may cause 
undue  complications. She caution ed members to avoid micromanaging the budget funds as this 
could lead to inefficiencies and impaired  productivity.  
1.17.   In response to earlier comments, a n official  from the S ecretariat stated that the paper had 
not made any recommendations regarding investment of the funds as this would have been 
premature as the allocation of the budgetary surplus was still under discussion by the Members.   WT/BFA/175  
 
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  1.18.   Another official  from the Secretariat indicated that the T reasury Management P olicy that is 
currently in force permits investments into cash and bonds with a maximum tenure of 36 months . 
She explained that the earning positive interest  would require  apportioning some of t he funds to 
long-term investments.  
1.19.   An official  from the Secretariat responded to the question posed by a M ember on the IPSAS 
framework. He explained that this is founded on the going concern principle whereby an entity is 
required to possess the necessary  funds for future operations. He said that return of the budgetary 
surplus to Members would  cause a deterioration of the already negative net equity position .  
1.20.   DDG Brauner stated that a detailed proposal on how to invest the long -term assets had not 
been i ncluded as there was  no agreement yet from Members  as to whether and how much should 
be allocated to long-term assets in general or specifically to fund ASHI.  He emphasized that where 
surplus funds are used for ongoing operations, this is done within the l imit of the authorized budget. 
He said this is  the case for periods , within the budget year,  when  cash inflow is very low.  
1.21.   DDG Brauner comment ed that while two delegations had expressed preference for r eturning 
surplus funds, it is a rare practice. He reminde d the Committee  that the IPSAS framework for 
financial reporting was adopted upon the CBFA's  recommendation.  
1.22.   The Committee took note of the report  and agreed that this item should be included on the 
agenda of  the next CBFA meeting .  
2  FINANCIAL REGULATION  19 ON EXTRA BUDGETA RY FUNDS – ORAL UPDATE  
2.1.  An official  of the Secretariat recalled the active engagement by Members regarding Financial 
Regulation 19 , during the previous meeting of the CBFA . He explained that the Secretariat had taken  
note of the points made . He thanked the M embers for the opportunity to develop a deeper 
understanding of an aspect of our financial regulations that has not been scrutinized for many years, 
nor during the ten ure of most participants in the  Committee.  
2.2.  The official  of the Secretariat said  that following a process of reflection and review, the 
Secretariat stands by its interpretation as presented in July. He explained that Financial Regulation  
19 defines a two -step process for the acceptance of voluntary contributions, gifts or donations from 
WTO Members and Observers. The first step in the process allows for a voluntary contribution to be 
accepted by the Director General if the purposes for which  the contribution is made are consistent 
with the policies, aims and activities of the WTO. The second step specifies that if accepting 
contributions directly or indirectly involves additional financial liability for the Organization, then the 
consent of t he CBFA is required.  
2.3.  He indicated that only the second of these steps implicate d the CBFA and so where Members 
continue to have questions about the interpretation of the first step, those questions might be more 
effectively addressed in a forum aside from the CBFA.  The official  said that there will be no additional 
liabilities for the WTO because all costs associated with the activities will be borne by the extra -
budgetary resources available for the project. He also clarified that when existing staff work on 
projects financed by extra-budgetary funds, this does not constitute an additional liability as the 
liability resulting from the employment of the staff already exists.  
2.4.  A Member referred to previous requests for the project proposal and said Financial Regulation 
19 did not compl y with Article VII of the  Marrakesh Agreement.  
2.5.  A Member expressed concern s regarding the interpretation and said this  has systemic 
implication s which are not simply subjective. He explained that his delegation does not believe th at 
the required transparency ha d been upheld  and requested that the specific agreement be provided  
to delegations .  
2.6.  A Member  was of the view  that the CBFA should concentrate on financial rules and regulations 
of the Organization. She stated that in her opinion, the Secretariat respected the financial 
regulations. However, she expressed the need for more transparency as voiced by other delegations. 
She then asked that the text of the bilateral agreement be made available to the Committee.  WT/BFA/175  
 
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  2.7.  In agre ement with the previous M ember, another  Member emphasized that the Committee 
should remain within its jurisdiction. He indicated it would be best to discuss political aspects outside 
the CBFA.  
2.8.  Regarding the requests for the agreement to be shared with Members, t he official  of the 
Secretariat stated that there is a long history and tradition with long standing precedents and that 
this is being considered in house to maintain consistency.   
2.9.  DDG Karl Brauner reiterated that political issues would be best taken up  outsid e the CBFA.  
2.10.   A Member said that there are political dimensions to everything. He also reiterated that his 
delegation had remained constructive in its views on the Secretariat 's interpretation of Regulation 
19. He expressed concerns relating to  transparency and concerns about investment facilitation being 
taken up in the CBFA . 
2.11.   A Member shared  her delegation's approval of the adopted IPSAS framework , saying that this  
reflects contemporary practices a nd policies. She stated that Investment Facilitation  was outs ide the 
agenda of the C ommittee.  
2.12.   A Member expressed that it is inconceivable for funds to be approved by the CBFA without 
information  of the project or purpose of the project.  
2.13.   The Chairman stated that more deliberations may be needed during future meeting s. 
3  Q2 2018 BUDGET AND F INANCE REPORT – WT/BFA/W/4 58 
3.1.  An official  from the Secretariat presented the budget and finance report for the second quarter 
of 2018. The receipts of contributions from Membe rs as at the end of June 2018 were  relatively 
higher than  the receipts in June 201 7. With respect to the assessed contributions of CHF 195.5 
million, 6 5% was received. For the second quarter of 201 8, the receipts of contributions from 
Observers amounted to CHF 3 22,644  representing 48% of the assessed amount. 88 Members  and 
11 Observers, respectively, had no outstanding balance.  
3.2.  She informed the Committee that a s of 12 September 201 8, seven  Members were subject to 
Category I of the Administrative Measures ; four Members were subject to Category II; and seven  
Member s were subject to Category  III.  
3.3.  She stated that s ince June 2018 , The Gambia, Senegal, Djibouti and Burkina Faso had been 
removed from the list of Administrative Measures. One Observer was  subject to Category I and t wo 
Observers were subject to Category III of Administrative Measures. Since the end of June 2018, the 
Syrian Arab Republic was removed from Category I.  
3.4.  On the Consolidated Statement of Budgetary Expenditures as at 30 June 201 8, the official  from 
the Secretariat indicated that the amount  of expenditure as at 30 June 201 8, was CHF 106 million . 
Regarding Part A of the budget, she noted that t he high level of expenditure for Temporary 
Assistance a rose from the replacement of staff on Leave Without Pay and long -term sick leave as 
well and tha t this was compensated for by vacancies to yet be filled. Therefore, the  expen diture 
under Staffing Resources  was 4 8% of the amount budgeted for the year.  
3.5.  Under Part B, the Secretariat indicated that the major technical contracts for security, cleaning  
services , the International Computing Centre and  the IT Service Desk were committed until year -
end.  
3.6.  The Committee took note of the report.  
4  Q2 2018 EXTRA BUDGET ARY FUNDS REPORT – WT/BFA/W/4 59 
4.1.  An official  from the Secretariat present ed an overview of the financial situation for the second 
quarter  of 2018 for the Doha Development Agenda Global Trust Fund (DDAGTF) and other trust 
funds. He indicated that several Trust F unds were in a reasonable position and that  the current year 
technical programs  were being implemented according to plans .  WT/BFA/175  
 
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  4.2.  He stated that there has been a gradual decline in contributions to the DDAGTF.  The opening 
balance of the DDAGTF at the beginning of the year was CHF 13.5 million. Contributions as at the 
end of the second quarter amounted to 0.5 MCHF  whilst expenditures and commitments totalled 
CHF 9.7 million.  
4.3.  The official  informed  the Committee  that the Standards and Trade Development Facility (STDF)  
would need additional contributions to cover pre -approved projects.  He then informed the 
Committee that the Secretariat indicated that there are four substantial events planned from now 
to early 2019  under Trade Facilitation Agreement Facility.   
4.4.  The Secretariat expressed its gratitude to the following delegations for their contributions , 
received between June and September 201 8: Australia, Denmark , European Commission , France 
and Sweden.   
4.5.  The official  touched on the history of Trust Funds, saying that of the existing 10 active Trust 
Funds, three Funds were established before the DDAGTF and six after the DDAGTF .  
4.6.  One Member raised a concern regarding the name of the DDAGTF. She indicated that  it has 
become difficult to persuade her Ministry of Finance  to donate  to the  Fund. She added that as there 
was a declining trend  from donors  in contributing to the DDAGTF, Members could consider renaming 
it.  
4.7.  Regarding the last point, the Chairman answered that the Organization was still linked to the 
DDAGTF as yet .  
4.8.  The Secretariat informed the Member that the Technical Activity Plan under  the DDAGTF had a 
number of other activities  and programmes that benefit the Organization.  
4.9.  The Co mmittee took note of the report.  
5  REPORT ON WTO SECRET ARIAT RISK MANAGEMEN T – WT/BFA/W/4 52 
5.1.  An official  of the Secretariat introduced the report containing the key elements of the risk 
management system implemented by the WTO Secretariat . She explained the p rocess followed in 
developing the risk register. She stated that  to date, there were 65 risk s identified within the 
Organization 's risk chart . Among these, she cited the five following most critical risks and mitigating 
actions for each:  delay s or suspensi ons in assessed  contributions by contributors; the financial risk 
related to the funding of the actuarial deficit of ASHI; delay in Dispute Settlement Appeals; questions 
raised about the efficiency and relevance of the Multilateral Trade System; and risks of cyber -attacks  
by undesirable parties who have access to the WTO information system . She then underlined that 
the Secretariat was especially  concerned by risks equal  to or above 8  on the rating scale  and added  
that these are the risks that the Secretariat brings to the Committ ee's attention.  
5.2.  One Member welcomed the report and wished to know how risks were evaluated  by the 
Secretariat . On this request, the Secretariat explained  that the rating of a risk is the product of the 
likelihood of occurrence and the impact of its consequence. She acknowledged that there were 
subjective elements  in the ratings .  
5.3.  The Committee took note of the report.  
6  2017 ANNUAL REPORT O N DIVERSITY IN THE W TO SECRETARIAT – WT/BFA/W/4 57 
6.1.  An official of the Secretariat presented an overview of the 201 7 annual report on diversity  in 
the WTO Secretariat . She detailed data on the current composition of WTO staff based on  WTO 
Membership by gender and by region, and compared the evolution of staff diversity since 1995. The 
official of the Secretariat underlined that there was continuous improvement in the representation 
of Developing Countries and Least Developed Countries as well as significant improvement in gender 
diversity amongst professional staff.  
6.2.  She pointed out  that the share of professional staff had comparatively increased over the years 
and that there has been a significant improvement in terms of gender balance since 1995. The share WT/BFA/175  
 
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  of professional staff represented by developing and Least Developed Countries had increased from 
21.6% in 1995 to 38% in 201 7. The percentage of female staff members has continued to increase, 
especially from Developing Countries (7% in 1995 to 13. 9% in 201 7). In addition, professional staff 
from Africa, Asia and Latin Amer ica had continued to rise progressively since 1995  (22.2% in 1995 
to 35.3% in 2017) , whereas Europe, Oceania  and North America had continued to decrease.  
6.3.  She stated that o verall, the gender diversity among professional staff had improved and the 
share of female professional s had gone up to 45% in 2017, compared to  31% in 1995. By region, 
the gender diversity in professional staff had improved for Africa, Asia and Europe and remained 
more or less stagnant for Latin Ameri ca and North America. T here was a remarkable  improvement 
in the gender diversity of Grade 7 professional staff, as the share of female professional s grew from  
37% in 199 5 to 52% in 2017 . Similarly, in Grade 10 with  the share of female professional s grew 
from 29% in 1995 to 39%  in 2017.  
6.4.  From Grade 11 and above, there were 4 female Directors in 2017 and 1 was promoted recently 
from Grade 10 to Grade 11. The Official  mentioned  that as of December 2017 , Africa and Latin 
America had the highest representation at the Senior Management level and tha t the representation 
from Africa, Asia and Latin America had more than  doubled since 1995.   
6.5.  On recruitment a ctivities , she mentioned that a 22.2% of applications were received from 
Africa n candidates and 24.8% from Asian candidates. However, some candidate s, regardless of 
region, did not meet the criteria thus impacting the shortlisting exercise.  
6.6.  The official  of the Secretariat further stated that  the Secretariat keeps striving for  gender 
representativeness  in the shortlisting  of candidates at senior levels  although this was hampered by 
the low number of female applicants.  
6.7.  With respect to overall recrui tment activity, the official pointed out that there was an increase 
in the total number of applications received  and the averag e number of applications per 
advertisement increased by 13.5% over the last year (118 in 2017 against 104 in 2016).  
6.8.  She further explained that for increasing outreach, the Secretariat officials from the Human 
Resources Division  visited several Member count ries and organized sessions on opportunities at the 
WTO. The job postings were widely shared with the delegations. The Human Resources Division of 
the Secretariat also partic ipated in career events and fora  at some  universities with the objecti ve of 
spread ing awareness about Young Professionals, Internship and other opportunities at  the WTO.  
6.9.  Several delegations appreciated the detailed and comprehensive report on diversity as well as 
the efforts made by the Secretariat to improve gender balance and geograph ical representation . 
Member s also  appreciated the increase of the proportion of employees from developing and Least 
Developed Countries.  
6.10.   Some Delegations raised concern on the low level of gender diversity in the senior roles at 
the Secretariat  and asked a bout the efforts being taken by the Secretariat.  
6.11.   The official  of the Secretariat clarified that there was low staff turnover  and that, as a result, 
there was limited opportunity to shift the  trend. She noted that for senior vacancies, Members were 
also re quested to assist in widely circulating  vacancy notices to  qualified candidates . Through these 
efforts, there had been  a marginal improvement in the number of applications  received for Director  
positions, 27 in 2017 against 24 in  2016.  
6.12.   The Committee took note of the 2017 report on diversity.  
 
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