RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/BFA/102 
7 March 2008 
 (08-1020) 
Committee on Budget, Finance and Administration  
 
 
 
REPORT OF THE MEETING HELD ON 26 FEBRUARY 2008 
  
1. The WTO Committee on Budget, Finance and Admi nistration met on 26 February 2008 under 
the chairmanship of Mr. Tony Lynch of New Zealan d.  The terms of reference and composition of the 
Committee are set out in document WT/L/44/Rev.1. The agenda contained in document 
WTO/AIR/3153 was adopted.  
I. ADMINISTRATIVE UP-DATES AND PROGRESS REPORTS AS AT 
31 JANUARY 2008 
A. C
ASH SITUATION AND STATEMENT OF OUTSTANDING CONTRIBUTIONS – PROGRESS REPORT  
B. CONTRIBUTIONS OF OBSERVER COUNTRIES TOWARDS THE COST OF SERVICES PROVIDED BY 
THE SECRETARIAT – PROGRESS REPORT  
2. A member of the Secretariat presented the cash  situation, the statement of outstanding 
contributions from Members as at 31 January 2008 and a statement regarding the contributions of 
Observer countries towards the cost of services provide d by the Secretariat.  As at the reporting date, 
the total of funds available (WTO and Extr a-budgetary Funds) stood at CHF 79 million.  
Contributions received from Members amounted to CHF 48 million for the current year and CHF 0.5 
million for prior years, while those from Observers  amounted to CHF 100,000 for the current year and 
CHF 80,000 for prior years.  The Working Capital Fund stood at CHF 9.7 million as at 31 January 2008.  The Secretariat pointed out that seven Members (Chad, the Democratic Republic of 
the Congo, Djibouti, Guinea, Guinea-Bissau, Niger and Tonga) still had outstanding advances to the 
Working Capital Fund amounting to CHF 224,000 as at 31 January 2008.  Six of the seven Members 
belong to Category IV (Inactive Members). 
C. WTO
 PENSION PLAN 
3. A progress report (document CRP(08)03) was presented by a member of the Secretariat who 
informed the Members that  the General Council had elected a new chairman and two new members to 
the Management Board. 
4. With respect to the investment strategy, Memb ers were informed that the Management Board 
was continuing its search for candidates for an invest ment committee to assist the Board in the setting 
and maintaining of the investment strategy a nd the selection of the investment managers. 
5. It was further reported that the consulting act uary had been requested  to base the revised 
assumptions regarding mortality and real salary m ovements resulting from th e study by the working 
group on the funding position of the Plan  on the actuarial valuation as at 31 December 2007.  The 
Secretariat pointed out that the valuation was expected to reveal an actuarial deficit. 
6. The Committee took note of the various reports. WT/BFA/102 
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  D. S
TATUS OF EXTRA -BUDGETARY ACTIVITIES : 
i) Technical Assistance Activity as at 31 January 2008; 
ii) Doha Development Agenda Global Trust Fund. 
7. Another member of the Secretariat presented documents (08)04 and CRP(08)05 and informed 
the Committee that as at 31 January 2008, the fi nancial situation of the DDA Global Trust Fund was 
again very critical, showing a remaining bala nce of only CHF 0.2 million.  Consequently, 
implementation of activities under the DDA Global Tr ust Fund had to be put on hold pending the 
receipt of contributions.  It was pointed out that the slow receipt of contributions and the unpredictable nature of the voluntary contributions pu t the Secretariat in a very difficult situation in 
terms of planning and implementing the annual plans for technical assistance and training activities.  
According to the terms of reference of the DDAGTF,  75 per cent of the annual target amount should 
be received by 31 March and 100 per cent by 30 June.  In order to meet the end-of March threshold, 
contributions of some CHF 10 million would n eed to be received in the coming weeks. 
8. Members were further informed that an info rmal meeting had been held with donors in 
February in order to bring the critical situation to  their attention and that several donors had indicated 
their intention to contribute at the same level as in 2007.  However, at the time of the report, no firm 
pledges had yet been registered, and no new funds re ceived and therefore, activities were still on hold.  
Consequently, Members were urged to make their co ntributions as soon as possible in order to enable 
the Secretariat to resume the implementation of the Plan. 
9. In response to a question, a member of the Secr etariat explained that the new Director of the 
Institute for Training and Technical Cooperation ha d recently taken up his functions and had indicated 
that he intended to look into more pro-active fund raising measures. 
10. The Committee took note of the report. 
E. P
ROGRESS REPORT ON BUILDING NEEDS OF THE WTO 
11. A member of the Secretariat informed the Memb ers that the Director-General had reached a 
preliminary understanding via an exchange of lette rs with Micheline Calmy-Rey, President of the 
Swiss Confederation, as to the basic elements of a plan for the renovation and expansion of the Centre 
William Rappard (CWR).  According to the unde rstanding reached, the plan for the CWR would 
include (i) the full renovation and modernization of the existing building, including the improvement 
of physical infrastructure and the densification of  the main conference room;  (ii) the intra-muros 
expansion of the CWR including a delegates' lounge  in the North Courtyard and a new conference 
area in the South Courtyard and;  (iii) the comple tion of a new annex building in the South parking 
area to accommodate approximately 300 work spac es, including a new underground parking facility 
for 200 cars. 
12. It was further pointed out that in the exchange of letters between the Director-General and the 
President of the Swiss Confederation, it was made clear that the financing of this project would be 
accomplished with a CHF 70 million grant from the Swiss government to the WTO and a 
CHF 60 million interest-free loan over 50 years to the WTO by the host country.  Members were  also 
informed that the full project, including the renovation and the new building, would take around 5 years to complete. The renovation works would begin in the last quarter of 2008 and work on the new building in about 2011. 
13. As for the next steps, it was reported that th e WTO and the Swiss authorities would have to 
negotiate a formal Memorandum of  Understanding (MOU) as a basis for both the Swiss Parliament 
and the General Council of the WTO to adopt the fi nal legal and financial a rrangements necessary to  WT/BFA/102 
 Page 3 
 
 
  carry out the project.  The Swiss authorities were expected to approve funds for both the renovation 
project and the new building in three separate tran ches over the next few years.  The first such 
appropriation would be for the initial renovation wo rk and would have to occur by early summer 
2008.  At the same time, the WTO General Council woul d also have to approve the request for a loan 
and give its consent to the overall project. 
14. With respect to the renovation project, it was re ported that rental space in the former Serono 
site on the Chemin des Mines would be provided for WTO staff, including staff from Rue Rothschild, by the host country for the duration of the works, w ith the cost of such rental being deducted from the 
CHF 70 million  funding.  It was fu rther explained that the planning for the occupancy of the Chemin 
des Mines building (CDM) and the simultaneous empt ying of the first sector of the CWR had already 
started and that this complex logistical task mi ght require some additional expenditures for 2008.  
However, these expenses would be clearly identifie d and the Secretariat would explain to Members 
how it planned to meet such expenditure. 
15. Members were also informed that the WTO and the FIPOI were working together on the 
design and work-plan for the renovation and the intra- muros extensions.  The security enhancements 
for the CWR already agreed upon between the WTO and the host country would be incorporated in 
the project, including a new accreditation building near the entrance and a full security perimeter 
around the WTO complex. 
16. Finally, it was reported that a Renovation Task Force composed of key members of the 
Secretariat had been appointed by the Director-General and that regular reports on the progress of the project would be provided to the CBFA. 
17. During a short presentation, Members were fu rther informed that the renovation process 
would take place in phases. The building would be divided into sectors, corresponding to each phase.  
It was pointed out that it was important to complete works on the new South wing conference centre before starting with the North wing renovation, b ecause the present conference facilities in the North 
wing would then be disabled.  It was also explai ned that the renovation of each sector was estimated 
to take between four to six moths, according to th e size of the sector. The renovation of the first sector 
was expected to start in the fall of 2008. 
18. One Member stressed the need to plan carefu lly in order to avoid time and cost overruns. 
Another Member requested assurances that the MOU w ould ensure that the project plan was a single, 
integrated plan even if the funding would be made av ailable in three tranches.  In reply, the Secretariat 
confirmed that it would be an integrated project based on a single undertaking. 
II. INACTIVE MEMBERS 
19. A member of the Secretariat presented document WT/BFA/W/167 which provided a list of 
Members which, as of 21 February 2008, had arrear s for three or more years commencing with the 
year 1989. WT/BFA/102 
Page 4  
 
  20. In accordance with paragraph 7 (b) of document PC/7, L/7578, the Committee 
recommends to the General Council that the following  Members classified in Category IV of the 
Administrative Measures (Inactive Members)  be urged to liquidate their arrears:  
Burundi 
Central African Republic 
Chad 
Congo Côte d'Ivoire Democratic Republic of the Congo Djibouti 
Dominica 
Gabon Gambia 
Guinea 
Guinea-Bissau 
Malawi Mauritania Niger Paraguay 
Sierra Leone 
Togo 
III. POSSIBLE ADVERSE IMPACT OF MANAGEMENT DECISIONS ON THE 
ACTUARIAL BALANCE OF THE WTO PENSION PLAN 
21. The Chairman of the Management Board of the WTO Pension Plan addressed the Committee 
with respect to the amendment to Article 9 of the Pe nsion Plan Regulations.  He explained that, in the 
Board's view, Article 9 in its current form did not adequately cover a situation where the liabilities of 
the Pension Plan increased, not as a result of external  events beyond the control of the Board and/or 
Organization, but as a result of specific management decisions.  In the case of such decisions, it was the view of the Board that the resulting cost shoul d be borne by the employer alone and not shared 
between employer and employee.  Article 9(d) di d not specifically provide for this and left the 
question of apportionment of cost open. Article 9( e) was intended to close that loophole and would 
make it clear that the Organization itself would make good any increase in Plan liabilities arising from management decisions.   
22. As an example, if the Organization intended to  carry out a restructuring exercise where early 
retirement was used as an incentive to encourage staff to leave, management would be required under 
Article 9(e) to factor in the cost arising from th e additional Plan liabilities in the overall cost of the 
restructuring proposal submitted to the CBFA.  Ho wever, the Organization would not have to pay 
automatically for the cost of any additional Plan  liability, but only for those liabilities above and 
beyond those foreseen by the consulting actuary under the normal operation of the Plan.  In that case, 
the actuary would make the necessary recommendati on for action under the Plan Regulations.  Any 
adjustment to contributions would then be subject to approval by the General Council. 
23. Several Members expressed their reservations with respect to Article 9(e).  One Member 
noted that, when Article 9 had been written, th e possibility of involuntary and/or encouraged 
separations had already existed.  In case of a deficit,  Article 9(d) did not imply that the resulting costs 
would have to be shared between Management and sta ff, but only that the deficit had to be corrected 
and that there were various ways of doing so.  An other Member was concerned lest Article 9(e) be 
applied automatically.  One more Member suggest ed determining who was accountable for the costs 
of a restructuring exercise.  Another Member cons idered that there was a weakness in the process 
because Members were not made aware of pot ential contingent liabilities when approving 
restructuring.  Any future financial implications for the Pension Plan should also be examined.  
Several Members were of the view that staff inte rests should also be taken into account, as pensions 
were an important aspect of their terms and conditions of employment. 
24. The Chair of the Management Board suggested a re-drafting of Article 9(e) to address the 
comments made by Members and include useful cross references, and confirmed that there was no automaticity in Article 9(e), because every restruct uring exercise would have  to go through the CBFA 
and then through the General Council.    WT/BFA/102 
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  25. The Committee will revert to this item followi ng further consideration of the proposed 
amendment by the WTO Pension Plan Management Board. 
IV. ELECTION OF CHAIRPERSON 
26. The Chairperson recalled that the Chairman of  the General Council had carried out informal 
consultations on the appointment of Chairpersons  to the various WTO standing bodies in accordance 
with the established guidelines for such officers.  On the basis of the understanding reached, the 
Committee on Budget, Finance and Administration re-e lected Mr. Tony Lynch as chairperson of the 
Committee. 
27. The re-elected Chairman thanked the Committe e for its participation and confidence and 
indicated that he looked forward to working with and for the Committee. 
 
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