WORLD TRADE  
ORGANIZATION  RESTRICTED 
WT/BFA/124 
14 July 2011 
 (11-3524) 
Committee on Budget, Finance and Administration  
  
 
REPORT OF THE MEETING HELD ON 14 JUNE 2011 
 
 1. The WTO Committee on Budget, Finance and Ad ministration met on 14 June 2011 under the 
chairmanship of Mr.  Pasi-Heikki Vaaranmaa (Finland).  The terms of reference and composition of 
the Committee are set out in document WT/L/44/Re v.1.  The agenda contained in document 
WTO/AIR/3761 was adopted. 
I. INTERNATIONAL TRADE CENTRE 
2. The Deputy Executive Director of the Intern ational Trade Centre (ITC) presented the 
following three items to the Committee: 
(a) Preliminary budget estimates to accommodate ITC’s programme of activities during 
the biennium 2012-2013. 
(b) An updated report on the review of the ITC Budget Process. 
(c) A report on the funding of after service health insurance benefits.   
A. P
RELIMINARY BUDGET ESTIMATES 2012-2013  (A/66/6  (SECT . 13)) 
3. The ITC's regular budget was equally funded by the UN and the WTO in Swiss francs.  The 
budget was also approved in full by both Organiza tions.  The UN Secretary-General had made a UN 
Secretariat-wide request on 7 March 2011, includi ng ITC, inviting UN departments to reduce their 
proposed 2012-2013 budgets by a minimum of 3 %. On 18 May 2011, ITC had been informed that the UN Secretariat had decided to exempt ITC from the request to identify a 3 % reduction in the budget 
as it was a co-sponsored organization and received funding from the UN as a grant contribution. The 
UN Advisory Committee for Administrative and B udgetary Questions (ACA BQ) had reviewed the 
ITC preliminary budget proposal for 2012-2013 on 24 May 2011. 
4. ITC's strategic goals for 2010-2011 and achieveme nts were first presented. The annual client 
survey showed a positive trend in the quality and rele vance of ITC's services over the last three years. 
Technical assistance delivery rates were also on the rise despite the 2 per cent reduction in the regular 
budgets for 2008-2009 and 2010-2011 impos ed by the UN General Assembly. 
5. ITC had several challenges for the next bie nnium, such as enhancing accountability and value 
through result-based management, a nd delivering projects with greater potential impact to achieve 
long-term sustainability, efficiency and effectiven ess by growing projects into larger multi-year and 
multi-stakeholder programmes.  ITC would continue  its efforts, conscious of WTO and UN Member 
State requirements for prudence, and had planned for a budget increase for the next biennium to 
include only statutory and unavoidable adjustment s of around 1% each year.  It also included a 
request to convert the funding for two temporary posts into funding for continuing posts at no 
additional cost. WT/BFA/124 
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  6. The ITC's management recognized the current difficult financial situation.  ITC would, 
therefore, continue to seek efficiencies and cost reductions.  At the same time ITC would be consulting with all stakeholders to ensure that a ll views had been taken into consideration.  ITC 
management would provide a comprehensive budget proposal to the CBFA in the fall 2011.  
7. Several Members expressed support for the work of the ITC, the efforts engaged to increase 
efficiency and the approach taken on results-b ased management. Some Members expressed the need 
to have a zero nominal growth in the budget and ask ed about the impact of foreign currencies on the 
ITC cost structure. The Committee then took note of the Report.   
B. ITC
 BUDGET PROCESS (ITC/BUD/62) 
8. The Committee, when reviewing the ITC 2010-2011 budget, had asked for a review of the 
ITC budget process with a view to its enhancem ent.  The ITC budget was approved by the UN 
General Assembly and the WTO General Council.  Th is dual approving mechanism gave rise to some 
challenges and inefficiencies.  ITC had presented a first report to the Committee in November 2010.  
Following this first review, ITC had submitted th e following recommendations to the Committee for 
approval, the administrative arrangements  agr eed between the WTO and the UN remaining fully 
applicable: 
(a) ITC would continue to send the UN simplified budget fascicle to the WTO Secretariat 
for information in the spring preceding the biennium. This budget fascicle would be 
distributed to WTO Members.  
(b) ITC would submit to WTO Members during the fall preceding the next biennium the 
full budget fascicle in the UN format. A cover sheet adding WTO budget-specific information would be added.  Information would be presented in Swiss francs and US 
Dollars, but the Swiss franc would continue  to be the currency in which the budget 
was approved. 
(c) The reports of the Advisory Committee on Administrative and Budgetary Questions 
(ACABQ), a subsidiary organ of the Gene ral Assembly, on the examination of ITC’s 
budget would be distributed to WTO Members. 
9. Those recommendations would provide WTO Memb ers with more detailed and timely budget 
information and would avoid ITC producing two completely different documents reproducing the 
same ITC budget information.  
10. The Committee took note of the report and approved the recommendations on the 
changes in the ITC Budget Process as presented in document ITC/BUD/62 . 
C. REPORT ON AFTER SERVICE HEALTH INSURANCE LIABILITY (ITC/BUD/63,  A/64/366) 
11. ITC presented and shared with the Committee a Report of the UN Secretary-General on the 
liabilities and proposed funding for after-service h ealth insurance benefits.  The purpose of this 
document was to inform the Committee of the level of  ITC’s estimated liabilities in that respect and of 
the progress of discussions within the UN General Assembly on that question. 
12. The UN Secretary-General had recommended movi ng away from financing such benefits on a 
pay-as-you-go basis and introducing a funding strate gy that would ensure that adequate funds were 
systematically put aside to meet the cost of  current and future liabilities in full.    WT/BFA/124 
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  13. The actuarial valuation for ITC end-of-ser vice liabilities was undertaken and amounted to 
US$ 44 million at the end of 2010. ITC intended to adopt  a funding policy in line with that of the UN, 
once decisions on the latter had been made, which ITC would submit to the UN and the WTO for 
approval. 
14. The Committee took note of the Report.   
II. ADMINISTRATIVE UP-DATES AND PROG RESS REPORTS AS AT 31 MAY 2011 
A. WTO  BUDGET AND FINANCE REPORT (WT/BFA/W/242) 
15. A member of the Secretariat presented the situation regarding Members' contributions as at 
31 May 2011 showing that CHF 118 million (61 per cent) of the assessed CHF 194 million had been 
received and that 60 Members or 39 per cent of the Membership had no outstanding balance.  Payments received from Observers represented 46 per cent of the total assessment of CHF 0.9 million.  
The receipt of contributions was slightly lowe r than at the same time in prior years. 
16. The cash situation could be considered as ad equate as the WTO held CHF 107 million on its 
bank accounts, including the Working Capital Fund a nd Extra-Budgetary Funds as at 31 May 2011.   
17. It was reported that 17 Members were under Ad ministrative Measures at the end of May, 
comprising four in Category I, four in Categor y II, two in Category III and seven Members in 
Category IV (Inactive).   
18. The 2011 budgetary performance remained largel y on schedule after five months with an 
implementation rate of 44 per cent. The expenditure level in the dispute settlement area was rising due 
to the high level of activity.  Some sections of th e budget had a higher level of implementation as they 
included commitments until the end of the year. 
B. E
XTRA -BUDGETARY FUNDS REPORT (CRP(11)03) 
19. A member of the Secretariat presented the financial situation on trust funds, especially 
focusing on the Doha Development Agenda Global Trust Fund (DDAGTF).  As at 31 May 2011, total 
committed expenditure exceeded funds available in the DDAGTF by CHF 0.8 million. Total 
expenditure amounted to CHF 14.3 million.  In the first five months of 2011, the WTO had received 
voluntary contribution payments from six Members with  the largest contribution made by Norway for 
an amount of CHF 1.6 million.  The funding situation of the DDAGTF was a matter of serious concern. The level of contributions after five months was the lowest since the inception of the 
DDAGTF.  The Secretariat urged Members who wanted  to contribute to do so as soon as possible.   
20. The DDGTF current balance would imply the cancellation or postponement of activities 
planned for the rest of the year.  The Secretar iat would have to engage  planned activities with 
significant caution until the funding situation became clearer. 
C. WTO
 PENSION PLAN REPORT (WT/BFA/W/240) 
21. The Secretary of the WTO Pension Plan inform ed the Committee that the Management Board 
of the WTO Pension Plan had met once since March and reviewed the situation with respect to the 
recovery of withholding tax levied on Pension Plan investments.  WT/BFA/124 
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  D. HUMAN RESOURCES REPORT  
22. A member of the Secretariat presented an overview of human resources by funding source, 
contract type and division.  As at 31 May 2011,  the WTO was employing 713 staff with 94 per cent 
funded by regular budget and 6 per cent from extr a-budgetary funds.  An overview of the staff 
distribution by division was also provided.   
23. In accordance with the WTO salary adjustme nt methodology, the Director-General had 
decided to apply a 1 per cent negative adjustment to the WTO salary scale in 2011. The Director-General had further decided to implement this ad justment by freezing salaries for all staff in 2011, 
including for new recruits. The 1 per cent reduc tion in the 2011 WTO salary scale would be offset 
against future salary adjustment increases. 
24. The Committee was then updated on the progress of  the reallocation exercise of 24 posts that 
was planned for the current biennium and on th e number of activities engaged under the learning 
programme.  A new bonus proposal was also in th e final stages of consultation with the Joint 
Advisory Committee (JAC). The JAC would then review a revised promotion policy.  
25. One Member invited the Secretariat to contin ue its efforts to promote diversity among the 
staff as it remained a key issue.  
E. B
UILDING PROJECT AND COMMON FACILITIES REPORT (WT/BFA/W/239) 
26. A member of the Secretariat reported first on the progress of the building project. The 
building project was now in full swing, with build ing work being carried out simultaneously on the 
three key projects. The renovation of offices was on-going in the area around the North courtyard of 
the Centre William Rappard (CWR). Construc tion work progressed on the South Courtyard 
Conference Centre and the Atrium (intra-muros pr oject). The excavation fo r the new office building 
(extra-muros project) was almost completed. 
27. In September, 117 staff were scheduled to move  offices, as the renovation of the area around 
the North courtyard would be completed. Some 1,000 office moves had been carried out since the 
start of the building project in 2008. A “soft openi ng” of the South courtyard conference centre was 
scheduled for the WTO Public Forum.     
28. Discussions were taking place with the Swiss authorities regarding the security perimeter 
project.  Questions regarding the financing of the accreditation building were still open.  The work on 
the Sécheron car park was moving ahead.  Fina lly, discussions had been engaged between the 
Secretariat and the Swiss authorities with a view to adapting the existing Infrastructure Contract 
following the completion of the building project. 
29. The Deputy Director-General presented the Co mmittee with an updated list of the common 
facilities projects.  Those projects included the installation and equipping of the new facilities 
provided by the building project once completed.  Th e estimated overall cost of the common facilities 
projects amounted to a total of CHF 21.3 million, di vided into 9 projects or lots. Two thirds of the 
estimated expenditures related to the equipping and furnishing of the conference rooms. The existing 
conference facilities in the CWR had been equipped a long time ago. For instance, the interpretation 
equipment was obsolete. The scheduled renovation of  these facilities had been postponed in order to 
await the completion of the building project.  The pr imary source of funding for the common facilities 
projects would be the Members’ Transition Opera ting Fund (the Fund) established in 2008 with a 
current balance of some CHF 7.3 million. The S ecretariat was also seeking the authority from the 
Committee to engage CHF 2.3 million of expendi ture from the Fund for common areas furniture, 
archive rooms and furniture for the new ITTC training centre.      WT/BFA/124 
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  30. Several Members enquired about the increase in  the cost estimates from CHF 18 million to 
CHF 21.3 million, the competitive tendering process for these projects and the increase in the cost of 
the equipping of the South courtyard conference cen tre.  The Committee decided to defer its decision 
on the approval of the related expe nditure to its next meeting.  
31. The Committee took note of the administrative up-dates and progress reports.   
III. REPORT BY THE OFFICE OF INTERNAL AUDIT (WT/BFA/W/226) 
32. The Head of the Office of Internal Audit presen ted the second annual internal audit report to 
the Committee.  She first reminde d the Committee about the establis hment, purpose, authority and 
responsibility of the internal audit function at the WTO.  The internal aud it activities carried in 2010 
were then presented.  She detailed the scope, obj ectives and key recommendations of the two audits 
performed on payroll activities and on ITTC admi nistrative and logistical support activities.  
33. A special and detailed review had also been carri ed out on the internal delegation of authority 
within the Secretariat.  The objective was to ensu re an adequate basis of accountability, control and 
outline of individual roles.  The Office of Internal Audit had also carried out a follow-up review on 
the procurement audit completed in 2008, on the mission travel audit performed in 2009 and on the 
payroll activities audit completed during the first half of 2010.  The implementation status of 
recommendations from these three audits was presented. 
34. The Head of the Office of Internal Audit c oncluded her presentation by reporting on the main 
challenges faced by the internal audit function th ree years after its establishment and the progress so 
far made in handling them.  The internal audit plan for 2011 provided for three new audits on 
outsourced services: the cleaning services, the secur ity services and informatics.  Follow-up audits 
would also be conducted. 
35. The Chair thanked the Head of the Office of In ternal Audit for her wo rk. The Committee then 
took note of the report.  
IV. ADMINISTRATIVE MEASURES FOR INACTIVE MEMBERS 
36. The Chair of the Working Group on Administ rative Measures updated the Committee on the 
progress achieved. He conveyed the acknowledgment of  the Working Group to the Director-General 
for the efforts made and the results achieved in resolving the position with respect to a number of 
Inactive Members. The Working Group had noted th at Administrative Measures were still not being 
fully implemented and urged the Secretariat to take action in conformity with those measures. As for 
the draft proposal to adjust current Administrative Measures, a number of consultations had been held 
with regional coordinators who had requested more time  to consult their groups. 
37. The Deputy Director-General reminded the Committ ee of the results achieved in the last two 
years in reducing by more than half the number of  Members subject to Administrative Measures.  He 
also updated the Committee on what remained to be done to resolve the position with respect to the 
remaining seven Inactive Members.  The Committee was informed that the Republic of Djibouti had 
communicated to the Secretariat its willingness to en ter into a payment scheme to settle its arrears in 
outstanding contributions. While Administrative Meas ures had not been fully and strictly applied in 
the past, the Director-General would respond to the Working Group’s concerns about their implementation and would take the necessary action to have them fully implemented by the end of the 
year.      
38. Several Members, while thanking the Director-G eneral for his commitment to find solutions 
with Members subject to Administrative Measures, expressed strong concern that the Secretariat had WT/BFA/124 
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  not fully applied measures that had been approved by  the General Council.  In order to maintain a 
relation of trust with the Committee, the Secretaria t was expected rapidly to take the necessary action 
to redress the situation and fully implement those measures.  
39. The Chair indicated that the report on WTO security and safety would be presented at the 
next meeting of the Committee. 
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