RESTRICTEDWORLD TRADE
ORGANIZATIONWT/BFA/39
3 June 1999
(99-2248)
Committee on Budget, Finance and Administration
REPORT OF THE MEETING HELD ON 19 MARCH
AND 22 APRIL 1999
1. The WTO Committee on Budget, Finance and Administration met on 19 March and
22 April 1999 under the successive chairmanship of Mr. Lavorel from the WTO in the absence of
Mr. W. Meier of Switzerland, Chairman of the Committee, and of Ms. Dubois-Destrizais of France.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/1041/ Rev.1 was adopted with additional points from
the Delegation of Nicaragua and Cuba under Other Business, regarding respectively a communication
that the Director-General had received from the Minister of Foreign Affairs of Nicaragua and the
distribution of publications.
I. ELECTION OF CHAIRPERSON
2. The Chairman of the General Council had carried out informal consultations on the
appointment of Chairpersons to the different WTO standing bodies in accordance with the established
guidelines for the appointment of such officers.  On the basis of the understanding reached,Mr. Lavorel proposed that the Committee on Budget, Finance and Administration formally elect
Ms. Dubois-Destrizais as Chairperson by acclamation.  The Committee so agreed, and Mr. Lavorel
then handed over the chairmanship to Ms. Dubois-Destrizais who thanked the Members for their
confidence.
II. WORK PLAN FOR 1999
3. The Chairperson referred to the document CRP(99)04 of 15 March 1999 on the proposed
schedule of meetings for 1999.  It included inter alia  the examination of:  (i) the Final Position of the
1998 Budget;  (ii) the Director-General’s Financia l Report on the 1998 Accounts of the WTO and the
Report of the External Auditor Thereon;  (iii) the Budget Estimates for 2000 for the WTO and the
International Trade Centre (ITC);  and (iv) the minimum contribution to the WTO Budget.  The
Chairperson stressed that if, in the course of the year, more meetings were required, or additionalissues necessitate discussions or review, they would be added to the proposed schedule.
4. Several Members considered that, as the WTO secretariat was independent as of 1999, it was
important that the Budget Committee meet (formally and informally) more frequently to exercise its
control function over administration and budget so as to ensure transparency and accountability.  A
few expressed concern that an increased number of meetings would strain the capacity of someDelegations to cover adequately all meetings.  In concluding, the Chairperson indicated that the
Committee should show pragmatism, rigour and flexibility in holding meetings and would program
additional meeting if necessary.  The Committee took note of the comments.WT/BFA/39
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III ADMINISTRATIVE UP-DATES AND PROGRESS REPORTS AS AT
28 FEBRUARY 1999
A. CASH SITUATION AND STATEMENT OF OUTSTANDING CONTRIBUTIONS
(CRP(99)01 AND WTO/BFA/SPEC/30)
B. INSTALMENT PAYMENTS FOR COUNTRIES IN ARREARS (CONTRIBUTIONS
FROM 1987 (CRP(99)02)
C. CONTRIBUTIONS OF OBSERVER COUNTRIES TOWARDS THE COST OF SERVICES
PROVIDED BY THE SECRETARIAT (CRP(99)03)
5. The Secretariat presented reports on the cash situation and statement of outstanding
contributions as at 28 February 1999, the instalment payments for countries in arrears, and the
contributions of Observers countries towards the cost of services provided by the Secretariat.  The
total contributions received amounted to CHF 47,295,038, and the Working Capital Fund stood at
CHF 7,533,265.  As of 28 February 1999, there were six Members each in Category I and Category II,while in Category III there were four and in Category IV, 20.  In the context of the instalment
payment for countries with contributions in arrears (contributions for 1987 and earlier years), Ghana
had paid all arrears.
6. At the request of Members, document CRP(99)07 concerning the WTO technical
co-operation activities was prepared by the Secretariat and distributed to the Members after the
meeting.  A Member requested that an analytic page be included in Trust Funds activities paper in the
future.
7. The Committee took note of the reports.
IV. INACTIVE MEMBERS
8. Following the recommendation of the Preparatory Committee of the World Trade
Organization on the issue of Members in category IV of the administrative measures, the Secretariat
prepared a list of Members which have accumulated more than three years of arrears up to and
including the financial year of 1998 as at 28 February 1999 (WT/BFA/W/30).
9. Consequently, in accordance with paragraph 7(b) of document PC/7,L/7578, the Committee
recommends to the General Council that the following Members be urged to liquidate their arrears:
Angola Gambia
Antigua and Barbuda Guinea
Burundi Guinea-Bissau
Cameroon Mauritania
Central African Republic Nicaragua1
Chad Niger
Congo Rwanda
Democratic Republic of the Congo Sierra Leone
Djibouti Solomon Islands
Gabon Togo
                                                     
1 At the time of finalizing this report, Nicaragua had made a payment and was no longer under any
category of the administrative measures.WT/BFA/39
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V. ASSESSMENT OF ADDITIONAL CONTRI BUTION TO THE 1999 BUDGET AND
ADVANCE TO THE WORKING CAPITAL FUND: ACCESSION OF LATVIA
10. In view of the accession to the WTO of the Government of Latvia
(document WT/BFA/W/29), the Committee recommends to the General Council that a pro rata
contribution to the 1999 Budget amounting to CHF 53,748 be assessed on this Government.  This
assessment, calculated as from 10 February 1999, is based on an annual contribution of 0.05 per cent,
taking into account the international trade figures (imports plus exports in goods, services and
intellectual property rights) of Latvia for the years 1995 – 1997.  Furthermore, on the basis of the
Working Capital Fund of CHF 7,533,265 on 10 February 1999, the Committee recommends to the
General Council to assess an amount of CHF 37,666 on the Government of Latvia as an advance to
the Fund.
VI. CONTRIBUTION TO THE WTO
11. With regard to the minimum contribution to the WTO Budget, the Chairperson presented a
proposal in document WT/BFA/W/31 that the mini mum contribution be reduced from 0.03 per cent to
0.015 per cent as from the budget for the year 2000 and that the contribution of observers be fixed at
the level of 0.015 per cent from the year 2000 onward as compared to half the minimum contribution.
She stressed that this question had been debated extensively in the past and that the matter had been
favourably received in the course of the Committee’s meetings in late 1998.  She indicated that it was
not her intention to take a decision at that meeting of the Committee and not to have a general debateon the question.  All documents were on the table, of course additional options could be raised and
she was, with the secretariat ready to give all information needed.  But it was time for delegations to
request instructions from their Capitals.  She wished that a decision could then be taken at the next
meeting of the Committee in June.  It was necessary to take a decision before the Committee would
start the discussion on the WTO Budget for 2000 in September.
12. Some Members enquired on the method of calculation.  At the request of some Members, an
informal technical meeting on the method of calculation was held on 1 April 1999 at which time
document CRP(99)06 was examined and various technical points clarified.
13. The discussion on the issue continued when the Committee resumed on 22 April.  Document
CRP(99)09 reflecting simulations on different mini ma, as suggested in the informal technical
meeting, was distributed to Members.  The Chairperson said that the minimum of 0.015 per cent was
found to be a good compromise among various minima.  It was her intention to maintain her proposal
at that level.  She stressed again the importance of dealing with the proposal at the June meeting of the
Committee since, if the Committee was not in a position to make a recommendation to the General
Council at that time, the draft Scale of Contributions, which is prepared in August and distributed inSeptember, would have to be calculated at the minimum of 0.03 per cent, thus making it more
difficult to discuss the proposal with a modified Scale of Contributions.
14. The Committee took note of the comments.
VII. PERSONNEL MANAGEMENT QUESTIONS
15. At its meeting on 19 March 1999, a member of the Secretariat introduced document
CRP(99)05 concerning the classification of posts in the WTO Secretariat.  He indicated that a
comprehensive post classification exercise had been undertaken to ensure that the principle of equalpay for work of equal value was observed across the Organization, and to identify career streams for
the various occupational groups in the WTO.  Each career stream consisted of a series of discrete
grade level definitions specifying the qualifications duties and responsibilities required at each grade
in the career stream and culminating in a ceiling grade corresponding to the full requirements of theWT/BFA/39
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post.  On the basis of detailed submissions received from division Directors, the joint
management/staff group determined the ceiling grade.
16. Some Members showed concern that grade creep could result from the classification exercise
and enquired what mechanisms were in place to control it.  They also expressed the wish thatMembers be consulted prior to the finalisation of the post classification exercise.  Others enquired
about the long-term results of the classification exercise in respect of expenses.  With regard to
promotion, Members enquired about the promotion policy and its control mechanism as well as the
system for performance evaluation.
17. The discussion resumed on 22 April 1999.  The Secretariat introduced document CRP(99)08
which provided an overview of the integrated pe rsonnel management system in forced in the WTO
since 1 January 1999.  The overview addressed concerns expressed by some Members during the
discussions on 19 March 1999 with regard to recruitment, post classification, promotion and
performance management and their budgetary impact.  With regard to recruitment, Staff Regulations
3.1 to 3.4 outlined the policy which was to identify through appropriate interview and testing
procedures the most suitable candidate to fill a post at the lowest level commensurate with securingthe required expertise.
18. Staff Regulation 6.4 stipulated that the WTO would institute and maintain programmes to
classify posts.  The classification standards had been developed on the basis of Common System
standards and permitted the definition of a career path for each post.  In this respect, the Secretariatstressed that it was justified to have director posts at a single level but that there was no question of
automatic progression to Grade 12.  Grade 11 served as an exceptional level for a very restricted
number of outstanding professionals as well as the first level of the director career path.
19. The policy on promotion, the key instrument of personnel management, was stipulated in
Staff Rules 107.1(b) and(c).  Proposals for prom otion are reviewed by the Appointments and
Promotions Board (APB), which formulated  recommendations for consideration by the
Director-General.  In this respect, performance evaluation had to be applied systematically,
consistently and transparently across the Organization.  Work was currently in progress on the
preparation of a system of performance-related pay to be introduced in the year 2000.
20. Another member of the Secretariat explained the development of standard costs and salary
increments in the annual budgeting exercise.  As indicated in the document CRP(99)08, Professional
and General Service standard costs have been downward adjusted from 1995 to 1999.  Under the
WTO, the only automatic adjustments to salaries would result from inflation.  From the year 2000, the
present system of automatic steps would be replaced by a performance-related pay system.  With
regard to promotions, as indicated in the document , the cost of a single promotion was equivalent to
two additional steps (annual increments) in the lower grade.  Therefore, for Professional level staff,
the cost would be up to CHF 5,900 while that for General Service staff would be up to CHF 5,300.
21. Some Members expressed concern over the recent post classification exercise and especially
on the question of a ceiling grade for a defined post and the budgetary impact on a long-term basis.They indicated that they would not want a top-heav y organization.  Several Members stressed that the
post classification exercise should not entail a budgetary increase.  Others suggested that consultations
take place between the Members and the Secretariat prior to any major change of the structure and
balance of the latter.  Some Members considered that the Secretariat should have a certain autonomy
in personnel matters.  They suggested, however, that the annual budgeting exercise could provideinformation on the number of promotions planned with an indication of the additional amount
involved in order to ensure transparency and budgetary control.
22. In reply to questions, the Secretariat indicated that the APB advised the Director-General on
recruitment and promotion matters.  However, it was the prerogative of the Director-General toWT/BFA/39
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appoint staff at grades 11 and 12.  The membership of the APB was different from that of the panels
which interviewed candidates for posts.  With regard to recruitment matters, the Secretariat took into
consideration the element of gender and geographical  distribution at the projection stage.  A Deputy
Director-General from the Secretariat expressed his availability to the Members for further
consultations to enhance the understanding on the various matters under discussion between theMembers and the Secretariat.  The Members welcomed the initiative.
23. The Committee took note of the comments from the Members and indicated that the matter
would be taken up again at the next meeting of the Committee.
VIII.  ESTABLISHMENT OF THE WTO SECRETARIAT
24. The Secretariat gave an oral report on the establishment of the WTO Secretariat and recalled
the first progress report that the Secretariat had circulated to Members on 27 January 1999
summarising developments since October 1998.  As conditions for the establishment of the
independent WTO Secretariat and Pension had been  met, the Director-General terminated the
membership of ICITO in the United Nations Joint Staff Pension Fund (UNJSPF) as of 31 December1998.  Since then, 85 per cent of the estimated amount of assets to be recovered from the UNJSPF had
been transferred to the WTO and invested in the name of the WTO Pension Plan in an interest-bearing
account.  Preliminary work had begun on the investment policy for the new pension plan through the
hiring of a firm of independent experts based in  Switzerland.  A Management Board was established
under the chairmanship of Ambassador Morjane following the election of Members by theGeneral Council and the designation by the Director-General of members from the Secretariat.  The
Management Board met for the first time in mid-April.  The next meeting was foreseen for
3 May 1999 to consider investment policy.  In the meantime, the Secretariat had received the final
certification from the Panel of Independent Actuaries set up by the General Council.  It confirmed that
the compensation and personnel scheme remained cost neutral and viable in the long-term, taking intoaccount the estimated final amount of assets to be recovered from the UNJSPF.  The certification had
been circulated to the members of the Board.
25. The Secretariat also informed the Committee that  at the dissolution of the ICITO, there had
been 28 staff who did not accept a WTO contract.  A total of CHF 3.6 million had been paid out to
cover indemnities and other end of service payments.  The termination indemnities paid were strictly
in line with the UN Regulations.
IX. OTHER BUSINESS
COMMUNICATION FROM NICARAGUA
26. A delegate from the Nicaragua Mission took the floor and informed the Committee of the
heavy burden which hurricane Mitch had inflicted on his country.  Taking into account of the
exceptional circumstances faced by his Government, the latter would like to request the support of
Member States for the cancellation in full of Nicaragua’s debt towards the WTO.  He further proposed
that a contingency fund be created, made up of contributions from donor Members, to supportcountries, which in spite of their demonstrated willingness to pay, have been unable to do so due to
exceptional circumstances.
27. It was noted that the point would be included on the agenda for the June meeting of the
Committee.
DISTRIBUTION OF DOCUMENTS28. The Delegation of Cuba referred to the WTO practice of distributing only two copies of
publications to Missions.  He requested flexibility in the practice and that Missions should be able toWT/BFA/39
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receive copies according to their needs.  He requested that the matter be discussed at the next meeting
and the Secretariat prepare a note on the current situation of the distribution of the document and its
financial consequence.
29. It was noted that the point would be included on the agenda for the June meeting of the
Committee.
X. POINTS FOR DECISION: Paragraphs 9 and 10
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