RESTRICTED
GENERAL AGREEMENT PC/W/13
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ONTARIFFS AND TRADE 7December 1994
Limited Distribution
WORLD TRADE ORGANIZATION
(94-2688)
IMPLEMENTATION CONFERENCE
8DECEMBER 1994
MEASURES TODEAL WITH MEMBERS INCATEGORI IVOF
THE ADMINISTRATIVE ARRANGEMENTS ONARREARS
Background
1. Theexisting GATT procedures fordealing witharrears willbeadopted bytheWTO. InOctober
1988, theGATT Council approved arecommendation onadministrative arrangements forimproving
thecashsituation oftheGATT, which included asafinalstage (Category IV)thefollowing:
"Should acontracting party beinarrears forthreeyears'assessed contributions atthe
endofGATT 'sfinancial year, thesituation would bereviewed bytheCommittee on
Budget, Finance andAdministration withaviewtoproposing, asappropriate, other
measures totheCouncil toreinforce theobligation topaycontributions".
(Forfulldetails oftheadministrative measures, seeGATT Budget, Finance andAdministration
Committee Paper L/6384 paras 34to41-seeAnnex 1).
2. InJune1991, theGATT Committee onBudget, Finance andAdministration examined the
situation ofcontracting parties withthree ormore years'assessed contributions outstanding and
recommended that"adecision ontheintroduction offurther administrative measures bedeferred until
theconclusion oftheUruguay Round". (L/6870, paragraph 51)
3. Atpresent there are21Contracting Parties inCategory IV,seeAnnex 2.
Considerations
4. Itisrelevant thatArticle VII-4 oftheWTO Agreement states:
"Each Member should promptly contribute totheWTO itsshare intheexpenses of
theWTO inaccordance withthefinancial regulations adopted bytheGeneral Council".
5. ItisappropriatefortheWTOtostartwithacompletesetofadministrativeproceduresfordealing
witharrears. Itistherefore necessary toaddress thepresent situation whereby nomeasures arein
place todealwithMembers inCategory IV.
6. Itisimportant thatthefinancial accounts oftheWTO arenotdistorted bytheundifferentiated
treatment ofchronic andlong-term debt.PC/W/13
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Recommendation
7. Itisrecommended that:
(a) aMember bedesignated asanInactive Member if,attheendofafinancial year, the
fullcontributions forthreeormoreyears, commencing withtheyear1989*, areunpaid;
(b) thelistofInactive Members benotified totheGeneral Council bytheCommittee on
Budget, Finance andAdministration atthebeginning ofeachcalendar yearwitha
recommendation thatthese Members beurged toliquidate theirarrears;
(c) assessments forInactive Members foragiven yearbeplaced inaseparate account
andnotcounted aspartoftheanticipated revenue oftheWTO forthatyear;
(d) assoonasanappropriate payment ismade byanInactive Member, theGeneral Council
benotified immediately oftheconsequential deletion fromthelistofInactive Members;
(e) Inactive Members bedenied access totraining ortechnical assistance other thanthat
necessary tomeettheirWTO Article XIV-2 obligations;
(f) arrears collected from Inactive Members foragiven yearbeplaced intheSurplus
Account.
8. Itisrecommended thatthese measures beintroduced witheffect from1January 1995 except
forparagraph 7(c)which would beintroduced witheffect from the1996 financial year.
*This isontheunderstanding thattheassets andliabilities oftheGATT havebeentransferred
totheWTO.
Note: Itisrecommended thatacomparable resolution beprepared fortheSession ofCONTRACTING
PARTIES inrespect ofContracting Parties toGATT 1947 notalsoMembers oftheWTO.PC/W/13
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Annex 1
34. TheSecretariat wasrequested toreport ontheexperience ofother international organizations
indealing withtheproblem ofcontributions inarrears (seeAnnex B).
35. Withregard tothepossibility ofcharging interest onoutstanding contributions, some members
saidthattheywereopposed tosuchameasure asitwould inflict anevenheavier burden oncontracting
parties whoalready havegreat difficulties inmeeting theirfinancial obligations andwould onlyserve
toincrease thelevelofoutstanding contributions. Other members thought thatinterest should notbe
charged adinfinitum butrather should belimited tothree orfouryears.
36. Onemember oftheCommittee suggested thatifpayment ofcontributions weremore thansix
months late,thecontracting party concerned would beobliged tomake anadvance payment onthe
nextyear'scontribution. Hefurther proposed thatparticipation inpanels ormeetings onCodes could
beassessed separately tothose contracting parties involved, while another member thought thatsuch
ameasure might discourage awider participation intheGATT framework andshould notbepursued.
Itwasalsosuggested thatcontracting parties inarrears would becharged thecostsofapanel thatthey
might request orthatcosts ofpanels could bedebited totheoffending party.
37. Onemember considered thatabetter financial management ofthesystem ofmailing documents
wouldentailsavingswhichcouldimprovethecashsituationsignificantly.HethoughtthattheCommittee
could request theSecretariat toaskcontracting parties iftheywanted tocollect theirdocuments on
theirownthrough theirGeneva-based delegations ortoreceive them bymaillocally orincapitals,
onpayment ofanappropriate fee.
38. TheCommittee wasultimately oftheopinion thatfinancial measures suchasthecharging of
interest oncontributions inarrears should notbeintroduced.
39. Anumber ofmembers werenotprepared toaccept measures which would infringe upon the
rightsofcontractingpartiesundertheGATT.Theywouldfavourthosewhichwouldcauseadministrative
inconvenience orembarrassment forcontracting parties inarrears. Inaddition, itwassuggested that
therewould beapermanent pointontheCouncil agenda under which theDirector-General would inform
theCouncil onthestateofcontributions. Contracting parties withcontributions inarrears could then
beasked toreport totheCouncil onmeasures theyintend totakeinorder tomeettheirobligations.
40. Some members thought thatmeasures should beimposed onlyafterthelevelofoutstanding
contributions reached thatequal totwoyears'assessments, andthatthereshould furthermore beagrace
period offourmonths before suchsanctions wereapplied. Others feltthattheadministrative measures
shouldgofurtherinordertoassuretheireffectiveness.Yetothersexpressedreservationsontheprinciple
itself ofapplying sanctions tocontracting parties.
41. Soastoavoid theoccurrence ofarrears inthefuture, theCommittee recommends totheCouncil
thatthefundamental obligation topaycontributions infullbereinforced andthatgradually implemented
administrative measures beintroduced asfrom 1January 1989.1These measures, which would be
1These measures willnotbeapplied incaseofoutstanding contributions relating to1987and/or
earlier assessments.PC/W/13
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applied, where appropriate, after three month 'snotice bytheSecretariat tothecontracting party
concerned andthegranting ofagrace period ofonemonth, would comprise:2
After onefullyear'sassessed contribution remains outstanding attheendofGATT 'sfinancial
year:
- documentation would notbeposted todelegations totheGATT inGeneva,
- representatives would notbenominated topreside overGATT bodies.
After more thanonebutlessthantwofullyears'assessed contributions remain outstanding
attheendofGATT 'sfinancial year:
- documentation would notbeposted todelegations totheGATT inGeneva,
- representatives would notbenominated topreside overGATT bodies,
- newmembership toandparticipation intheCommittee onBudget, Finance and
Administration would bereserved forcontracting parties whose contributions arepaid
orwhohavenotmore thanonefullyear'sassessment outstanding.
After twobutlessthanthree fullyears'assessed contributions remain outstanding attheend
ofGATT 'sfinancial year:
- documentation would notbeposted todelegations totheGATT inGeneva,
- representatives would notbenominated topreside overGATT bodies,
- newmembership toandparticipation intheCommittee onBudget, Finance and
Administration would bereserved forcontracting parties whose contributions arepaid
orwhohavenotmore thanonefullyear'sassessment outstanding,
- documentation would notbeposted tocontracting parties,
- recommendations bytheCommittee onBudget, Finance andAdministration tothe
Council orCONTRACTING PARTIES onfinancial matters would beacted ononly
bycontracting parties whose contributions arepaidorwhohavelessthantwofullyears'
assessments outstanding.
After threefullyears'assessed contributions remain outstanding attheendofGATT 'sfinancial
year:
Should acontracting party beinarrears forthree fullyears'assessed contributions
attheendofGATT 'sfinancial year,thesituation would bereviewed bytheCommittee
onBudget, Finance andAdministration withaviewtoproposing, asappropriate, other
measures totheCouncil toreinforce theobligation topaycontributions.
2Thefirstgrace period willbeextended to30June1989. Allcontributions received from 1
January 1988to30June1989will,inthefirstinstance, becredited against the1988assessment unless
otherwise instructed bythecontracting party concerned. Allcontributions received after30June1989
will,inthefirstinstance, becredited against theoldest outstanding contribution beginning with1988;
thecontracting party concerned mayhowever electtopayfirsttheamounts dueunder anyinstalment
plans established under paragraph 25a)andb).PC/W/13
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Annex 2
Listofcontracting Parties which areinCategory IVasof30September 1994.
Antigua andBarbuda Kenya
Burundi Mauritania
Cameroon Nicaragua
Central African Republic Niger
Chad Rwanda
Congo Senegal
Dominican Republic Sierra Leone
Gambia Suriname
Ghana Togo
Haiti Uganda
Zaire