RESTRICTED
PREPARATORY COMMITTEE PC/BFA/M/1
FOR THE 22August 1994
WORLD TRADE ORGANIZATION
(94-1675)
SUB-COMMITTEE ONBUDGET ,FINANCE
AND ADMINISTRATION
MINUTES OFMEETING
Held intheCentre William Rappard
on4August 1994
Chairman: H.E. Mr.A.Szepesi (Hungary)
1. Further tothearrangement ofthePreparatory Committee fortheWorld Trade Organization
atitsmeeting of22July1994 (PC/M/4, paragraph 21),theSub-Committee onBudget, Finance and
Administration ofthePreparatory Committee meton4August 1994 inorder tocome toconcrete
conclusions onmatters which hadaparticular urgency before thesummer break.
2. Theagenda distributed inPC/AIR/21 contained thefollowing points:
A.Organizational structure andstaffing requirements oftheSecretariat
B.Guidelines ontheassessment ofcontributions totheWTO budget
C.Choice ofconsultants forthemanagement review andapproval oftheterms of
reference thereof.
3. TheChairman saidthateachofthematters fordiscussion hadbeenclosely examined inboth
group andindividual informal consultations which hadtaken place onnumerous occasions inthepast
fewmonths. Ageneral consensus haddeveloped withregard totheissues which should beresolved
before thesummer break. Hehoped thatthedecisions proposed forthemeeting would meetwiththe
approval oftheSub-Committee andthatthefirstperiod ofintense activity leading uptothe
establishment oftheWorld Trade Organization could thusbebrought toaclose. TheChairman said
thathewould takeitemCfirst, itemAsecond anditemBlast.
Choice ofconsultants forthemanagement review andapproval oftheterms ofreference thereof
4. TheChairman introduced document CRP(SUB-ADM)(94)12 which provided asummary of
thehistorical development oftheissue aswellasarecommendation onthechoice ofconsultants.
After having evaluated initial contacts withinternational consulting firms, andinviewofthefactthat
Deloitte andTouche SAarelocally-based with individual consultants ofgood reputation and
experience, itwasthought thattheywould bethebestequipped toprovide therequired service.
5. With regard totheproposed mandate foranexternal management review (CRP(SUB-
ADM)(94)13), theChairman saidthatthishadbeenextensively discussed inthecourse ofinformal
consultations.PC/BFA/M/1
Page2
6. TheSub-Committee tooknoteofdocument CRP(SUB-ADM)(94)12, andapproved the
proposed mandate foranexternal Management Review indocument CRP(SUB-ADM)(94)13
(attached hereto asAnnex I)andthechoice ofDeloitte andTouche SAtoundertake the
Management Review. Inreaction tosome comments made during theinformal consultations, the
Chairman added thattheconsultants 'subsequent report should betreated asconfidential.
Organizational andstaffing matters
7. TheChairman referred tothedraftdecision contained indocument CRP(SUB-ADM)(94)14
andbriefly described thepoints contained therein. Thefirstpoint dealtwiththeextension ofUruguay
Round, TPRM andother staffonfixed-term contracts terminating attheendof1994. Thesecond
point concerned alistofnewposts tobecreated in1994. Inthiscontext, theChairman saidthatthe
Secretariat hadindicated thatoneProfessional postwould bereassigned totheAgriculture Division,
allowing therecruitment ofanexpert insanitary andphytosanitary matters. Thethirdrelated tothe
management review which hadbeendiscussed earlier inthemeeting. Thefourth point committed
theSub-Committee toundertake apolicy debate withregard tosuchconceptual issues asresearch and
analysis, technical co-operation andaccession. Thelastpoint noted thatthestaffing requirements for
1995 would beconsidered afterthecompletion ofthemanagement review.
8. TheSub-Committee agreed onthefollowing:
1.Thecontracts ofUR,TPRM staff andother staff whohave been recruited under
similar conditions (fixed-term contracts terminating attheendof1994) canbeextended
fortwoyears. Thecontract policy oftheWTO willbedetermined later intheyearand
willapply toallstaff.
2.Posts tobecreated in1994:
(i) AtDirector level(2posts)
-oneintheIntellectual Property andInvestment Division
-oneintheTrade andEnvironment Division
(ii) AttheProfessional level(16posts)
-twointheLegal Affairs Division
-oneintheGeneral Council andAppeals Division
-oneintheMarket Access (Goods) Division
-oneintheRules Division
-twointheTechnical Cooperation andTraining Division
-twointheTrade Policy Review Division
-oneintheStatistics andInformatics Division
-oneintheIntellectual Property andInvestment Division
-twointheTrade andEnvironment Division
-three intheServices DivisionPC/BFA/M/1
Page3
(iii) AttheGeneral Service level(5posts)
-oneintheLegal Affairs Division
-oneintheAgriculture Division
-oneintheTrade Policy Review Division
-oneintheTrade andEnvironment Division
-oneintheServices Division
Astwoposts, oneattheDirector levelintheMarket Access (Goods) Division andoneat
theGeneral Service level intheTextiles Division canbecancelled in1994, thenet
requirement is21newposts (1D+16P+4GS). Induecourse, theGATT Budget
Committee willbeinvited toprovide funds.
3.There should beanexternal Management Review conducted byDeloitte and
Touche SA.Induecourse theGATT Committee onBudget, Finance andAdministration
willbeinvited toprovide funds fortheReview.
4.InSeptember 1994, theSub-Committee willhaveapolicy debate onsuchconceptual
issues asresearch andanalysis, technical co-operation andaccession. Theoutcome ofthis
debate willform partofthecontribution oftheMembers totheManagement Review.
5.Thestaffing requirements for1995 willbeconsidered after thecompletion ofthe
Management Review. Indetermining thestaffing requirements, Members willbear in
mind theresults oftheReview andwillcommit themselves tofinancing theadditional
staffandrelated resources thattheymayapprove.
Guidelines fortheassessment ofcontributions totheWTO budget
9. TheChairman reported thataworking group chaired byMr.Pierre Gosselin, Chairman ofthe
GATT Committee onBudget, Finance andAdministration, haddevoted many hours tothequestion
oftrying toincorporate international trade shares inservices andintellectual property rights intothe
calculation ofassessments totheWTO budget. Thedraftdecision contained indocument CRP(SUB-
ADM)(94)15 wasthefruitofthegroup 'sconsultations andreflected aconsensus onpoints ofview
which hadbeeninitially quite divergent.
10. Inessence, thedraft decision expresses theview that,inprinciple, assessments totheWTO
Budget should reflect shares ininternational trade ingoods aswellasinservices andintellectual
property. However, given thefactthatthedatawithregard toservices andintellectual property still
required further study, thecalculation ofassessments forthe1995 budget oftheWTO willfollow
existing GATT practice. TheSub-Committee aswellastheWTO Committee onBudget, Finance and
Administration willcontinue toexamine thisquestion sothatchanges canbeandwillbeintroduced
inoneyear, thatis,intheassessments tothe1996Budget oftheWTO. Finally, theWTO Committee
onBudget, Finance andAdministration willreview thefunctioning ofthenewsystem ofassessments
three years afteritsintroduction. After thispresentation made bytheChairman, theSub-Committee
approved thedecision contained inAnnex II.PC/BFA/M/1
Page4
Comments byMembers
11. After theadoption ofthese decisions, thefollowing comments weremade bytheparticipants.
Therepresentative ofSingapore saidthathisGovernment stillhadresidual problems with the
proposed system ofassessments totheWTO, butthattheywould notblock aconsensus onthematter.
Hesaidthatanymethod should beequitable andshould technically, statistically andaccurately reflect
therelative share ofacountry 'sinternational trade ingoods, services andintellectual property rights.
representatives ofMalaysia (speaking onbehalf oftheInformal Group ofDeveloping Countries)
Switzerland, andVenezuela (speaking onbehalf ofLatin American andCaribbean States) also
expressed theviewthatfurther study needed tobeundertaken withregard totheproposed system of
assessments totheWTO.
12. Therepresentative ofEgypt noted herGovernment 'sconcern atnothaving beeninvited totake
partintheinformal discussions ontheassessment ofcontributions fortheWTO. However, shesaid
thatEgypt would goalong withtheinterim solution proposed andagreed uponbytheSub-Committee
asreflected intheattached decision (Annex II).
13. Incommenting onthenewposts tobecreated in1994, representatives ofMalaysia (speaking
onbehalf oftheInformal Group ofDeveloping Countries), Egypt, Tanzania, Brunei Darussalam
(speaking onbehalf ofASEAN), Nigeria, Bangladesh, andVenezuela (speaking onbehalf ofLatin
American andCaribbean States) expressed theview thatthere wasaneedtohaveamore equitable
geographical representation among theProfessional staffoftheSecretariat. They wereoftheopinion
thattheforthcoming recruitment exercise would provide anopportunity tocorrect whattheyperceived
asacurrent imbalance. They agreed thatitwasultimately theprerogative oftheDirector General
toengage themostqualified individuals, butrequested thattheChairman oftheSub-Committee bring
theirconcerns totheattention ofthesenior management oftheSecretariat.
14. Therepresentative ofTanzania raised thequestion oftheminimum assessment tothebudget.
Hewasoftheopinion thatassessments ontheLeast Developed Countries (LLDCs) should mainly be
related totheirtrade structures. Hefeltthatcommodity exports which were ineffect loss-making
should beexcluded from trade figures andthattheinclusion ofstatistics forimports forLLDCs
should bestudied asthese countries were being penalized fornothaving amanufacturing capacity.
Hesaidthatthose attheminimum contribution, mostly LLDCs, were theonlyoneswhich were
assessed atmore thantheirshare ofoverall trade. Hethought thatthere wasacaseforspecial and
differential treatment tobeaccorded totheLLDCs. HefeltthatLLDCs contribution should be
symbolic andthatthere wassufficient support forfurther discussion ofthissubject.
15. Representatives ofBangladesh andVenezuela supported theideaofhaving amore equitable
assessment forLLDCs andtheBangladesh representative saidmore specifically thatthere should be
auniform assessment forallLLDCs.
16. Inreply totherequest addressed tohim, theChairman saidthattheconcern expressed by
several members oftheSub-Committee onthequestion ofregional representation ofthestaffwithin
theSecretariat would becommunicated totheDirector-General. Headded thattheproblem ofthe
minimum contribution should continue toberaised intheCommittee onBudget, Finance and
Administration oftheGATT andsubsequently intheappropriate Committee oftheWTO. Before
closing themeeting theChairman indicated thatanumber ofimportant issues willhave tobe
examined bytheSub-Committee inthefall.PC/BFA/M/1
Page5
Annex I
CRP(SUB-ADM)(94)13
3August 1994
Mandate foranExternal Management Review
oftheGATT/World Trade Organization Secretariat
Taking intoaccount:
- theexisting andcontinuing GATT functions andstructure;
- thenewfunctions asaresult oftheimplementation oftheUruguay Round agreements andthe
creation oftheWorld Trade Organization;
- theneedtoensure anallocation ofstaffing resources consistent withmaintaining ahighlevel
ofefficiency andquality ofservice;
- theinterests ofMembers inlimiting budgetary increases associated withthecreation ofthenew
organization;
- theconclusions ofthepolicy debate oncertain Secretariat functions tobeorganized bytheSub-
Committee onBudget, Finance andAdministration oftheWTO Preparatory Committee in
September 1994;
Consultants shallundertake thefollowing:
1. Review organizational structure, staffing requirements andresource allocation oftheSecretariat,
withaparticular emphasis on:
a.creating anefficient organization, withdueregard fortheeconomic useofresources;
b.creating anefficient management hierarchy;
c.identifying overlapping functions andeliminating redundancies, ifany,inposts;
d.identifying, wherever possible, coreactivities which mayrequire long-term staffing and
activities which maybetemporary;
e.identifying possibilities forimproving internal procedures within theSecretariat, including
decision-making andcommunication processes.PC/BFA/M/1
Page6
2. With aviewtoaccomplishing thetasks defined above:
a.propose options providing fortheoptimal useofavailable resources;
b.include anassessment oftheDirector-General 'sProposal ontheOrganization ofthe
Secretariat dated June1994 andtherequested increases instaffing contained therein;
c.make suggestions regarding thephasing oftheimplementation ofanychanges.
3. Make recommendations on1.and2.above inafinalreport, tobepreceded by:
a.interviews withrepresentatives ofMembers andSecretariat staff;
b.periodic progress reports totheSub-Committee onBudget, Finance andAdministration and
theSecretariat allowing fortheassessment ofconsulting activities anddevelopment ofclient
guidance ondesirable changes orrefocusing insuchactivities; and
c.adraft finalreport tobereviewed andcommented upon byMembers andbySecretariat
officials.
4. Startthework on1September 1994 andsubmit thedraftfinalreport on15November 1994
andthefinalreport on15December 1994.PC/BFA/M/1
Page7
Annex II
Assessments fortheWTO
TheSub-Committee agreed that:
1. inprinciple, theassessment ofcontributions totheWTO budget should reflect shares
ininternational trade ingoods, services andintellectual property. However,
2. further study ofthedataavailable forcalculating assessments totheWTO budget to
reflect trade inservices andtrade inintellectual property rights, including thecomponents
thereof, isrequired. Therefore,
3. thecalculation ofassessments forthe1995 budget oftheWTO should follow existing
GATT practice. Inthemeantime,
4. thebasis forassessing contributions, incorporating theprinciple in(1)above, would
continue tobeexamined andreviewed bytheSub-Committee onBudget, Finance and
Administration oftheWTO Preparatory Committee andsubsequently bytheWTO Committee
onBudget, Finance andAdministration sothatchanges would beintroduced toreflect the
above principle notlaterthanoneyearafterthecreation oftheWTO, i.e.intheassessment
ofcontributions tothe1996 budget oftheWTO; and
5. afullreview ofthefunctioning ofthenewsystem ofassessments would beundertaken
bytheWTO Committee onBudget, Finance andAdministration three years after its
introduction.