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Info Service on WTO and Trade Issues (Nov23/16) Geneva, 24 Nov (D. Ravi Kanth) — Members of the World Trade Organization on 22 November apparently agreed to increase the WTO’s budget for 2024, even as negotiations are underway on a compromise proposal floated by the European Union that seeks a 3.6 percent rise in the trade body’s regular budget, said people familiar with the development. The EU’s proposal, which was initially circulated as a restricted document on 22 November under the heading of “Elements for a budget outcome based on a compromise by a group of members”, apparently suggested “an increased contribution to the WTO Pension Fund of CHF 4.4 million (around $4.5 million), and an increase of CHF 0.73 million ($0.75 million),” said people familiar with the development. The EU is expected to convert its compromise proposal into a regular proposal for circulation either on 24 or 27 November, said a trade official, who preferred not to be identified. The quantum of increase in the EU’s proposal is much less than what the WTO Director-General, Ms Ngozi Okonjo-Iweala, had asked for early this year, “but is more than nothing,” the official said. However, at a meeting of the Committee on Budget, Finance, and Administration (CBFA) on 22 November, Russia and Indonesia apparently conveyed their disapproval of any increase in the WTO’s budget for 2024, said people familiar with the discussions. Indonesia said it will not be in a position to pay for any additional increase in the WTO budget, according to people familiar with the discussions. While recognizing the pressing need for additional resources to facilitate the WTO Secretariat’s operations, Indonesia said that “increasing our contribution to the budget is not currently feasible,” given the current challenging economic situation. Indonesia asked the Secretariat to “explore avenues for a zero nominal growth approach.” More importantly, Indonesia underscored the need for the Secretariat, in collaboration with the members, to “streamline operations, control costs, and explore innovative funding mechanisms to mitigate the impact of the budget constraints.” DG’S PROPOSAL Earlier, the DG had asked for a “modest budget increase of CHF 14.56 million (around $15 million) for 2024”, and an additional CHF 1.94 million for 2025, said people familiar with the development. Despite the near rejection of her first budget-hike proposal last year, the DG chose to come back again with a new 43-page proposal, which came up for a first reading at the CBFA on 18 July. Nigeria, Cameroon on behalf of the Africa Group, Singapore, and Switzerland among others seem to have supported the DG’s latest proposal seeking a 7.4 percent budget hike for 2024, from CHF 197.2 million this year to CHF 211.76 million in 2024, and a 0.9 percent increase in 2025, i.e., from CHF 211.76 million in 2024 to CHF 213.70 million in 2025. But several other countries including India, Bangladesh, Nepal, the United States, and some South American countries apparently raised numerous questions on the need for a budget hike at this current juncture when nations are continuing to face grim economic problems, said people familiar with the discussions. However, several EU members changed their positions from a complete rejection of an increase in the WTO budget to a meagre increase, as proposed in their latest proposal (Job/BFA/95), seen by the SUNS. Apparently, some of the big donors like Germany, the Netherlands, and Sweden among others, who nearly rejected the DG’s budget hike proposal for 2023, seemed to have changed their positions, said people familiar with the discussions. The CBFA is currently chaired by Ambassador Bettina Waldmann of Germany. The EU’s latest compromise proposal indicates how much each country will have to pay in 2024 as compared to the current year. The United States, given its overall share in international trade both in goods and services, will have to pay CHF 23.70 million in 2024 as compared to its contribution of CHF 22.80 million this year. China, according to the EU’s proposal, will be required to pay CHF 23.20 million in 2024 as compared to CHF 21.03 million this year. Germany would be required to pay CHF 14.84 million in 2024, as compared to CHF 14.06 million this year. Japan, which is currently contributing CHF 7.4 million, will be required to pay CHF 7.6 million in 2024. India’s contribution will go up by almost CHF 400,000 in 2024, from CHF 4.57 million to CHF 4.96 million, while Malaysia’s contribution will go up by about CHF 100,000, from CHF 1.83 million this year to CHF 1.927 million in 2024, according to the EU’s proposal. It appears that the United States and India still have several unanswered questions, said negotiators involved in the budget discussions. As regards an increase in the contributions to the WTO’s pension fund, India has apparently made it known that unless the WTO undertakes deeper pension reform, it will not agree to an increase at this juncture, said a person, who asked not to be quoted. In her 43-page proposal, circulated as a restricted document (WT/BFA/W/643) and seen by the SUNS, the DG seems to have laboured hard to make a strong and convincing case for the budget hike in 2024 and 2025. The DG had said that, “At your request, we are submitting the proposal well in advance to allow Members sufficient time to consider the proposal and consult with capitals.” As previously reported in the SUNS, though the DG said that her new proposal is being submitted at the members’ request, it is not clear who/which members urged Ms Okonjo-Iweala to submit the proposal at a time when members’ finances are in parlous straits, said an official from Asia. The DG continued: “In view of the new areas of work, expansion of the Secretariat’s deliverables, as well as non-discretionary cost increases emanating from inflation for the Organization to operate efficiently in the future, a modest budget increase of CHF 14.56 million is necessary for 2024, and an additional CHF 1.94 million in 2025.” The DG argued that “the increase for 2024 is equal to 7.4 percent of the Zero Nominal Growth budget amount of CHF 197.2 million that has been in place since 2011, and the 2025 increase represents an additional 0.9 percent.” “Accordingly, I am submitting a request for the Organization’s budget to be increased in 2024 from CHF 197.2 million to CHF 211.759 million (close to USD 212 million).” “Half of this increase,” she said, “is linked to contractual, external, and unavoidable costs (or a 3.6 percent increase over the Zero Nominal Growth Budget).” “The other half (3.8 percent),” according to the DG, “is intended to improve the Secretariat’s resources and expertise to better serve all Members. In 2025, I ask for an additional increase from CHF 211.759 million to CHF 213.699 million (0.9%).” She claimed, “This request represents a decrease of CHF 1 million compared to the mid-term budget request for 2023.” The DG apparently justified the request by saying: “We need appropriate resources to meet the challenges of our era and to build a better world for people through global cooperation and rules-based international trade.” MEMBERS RAISE DOUBTS Privately, several members suggested that the budget increase being sought by the DG is not sustainable and not justified at this juncture. Apparently, part of the problem of the resource crunch being faced by the Secretariat is due to the allegedly lavish travel expenditure incurred by the DG on account of her doing whatever is necessary to get the ratification of the Fisheries Subsidies Agreement, said a member, who asked not to be quoted. “If she is carefully managing the Secretariat, we will not be in this crisis,” said a Secretariat official, who asked not to be identified. “Asking for more money to promote over 60 people a year is absurd,” the official said. The DG apparently “froze” all posts in the Secretariat, with no new recruitment to replace the retiring officials or those who resigned from their jobs because of apparent grievances, the official said. Her action to “freeze” posts suggests that the Secretariat is overloaded, “as it managed to run just fine without any disruptions to services,” said another official who preferred anonymity. The argument that the Secretariat does not have the requisite skills is without any merit, the official said. Apparently, the DG allocated “some of the frozen posts to the Transformation Office and her request for 15 additional posts defies logic, at a time when so many people in the Secretariat are apparently complaining that they do not have enough work,” the official said. Further, there are so many economists in the Secretariat who can do economic modelling and other work, the official added. “There are also complaints about the promotion system, and the manner in which Directors are being asked to promote people she [the DG] likes could lead to demoralization,” the official said. Recently, several developing countries questioned the resources being spent on the informal Joint Statement Initiatives (JSIs), which were not mandated by trade ministers. It appears that the Secretariat has the statistics for the expenditures incurred on the JSIs but does not want to release them, as it would weaken the DG’s case for a budget hike, the official said. TRANSFORMATION OFFICE Meanwhile, in her report to the CBFA on 22 November, the WTO’s deputy director-general, Ms Angela Ellard, presented a rather upbeat report, despite the seemingly growing disillusion among staff members, said several members, who asked not to be quoted. In her report, circulated as a restricted document (Job/BFA/96) on 23 November, Ms Ellard remained upbeat about the ongoing transformation exercise, saying that: “Our transformation initiatives continue to progress well.” She said, “we received a good response to the call under our new Recognition and Rewards Programme for nominations to be made for 2023 Director-General’s Awards for Innovation and for Teamwork, and for the Excellence in Management Award. These nominations are now under review. At the beginning of the month, we launched the 2023 Good Colleague Award, where staff can vote to recognize their peers.” She also said that “Phase 2 of our Pilot Internal Mobility initiative is underway, in accordance with our existing policy. Compared to Phase 1, a greater number of entry-level staff members have expressed interest in a temporary secondment to another Division. The timing and duration of secondments will be carefully discussed to ensure a positive impact on the Secretariat and staff members. Moving forward, we plan to learn from this pilot initiative and continue to improve mobility across the Secretariat.” Ms Ellard also touted the “revised promotions policy,” saying that: “Good progress continues on a new recruitment policy, and key elements of the new policy will be tested with staff soon. The Human Resources Division is also working to complete the development of a new competency framework, and to launch a new 360 degree review process for Directors in early 2024.” Notwithstanding the rather “fancy” titles and corporate jargon espoused in the transformation exercise, on the ground, WTO staffers seem to be rather unhappy, with apparently high levels of resentment being expressed over the allegedly “autocratic” policies/practices being followed in the higher echelons, several staff members of the Secretariat told the SUNS. The recent promotions of some persons in the Secretariat to higher posts, overlooking other deserving candidates, particularly female officials, appear to have hurt the overall sentiments of the staff, said WTO staffers, who preferred not to be identified.+
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