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TWN
Info Service on WTO and Trade Issues (Dec23/07) Geneva, 13 Dec (D. Ravi Kanth) — The controversial hike of 3.6 percent in the World Trade Organization’s budget for 2024 was tentatively agreed on 12 December, provided that the Russian Federation conveys its final decision to the WTO’s General Council on 14 December. However, a separate proposal for an increased contribution to the WTO’s Pension Fund of CHF 4.4 million (around USD 4.5 million) was turned down by India, Indonesia, and Russia until the WTO Secretariat carries out substantial pension reform, said people familiar with the development. At a specially convened meeting of the Committee on Budget, Finance, and Administration (CBFA) before the Doha Trade Negotiations Committee (TNC) meeting on 12 December, members, except Russia, approved the meagre increase of 3.6 percent in the WTO’s regular budget from CHF 197.2 million in 2023 to approximately CHF 204.29 million in 2024. The budget proposal seems to have been worked out by the European Union, said people familiar with the development. While India, Indonesia, and the United States among others seem to have reluctantly joined the consensus, Russia informed that it would need approval from its capital. Consequently, the issue has been slated for final approval at the General Council meeting starting on 14 December, said people familiar with the development. Initially, the EU’s proposal was 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”. Later, the same proposal surfaced as the EU’s proposal, said people who asked not to be identified. As regards a similar hike of 3.6 percent in the WTO budget for 2025, India and Indonesia among others said it should be discussed next year. In effect, the current hike is applicable only for 2024. The meagre hike in the WTO’s budget for next year is a setback of sorts for the WTO Director-General, Ms Ngozi Okonjo-Iweala, who had asked for a “modest budget increase of CHF 14.56 million (around USD 15 million) for 2024”, and an additional CHF 1.94 million for 2025, said people familiar with the development. As previously reported, despite the near rejection of her first budget-hike proposal in 2022, 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 2023. 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 US, and some South American countries had 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. The big contributors to the WTO’s budget like Germany, the Netherlands, and Sweden among others, who had 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 US, 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 US 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 and Indonesia appear to have conveyed their disapproval of the proposed hike, saying that unless the WTO undertakes deeper pension reform, they will not agree to an increase at this juncture, said a person, who asked not to be quoted. Privately, several members cast doubts on the DG’s proposal, saying that some of her allegedly lavish expenditures on her travels with a big Secretariat team of officials and expenditure for convening the Joint Statement Initiatives (JSIs), which were not approved multilaterally by members, as well as the expenses incurred for the transformation exercise at the WTO Secretariat, with a nearly one million CHF payment to management consultancy McKinsey and Company, appeared to contribute to the budget crunch. “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 added. DG’S JUSTIFICATION The DG, however, maintained in her budget proposal submitted in June that given “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 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.” 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. The DG seems to have allocated “some of the frozen posts to the Transformation Office and her request for 15 additional posts defies logic, at a time when many people in the Secretariat are 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 how Directors are being asked to promote people she [the DG] likes could lead to demoralization,” the official said. +
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