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Info Service on WTO and Trade Issues (Jul21/16) Geneva, 13 Jul (D. Ravi Kanth) – The United States on 12 July co-sponsored a proposal from India to bring greater transparency in the use of voluntary contributions/trust funds by the World Trade Organization’s director-general Ms Ngozi Okonjo-Iweala, said people familiar with the development. At a meeting of the Committee on Budget, Finance, and Administration (CBFA), India explained the salient features of its proposal (outlined in restricted document WT/BFA/W/564) on the proposed regulation of voluntary funds/trust funds provided by members and observers to the DG. The proposal underscores the need for a transparent review process to ensure that the use of the proposed trust funds remains consistent with the WTO’s overall objectives, policies, and guidelines. It calls for a separation in the use of regular budgetary funds from the activities funded by voluntary funds/trust funds. The Indian proposal has suggested that a standard charge of 13% may be levied on direct expenditure incurred by trust funds to reflect the supporting services provided by the WTO secretariat. The use of trust funds has created several controversies in the recent past. In 2019, the United States and several other countries seriously objected to agreements signed by the former DG, Mr Roberto Azevedo, with China in 2017 for availing of millions of Swiss francs to promote a non-mandated issue, namely, the Joint Statement Initiative on investment facilitation, without informing members. The Azevedo administration had maintained that the DG can receive voluntary funds/trust funds with “no additional financial liability.” However, members were not satisfied with the Secretariat’s explanation, and ever since then the issue of the review of trust funds has remained unresolved. Recently, France donated 6 million euros to finance WTO technical assistance programs for developing and least-developed countries from 2021 to 2023 ostensibly for improving their understanding of global trade rules and standards. Ostensibly, the French assistance to the WTO appears to be a soft form of “colonial” outlook as it assumes that developing countries and LDCs have no understanding of WTO trade rules and standards, said a person, who asked not to be quoted. Against this backdrop, at the CBFA meeting, India explained that its proposal is based on a compromise, highlighting the importance of arriving at decisions by consensus. India argued that its proposal on voluntary contributions and trust funds does not change the current practice of how the funds are approved by the DG, said people familiar with the discussions. It merely suggested that as and when the voluntary contributions impose additional costs on the WTO’s regular budget, they would need to be approved by the CBFA. Effectively, the CBFA’s clearance is essential when the regular budgetary funds are used for the trust fund activities. Also, such a step would stop the diversion of regular budgetary funds to the use of trust fund activities, said people, who asked not to be quoted. The Indian official clarified that it is not seeking to stop the use of regular budgetary funds for the use of the trust funds. It wants members to be informed on how their contributions to the regular budget are being used. As part of the transparency requirement, the Indian proposal calls for submitting proposals on voluntary contributions to the CBFA within 60 days so that the committee can offer its advice. India emphasized that it always supported technical assistance to developing countries through regular budgetary and voluntary contributions. India assured the least-developed countries that its proposal, in no way, would impact the technical assistance activities. At the meeting, the US said that it would like to co-sponsor the Indian proposal, while the European Union welcomed it. Several other countries also indicated that they would positively assess the Indian proposal. THE MCKINSEY REVIEW At the CBFA meeting, the deputy director-general Ms Angela Ellard said that McKinsey & Company will submit its report on the structural review of the WTO secretariat in the first week of August. The report, which does not go into areas where members’ rights and obligations are involved, focuses on the structural changes to be brought in the Secretariat’s overall functioning so as to bring greater efficiency and synergies, said people familiar with the deliberations. During the meetings held by the representatives of McKinsey & Company, several members drove home the message that there has to be greater horizontal coordination between the functioning of the WTO committees. Significantly, members also complained about the functioning of the communications division and the statements put out by the division on the official website without seeking the approval of the respective chairs or members, said people familiar with the development
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