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Info Service on WTO and Trade Issues (Jul23/12) Geneva, 21 Jul (D. Ravi Kanth) — The World Trade Organization’s Director-General, Ms Ngozi Okonjo-Iweala, has apparently faced “rough weather” over her second “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 has chosen to come back again with a new 43-page proposal that came up for a first reading at the WTO’s Committee on Budget, Finance and Administration (CBFA) on 18 July. Nigeria, Cameroon, on behalf of the African 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 in 2023 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 severely questioned the need for a budget hike at this current juncture when nations are facing grim economic problems, said people familiar with the discussions. A North European trade envoy, who preferred not to be quoted, told the SUNS that they are “constructively” examining the DG’s proposal, suggesting that the envoy’s capital will also examine it. Canada said that it is still considering the new budget-hike proposal. However, some of the big donors such as Germany, the Netherlands, and Sweden among others, who apparently poured “cold water” on the DG’s earlier proposal last year, seemed to have not raised much opposition this time around, though, they are yet to approve it. Given the range of questions and critical remarks made against the DG’s new budget-hike proposal, a senior official from the Secretariat deferred the meeting till 21 September. The Secretariat official asked the countries which raised questions at the meeting to put their concerns/questions in writing for the Secretariat to answer at the next meeting. DG’S PROPOSAL 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. In the concluding paragraph, she said: “As foreseen in Financial Regulation 6, any budget proposal is to be presented to the Committee at least eight weeks prior to the last scheduled meeting of the year of the General Council.” The DG said, “At your request, we are submitting the proposal well in advance to allow Members sufficient time to consider the proposal and consult with capitals.” Though she 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 perilous straits, said an Asian official. In her proposal, the DG said: “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 US$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.” Ms Okonjo-Iweala called on the “esteemed Members to favourably consider and approve this request, thus empowering the Secretariat to fulfill the valuable mission you have entrusted to us.” She touted, “The WTO has proven its value and its ability to deliver, even in trying times,” cautioning that “it cannot be taken for granted.” The DG apparently justified her 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 increase in the budget 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. Her apparent request for 15 additional posts defies logic, the official said, suggesting that there are so many people complaining that they do not have enough work to do. 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 reiterated. Further, there are so many economists in the Secretariat who can do economic modelling and other such work. There are also complaints about the promotion system, and the manner in which Directors are allegedly being asked to promote people the DG apparently 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 are 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 the budget hike, the official said. TRANSFORMATION OFFICE As previously reported in the SUNS, the DG has the final word on whether to pursue her alleged grand project to create a “Transformation Office” to develop a “vision and strategy” for the Secretariat. However, members’ views remain mixed on the project, as it most likely has budgetary implications. A restricted document (WT/BFA/W/635) issued on 1 May, just before the Committee on Budget, Finance, and Administration (CBFA) met on 16 May, said: “Work is underway to define a vision statement and strategic pillars for the future of the Secretariat. Secretariat staff and leadership, Members, and external experts are being engaged in a consultative process.” Earlier, the DG had proposed a budget hike of 7.7%, from CHF 197.2 million to CHF 212.45 million, for 2023. But members apparently shot down her proposed budget hike on grounds that it could impose huge costs on them when they are fiscally hit by the COVID-19 pandemic. Interestingly, the Transformation Office project, which seems to be modelled along the lines of such a division in the World Bank, comes at a time when the WTO is facing a resource crunch due to a variety of factors, including the DG’s allegedly “lavish” travel budget, said trade envoys familiar with the WTO’s finances. Several members seem somewhat aghast as to why the DG is pressing for the creation of a new Transformation Office that will most likely involve considerable costs at a time when the organization is facing a severe financial crunch, said trade envoys, who asked not to be quoted. +
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