World Trade Organization Director-General Ngozi Okonjo-Iweala apparently received a frosty response from several members, including the United States, to her “modest budget increase of CHF 14.56 million (around $ 15 million) for 2024,” and an additional CHF 1.94 million for 2025, according to our correspondent.
At the WTO’s Committee on Budget, Finance and Administration yesterday, the DG’s proposal came up for a first reading. Apparently, Nigeria, Cameroon on behalf of Africa Group, Singapore, and Switzerland supported the 7.04 percent hike for 2024 from CHF 197.2 million this year to CHF 211.76 in 2024, and 0.9 percent hike in 2025, i.e., from CHF 211.76 in 2024 to CHF 213.70.
However, apparently, India, Nepal, Bangladesh, the United States the United Kingdom, and other members grilled the Secretariat on the proposal and raised many questions about the need for a budget hike after rejecting one last year, said participants who asked not to be quoted.
A North European trade envoy, who preferred not to be quoted, told the WTD that they are “constructively” examining the DG’s proposal.
However, some of the big donors to the WTO like Germany, the Netherlands and Sweden among others, who poured cold water on the DG’s earlier proposal last year, seemed to have not raised much opposition this time around, although they are yet to approve it.
Given the range of questions and skeptical remarks made against the DG’s new budgetary-increase proposal, it was agreed to defer the discussion/meeting until September 21. Secretariat officials asked the countries that raised questions at the meeting to provide their concerns and questions in writing for them to answer at the next meeting.
In her 43-page proposal circulated as a restricted document (WT/BFA/W/643, the DG seems to have labored hard to make a strong and convincing case for the budget hike in 2024 and 2025.
She said, in the concluding paragraph, “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 added 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.”
It is not clear 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.
She 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 (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 213.699 million (0.9%).”
She said “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 continued 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.”
Privately, several members suggested that the increase being sought by the DG is not sustainable and not justified at this juncture.
Referring to the effort to get the ratification of the Fisheries Subsidies agreement, a Secretiariat Official told WTD. “If she is carefully managing the Secretariat we will not be in this crisis”
The DG apparently “froze” all posts in the Secretariat, with no 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 DG’s allocation of “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. There are also complaints about the promotion system and the manner in which Directors are being asked to promote people the DG likes, as it could lead to demoralization, the official said.
In addition, several developing countries are questioning resources being spent on informal Joint Statement Initiatives which are not mandated by trade ministers. It appears the Secretariat has the statistics for the expenditures incurred on JSIs but it does not want to release them as it would weaken the DG’s case for budget hike, the official said.
As reported previously, the DG has the final word on whether to pursue her project to create a “Transformation Office” to develop a “vision and strategy” for the Secretariat, but members’ views remain mixed on the project, as it most likely has budgetary implications.
The document issued on May 1, seen by the WTD, says that “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 7.7percent, 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.
Several members are questioning 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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