GENERAL AGREEMENT ON TARIFFS AND TRADE RESTRICTED L/6151. Limited Distribution. Nigeria

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1 GENERAL AGREEMENT ON TARIFFS AND TRADE RESTRICTED L/ April 1987 Limited Distribution REPORT OF THE COMMITTEE ON BUDGET, AND ADMINISTRATION FINANCE 1.. The Committee on Budget, Finance and Administration met at the Centre William Rappard, Geneva on 1 and 10 April 1987 in formal sessions and has had an informal. session on 11 March The Committee was chaired by H.E. Mr. K.G.A. Hill of Jamaica and the membership of the Committee was as follows: Australia Israel Singapore Canada Italy Spain Chile Jamaica Sweden France Japan Switzerland Germany, Fed. Rep. Korea, Rep. of United Kingdom Hone Kong Malaysia United States Hungary Netherlands Zaire India Nigeria The agenda as presented in GATT/AIR/2399 was approved with two additional items under Other Business: Dispute Settlement Panels and Distribution of Documents. 4. A, the beginning of the meeting, the Committee heard an introductory statement by the Director-General. His remarks were confined to three major issues: the Supplementary Budget relating to the Uruguay Round, salaries and pensions for GATT Professional staff, and cash management problems of the Secretariat. 5. With regard to the Supplementary Budget of Sw F 1,225,000 which was within the amount of Sw F 1.5 million approved in the 1987 budget, the Director-General outlined the reorganization of the Secretariat which he had implemented on 1 January 1987 in order to respond better to the needs of the CONTRACTING PARTIES under the Uruguay Round. This reorganization made it possible to reduce the number of posts required to undertake new tasks but also created gaps which had to be filled. He stressed the need for flexibility to manage the Secretariat. 6. On the subject of salaries for GATT Professional staff, the Director-General emphasized the importance which he and the staff attached to the urgent adoption of measures to offset the adverse effects of currency fluctuations on take-home pay and to restore some parity with conditions enjoyed in New York. He noted that the International Civil Service Commission had recently approved a modification to the operation of the Remuneration Correction Factor, the effect of which was to fix a floor for the exchange rate at Sw F 1.70 to US$1. He indicated that representatives of organizations had conveyed to the Commission the view

2 Page 2 that this measure was not adequate. He hoped, therefore, that the action taken by the Commission would not deter the Committee from giving the recommendations in the Report of the Informal Advisory Group the serious consideration they deserved. 7. Concerning the issue of cash management, the Director-General mentioned three aspects: outstanding contributions, the calculation of contributions and the Working Capital Fund. He noted that the documents prepared by the Secretariat on these points contained various proposals and hoped that the Committee would feel ready to make recommendations to the Council in the near future. 1. Audited Accounts for 1935: Director-General's Financial Report on the 1985 Accounts and Report of the External Auditor Thereon 8. The Committee examined the Director-General's Financial Report on the 1985 Accounts and Report of the External Auditor Thereon (document L/6054). Wiith regard to the Trust Fund for the Independent Group to Study the Trading System it was noted that the External Auditor recommended that every effort be made to secure the donations needed to clear the balance due to the General Fund and to ensure that the situation would not recur. 9. The Committee recommends to the Council that the CONTRACTING PARTIES approve the audited accounts for 1985 and convey to the External Auditor their thanks for the valuable assistance given to the CONTRACTING PARTIES in the audit of the accounts since II. Appointment of Representative and Alternate Representative of the CONTRACTING PARTIES on the ICITO/GATT Pension Committee 10. The Committee recalled that the mandate of Mrs. E. Michaud and Mr. G.A. Stünzi, as member and alternate member representing the CONTRACTING PARTIES on the ICTIO/GATT Pension Committee, had expired on 31 December Mrs. Michaud had indicated her wish that her mandate not be renewed and Mr. Stünzi had made known that he would accept a new mandate onlv if no other candidate could be found. As a result of consultations, Mr. Nils-Erik Schyberg (Sweden) and Mr. Munir Ahmad (Pakistan) had indicated that they would be prepared to serve as member and alternate member representing the CONTRACTING PARTIES on the ICITO/GATT Pension Committee. 11. The Committee reiterated its appreciation to Mrs. E. Michaud and Mr. G.A. Stünzi for the service they had performed on behalf of the CONTRACTING PARTIES during the time of their tenure on the ICITO/GATT Pension Committee. 12. The Committee recommends that the Council approve the nomination of Mr. Ni's-Erik Schyherg and Mr. Munir Ahmad as member and alternate member respectively to represent the CONTRACTING PARTIES on the ICITO/GATT Pension Committee for a three year period commencing on 1 January 1987.

3 Page 3 III. Supplementary Budget Estimates for the Financial Year 1987 to Meet the Additional Requirements Arising from the Uruguay Round of Multilateral Trade Negotiations 13. A Deputy Director-General indicated that the amount involved, in 1987, was Sw F 1,225,000, which was well within the figure of Sw F 1,500,000 established by the Committee and approved by the Council. The cost of the continuation, in 1988, of the above-mentioned provision for 1987 would amount to some Sw F 2,343,000. He also mentioned that, in spite of the reorganization of the Secretariat. eight additional Professionals and corresponding support staff were very much needed. The Committee was informed that all existing staff Resources including those under temporary assistance had been used. It was pointed out that there would need to be flexibity in using the extra staff resources depending on the demands that arose during the negotiating process, and that, accordingly, the Committee should keep this matter under close review. With regard to the Trade Police Data Base, he said that a provision of Sw F 100,000 had been included pending approval of its establishment by the Council which would be provided with detailed information. It was noted that the cost in 1988 of the Data Base could be in the region of Sw F 450, I. connection with, the Data Base issue, one member of the Committee suggested that the use of consultants rather than engaging temporary staff members be investigated. 15. The Committee received detailed information on the temporary assistance posts requested. Its noted that recruitment would be made on the basis of vacancy notices. Some members expressed the hope that the candidates finally selected would reflect as wide a geographical spread as possible. 16. The Committee recommends that the Council approve the detailed Budget Estimates of Sw F 1,225,000 to cover expenditure relating to the Uruguay Round as per attached Annex. This amount includes Sw F 100,000 which has been set aside to cover the initial cost in 1987 of a Trade Policy Data Base subject to the approval of its establishment by the Council at a later date. The total expenditure shall be detailed in Part VII - Section 16 of the Budget Accounts. IV. Final Position of the 1986 Budget of the GATT 17. The Committee examined document L! Final Position of the 1986 Budget of the GATT, and heard explanations by a representative of the Secretariat. 18. It was noted that budgetary savings of Sw F 4,528,691 and excess miscellaneous income as well as contributions assessed on contracting parties subsequent to the adoption of the 1986 scale of contributions amounted to Sw F 5,223,249. However, because of the level reached by the contributions in arrears, and because there was a refund to the Working Capital Fund of the advance made at the end of 1985, there was a deficit of Sw F 2;349,623 on 31 December This amount was entirely covered by a transfer from the Working Capital Fund, leading to a nil balance of the Surplus Account.

4 L/ 6151 Page In order to cover over-expenditures on certain sections of the Budget the Committee recommends to the Council that the transfers between budgetary sections be approved as follows: FROM: Part II: SECRETARIAT Sw F TO: Part I: MEETINGS Sw F Section 4 - Dispute settlement panels 45,555 Section 5 - Missions 3,876 Section 8 - Printing Section 10 - Permanent equipment Part IV: COMMERCIAL POLICY TRAINING COURSES Section 1 - Forty-second session of the CONTRACTING PARTIES Section 2 - Meetings of the Council and other meetings Part II: SECRETARIAT Section 9 - Representation and hospitality 12,374 98,051 7,058 Section 13 - Commercial Policy Training Courses 67, , ,483 ==== V. Use of Savings Accruing to GATT in respect of GATT's Contributions to the ITC Budget 20. The Committee recalled that as at 31 December 1986 there were savings of Sw F 423,08b in respect of the 1986 GATT contribution to the Budget of the International Trade Centre. These savings resulted from economy measures decided upon by the United Nations and the fall of the US dollar vis-a-vis the Swiss franc. It was suggested that these savings might be earmarked for ITC activities. 21. After an exchange of views among members of the Committee, it was agreed to continue the current practice whereby GATT budgetary savings including those on contributions to the ITC are transferred to the Surplus Account and no allocation of savings should be made to the ITC. VI. Trust Fund for the Independent Group to Study the Trading System 22. A representative of the Secretariat informed the Committee that the balance due to the General Fund amounted to Sw F 105,584 as at 31 March 1987 compared to Sw F 161,705 at the end of 1985 and that further contributions were expected to cover this outstanding amount. It was also noted that interest on the outstanding amount was credited to the General Fund.

5 Page 5 VII. Measures to Encourage Payment of Outstanding Contributions 23. The Committee requested the Secretariat to continue its efforts to secure payment of contributions in arrears. It was also recalled that an assessed contribution became due and payable on 1 January of the year to which it referred and that each contracting party was expected to comply with these requirements. With regard to current year's contributions, some members of the Committee suggested that there should be further study of systems whereby interest yielded on investments would be refunded to contracting parties which paid their contributions early in the year when they were due. This examination should include a comparison of the systems recently adopted by the International Civil Aviation Organization and the Organisation for Economic Co-operation and Development. Some members urged the adoption of a system such as these. 24. Other members of the Committee remarked that the distribution of interest would reduce the miscellaneous income and, consequently might have a counter effect on the cash,position if adequate measures were not adopted at the same time. VTII.Salaries and Pensions of Professional GATT Staff 2. A. separate report by the Chairman will be made on this matter to the Council at its meeting on 15 April. IX. Calculation of Contributions to the GATT Budget 26. Some members of the Committee considered that the present minimum contribution of 0.12 per cent represented a heavy burden on the smaller and least developed contracting parties, and were of the opinion that reducing this minimum. could. scale back contributions in arrears. It was agreed that this matter should be further examined at a forthcoming meeting. X. Working Capital Fund 27. The Director-General had proposed that the Working Capital Fund be set and maintained at a sufficient level to guarantee the GATT's financial stability. Accordingly, he had suggested that the amount of the Working Capital Fund be raised by instalments over three years to around 10 per cent of the GATT budget, i.e. Sw F 6,000, Some members expressed opposition to any increase in the Working Capital Fund while others were prepared to consider this possibility. Several members considered that there was a clear linkage between the issues relating to measures to encourage the payment of outstanding contributions, the level of the minimum contribution and the level of the Working Cap'tal Fund, but others did not share this view. XI. Other Business 29. Dispute Settlement Panels. One member recalled that the credit for this item had been reduced by the Committee to Sw F 50,000 on the clear understanding that the reduction would in no way impair the functioning of the mechanism for the settlement of disputes. Present estimates indicated that costs might rise to some Sw F 90,000 for The Secretariat was requested to pay close attention to this matter and keep the Committee informed on its evolution, if necessary.

6 Page Distribution of Documents. Some Committee members remarked that documentation in the original language was received late. It was further noted that the translated versions were frequently circulated even later. It was suggested that documents in all languages should be released simultaneously. A Deputy Director-General said that he would personally examine the situation and try to correct it. POINTS FOR DECISION : Paragraphs

7 Page 7 ANNEX ADMINISTRATIVE AND FINANCIAL QUESTIONS Introduction Supplementary Budget Estimates for the Financial Year 1987 To Meet Additional Retuiremonts Arising from the New Round of Multilateral Trade Negotiations: Uruguay Round Note bv the Director-General 1. It will be recalled that in the October 1986 Budget Committee discussions of GATT's 1987 proposed budget, the Ditector-General indicated that he was not in a position at That time to present a definitive proposal about the budgetary implications of the Uruguay Round. At the request of the Committee, however, he suggested that an amount of Sw F 1,500,000 could be included in the 1987 budget in order to cover possible additional costs arising from the new trade round. It was understood that the application of this amount would be decided on the basis of detailed estimates to be prepared by the secretariat for consideration by the Budget Committee, which would then make a recommendation to the Council. 2. During the preparatory period for the Uruguay Round, in 1986, the additional workload on the Secretariat consisted principally of servicing the Preparatory Committee. organizing and servicing the Punta del Este meeting, and servicing the firsts meetings of the three supervising Groups of the Round. This workload was carried by redeployment of existing staff. Since January 1987, however, the full negotiating structure of the Round has been decided, and substantive negotiations affecting a wide subject area have begun. It is now confirmed that, as expected, the Round will make substantial additional demands on the Secretariat which cannot be met entirely by redeployment of existing staff. These demands include enhanced surveillance of trade policy developments; support of negotiations both in all the traditional GATT fields. including the existing Articles and Codes. and in areas such as services which are new to GATT; broadened technical assistance to developing country participants in the negotiations; and an increase in the number of meetings and volume of documentation. Some activities which took place in the preparatory phase will be subsumed in the negotiations themselves. However, most regular GATT activities will continue as before: examples are the work connected with panels, the meetings of permanent bodies such as the Council, Committee on Trade and Development and Balance-of-Pa-yments Committee, the servicing of accession requests, and the continuing regular meetings of the various Code committees. 3. As a first step in meeting these enlarged requirements, as far as they could be judged at the time, the Director-General implemented on 1 January 1987 a reorganization of the Secretariat. Some 50 staff members (30 Professionals and 20 General Service category) were

8 Page 8 affected. The responsibilities of a number of Divisions were modified. The former Office for Multilateral Trade Negotiations became the Group of Negotiations on Goods and GATT Policy Affairs Division, with responsibility principally for the GNG, Consultative Group of Eighteen, and three Uruguay Round negotiating groups. The former Non-Tariff Measures Division and Trade Policies Division were combined as the Non-Tariff Measures and Surveillance Division, retaining all their former work except for customs matters, and adding servicing of the Trade Negotiations Committee and the Surveillance Body. A new Trade and Finance Division took over responsibility for balance of payments matters, import licensing, matters concerning the trade-finance link, including relations with the International Monetary Fund and World Bank, and trade-related investment measures. A reshaped Technical Barriers to Trade Division has as its principal responsibilities technical barriers, government procurement and customs matters. A new Group of Negotiations on Services Division supports this major new area of work. 4. This redeployment of the Secretariat's existing resources will go far towards supporting the anticipated workload arising from the Uruguay Round and the continuing regular work of GATT. Some reinforcement of the staff is, however, unavoidable. Redeployment has deprived some Divisions of staff who must be replaced in order to carry out permanent responsibilities: this has occurred, for example, in the Research Unit and in Technical Cooperation Division. The Uruguay Round is also creating net additional requirements for professional staff in several areas. Negotiations on GATT Articles and the MTN Codes, combined with the high level of work on panels, mean that the amount of legal work will increase sharply. In the area of trade in services, increased staff are required in support of the negotiations, through broadening the institutional understanding of the functioning of service markets and compiling and analyzing the large volume of statistical data involved. The press and public are demanding increased dissemination of information and response to enquiries, requiring some reinforcement of public information staff. Assistance to developing countries through both the Technical Cooperation Division and virtually all the individual operational Divisions will need to be strengthened. The staff requirements for development of an integrated trade policy data base must be provided for. Recruitment of additional staff in the General Service category is also essential, in support of the reorganized secretariat and of the increase in meetings and documentation. 5. Having appraised all these factors, the Director-General is now able to present his proposals for meeting the identified demands which the Uruguay Round will make on the Secretariat. He intends to keep the position under close and constant review. While some further redeployment of staff may prove necessary and some additional proposals maybe required, the Director-General expects that the proposals put forward in the present Supplementary Budget for 1987 will also meet the bulk of the needs of the Uruguay Round through Any additional proposals in support of the Uruguay Round in the 1988 budget proposals are therefore likely to be very limited in scope.

9 Page 9 6. It should be noted that, in so far as increases in staff resources are being proposed, they will be met exclusively by recruitment on a temporary basis. In other words, none of the proposed posts are being put forward as additions to the permanent establishment of the secretariat. It is foreseen that the need for these posts will continue in In this light, the Director -General herewith submits his additional budget proposals for the financial year 1987 which he views as essential for the tasks facing GATT Secretariat in the context of the Uruguay Round of Multilateral Trade Negotiations. I. Additional professional staff requirements 8. In total an additional eight professional temporary assistance posts are proposed. As described in paragraph 4 above, these posts are of two kinds. Some will permit replacement of staff redeployed for the Uruguay Round, so that recognized existing duties, not necessarily connected with the Round, can be performed. Others are required to meet the net additional workload arising from the Uruguay Round that cannot be met through redeployment. As explained in paragraph 4, some of these needs (e.g., legal services and technical cooperation) affect many areas of the negotiations. Others arise in specific sectors, such as trade in services. The annexed table shows where the new proposed professional posts would be located initially. 9. The cost of these eight posts for a full year would amount to Sw F 871,000. However, in view of the fact that they will not be required for a full calendar year in 1987, it is estimated that the cost this year will be: Sw F 290,000 II. Additional support staff requirements 10. The reorganization of the secretariat, and the identification and assessment of additional tasks arising from the Uruguay Round, require a parallel increase in temporary assistance support staff. Eight positions are needed to provide the normal secretarial and back-up services in order to permit the redeployed and additional professional staff members to function as efficiently as possible. 11. For 1987, the cost involved amounts to: Sw F 431.,000 This assistance is estimated to cost Sw F 518,000 on a yearly basis. III. Additional work/months required directly related to the increase in meetings and documentation 12. In several areas of the secretariat, additional temporary assistance work months will be required, largely on an intermittent basis during

10 Page 10 periods of heavy work, in order to meet the additional demands imposed by the Uruguay Round. Additional translation capacity will be necessary. A' the General Service category level, additional work month requirements have been identified in order to provide conference huissier service, audio support services at meetings and temporary staff for compilation, reproduction and distribution of conference documents. 13. In 1987, the costs involved will represent: Sw F 365,000 This assistance is estimated to cost some Sw F 480,000 on a yearly basis. IV. Other requirements 14. Other areas of the budget which have been or will be directly affected by the Uruguay Round include the reproduction of documents, the preparation of information material and permanent equipment. The additional offices at the Chemin des Mines leased in 1986 will meet needs through The details of these other requirements are as follows: - Dozumentation reproduction roneoo equipment) As a result of increases in the production of documentation, especially tables, it is necessary to lease an offset printing machine in the A3 format. Sw F 10,000 - Tape recorders, typewriters, etc. The proposal for office equipment corresponds to the requirements related to the proposed additional staff mentioned above. - Information material Sw F 14,000 It will be necessary to provide for additional information material related to the Uruguay Round. Sw F 15,000 V. Trade Policy Data Base 16. The question of the introduction of a fully integrated Trade Policy Data Base has been raised in several GATT committees and a large number of delegates have emphasized the importance of establishing such a body of information. While a decision on its eventual structure has still to be made, it would be prudent pending its approval by relevant GATT bodies to

11 Page 11 provide for budgetary cover in 1987 in order to permit work on the establishment of the Trade Policy Data Base to begin in the latter part of the year. The staff requirements are estimated at three Professionals and one and a half General Service support staff. The introduction of such a data base is estimated to cost in 1987: Sw F 100,000 On a yearly basis the cost is estimated as Sw F 435,000. VI. Conclusions 17. The total additional requirements which will be financed from the 1987 credit of Sw F 1,500,000 under Part VII, Section 16 - Uruguay Round - therefore amount to: Sw-F 1,225,000 A summary of the financial estimates is attached to this document. 18. It should be pointed out that the present proposals will have implications on the 1988 budget proposals in the sense that their continuation next year will imply a cost estimated at the present time at some Sw F 2,343,000.

12 Page 12/13 Summary of Supplementary Budget Estimates I. 8 additional Professional temporary assistance staff members (33 work months) 1987 Swiss 290,000 francs Implications for ,000 II. 8 additional support General Service category staff members (81 work months) 431, ,000 III. Additional temporary assistance related to the increase in meetings and documentation (13 work months of Professionals and 48 work months of General Service category in 1987) 365, ,000 IV. Other requirements (Documentation reproduction equipment, office equipment, information material) 39,000 40,000 V. Trade Policy Data Base (6 work months of Professionals and 8 work months of General Service category in 1987) 100,000 Total 1,225, ,000 2,343,000

13 APPENDIX L/6151 ALLOCATION OF GATT'S STAFF (Work Years) Page14 Situation as at 1 January a-- Additional Requests Divisions Permanent Temp. Assist Temp. Assist P and above G P and above G P and above G Office of the Director-General Office of Legal Affairs Session and Council. Affairs Division Information Service and Library Group of Negotiations on Goods and GATT Policy Affairs Division Textiles Surveillance Body General Service support staff OPERATIONAL DEPARTMENT A Non-Tariff Measures and Surveillance Division Development Division Trade and Finance Division Technical Co-operation Division Special Projects Division Group of Negotiations on Services Division General Service support staff

14 economic Research and Analysis Unit Trade Policy Data Base Agriculture Division Tariff Division Technical Barriers to Trade Division General Service support staff Translation and Documentation Division Personnel Office / General Service support staff / 11.41/ Representing 8 Professional positions, 13 work months of translators and 6 work months at Professional level relating to to Trade Policy Data Base. X r 2/ - Representing 8 General Service category positions, 48 work months relating to the increase in meetings and documentationt and 8 work months at General Service category level relating to Trade Policy Data Base. OPERATIONAL DEPARTMENT B 1 2 External Relations Division 'Training Division COORDINATION AND ADMINISTRATION Administrative and Financial Division N.B. Figures are expressed in tenths of years.