* WTO budget capped despite surge in dispute workload
* WTO warns of delays in adjudications and appeals
* WTO finances tipped into loss by pension and health
By Tom Miles
GENEVA, Oct 17 The World Trade Organization has
warned member countries that their refusal to increase its
budget is causing a logjam in dealing with trade disputes.
In a confidential budget proposal seen by Reuters, WTO chief
Roberto Azevedo told the 159 member countries to expect delays
in adjudications by WTO panels "for the next while" and "serious
difficulties and delays" for appeals in the next two years.
"The Appellate Body can expect to receive around 20 appeals
during the biennium 2014-15 including several of massive size,"
said the budget proposal, sent to WTO members on Oct 2.
"Such an increase in the number of appeals, on top of the
increasing complexity and size of the average appeal, will put a
huge strain on the resources of the Appellate Body and its
Secretariat in the course of the next biennium."
The current lawsuits include a multi-billion dollar fight
over subsidies for Boeing and Airbus, a
challenge to Australia's landmark tobacco packaging laws and a
dispute about Chinese exports of rare earth metals.
WTO rulings going to appeal now average about 364 pages,
twice as long as in the early days of the WTO, and cases
routinely involve more complainants and third parties,
generating more written and oral submissions and exhibits.
The WTO has already moved staff internally to cope with the
disputes, and hired 14 dispute lawyers on 2-year contracts,
other WTO documents show. The new budget proposal steps up
spending to handle the challenge.
"We expect that the rises in those areas might be
significantly more important than currently budgeted for and
that additional savings might be required while executing the
budget," Azevedo wrote.
MEMBERS DEMAND TIGHT BUDGET
The budget is tight because WTO members, who contribute in
proportion to their share of international trade, have told
Azevedo that he must operate with zero nominal growth in 2014
and 2015, capping annual spending at 197.2 million Swiss francs.
The budget may face further pressure if the WTO manages to
agree a landmark global trade reform at a ministerial meeting in
Bali in December, which would break a 12-year deadlock in global
trade talks and unleash much more negotiating activity.
"Members are expecting that the Secretariat has to maintain
all its activity, be able to reinforce the dispute settlement
function and be ready to respond to the post Bali situation,"
Azevedo wrote. "The question is how can the Secretariat operate
within those constraints?"
About two-thirds of the WTO budget goes on its staff, which
has become more top heavy over the past decade, and which
Azevedo said had more people at higher grades than other
No promotions have been budgeted for, and Azevedo said he
planned to look at reallocation of staff "in a more active way",
while promising to consult broadly with staff representatives.
A former Brazilian diplomat, Azevedo took over as head of
the WTO in September from Pascal Lamy and earns a base salary of
302,537 Swiss francs ($335,500) plus allowances of almost
Lamy kept the WTO within budget for each of the past seven
years, achieving a surplus of 14.9 million francs in 2012.
But that saving was wiped out by the adoption of new
accounting standards that forced the WTO to recognise 820
million francs of long-term pension and health insurance
liabilities, pushing 2012 into a 20 million franc loss.