* 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 liabilities
By Tom Miles
GENEVA, Oct 17 (Reuters) - 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.
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 comparable organisations.
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 200,000 francs.
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.