No consensus on WTO’s 2020 budget

The World Trade Organization’s biennial budget for 2020 hangs in the balance.

Members failed to reach consensus on the budget on Wednesday due to differences over a controversial agreement finalised by the WTO Secretariat with the US for limiting expenses for judges at the Appellate Body, said people familiar with the development.

At a meeting of the WTO’s committee on Budget, finance, and administration, several countries — India, the European Union, China, and Turkey — questioned the WTO Director-General Roberto Azevedo about the underlying rationale of the agreement he had finalised with the US. They argued that the agreement between the Secretariat and the US would lead to a differential and discriminatory treatment for adjudicating trade disputes, said several persons, who asked not to be identified.

The US plan would impose stringent conditions on the expenses for the three Appellate Body members to adjudicate a major trade dispute. It also paves the way for approving the budget for the WTO — which normally operates on a two-year budget cycle — with a budget for 2020 and not 2021.

The US has repeatedly blocked the selection process for filling six vacancies at the Appellate Body insisting that the judges failed to adhere to the dispute settlement understanding. One hundred and seventeen countries had urged the US to lift its blockade to enable members to select the six judges at the highest court. Otherwise, the Appellate Body will become dysfunctional on December 11.

The three AB members, according to the agreement worked out between the US and the WTO Secretariat, will receive CHF 1,00,000, as compared to their normal fee of CHF 1,13,000 for each judge.

India urged Azevedo and his officials to clarify whether it is proper to take up just one appeal while leaving other 10 cases in the cold storage.

Members alleged that the arrangement finalised to address US concerns is discriminatory as 10 pending disputes will be in limbo.

China asked whether the fees of CHF 1,00,000 for the AB members next year is sufficient to pay the annual fee of CHF 1,13,000 for one AB member who has her contract till November 2020.

In normal times, the Appellate Body’s seven members were paid a total annual fee of CHF 7,91,000 which would come to CHF 1,13,000 per judge.

In his reply to the Chinese query, Azevêdo said he has no answer, according to a participant who asked not to be identified.

The Director-General also defended the arrangement worked out with Washington, saying it offers considerable flexibility for members to decide other pending appeals before the AB. He also appealed members to approve the budget without delay on compassionate grounds, the participant said.

Japan and Brazil among others supported the arrangement that was finalised with Washington, insisting that there is considerable scope and flexibility to address the remaining disputes as well, said another participant from an industrialised country.

India also raised issues concerning financial regulation 19 about the trust funds and how they must be deployed. India said that the financial regulation must be included in the budget proposal, but that was not acceptable to the WTO Secretariat, said a participant under the condition of anonymity.

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