6:32 AM Jul 28, 1994


Geneva 28 July (TWN) -- The major beneficiaries of the Uruguay Round agreement are reluctant to pay the price in terms of contributing to the budget of the organization to administer it in proportion to their overall benefits.

This is reported to be holding up work in the Budget sub-committee of the WTO.

The division is over whether the budget of the WTO, which would now deal not only with merchandise trade, but also services trade and trade in intellectual property should be apportioned among members as at present, only in terms of country-shares in merchandise trade or a new formula to reflect the shares in intellectual property registrations and share in world services exports.

A meeting of the budget subcommittee Wednesday ended without a solution, participants reported.

Tied to the decision on this issue are decisions on the expansion of the secretariat and creation of additional posts.

The budget of the GATT, which deals only with trade in goods, is apportioned among the contracting parties on the basis of their shares in world merchandise exports.

Given that the WTO will also be administering the TRIPs and Services agreements, the Preparatory Committee's Budget sub-committee appears to have agreed at an earlier meeting that the budget should be apportioned among members on the basis of share in trade in goods, services and intellectual property.

The shares in services trade, it also appears to have been agreed, is to be set on the basis of the IMF's balance-of-payments data and that in intellectual property on the basis of registrations in the patents, trade marks, copyright and other IPRs maintained by the World Intellectual Property Organization (WIPO).

While agreeing to this equitable principle of apportionment, the United States has been fighting to put off its application into the future.

A private argument that the US had advanced, which others were willing to accommodate up to a point, was that at a time when the WTO's acceptance by the US Congress was facing some difficulty, including on what it would cost the US (over tariff cuts), the new additional cost in terms of the budget might create problems.

Developing countries like India which wanted the new formula to apply from day one of the WTO appear to have veered around since then to a compromise to put off the application for two years.

But the US has sought to put it off for atleast five years, and with no automatic commitment at the end to use the new formula either.

Singapore, among the developing countries, has supported the United States and has favoured continued budget apportionment under the current formula. Under the new formula, Singapore too would find its contribution going up by 30-40 percent.

France, Japan and a few other industrialized countries whose budget share too would go up however have been willing to pay the increased shares, but were willing to find accommodation for the US by postponing the application by two years.

Italy, whose budget share too would go up, has been also opposing the new formula on the ground that the BOP statistics on services trade would be aggregate and not reflect the varying sectoral shares, and that without a satisfactory agreement on maritime services trade, Italy would not gain.

Singapore has been also arguing that services negotiations on financial services, basic telecommunications and maritime transport are still continuing -- a view that others don't accept, given the overall framework and the initial commitments.

After several consultations, a formula was proposed to the effect that the "changes if appropriate, should be introduced to reflect the new principles no later than two years".

While shorter than the five years sought by the US, in fact it would have been no decision at all, and the issue would have been left hanging as a suggestion for future decision 'if appropriate'.

This was blocked initially by India.

But on Wednesday at a meeting of the Committee on Administrative and Budgetary questions, Germany came out in favour of the new formula and said that it should be used in apportioning the budget as from the date of entry into force of the WTO.

The chairman of the Committee, Andres Szepesi of Hungary is to continue further consultations to find a solution by early next week, before delegates break up for summer.

Decisions, provisional, for new posts in the expanded WTO secretariat and the staffing levels (and promotions) are all tied up with the budget decision.