CL 125/5

Council

Table of Contents

I.  INTRODUCTION

II. ELECTION OF CHAIRPERSON AND VICE-CHAIRPERSON

III. AGREEMENT BETWEEEN FAO AND THE INTERNATIONAL OFFICE OF EPIZOOTICS (OIE)

IV. COOPERATION AGREEMENT WITH THE INTERNATIONAL ORGANISATION FOR THE DEVELOPMENT OF FISHERIES IN EASTERN AND CENTRAL EUROPE (EUROFISH)

V. THE NUMBER AND LENGTH OF TERMS OF OFFICE OF THE DIRECTOR-GENERAL

VI. NATIONAL EXECUTION OF TECHNICAL ASSISTANCE PROJECTS

VII. SPLIT ASSESSMENTS

VIII. CAPITAL BUDGETING

IX. RECOGNITION OF “SPOUSES” UNDER SAME-SEX MARRIAGES

APPENDIX I: Draft Agreement between the Food and Agriculture Organization of the United Nations and the Office International des Épizooties

APPENDIX II: Draft Cooperation Agreement between the International Organisation for the Development of Fisheries in Eastern and Central Europe (EUROFISH) and the Food and Agriculture Organization of the United Nations (FAO)

APPENDIX III: Draft Conference Resolution – The Number and Length of Terms of Office of the Director-General, Article VII.1 of the Constitution of FAO

APPENDIX IV: Draft Conference Resolution – Amendment to Regulation VI of the Financial Regulations (Funds under Partnership in Development Projects)

APPENDIX V: Draft Conference Resolution – Amendment to Regulation V of the Financial Regulations (Split Assessments)

APPENDIX VI: Draft Conference Resolution – Amendment to Regulation VI of the Financial Regulations (Capital Budgeting)

I. INTRODUCTION

1. The Seventy-fifth Session of the Committee on Constitutional and Legal Matters (CCLM) was held on 6 and 7 October 2003. All the Members of the Committee, as listed below, were represented: Canada, France, Iraq, Malta, Niger, Philippines and Uruguay.

II. ELECTION OF CHAIRPERSON AND VICE-CHAIRPERSON

2. Following the retirement of its former Chairperson, H.E. Francis Montanaro Mifsud (Malta), the Committee elected the former Vice-Chairperson, Mr. Adam Maiga Zakariaou (Niger), as Chairperson.

3. The Committee elected Ms Claire Gaudot (France) as Vice-Chairperson.

III. AGREEMENT BETWEEEN FAO AND THE INTERNATIONAL OFFICE OF EPIZOOTICS (OIE)

4. The CCLM recalled that in 1947 a Note of Understanding was concluded between FAO and the Office International des Epizooties (OIE) with a view to coordinating their activities. This informal relationship was subsequently superseded by a formal agreement approved by the Conference at its Seventh Session in November 1953.

5. The CCLM took note that the extended cooperation between the two organizations did not exclude some shortcomings and that the enlargement of OIE’s field of activities has created risks of duplication. This has led FAO and OIE to the conclusion that the agreement of 1953 needed to be renegotiated, in particular to better respond to their respective mandates as reference bodies for international zoosanitary and food safety standards within the framework of the WTO Agreement on the Application of Sanitary and Phytosanitary Measures (SPS).

6. The CCLM reviewed the text of the draft agreement and found it to be in conformity with Article XIII of the FAO Constitution and Conference Resolution N^o 69/59 “Guiding lines regarding relationship between FAO and intergovernmental organizations” (Part N of the Basic Texts). Pursuant to Rule XXIV.4 (c) of the General Rules of the Organization, the CCLM recommended that the draft agreement between FAO and OIE, attached to this report as Appendix I, be submitted to the Council, at its Hundred and Twenty-fifth Session, in November 2003, for approval and subsequently to the Conference, at its Thirty-first Session in November-December 2003, for confirmation.

IV. COOPERATION AGREEMENT WITH THE INTERNATIONAL ORGANISATION FOR THE DEVELOPMENT OF FISHERIES IN EASTERN AND CENTRAL EUROPE (EUROFISH)

7. The CCLM reviewed the proposed Cooperation Agreement with the International Organisation for the Development of Fisheries in Eastern and Central Europe (EUROFISH). The CCLM recommended some amendments to its provisions in order to clarify their scope and meaning. The Cooperation Agreement, as revised by the CCLM, is set out in Appendix II to this Report.

8. Subject to the changes made to the Cooperation Agreement, the CCLM found it to be in conformity with Article XIII of the FAO Constitution and Conference Resolution N^o 69/59 “Guiding lines regarding relationship between FAO and intergovernmental organizations” (Part N of the Basic Texts). Pursuant to Rule XXIV.4 (c) of the General Rules of the Organization, the CCLM recommended that the draft Cooperation Agreement with EUROFISH be submitted to the Council, at its Hundred and Twenty-fifth Session, in November 2003, for approval and subsequently to the Conference, at its Thirty-first Session in November-December 2003, for confirmation.

V. THE NUMBER AND LENGTH OF TERMS OF OFFICE OF THE DIRECTOR-GENERAL

9. The CCLM recalled that the Council, at its Hundred and Twenty-third Session held from 28 October to 1 November 2002, asked, inter alia, the Independent Chairman of the Council, together with a regional representative group of “Friends of the Chair”, to deal with the question of the number and length of terms of office of the Director-General (Article VII.1 of the Constitution), keeping in mind the transitional provisions such as the date of entry into force of an amended Article VII.1 of the Constitution and the rights and obligations of the incumbent.

10. The CCLM further recalled that the Council, at its Hundred and Twenty-fourth Session held from 23 to 28 June 2003, accepted the report of the Group of “Friends of the Chair” and agreed to transmit the proposed amendment to Article VII.1 of the Constitution that “the Director-General should be appointed for a term of six years, renewable only once for a further term of four years”, to the Committee on Constitutional and Legal Matters, at its Seventy-fifth Session, in October 2003, along with the report of the Group of “Friends of the Chair” before being submitted to the Thirty-second Session of the Conference for adoption.

11. The CCLM, in accordance with the above-mentioned decisions of the Council and taking into account the report of the Group of “Friends of the Chair”, reviewed the proposed amendment to Article VII.1 of the Constitution. It agreed that, in order to follow the pattern of the present wording of Article VII.1 of the Constitution, the revised version of such Article could read as follows: “1. There shall be a Director-General of the Organization who shall be appointed by the Conference for a term of six years. He shall be eligible for reappointment only once for a further term of four years.”

12. The CCLM reviewed also the draft Conference resolution regarding the proposed revised version of Article VII.1 of the Constitution and recommended that it be transmitted, as attached to this report as Appendix III, to the Conference through the Council.

VI. NATIONAL EXECUTION OF TECHNICAL ASSISTANCE PROJECTS

13. The CCLM noted that, at its Hundred and Second Session held from 5 to 9 May 2003, the Finance Committee had been apprised of a number of changes that have occurred in the course of the past few years, which have modified the conditions under which FAO implements technical assistance projects in an increasing number of countries. As these countries expand their own technical and managerial capabilities they look more than in the past to the so-called national execution as their preferred modality for the implementation of projects.

14. The CCLM was further informed that, in order to respond more efficiently to the demands placed upon it in that respect, FAO had embarked in a process of reconsideration of some of its procedures. As a result of this process, a number of “business models” for projects under Partnership in Development Agreements were developed. Such models were intended to constitute reference documents providing a basis for project formulation both by FAO and the governments. Throughout the process, the Organization drew heavily from the experience of the United Nations Development Programme which acquired substantial experience on the matter.

15. The CCLM noted also that the Finance Committee, at its Hundred and Second Session held from 5 to 9 May 2003, had endorsed a proposal that the Financial Regulations be amended in order, in particular, to ensure that appropriate national certification and control mechanisms be in place as concerns those activities of projects under Partnership in Development Agreements to be carried out by governments and other national entities, in accordance with their national rules and regulations, and that this be duly reflected in the relevant project agreements. When reviewing the proposed amendment to the Financial Regulations, the CCLM, after having noted that it covered two distinct situations, recommended that, for the sake of clarity, the proposed amendment be structured in two sub-paragraphs.

16. In light of the foregoing, the CCLM recommended that the draft Conference Resolution, containing the proposed amendment to the Financial Regulation VI as set out in Appendix IV to this report, be transmitted to the Council, for its subsequent submission to the Conference for consideration and adoption.

VII. SPLIT ASSESSMENTS

17. The CCLM recalled that the Finance Committee, at its Hundred and Fourth Session held from 15 to 19 September 2003, “recommended the adoption of the split assessment methodology beginning with the 2004-2005 biennium for endorsement by the Council”, and _ftn2#_ftn2“endorsed the proposed revisions to the Financial Regulations and the prototype of the Appropriations Resolution … for transmission to the CCLM for endorsement and submission to the Council”.

18. The CCLM reviewed the proposed amendments to Financial Regulation V as well as to the prototype of the Appropriations Resolution. The CCLM considered it appropriate to introduce three new preliminary paragraphs at the beginning of the draft Conference resolution and to make some minor modification of a formal nature in the text of the proposed Regulations 5.6 ands 5.7. The CCLM found the amendments to be in conformity with the Basic Texts of the Organization and in proper legal form and recommended that these amendments, as attached to this report as Appendix V, be transmitted to the Council for consideration and its subsequent submission to the Conference.

VIII. CAPITAL BUDGETING

19. The CCLM recalled that the Finance Committee, at its Hundred and Fourth Session, held from 15 to 19 September 2003, “endorsed for consideration by the Council the establishment of a Capital Expenditures Facility” and “also endorsed the draft text of the proposed Financial Regulation 6.10 …, for submission through the Committee on Constitutional and Legal Matters to the Council”.

20. The CCLM reviewed the proposed amendments to Financial Regulation VI, consisting in the addition of a new paragraph 6.10, as well as the proposed draft Conference Resolution on Capital Budgeting. The CCLM suggested the addition of three new historical paragraphs and the deletion of an unnecessary subtitle in the text of the draft resolution. The CCLM found the amendments to be in conformity with the Basic Texts of the Organization and in proper legal form and recommended that these amendments, as attached to this report as Appendix V, be transmitted to the Council for consideration and its subsequent submission to the Conference.

IX. RECOGNITION OF “SPOUSES” UNDER SAME-SEX MARRIAGES

21. The CCLM took note that, in 2002 and 2003, FAO was presented with several claims from staff members for dependency allowance on the basis of either “registered partnership” or “same-sex marriage” under the staff member’s national law. Such claims have generated reflection within FAO on the types of unions qualifying as “marriage” and the precise definition of “spouse” for administrative purposes. In fact, whereas the FAO Staff Rules and Administrative Manual do not contain a definition of “spouse”, it has been consistent and longstanding policy and practice throughout the United Nations system to require the production of a “marriage certificate” or other document evidencing the relationship of husband and wife in order for a staff member to qualify for dependency allowance.

22. The CCLM took also note that recent case law of the Administrative Tribunal of the International Labour Organization (ILOAT) concerning “registered partnerships” holds that, since these do not constitute a “marriage” under the respective national law, they cannot give rise to dependency allowances. It took also note that case law of the ILOAT and the United Nations Administrative Tribunal (UNAT) seems to support the recognition of “same-sex marriages” for the purposes of dependency allowances although they have not yet been confronted directly with a specific case of “same-sex marriage”.

23. The CCLM reviewed the issue of recognition of spouses under “same-sex marriages” and considered that it was closely linked with that of “registered partnerships”. The CCLM further noted that both issues were under active consideration in the United Nations system and that further debate would take place within the system especially after the Secretary General’s declaration on this matter. The CCLM recommended, therefore, that the Organization follow closely the discussions within the United Nations system with a view to reaching a common position in that regard.

APPENDIX I

DRAFT AGREEMENT BETWEEN
THE FOOD AND AGRICULTURE ORGANIZATION
OF THE UNITED NATIONS
AND
THE OFFICE INTERNATIONAL DES ÉPIZOOTIES

The Food and Agriculture Organization of the United Nations hereinafter referred to as FAO and the Office International des Épizooties (World Organisation for Animal Health), hereinafter referred to as the OIE, wishing to co-ordinate their efforts in the control of animal diseases and safety of food within the framework of their respective mandates, agree to the following:

Article I

1.1     FAO and OIE agree to co-operate closely in matters of common interest pertaining to their respective fields of competence.

1.2     For the purposes of the present Agreement:

- “animal” includes livestock, birds, wild fauna, bees, companion animals, fish and other aquatic animals;

- “agriculture” includes crops, livestock, fisheries and forestry.

Article II

2.1     The OIE is primarily responsible for the:

(a)         Establishment of standards, guidelines and recommendations relevant to animal diseases and zoonoses in accordance with its Statutes and as defined in the WTO-SPS Agreement.

(b)         Development and updating of international science-based reference standards and validation of diagnostic tests published in the Terrestrial Animal Health Code, Aquatic Animal Health Code, Manual of Diagnostic Tests and Vaccines for Terrestrial Animals and Manual of Diagnostic Tests for Aquatic Animals;

2.2     FAO is primarily responsible for the:

(a)         Establishment of guidelines and recommendations on good agricultural practices relevant to the management of animal diseases and zoonoses;

(b)         Development of programmes and coordination of activities with other relevant organizations for the effective prevention and progressive control of important animal diseases, including promotion of the collection and analysis of information on the national distribution and impact of these diseases, and provision of relevant technical assistance, particularly in developing countries;

(c)         Establishment of international food safety standards, guidelines and other recommendations through the FAO/WHO Codex Alimentarius Commission in accordance with its Statutes and as defined in the WTO-SPS agreement;

2.3     The following activities are object of joint action:

(a)         Development and maintenance of an appropriate early warning and surveillance system for major animal diseases, and using official OIE sanitary and scientific information as well as other relevant sources of disease information, through a permanent coordinated approach by the major partners of a Global Early Warning and Early Response System;

(b)         Joint development of international standards relating to those aspects in animal production which impact on food safety, in collaboration with other relevant international agencies.

(c)         International promotion and co-ordination of veterinary and other related research activities on animal diseases and zoonoses and those aspects in animal production which impact on food safety;

(d)         Elaboration of regional and international strategies and assist in the negotiation of agreements for the effective prevention and progressive control of animal diseases and zoonoses;

(e)         Internet portal implemented by FAO on international regulations regarding biosecurity related to animal diseases and zoonoses

(f)         Provide expert advice on matters covered by this agreement;

(g)         Organising strategic meetings, conferences, committees, working groups and task forces on those aspects in animal production which impact on food safety control policies and programmes of both a regional and global scope;

(h)         Assisting, on request, countries in developing their veterinary education, veterinary services (or other competent authorities) and extension services;

(i)         Dissemination by publication and other means of technical information related to research, control methods, and those aspects in animal production which impact on food safety.

Article III

FAO and the OIE jointly collaborate, in particular, by the following means:

(a)         Reciprocal exchange of reports, publications and information including incidence of animal diseases and zoonoses. Special arrangements may be made by the Director General of FAO and the Director General of the OIE for the collection and analysis of relevant information from any Member Country and distribution of this information to governments of those countries which are not members of one or the other party;

(b)         Participation of each party in the relevant meetings and conferences of the other, with the right to take part in the discussions on a consultative basis. The two parties agree to avoid holding of meetings and conferences dealing with matters of mutual interest without prior consultation of the other party.

(c)         Each party may submit to the other proposals for technical consultation or specific action related to subjects of common interest;

(d)         Continuous consultation and concerted effort by the Director-General of FAO and the Director General of the OIE to reach the same or closely connected objectives and to avoid duplication.

(e)         Mutual consultation by the Director-General of FAO and the Director General of the OIE on matters of common interest, with a view to promoting arrangements for joint action in specific fields;

(f)         Adoption by the Director General of FAO and the Director-General of the OIE of appropriate administrative arrangements necessary to implement these policies, including exchange of experts, and cross-training of personnel.

Article IV

To promote efficiency and avoid duplication, FAO and the OIE shall, in the course of the preparation of their respective programmes of activity, in so far as they pertain to the present Agreement, submit to each other their draft programmes for comment and co-ordination, and each party shall take into account to the extent possible the recommendations of the other. Additionally, FAO and the OIE shall convene one annual co-ordination meeting of high level officials of each party.

Article V

Both parties may request that the present Agreement be amended. Any such amendment shall be adopted by mutual consent. An exchange of letters will detail the implementation of this agreement.

Article VI

The present Agreement supersedes the Agreement concluded previously between FAO and the OIE.

Signed in ......................... on .......................
 

APPENDIX II

DRAFT
COOPERATION AGREEMENT BETWEEN THE INTERNATIONAL ORGANISATION FOR THE DEVELOPMENT OF FISHERIES IN EASTERN AND CENTRAL EUROPE (EUROFISH)
AND
THE FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS (FAO)

The Contracting Parties,

Considering that EUROFISH was established with the assistance of FAO as an independent international organisation by an agreement, adopted by a Conference of Plenipotentiaries convened by the Director-General of FAO on 23 May 2000, which entered into force on 12 October 2001, and for which the Director-General of FAO is the Depositary;

Considering that Article 13, paragraph 1 of the Agreement for the Establishment of the International Organisation for the Development of Fisheries in Eastern and Central Europe (EUROFISH) provides that “there should be a working relationship between EUROFISH and the Food and Agriculture Organization of the United Nations. To this end, EUROFISH shall enter into negotiations with the Food and Agriculture Organization of the United Nations with a view to concluding an agreement pursuant to Article XIII of the Constitution of the Organization. Such agreement should provide, inter alia, for the Director-General of FAO to appoint a Representative who would participate in all meetings of EUROFISH, but without the right to vote”;

Considering also that the Governing Council of EUROFISH, at its First Regular Session, on 20 and 21 January 2002, decided that EUROFISH would enter into negotiations with FAO with a view to formalizing the cooperation between the two organizations;

Considering further that Article XIII, paragraph 1 of the FAO Constitution states that “in order to provide for close cooperation between the Organization and other international organizations with related responsibilities, the Conference may enter into agreements with the competent authorities of such organizations, defining the distribution of responsibilities and methods of cooperation”;

Recognizing the interest which FAO has in the promotion of cooperation for the development of fisheries in Eastern and Central Europe and in supporting the objectives of EUROFISH.

Have agreed as follows:

1. An ongoing cooperation shall be established and maintained between EUROFISH and FAO.
    
2. FAO shall participate in meetings of the Governing Council of EUROFISH, as well as in other technical meetings of EUROFISH, as an observer.
    
3. EUROFISH shall be invited to participate in the sessions of the Conference and the Council of FAO, the Committee on Fisheries (COFI), the COFI Sub-Committee on Aquaculture, the COFI Sub-Committee on Trade, the FAO Regional Conference for Europe and the European Inland Fisheries Advisory Commission, in an observer capacity.
    
4. FAO staff members will continue to assist EUROFISH as technical advisers.
    
5. FAO shall, as far as possible, and in conformity with the constitutional instruments and decisions of its competent bodies, give due consideration to requests for additional technical assistance made by EUROFISH.
    
6. As far as possible, FAO will use EUROFISH as an executing agency for projects on fishery marketing in Eastern and Central Europe. As appropriate, FAO will give due consideration to using EUROFISH to execute activities within the mandate of both organizations.
    
7. EUROFISH and FAO may, in appropriate cases, agree to convene under their auspices, according to arrangements to be made in each particular case, joint meetings concerning matters of interest to both organizations. In addition, EUROFISH and FAO may, when they consider it desirable, set up joint committees or working parties, on conditions to be mutually agreed in each case, to consider matters of common interest.
    

8. EUROFISH and FAO may, through special arrangements, decide upon joint action with a view to attaining objects of common interest.
    

9. Subject to such arrangements as may be necessary for the safeguarding of classified material, EUROFISH and FAO shall arrange for the fullest exchange of information and documents concerning matters of common interest.
    
10. The Fishery Industries Division and GLOBEFISH at FAO Headquarters in Rome will serve as focal point for liaison between EUROFISH and FAO.
     
11. The Contracting Parties may decide by mutual agreement to extend the scope of their cooperation as appropriate.

Entry into force

The present Agreement shall enter into force as soon as it has been approved by the appropriate Governing Bodies of both organizations.

APPENDIX III

DRAFT CONFERENCE RESOLUTION

THE NUMBER AND LENGTH OF TERMS OF OFFICE OF THE DIRECTOR-GENERAL, ARTICLE VII.1 OF THE CONSTITUTION OF FAO

THE CONFERENCE,

Recalling the decision taken by the Council, at its Hundred and Twenty-third Session, held from 28 October to 1 November 2002, regarding the question of the number and length of terms of office of the Director-General, Article VII.1 of the Constitution;

Having considered that, at its Hundred and Twenty-fourth Session, held from 23 to 28 June 2003, the Council accepted the report of the Group of “Friends of the Chair”, document CL 124/INF/22, and agreed to transmit the proposed amendment to Article VII.1 of the Constitution that the “Director-General should be appointed for a term o f six years, renewable only once for a further term of four years”, to the Committee on Constitutional and Legal Matters, at its Seventy-fifth Session, in October 2003, along with document CL 124/INF/22 before being submitted to the Thirty-second Session of the Conference for adoption;

Having further considered the report of the Seventy-fifth Session of the Committee on Constitutional and Legal Matters, held on 6 and 7 October 2003, as well as the Report of the Hundred and Twenty-fifth Session of the Council, held from 26 to 28 November 2003;

1. Decides to amend Article VII, paragraph 1, of the Constitution as follows:

“1. There shall be a Director-General of the Organization who shall be appointed by the Conference for a term of six years. He shall be eligible for reappointment only once for a further term of four years.”

2. Decides that the revision of Article VII, paragraph 1, of the Constitution shall apply to the election at the Thirty-third Session of the Conference in 2005 and govern the mandates of the Directors-General from 1 January 2006.

(Adopted on ...... December 2003)

APPENDIX IV

DRAFT CONFERENCE RESOLUTION

AMENDMENT TO REGULATION VI OF THE FINANCIAL REGULATIONS
(FUNDS UNDER PARTNERSHIP IN DEVELOPMENT PROJECTS)

THE CONFERENCE

Recalling that the Finance Committee, at its Hundred-and-second Session, held from 5 to 9 May 2003, endorsed a proposal that the Financial Regulations be amended in order to reflect the requirement that the Director-General, when entering into negotiations with concerned governments and national institutions, in connection with Funds under Partnership in Development Agreements should satisfy himself that adequate controls are in place;

Noting that the Committee on Constitutional and Legal Matters, at its Seventy-fifth Session, held on 6 and 7 October 2003, reviewed the proposed amendment to the Financial Regulations;

Noting further that the Council, at its Hundred and Twenty-fifth Session, held from 26 to 28 November 2003, approved the proposed amendment and recommended its adoption by the Conference at its Thirty-second Session;

1. Adopts new Financial Regulation 6.8, as follows:

“The Director-General may enter into agreements with governments and donors providing for technical assistance in the context of development projects to be executed/ implemented by the beneficiary government or other national entity. Under these modalities, referred to below as projects under Partnership in Development Agreements, the following shall apply:

(a) Where the funds are to be held and managed by the government or other national entity under national execution or implementation arrangements, FAO’s participation shall be separately reported to the Finance Committee as Funds under Partnership in Development Agreements, and such funds shall not be included in the Financial Statements of the Organization.

(b) Where the funds are to be held in trust by FAO and transferred to the government or other national entity for the implementation of agreed activities, the funds shall be reported to the Finance Committee in the Financial Statements of the Organization as Funds held in Trust on behalf of beneficiary governments under Partnership in Development Agreements and shall be subject to the internal and external auditing procedures of the Organization. Funds held in trust by FAO that are subject to national implementation shall be expended in accordance with the national regulations and rules of the implementing government and shall be subject to certification by the responsible national authorities, provided that the Director-General shall satisfy himself before entering into the agreement with the government that such regulations and rules are consistent with the Financial Regulations of the Organization and provide adequate controls over the expenditure of the funds. These projects under Partnership in Development Agreements shall be subject to audit at least once a year by an independent auditor appointed with the agreement of both the government concerned and the Organization in accordance with the respective agreements.”

2. Decides that subsequent paragraphs of Financial Regulation VI are to be re-numbered accordingly.

(Adopted on ..... December 2003)

APPENDIX V

DRAFT CONFERENCE RESOLUTION

AMENDMENT TO REGULATION V OF THE FINANCIAL REGULATIONS (SPLIT ASSESSMENTS)

THE CONFERENCE

Recalling that the Finance Committee, at its Hundred and fourth Session held from 15 to 19 September 2003, “recommended the adoption of the split assessment methodology beginning with the 2004-2005 biennium for endorsement by the Council” and endorsed the revisions to Regulation V of the Financial Regulations and to the prototype of the Appropriations Resolution, for transmission to the CCLM for endorsement and submission to the Council;

Considering that the Committee on Constitutional and Legal Matters, at its Seventy-fifth Session held on 6 and 7 October 2003, reviewed the proposed amendments to Regulation V of the Financial Regulation as well as the prototype of the Appropriations Resolution;

Noting that the Council, at its Hundred and Twenty-fifth Session held from 26 to 28 November 2003, agreed to transmit to the Conference, for its approval, the proposed amendments to Regulation V of the Financial Regulations as well as the prototype of the Appropriations Resolution;

1. Decides to amend Regulation V of the Financial Regulations as follows¹:

Regulation V
Provision of Funds

5.1 The appropriations for a financial period, subject to related adjustments effected in accordance with Regulation 5.2, shall be financed by annual contributions from Member Nations and Associate Members. Contributions from Member Nations shall be assessed in accordance with the scale of contributions determined by the Conference, which scale shall not include contributions from Associate Members. Contributions from Associate Members shall as far as feasible be calculated on the same basis as contributions from Member Nations, the amount thus obtained being reduced by four tenths to take account of the difference of status between Member Nations and Associate Members, and shall be credited to Miscellaneous Income. Pending receipt of contributions, appropriations may be financed from the Working Capital Fund.

5.2 In the assessment of the contributions of Member Nations and Associate Members for each financial period, adjustments shall be made in respect of:

1. estimated Miscellaneous Income of the financial period in respect of which the assessment of contributions is being made;
    

2. credits accruing to Member Nations as a result of the application of Financial Regulation 6.1 (b);
    
3. supplementary appropriations for which contributions have not previously been assessed on the Member Nations and Associate Members.

5.3 For determining the annual contribution of each Member Nation and Associate Member, the assessment of each such Member Nation and Associate Member for the financial period shall be divided into two equal instalments, one of which shall be payable in the first calendar year and the other in the second calendar year of the financial period.

5.4 At the beginning of each calendar year the Director-General shall:

1. inform Member Nations and Associate Members of their obligations in respect of annual contributions to the budget;
2. inform Member Nations of their obligations in respect of advances to the Working Capital Fund;
3. request Member Nations and Associate Members, as the case may be, to remit all contributions and advances due.

5.5 Contributions and advances shall be due and payable in full within 30 days of the receipt of the communication of the Director-General referred to in Regulation 5.4 above, or as of the first day of the calendar year to which they relate, whichever is the later. As of 1 January of the following calendar year, the unpaid balance of such contributions and advances shall be considered to be one year in arrears.

5.6 Annual contributions to the budget shall be assessed partly in United States dollars and partly in euro. Each biennium, the Conference will determine the proportionate share of the budget payable by all Member Nations and Associate Members in United States dollars and in euro respectively. Unless the amounts assessed are received simultaneously and in full in the currencies in which they were assessed, credit for any partial payment shall be given against contributions due in proportion to the amounts assessed in both currencies. Annual contributions to the budget shall be assessed in United States dollars. To the extent that the Conference, after ascertaining in what currencies Member Nations and Associate Members propose to make their contributions in the ensuing financial period, finds that anticipated United States dollar income will be inadequate to meet estimated United States dollar expenditures of the Organization as determined by the Conference,Should a the Conference will determine the proportionate share of contribution that all Member Nations and Associate Members who do not pay their contributions in full in United States dollars shall pay in that currency. Each Member Nation orand Associate Member shall pay any the remainderpart of its current year contributions in a currency other than United States dollar or eurolire, or in its own currency which, for the purposes of its contributions to the Organization, it will be the responsibility of that Member Nation or Associate Member to ensure the free convertibility of that currency into United States dollars and/or Eeuro. must be freely convertible into lire, the convertibility being the responsibility of the contributing government. The exchange rates applicable to such contributionto partial payment or payment in other currencies as described in this paragraph rate shall be the marketofficial rates of the the Eeuro and the lire to theUnited States Ddollar to the currency of payment dollar on the first business day in January of the calendar year in which the contribution is due, or the rate in effect on the day the payment is made, whichever is more favourable to the Organizationthe higher.

5.7 Obligations of Member Nations and Associate Members Nations in Eeuro which are considered to be in arrears in accordance with F.R.Financial Regulation 5.5 shall be converted into USUnited States dollars at the rate most beneficial to the Organization applying either the budget rate of the assessment year, or the average UN operational rate for the assessment year or the UN operational rate in effect on 31 December of the assessment year. Such arrears shall thereafter be considered payable in USUnited States Ddollars. For the purpose of determining loss of voting rights in the Conference, ineligibility for election to or loss of seat in the Council as foreseen in the Basic Texts of the Organization, contributions due for the two preceding calendar years will be calculated on the same basis as above. Payments received against arrears in freely convertible currencies other than USUnited States Ddollars shall be converted using the market exchange rate of the currency to the USUnited States Ddollar in accordance with the provision of the last sentence of F.R.Financial Regulation 5.6.

5.8Obligations of Member Nations and Associate Members, including arrears of contribution, shall remain payable in the currency of contribution of the year in which they were due.

5.8 Any nation admitted to membership or any territory or group of territories admitted to associate membership shall pay a contribution to the budget for the financial period in which the membership or associate membership becomes effective. Such contributions shall be an amount determined by the Conference and shall begin with the quarter in which the application was approved. All new Member Nations shall be required to make advances to the Working Capital Fund in accordance with Regulation 6.2 (b) (ii).

5.9 Non-member nations of the Organization that are members of intergovernmental commodity groups; subcommittees, subsidiary working parties and study groups established by the Committee on Fisheries; or of bodies established by conventions or agreements concluded under Article XIV of the Constitution shall contribute towards the expenses incurred by the Organization with respect to the activities of those groups or bodies in an amount determined by the Director-General except as otherwise decided by the Conference or the Council.

5.10 The Council, at any of its sessions, may advise the Director-General as to any steps that ought to be taken in order to expedite the payment of contributions. The Council may submit to the Conference such recommendations in this regard as it may consider appropriate.

2. Decides to amend the prototype of the Appropriations Resolution as follows:

Prototype Resolution for Adoption by the Conference
(all figures are hypothetical)

(Adopted on ..... December 2003)

_________________________

¹ Words struck out are deleted; words underlined are added.

APPENDIX VI

DRAFT CONFERENCE RESOLUTION

AMENDMENT TO REGULATION VI OF THE FINANCIAL REGULATIONS (CAPITAL BUDGETING)

THE CONFERENCE

Noting the recommendations of external experts and of the JIU that the Organization should introduce capital budgeting;

Recognizing the desirability of integrating capital expending planning into the existing planning framework:

Recalling that the Finance Committee, at its Hundred and fourth Session held from 15 to 19 September 2003, “endorsed for consideration by the Council the establishment of a Capital Expenditures Facility” and “also endorsed the draft text of the proposed Financial Regulation 6.10 …, for submission through the Committee on Constitutional and Legal Matters to the Council”;

Considering that the Committee on Constitutional and Legal Matters, at its Seventy-fifth Session held on 6 and 7 October 2003, reviewed the proposed amendments to Financial Regulation VI;

Noting that the Council, at its Hundred and Twenty-fifth Session held from 26 to 28 November 2003, agreed to transmit to the Conference, for its approval, the proposed amendments to Financial Regulation VI;

Decides:

1. to establish a Capital Expenditure Facility consisting of a separate budgetary chapter and a Capital Expenditures Account;
2. to designate Chapter 8 of the Programme of Work and Budget for the purposes of defining and authorizing capital expenditures;
3. to reasign the existing Chapter 8: Transfer to the Tax Equalization Fund to a new Chapter 10;
4. to establish a Capital Expenditure Account through the following addition of Financial Regulation 6.10 to the Financial Regulations of the Organization:

“6.10 There shall be established:

1. a Capital Expenditure Account, which will be used for the purpose of managing activities which involve capital expenditure, defined as being:
1. expenditures on tangible or intangible assets with a useful life in excess of FAO’s financial period of two years;
2. which generally require a level of resources which cannot be funded within the appropriation for a single biennium.
2. the source of funds will be:
1. Regular Programme Appropriations approved by Conference;
2. voluntary contributions;
3. recoveries from charges to users for the delivery of capital investment services.
3. the use of the Account will be authorized under Chapter 8 through approval of the Appropriations Resolution by Conference (Financial Regulation 4.1) or through the application of Financial Regulation 4.5 as regards budgetary transfers.
4. the balance on Chapter 8 of the budget at the end of each financial period shall be transferred to the Capital Expenditures Account for use in a subsequent financial period.”

(Adopted on ..... December 2003)