GENEVA, May 1 (Reuters) - The World Trade Organization is set to cut about 10% of its spending - including hiring freezes and reductions in short-term staff - after the U.S. fell back into arrears and a growing number of members failed to pay their dues on time, according to classified WTO documents seen by Reuters.

The watchdog for global trade rules since 1995 has already been tested by U.S. President Donald Trump's sweeping tariffs that upended international trade as well as by more than six years of paralysis after Trump's first administration in 2019 began blocking appointments to the organisation's top appeals court. 

Washington - usually the biggest contributor to the Geneva-based body - is one of 10 members in Category 1 arrears, meaning it has not paid its contributions for at least a year but for less than two years, adding to growing financial pressure on the organisation, internal documents dated March 12 and February 18 from its Committee on Budget, Finance and Administration showed.

It was not immediately clear when - or even if - the U.S. would pay up.

In March, U.S. Trade Representative Jamieson Greer said the WTO would play a limited role in global trade policy going forward, with Washington instead pursuing its trade agenda through regional, bilateral and, where necessary, unilateral channels following a deadlocked ministerial meeting in Cameroon.

The WTO has proposed cost-saving measures including cutting 39 short-term, full-time equivalent positions, freezing recruitment of fixed-term staff, using more low-cost interns and reducing electricity costs, one of the classified documents showed.

The organisation was already grappling with its biggest arrears problem in a decade, with 20 members subject to administrative measures as of the end of 2025.

"In response to this situation, the Secretariat has planned a 10% reduction in spending in 2026," a classified report on the budget committee held on March 2 showed. 

A statement by the committee's chairperson dated March 12 showed that 29 members are under administrative measures, including the U.S.

The WTO declined to comment, and the U.S. Trade Representative did not comment.

The WTO has proposed reducing spending from the 204.9 million Swiss francs ($263 million) budget approved by members for 2026 to 183.4 million Swiss francs, to bridge the gap until contributions are received, according to a restricted document dated February 18. 

The budget will be discussed at a WTO General Council meeting in Geneva on Wednesday.

U.S. OWES 23 MILLION FRANCS

Under WTO rules, any member that fails to pay its assessed contributions for more than a year is subject to "administrative measures", a graduated set of penalties that become more severe the longer payments remain overdue.

The U.S., Russia and several lower income countries are currently in the first of three such categories, meaning their representatives cannot preside over WTO bodies or receive certain official documentation.

As Reuters previously reported, the U.S. was in Category 1 arrears last year, but a WTO document dated February 13 showed it was removed from the list by the end of 2025 after making a payment.

A classified document from March shows it has since fallen back into Category 1, however. A separate WTO document based on assessments at the end of December showed it owed the WTO 23.09 million francs, equivalent to about 11% of the organisation's annual budget.

While advance payments by some members provided the WTO with "much-needed cash flow" at the start of the year, arrears needed to be cleared "as soon as possible", according to the documents.