PHA-Exchange> TRADE AND HEALTH

[Aviva]

From: "Rene Loewenson" <rene at tarsc.org>
<equinet-newsletter at equinetafrica.org>

The Fifth WTO Ministerial Conference will be held in Cancún, Mexico
from
10 to 14 September 2003. The main task will be to take stock of
progress
in negotiations and other work under the Doha Development Agenda. There
are rising concerns around the work programme for this meeting, arising
in part out of unresolved issues that date back to the Uruguay Round
and
the establishment of the World Trade Organization.  These relate to the
special and differential treatment of developing countries, the balance
in WTO between trade and other interests, such as health, and the
failure to ensure that negotiations are democratic, transparent and
participatory, particularly of African interests. 

 If you have input or
comments on what follows please email these to 
admin at equinetafrica.org.

******************8
THE GATS THREAT TO PUBLIC HEALTH
A JOINT SUBMISSION TO THE WORLD HEALTH ASSEMBLY
MAY 2003

Within just 10 years of its adoption, the General Agreement on Trade in
Services (GATS) has become one of the most controversial elements of
the
international trading system. More and more countries are becoming
aware
of the threat posed by the scope of the GATS agreement, and there is a
growing call for governments to defend essential services from the GATS
liberalisation agenda.

This briefing examines the threat which GATS poses to health. It looks
first at the challenge to health services themselves, including the
potential for increased inequity, fragmentation of health systems and
further marginalisation of the public sector as a result of the
increased marketisation of health care.

The briefing also examines the health risks which come with
liberalisation of other service sectors such as water and insurance,
and
reveals the challenge to national health regulations from current
negotiations at the World Trade Organisation (WTO).

In conclusion, the briefing recommends that no country should commit
its
health services to GATS. In addition, each country should actively
involve its health ministry and civil society in comprehensive ‘health
checks’ of any GATS commitments proposed in other sectors before
deciding on them.

How does GATS work?
GATS commits WTO members to successive rounds of negotiations “with a
view to achieving a progressively higher level of  liberalisation” in
their service  sectors. To achieve this, WTO members make
liberalisation
requests of other member countries in secret, bilateral meetings in
Geneva so as to open up to competition those sectors which are of most
interest to their own service providers.

The current round of negotiations is now entering its most intense
phase, when countries battle over which service sectors they will give
up to liberalisation and which they will protect from GATS. Although
developing countries officially have the right to choose whether to
commit a sector to GATS, in practice they come under intense pressure
in
these negotiations to meet the demands of more powerful WTO members –
pressure which the smaller and poorer countries are often powerless to
resist.

In this way, GATS is primarily a mechanism for the service corporations
of developed countries to expand their reach into new markets around
the
world. This is widely acknowledged by official negotiators: the
European
Commission has confirmed that GATS is “first and foremost an instrument
for the benefit of business, and not only for business in general, but
for individual service companies wishing to export services or to
invest
and operate abroad.”

GATS and health services
When GATS was adopted in 1994, few countries were aware of the
challenges it would bring. Very few government departments other than
trade and finance ministries were involved in the negotiations, and
several countries committed all or part of their health services to
GATS
liberalisation without the knowledge of their health ministries.

According to the WTO Secretariat, 42 countries have already committed
their hospital services to GATS. In addition, 15 have made commitments
under the category of ‘other human health services’, which include
laboratory, epidemiological and residential health services, as well as
podiatry and chiropody services supplied in clinics and elsewhere.

Health services are also included under the GATS heading of
‘professional services’, which covers medical and dental services as
well as the category of ‘services provided by midwives, nurses,
physio-therapists and paramedical personnel’. Already 52 countries have
made liberalisation commitments in the former category, and 28 in the
latter. GATS also covers insurance services, including health
insurance,
and 78 countries have already committed those services to
liberalisation
under GATS. This has caused particular concern in those countries which
base their health systems on social insurance programmes, since few
health ministries were informed that their trade negotiators had
committed their health insurance sectors to GATS.

The above figures may suggest that many countries have largely
committed
their health sectors to GATS already. Yet out of all sectors covered by
GATS, health and education are the two in which fewest commitments have
been made. As a result, the WTO sees the current GATS negotiations as
an
opportunity to achieve further liberalisation in those sectors. 

In fact, many countries have deliberately withheld their health
services
from GATS liberalisation in recognition of the great uncertainty
surrounding what a GATS commitment might mean for health care. It is
only now, in the current round of GATS negotiations, that health
services may again come under threat of liberalisation.

The GATS threat to health services
Providing basic services for all requires strong government regulation
and a proper understanding of where liberalisation may be beneficial,
and where not. Yet the ‘request-offer’ process of GATS negotiations is
designed to open up more and more service sectors to competition
through
a series of trade-offs at the WTO, rather than concentrating on which
type of system is most appropriate for which particular service. This
is
of special concern in the case of health services, where the
market-based model of competition threatens the integrity of health
systems themselves. Health is a human right and a public good whose
positive externalities cannot be 
captured through market mechanisms. As such it is not suitable to
commit
health services to binding liberalisation under GATS.

Nowhere is this more clearly seen than in the threat of competition
from
foreign hospitals. Even in countries where the public sector already
faces competition from domestic private hospitals, the additional
challenge of hospital services provided by foreign private sector
health
providers exerts extra pressure on public health systems which are
already under severe strain.

For those patients who can afford them, high-tech foreign hospitals may
offer an unparalleled level of health service. They also offer medical
personnel an opportunity to practise their profession in the most
modern
and fulfilling environment, and often at far higher rates of pay.

Yet by attracting the most experienced staff and the most affluent
patients away from the public sector, expansion of the private sector
undermines the integrity of the health system as a whole. As WHO
affirmed in its World Health Report 2000, leaving the public sector to
provide services only to the poorest and most needy patients undermines
the possibility of cross-subsidisation and risk pooling on which
sustainable health systems are based.

For the vast majority who are unable to afford the high costs of
foreign
private sector health care, the promise of ‘increased choice’ as a
result of liberalisation is therefore a hollow one. Rural communities
in
particular risk seeing their access to health care undermined by the
expansion of the private sector, as foreign hospitals draw away their
remaining doctors, nurses and midwives to serve the urban elite. 
Health
risks of other GATS liberalization The financing of health systems
faces
a similar challenge from GATS liberalisation. National health insurance
systems can be seriously undermined  by such liberalisation, as
competition from foreign providers threatens the sustainability of
programmes designed to spread costs across society and provide
affordable health care for all.

Yet it is not only in respect of health systems that GATS poses a
threat
to health. GATS covers a wide range of other service sectors with
direct
links to health outcomes, and liberalisation poses a threat in many of
these sectors too. Public statements by the European Commission that
the
EU is making no GATS requests in health services fail to acknowledge
the
potential health impact of its extensive requests in other sectors.

For example, the EU is attempting to use the current round of GATS
negotiations to open up the water sectors of 72 other WTO member states
– including both developing and least developed countries. There is
evidence from developing countries across Latin America, Africa and
Asia
that liberalisation of water systems typically raises water tariffs
beyond the reach of many poor households and can cause severe health
problems, especially among children.

As a result of such experiences, several developing countries which
experimented with liberalisation in their water services have taken the
service back into public hands. Yet once a sector is committed under
GATS, punitive rules on the modification of national commitments make
it
effectively impossible for a country to reverse liberalisation in this
way.

This is because WTO agreements are designed to bind liberalisation
commitments for the future so as to give foreign investors increased
security – even if this means exposing vulnerable communities and their
children to increased levels of risk. Many commentators see this
‘lock-in’ mechanism as the most dangerous aspect of GATS, since it
closes down the possibility of reversing excessive or damaging
liberalisation in the future.

GATS and public health regulation
As shown above, GATS has gone further than any other multilateral trade
agreement to bring the WTO’s liberalisation agenda into the heart of
national policy. This is particularly true of the GATS rules on
domestic
regulation, which are still being developed at the WTO.

GATS states that domestic regulations in WTO member countries must not
pose “unnecessary barriers to trade”. It also mandates the WTO’s
Council
for Trade in Services to develop new GATS rules to ensure that
technical
standards or licensing requirements in WTO member countries are “not
more burdensome than necessary to ensure the quality of the service”.

Yet there is widespread concern that these GATS rules will threaten key
public health regulations in WTO member countries. The GATS requirement
that regulations must be ‘necessary’ in WTO terms could expose any
domestic health policy to challenge at the WTO.

India’s progressive new regulations on the marketing of baby foods are
just one example of the type of ‘restrictions’ which could be under
threat. The new regulations, approved by India’s parliament in May 2003
in order to support breastfeeding, prohibit the promotion of breastmilk
substitutes, feeding bottles and all foods for babies under the age of
two years.
Yet such regulations could be interpreted as ‘unnecessary’ if the WTO
decided that there were other ways of achieving the same public health
objectives – even if there were specialist evidence to the contrary. 

This has raised fears that other key public health controls, such as
restrictions on the marketing of alcohol and tobacco or regulations
governing private hospitals, could also be threatened by GATS rules on
domestic regulation, once they have been adopted at the WTO. WHO
officials have openly voiced their opinion that the WTO cannot be
trusted to uphold legitimate public health provisions, and many other
organisations have called for a halt to the domestic regulation
negotiations at the WTO.

GATS and the migration of health personnel
In addition to the establishment of hospitals, clinics or insurance
offices, trade in services also covers the movement of individual
people
to provide services abroad. In the case of health services, this
‘trade’
takes place when doctors, dentists, nurses, midwives or other health
personnel move to other countries in order to practise there. In the
GATS context, this is referred to as ‘mode 4’.

Many developing countries are using the GATS negotiations to argue for
greater freedom for their nationals to work abroad, as they see this
export of labour as an area of comparative advantage for their
economies. Countries such as India, Mexico and the Philippines already
receive over $5 billion per year each in workers’ remittances, while in
countries such as Tonga, Lesotho and Jordan, workers’ remittances
represent over 20% of national GDP.

Yet the export of labour is not necessarily appropriate in all sectors.
In particular, the migration of health personnel to richer countries is
already a significant and well attested problem facing health systems
across the world.

Rather than promoting further migration in the pursuit of balance of
payments gains, the vast majority of developing countries need to find
ways of retaining key personnel in their own health systems, where
their
presence can make an immediate and lasting difference to the lives of
many of the world’s most vulnerable people.

Conclusion and recommendations
The current round of GATS negotiations have now entered their most
intense phase, with countries being asked to liberalise sectors which
they have previously kept closed to competition.

Yet the model of binding trade liberalisation at the WTO may not be
appropriate for services which have a major impact on human health. For
precisely this reason, several countries have stated that they are not
going to offer up key service sectors to GATS.

ASEAN health officials meeting in Jakarta in 2002 concluded that
developing countries should refrain from making health commitments
under
GATS, and called on all health ministries to ensure that their health
sectors are not traded away at the WTO. The same policy has been
adopted
by the EU, USA and many other countries, all of which have stated they
will not offer up their health services under GATS.

There have been similar calls for caution in other sectors, with South
African officials calling for water to be taken out of GATS altogether.
The same caution has been called for in other environmental services,
as
well as sectors such as tourism, energy, education and cultural
services, all of which could be threatened by GATS liberalisation
commitments.

In recognition of these dangers, it is recommended  that all WTO member
countries should:
1.	make no GATS commitments in the health sector or other
health-related sectors;
2.	conduct a comprehensive ‘health check’ on any other GATS
commitments proposed by WTO trade negotiators, with the active
involvement of health ministries and civil society;
3.	call a halt to the current WTO negotiations on rules governing
domestic regulation;
4.	call for a change to GATS rules which restrict countries from
retracting commitments already made under GATS.

This statement is endorsed by the following organisations: Equinet,
International People’s Health Council, Medact, People’s Health
Movement,
Save the Children UK, Wemos, World Development Movement. May 2003