The General Agreement in Trade on Services (GATS) and the Health Care Systems

Miguel San Sebastián, MD, PhD Umeå International School of Public Health, Sweden International People’s Health University, Cuenca, Ecuador

The World Trade Organization (1)

 1947: GATT (General Agreement on Tariffs and Trade)  1995: WTO (World Trade Organization) - trade in goods + agriculture + services + intellectual property - binding trade disputes procedure

The World Trade Organization (2)

 148 members (3/4 developing countries)  Ministerial conference (every 2 years)  General Council (monthly) oversees day to day operations directs the dispute settlement system encharge of the trade policy review mechanism

WTO: purposes (1)

 To assist the free flow of trade by facilitating the removal of trade tariffs or other border restrictions on the import and export of goods and services - Multilateral trade agreements (MLAs)

WTO: purposes (2)

 To serve as a forum for trade negotiations - Most favoured nation clause - National treatment clause - exceptions: poor countries  To settle trade disputes based upon an agreed legal foundation

MLAs relevant to Public Health

 Agriculture Agreement  Agreement on Technical Barriers to Trade (TBT)  Agreement on Sanitary and Phytosanitary Measures (SPS)  Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS)  General Agreement on Trade in Services (GATS)

How does GATS work?

(1)

 Successive rounds of negotiations “with a view to achieving a progressively higher level of liberalization” in their service sector (art. XIX)  WTO members make liberalization requests / offers of other member countries in bilateral secret meetings in Geneva

Scope of GATS

 148 countries (all WTO members)  Any sector (160) in any service except: - Services supplied in the exercise of governmental authority (fire, police, …) - Traffic air regulations

Key principles (1)

 Non discrimination - Most Favoured Nation Treatment (MFNT): applies to all countries that signed GATS - National Treatment (NT): applies only to those sectors for which commitments are made  Market access (6 quantitative limitations)

Key principles (2)

 Transparency: all regulations accessible and open to appeal  Temporary exemption: to MFN and NT i.e., on short-term economic crises  Lock-in effect: once a commitment is made, it is very difficult to withdraw it

MODE Mode 1 Cross-border trade Mode 2 Consumption abroad Mode 3 Commercial presence Mode 4 Movement of natural persons

Modes of trade

MEANING Trade takes place from the territory of country A into that of B Services consumed by nationals of country A in territory of country B A service supplier of country A crosses the border to establish and provide a service in country B Temporary movement from country A to B to supply a service EXAMPLE - Telehealth - Passing of information by means of fax or email - Tourism - Consumers who cross borders to obtain medical treatment - Establishment of a private hospital by a European company in Ecuador - Doctors moving to another country to temporarily provide their services

Health related sectors and sub-sectors

1. Business services A. Professional services a. Medical and dental services b. Midwives, nurses, physiotherapists, paramedical services 2. Financial services A. All insurance and insurance-related services a. Life, accident and health insurance services 3. Health related and social services A. Hospital services B. Other human health services

GATS and public services

 GATS does not apply to services “supplied in the exercise of government authority”  A service is supplied in the exercise of governmental authority “only when it is supplied neither on a commercial basis nor in competition with one or more service suppliers”   Regulation?

GATS and domestic regulation

 “ GATS does not remove a governments right to regulate services in its country”  Government regulation of a service should be “not more burdensome than necessary to ensure the quality of the service” (possibility of necessity test)   Threat to democracy?

Future negotiations

 To extend the number and extent of commitments made  To remove existing limitations on current commitments  To bind commitments so that they cannot be reversed

GATS and Health Care Systems (1)

Modes of trade Health services 1. Cross border supply 2. Consumption abroad Telemedicine Patients seeking health care in foreign countries Medical/health educational services provided to foreign students

GATS and Health Care Systems (2)

Modes of trade Health services 3. Commercial presence Foreign commercial presence: - in the hospital operation/ management sector - in the health insurance / education sector 4. Presence of natural persons Temporary movement of medical/health professionals to provide services abroad

GATS and Health Care Systems (3)

Commitmments to liberalize health services Service category Medical and dental services Hospital services Total WTO WTO developing members country members 54 44 36 29 Nursing, midwifery services Other health services 29 17 12 15

Modes

Modes of services: opportunities and risks for the Heath Care Systems

Opportunities Risks 1 Increase care to remote and under-served areas Diversion of resources from other health services 2 3 4 Generates foreign exchange earnings for health services of importing country Creates opportunities for new employment and access to new technologies Economic gains from remittances of health care personnel working overseas Crowding out of local population and diversion of resources to service foreign nationals Development of two-tiered health system, with an internal brain drain Permanent outflow of health personnel, with loss of investment in educating and training such personnel

Potential threats to health care systems (1)

 Increase of the “cream skimming” practice by private sector - favours healthy and wealthy (  inequalities) - draw personnel away from public health services  support for universal public health programs  Undermines public health systems denying the basic principles of cross-subsidisation and risk pooling

Potential threats to health care systems (2)

 Risk of domination by transnational corporations to the exclusion of domestic development  Risks compromising the quality of health care delivery  National public health regulations  Liberalization of other sectors: water, sanitation, education, environment

General Recommendations (1)

 Make no GATS commitments in the health sector or other health-related sectors;  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;

General Recommendations (2)

 Call a halt to the current WTO negotiations on rules governing domestic regulation;  Call for a change to GATS rules which restrict countries from retracting commitments already made under GATS

Conclusion

 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” (European Comission)