Understanding Commitments in Health Services Under GATS

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Understanding Commitments in Health Services
Under GATS
International Trade in Health Services

• Dr. Sameen Siddiqi
• Regional Adviser, Health Policy and Planning
• Regional Capacity Building Workshop on Health
  System Development for Policymakers
• Eastern Mediterranean Regional Office,
• World Health Organization
• July 30-August 2, 2006

Adapted from Nielson J. (2005) Ten Steps to
Consider Before Making Commitments in Health
Services Under GATS. In International Trade in
Health Services and the GATS Issues and Debates.
Editors Blouin C Drager N Smith R The World
Bank Washington D.C.
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Objectives of Assessing the Outcomes of TiHS
Public Heath policy objectives
Trade policy objectives
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Basic Questions in response to Liberalization of
TIHS?

• What effect liberalization of trade in services
  will have on health services?
• Access, quality, equity, efficiency
• How do we assess the influence of trade on
  health services?
• What national governments need to do to protect
  and promote public health?
• What is General Agreement on Trade in Services
  (GATS)?
• What is the relationship between TiHS and GATS?

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General Agreement on Trade in Services (GATS)
Purpose

• Create credible and reliable system of
  international trade rules
• Ensure fair and equitable treatment of all
  participants (principle of non-discrimination)
• Stimulate economic activity through guaranteed
  policy bindings and
• Promote trade and development through progressive
  liberalization.

http//www.wto.org/english/tratop_e/serv_e/gatsqa_
e.htm
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Trade in Health Services Modes of Supply
CB - Cross Border Supply CA - Consumption
Abroad CP -Commercial Presence NP - Movement
of natural persons
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(No Transcript)
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Concerted Action for Research Capacity Building
in TiHS in EMR

• WHO / IDRC Project (2003-06)
• Build capacity of researchers and institutions in
  countries of EMR in TiHS
• Adapt, refine and simplify the methodology for
  assessing TiHS
• Undertake country case studies to document TiHS
  across all four modes
• Disseminate the research results among concerned
  policymakers and stakeholders

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Foreign Health Professionals Working in MOH Oman
Source MOH, Oman, 2003
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Tunisian Health Professional Practicing Abroad
in 2004

Source Tunisian Agency of Technical
Cooperation 2005
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Mode 3 Commercial Presence FDI in Hospital
Sector in Jordan
Million US
Source Jordan Investment Board, Amman
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Mode 2 Financial Grant to Yemeni Patients
Traveling Abroad - 2003
Source MOPHP health offices of the five
specified governorates MOF
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Yemeni Patients Consuming Health Care Abroad

• No visa or foreign exchange restrictions for
  patients
• 2003 estimate for all patients 40,000
• Jordan is the most frequently visited country
• Other countries include Saudi Arabia, Egypt, Syria

US million
2000
2001
2002
2003
Source Expenditures extracted from balance of
payments estimates of Central Bank of Yemen - 2004
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Consumption Abroad Jordanian Perspective

• Jordan is the biggest promoter of medical
  tourism in the region
• Directorate of medical tourism established in
  partnership with private sector
• 120,000 patients sought medical services in
  Jordan in 2002 (private hospitals share 55)
• In 2001 estimated revenues from medical tourism
  in Jordan US 620 million
• Patients visit from Yemen, Bahrain, Sudan, Syria,
  Libya, Palestine and Saudi Arabia

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Trade in Health Services and GATS

• Trade in health services without any trade
  agreement
• Trade in health services under trade agreement
• Bilateral
• Regional (NAFTA, Gulf Countries FTA)
• Multilateral (GATS)

http//www.wto.org/english/tratop_e/serv_e/gatsqa_
e.htm
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Services Sectoral Classification List - GATS

• 1. Business Services
• 2. Communication Services
• 3. Construction and Related Engineering Services
• 4. Distribution Services
• 5. Educational Services
  
• 6. Environmental Services
  
• 7. Financial Services
• 8. Health Related And Social Services
• 10. Recreational, Cultural And Sporting Services
• 11. Transport Services
• 12. Other Services Not Included Elsewhere

• ?
• ?
• ?

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How is Health Sector Defined by W/120?

• Class 8 Health Related and Social Services
• Hospital Services
• Other Human Health Services
• Social Services and Others
• Class 1 Business Services
• A. Professional Services
• (h) Medical and dental services
• (j) Services provided by midwives, nurses and
  paramedics
• Class 7 Financial Services
• A. All Insurance and Insurance Related Services
• Life, Accident and Health Insurance Services

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What Obligations WTO Members Commit to under GATS?

• General obligations for all members
• Most Favored Nation (MFN) status
• Treat all WTO members as you would your most
  favored nationno discrimination
• Exceptions
• Regional Trade Agreements
• Sectoral exemptions
• Recognition of qualifications
• Transparency
• Review procedures for administrative decisions
• Basic competition disciplines

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What Obligations WTO Members Commit to under GATS?

• Modal Commitments
• Horizontal Commitments
• Covering a single mode of supply across all
  service sectors listed in schedule
• Unless any sector is specified
• Sectoral Commitments for each mode
• Market Access
• National Treatment
• Commitment is a Guaranteed Minimum Treatment to
  foreign service suppliers

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What does a Commitment under GATS mean?

• Specify for each service sector, mode of supply
  extent of market access and national treatment
• GATS commitments are binding once locked into
• GATS commitments apply on MFN basis granted to
  all WTO members

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While making Commitments what choices countries
have?

• Extent of Commitment
• None or Full- Commitment to provide full
  market access and/or national treatment for a
  particular mode (no restrictions)
• Partial Commitment- provide market access
  and/or national treatment, with restrictions
  listed
• Unbound- No commitment at all on market access
  and/or national treatment for a particular mode

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What does Market Access mean?

• None Full access
• Unbound No commitment
• Partial Commitment restrictions on
• No. of service suppliers
• Value of transaction or assets
• No. of service operations, service output
• No. of natural persons
• Type of legal entity or joint venture
• Percent of foreign capital or share holding

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What does National Treatment mean?

• Foreign service suppliers are granted treatment
  no less favorable than that accorded to national
  service suppliers
• Extent
• None, partial commitment, unbound
• No specific list of types of measures
• List restrictions in schedule of commitments

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Schedule of Commitment Table in Health Sector -
Template
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Jordans Schedule of Commitment in Health under
GATS

• National Treatment
• Equal, except non-Jordanians deposit JD 50,000
• Full ownership of hospital
• Three year exemption on duties and taxes
• Market Access Limitations
• Minimum 50 bedded hospital
• One of the owners must be a physician
• 75 of physicians, nurses must be nationals
• At least half of staff members nationals
• Director medical laboratories must be national

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Are Developing Countries Obliged to Liberalize?

• NO!
• Developing countries have flexibility to open
  fewer sectors, liberalize fewer transactions,
  progressively increase market access and attach
  conditions in line with national policy
  objectives

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Consider before committing in health sector under
GATS

• Can liberalization under GATS help achieve any of
  the health policy outcomes being sought
• Once commitment made, how best to regulate trade
  in health services to achieve the best health
  outcomes
• What is the national capacity to regulate trade
  in health services and how can it be improved

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• Thank you for your attention!

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Conclusions

• Most TiHS in the EMR takes place outside GATS and
  that distinction is important
• Most EMR countries have an explicit trade
  liberalization policy which impacts on health
  services
• Mode 2 and 4 are the most important modes of TiHS
  
• Policy coherence among MOH and MOT is essential
  
• Despite limited data, health policymakers are
  being informed of the public health implications
  of TiHS/GATS