Health Insurance and Health Services in ASEAN Framework Agreement on Services

1
Health Insurance and Health Services in ASEAN
Framework Agreement on Services

• Asia-Pacific Summit on
• Health Insurance and Managed Care
• Jakarta, 22-24 May 2002

2
Presentation Outline

• ASEAN Framework Agreement on Services (AFAS) and
  Liberalization of Services Trade in ASEAN
• Healthcare Services Liberalization in ASEAN
• Health Insurance and Financial Services
  Liberalization under AFAS

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ASEAN Framework Agreementon Services (AFAS)

• Liberalization of
• Services Trade in ASEAN

4
The Origin of AFAS

• ASEAN Framework Agreement on Services (AFAS) was
  signed by the ASEAN Economic Ministers during the
  5th ASEAN Summit held on 15 December 1995 in
  Bangkok, Thailand.
• AFAS adopts the structure and approach of General
  Agreement on Trade in Services (GATS) of the
  World Trade Organization (WTO).

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Why AFAS

• To complement the establishment of ASEAN Free
  Trade Area (AFTA) aiming to make the region a
  globally competitive manufacturing base.
• To strengthen ASEANs services sector in an
  expanding global market for services. Services
  account for at least 20 of recorded world trade
  as well as the majority of domestic activities,
  and is expected to reach 50 of world trade by
  year 2020.

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The Objectives of AFAS

• To enhance cooperation in services amongst Member
  States in order to improve the efficiency and
  competitiveness, diversify production capacity,
  and supply and distribution of services of their
  service suppliers within and outside ASEAN.
• To eliminate substantially restrictions to trade
  in services amongst Member States.
• To liberalize trade in services by expanding the
  depth and scope of liberalization beyond those
  undertaken by Member States under the GATS with
  the aim to realizing a free trade area in
  services.

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GATS - Plus

• Liberalisation in services is achieved through
  negotiations among Member States to arrive at
  GATS-plus commitments.
• For WTO members, it means commitments that are
  better than GATS or the offer of new service
  sectors not covered under GATS.
• For non-WTO Members, it must be commitments that
  are no less favorable than the existing service
  regime.

8
Coordinating Committee on Services

• Negotiations in services trade are being
  conducted through the Coordinating Committee on
  Services (CCS).
• The CCS was established in January 1996 and has
  seven negotiating groups under its purview
  corresponding to the seven priority sectors air
  transport, business services, construction,
  financial services, maritime services,
  telecommunication, and tourism.

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Negotiations under the CCS

• An important preliminary step in the negotiation
  process is the exchange of information about
  services regime among Member States.
• Member States are expected to request market
  access and national market commitments from other
  Members.
• Member States are expected to make offers of
  market access and national treatment to other
  Members. Such offers are applicable to all
  Members (Most Favored Nation Treatment).

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Modes of Services Supply

• Mode 1 Cross-Border Supply
• The service crosses border, independent of the
  supplier or the consumer
• Mode 2 Consumption Abroad
• The consumer or his/her property crosses border
• Mode 3 Commercial Presence
• Service supplier is a locally established office
• Mode 4 Movement of Natural Person
• Service supplier remains as a non-resident

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Limitations in Services Trade
12
Liberalization Commitments
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Progress of AFAS

• To date, ASEAN Economic Ministers (AEM) have
  signed three Packages of Commitments in two
  rounds of negotiations
• Round 1 (1996 1998 )
• 1st Package, signed on 15 December 1997
• 2nd Package, signed on 16 December 1998
• Round 2 ( 1999 2001 )
• 3rd Package, signed by 31 December 2001

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Sub-Sectors Tabled in 1st Package
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Sub-Sectors Tabled in 2nd Package
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Sub-Sectors Tabled in 3rd Package
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The Third Round of Negotiations

• Launched by ASEAN Economic Ministers (AEM) at
  their 33rd Meeting held in Ha Noi, Viet Nam on 15
  September 2001
• Begins in 2002 and end in 2004
• Aims to cover all sectors and modes of supply

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Mutual Recognition Arrangement

• During the 7th Summit in Brunei Darussalam on 5
  November 2001, ASEAN Leaders mandated the start
  of negotiations on Mutual Recognition Arrangement
  (MRA) to facilitate the flow of professional
  services under AFAS.
• CCS is currently considering a probability to
  conclude a Framework Agreement for the MRA
  vis-à-vis pursuing sectoral MRAs for different
  disciplines.

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Parameters to Guide Liberalization

• The 32nd AEM held in Chiang Mai, Thailand on 5
  October 2000 adopted parameters to guide
  long-term liberalization in trade in services.
• Key objective is to achieve free flow of services
  by 2020 as envisaged by ASEAN Leaders
• Flexibility could be accorded
• Milestones should be set
• Peer Review should be established
• All commitments are legally binding

20
Healthcare Services Liberalization in ASEAN
21
Commitment in Healthcare Services

• ASEAN Member States have not scheduled any
  commitments on healthcare services under AFAS
• However, 3 ASEAN Member States (Brunei, Malaysia,
  Singapore) have scheduled commitments in
  healthcare services under the GATS

22
Commitments in Healthcare Services
23
Commitments in Healthcare Services
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Commitments in Healthcare Services
25
Health Insurance and Financial Services
Liberalization under AFAS
26
Financial Services Liberalization

• On 28 June 1999 AEM agreed to request other ASEAN
  ministerial body (including Finance Ministers) to
  take the lead in service liberalization in their
  respective sectors.
• Negotiations in financial services sector are
  being conducted through the Working Committee on
  ASEAN Financial Liberalization under AFAS (WC).
  The WC was established in 2001.

27
Negotiations under the WC

• An important step of the negotiation is an
  exchange of information about financial services
  regime among Member States, including GATS
  commitments
• Member States are expected to make offers of
  market access and national treatment to other
  Members.
• Member States agree to schedule commitment in at
  least one common sub-sector for each round of
  negotiation.

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Liberalization Packages

• The 1st liberalization package for financial
  services under AFAS was signed by ASEAN Economic
  Ministers on 16 December 1998, concluding the
  1996 1999 round
• The 2nd liberalization package was signed by
  ASEAN Finance Ministers on 6 April 2002,
  concluding the 2nd Round ( 1999 2001 )

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Health Insurance Services Classification

• Classification of health insurance services is
  based on 1991 UN Statistical Offices Central
  Product Classification (CPC) Code.

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Insurance Services Commitments

• 7 ASEAN Member States (Brunei, Indonesia,
  Malaysia, Philippines, Singapore, Thailand, Viet
  Nam) scheduled their commitments on Non-life
  insurance during the past two rounds of
  negotiations
• 6 ASEAN Member States (Brunei, Indonesia,
  Malaysia, Philippines, Singapore, Thailand)
  scheduled commitments in Non-life insurance under
  the GATS

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AFAS GATS Commitments
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AFAS GATS Commitments
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AFAS GATS Commitments
34
AFAS GATS Commitments
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AFAS GATS Commitments
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AFAS GATS Commitments
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AFAS GATS Commitments
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AFAS GATS Commitments
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AFAS GATS Commitments
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AFAS GATS Commitments
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Epilogue
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Benefits of Liberalization

• More foreign investment in healthcare and health
  insurance services sectors
• Promotes efficiency in the domestic healthcare
  and health insurance services provision
• New products and know how are made available
  throughout ASEAN Member States
• Facilitate greater demand on healthcare and
  health insurance services

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Future Direction of Liberalization

• Liberalization under AFAS will continue through
  subsequent rounds of negotiations
• Developments in ASEAN will be closely related to
  the developments under GATS
• Developments in health insurance services will
  have linkage to the developments of healthcare
  services
• Liberalization will go hand-in-hand with capacity
  building initiatives

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Resources on the Web

• www.aseansec.org ? economic cooperation
• Finance section financial services
  commitments (incl. health insurance) of ASEAN
  countries
• Services section AFAS and commitments of
  non-finance services of ASEAN countries
• www.wto.org/english/tratop_e/serv_e/
• serv_commitments_e.htm
• List of schedules of commitments of all WTO
  members under the GATS