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

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

• Miguel San Sebastián, MD, PhD

International Peoples Health University, Cuenca,
Ecuador
Umeå International School of Public Health,
Sweden
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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

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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

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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)

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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

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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)

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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

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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

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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)

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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

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Modes of trade
MODE MEANING EXAMPLE
Mode 1 Cross-border trade Trade takes place from the territory of country A into that of B - Telehealth - Passing of information by means of fax or email
Mode 2 Consumption abroad Services consumed by nationals of country A in territory of country B - Tourism - Consumers who cross borders to obtain medical treatment
Mode 3 Commercial presence A service supplier of country A crosses the border to establish and provide a service in country B - Establishment of a private hospital by a European company in Ecuador
Mode 4 Movement of natural persons Temporary movement from country A to B to supply a service - Doctors moving to another country to temporarily provide their services
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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

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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?

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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?

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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

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GATS and Health Care Systems (1)

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

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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

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GATS and Health Care Systems (3)

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

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

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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

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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

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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

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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)