The General Agreement in The General Agreement in Trade on Services (GATS) Trade on Services (GATS)

and the Health Care and the Health Care SystemsSystems

Miguel San Sebastián, MD, Miguel San Sebastián, MD, PhDPhD

International People’s International People’s Health University, Health University, Cuenca, EcuadorCuenca, Ecuador

Umeå International Umeå International School of Public School of Public Health, SwedenHealth, Sweden

The World Trade Organization The World Trade Organization (1)(1)

1947: GATT (General Agreement 1947: GATT (General Agreement on Tariffs and Trade)on Tariffs and Trade)

1995: WTO (World Trade 1995: WTO (World Trade Organization)Organization)- trade in goods + agriculture + - trade in goods + agriculture + services + intellectual propertyservices + intellectual property- binding trade disputes procedure - binding trade disputes procedure

The World Trade Organization The World Trade Organization (2)(2)

148 members (3/4 developing countries)148 members (3/4 developing countries) Ministerial conference (every 2 years)Ministerial conference (every 2 years) General Council (monthly)General Council (monthly)

- oversees day to day operationsoversees day to day operations- directs the dispute settlement systemdirects the dispute settlement system- encharge of the trade policy review encharge of the trade policy review

mechanismmechanism

WTO: purposesWTO: purposes (1)(1)

To assist the free flow of trade To assist the free flow of trade by facilitating the removal of by facilitating the removal of trade tariffs or other border trade tariffs or other border restrictions on the import and restrictions on the import and export of goods and servicesexport of goods and services

- Multilateral trade agreements - Multilateral trade agreements (MLAs)(MLAs)

WTO: purposesWTO: purposes (2)(2)

To serve as a forum for trade To serve as a forum for trade negotiationsnegotiations

- Most favoured nation clause- Most favoured nation clause

- National treatment clause- National treatment clause

- exceptions: poor countries- exceptions: poor countries To settle trade disputes based To settle trade disputes based

upon an agreed legal foundationupon an agreed legal foundation

MLAs relevant to Public HealthMLAs relevant to Public Health

Agriculture AgreementAgriculture Agreement Agreement on Technical Barriers to Trade Agreement on Technical Barriers to Trade

(TBT)(TBT) Agreement on Sanitary and Phytosanitary Agreement on Sanitary and Phytosanitary

Measures (SPS)Measures (SPS) Agreement on Trade Related Aspects of Agreement on Trade Related Aspects of

Intellectual Property Rights (TRIPS)Intellectual Property Rights (TRIPS) General Agreement on Trade in Services General Agreement on Trade in Services

(GATS)(GATS)

How does GATS work?How does GATS work? (1)(1)

Successive rounds of negotiations “with Successive rounds of negotiations “with a view to achieving a progressively a view to achieving a progressively higher level of liberalization” in their higher level of liberalization” in their service sector (art. XIX)service sector (art. XIX)

WTO members make liberalization WTO members make liberalization requests / offers of other member requests / offers of other member countries in bilateral secret meetings in countries in bilateral secret meetings in GenevaGeneva

Scope of GATSScope of GATS

148 countries (all WTO members)148 countries (all WTO members) Any sector (160) in any service Any sector (160) in any service

except:except:

- Services supplied in the - Services supplied in the exercise of governmental exercise of governmental authority (fire, police, …)authority (fire, police, …)

- Traffic air regulations- Traffic air regulations

Key principles Key principles (1)(1)

Non discriminationNon discrimination

- Most Favoured Nation Treatment (MFNT): - Most Favoured Nation Treatment (MFNT): applies to all countries that signed GATSapplies to all countries that signed GATS

- National Treatment (NT): applies only to - National Treatment (NT): applies only to those sectors for which commitments are those sectors for which commitments are mademade

Market access (6 quantitative limitations)Market access (6 quantitative limitations)

Key principles Key principles (2)(2)

Transparency: all regulations Transparency: all regulations accessible and open to appealaccessible and open to appeal

Temporary exemption: to MFN and Temporary exemption: to MFN and NT i.e., on short-term economic NT i.e., on short-term economic crisescrises

Lock-in effect: once a commitment Lock-in effect: once a commitment is made, it is very difficult to is made, it is very difficult to withdraw itwithdraw it

MODEMODE MEANINGMEANING EXAMPLEEXAMPLEMode 1Mode 1Cross-Cross-border border tradetrade

Trade takes place Trade takes place from the territory of from the territory of country A into that of country A into that of BB

- Telehealth- Telehealth- Passing of - Passing of information by information by means of fax or means of fax or emailemail

Mode 2Mode 2ConsumptioConsumption abroadn abroad

Services consumed Services consumed by nationals of by nationals of country A in territory country A in territory of country Bof country B

- Tourism- Tourism- Consumers who - Consumers who cross borders to cross borders to obtain medical obtain medical treatmenttreatment

Mode 3Mode 3Commercial Commercial presencepresence

A service supplier of A service supplier of country A crosses the country A crosses the border to establish border to establish and provide a service and provide a service in country Bin country B

- Establishment of - Establishment of a private hospital a private hospital by a European by a European company in company in EcuadorEcuador

Mode 4Mode 4Movement Movement of natural of natural personspersons

Temporary Temporary movement from movement from country A to B to country A to B to supply a servicesupply a service

- Doctors moving - Doctors moving to another country to another country to temporarily to temporarily provide their provide their servicesservices

Modes of tradeModes of trade

Health related sectors and sub-Health related sectors and sub-sectorssectors 1. Business services1. Business services

A. Professional servicesA. Professional servicesa. Medical and dental servicesa. Medical and dental servicesb. Midwives, nurses, physiotherapists, b. Midwives, nurses, physiotherapists,

paramedical servicesparamedical services2. Financial services2. Financial services

A. All insurance and insurance-related servicesA. All insurance and insurance-related servicesa. Life, accident and health insurance servicesa. Life, accident and health insurance services

3. Health related and social services3. Health related and social servicesA. Hospital servicesA. Hospital servicesB. Other human health servicesB. Other human health services

GATS and public servicesGATS and public services GATS does not apply to services GATS does not apply to services

“supplied in the exercise of “supplied in the exercise of government authority”government authority”

A service is supplied in the exercise of A service is supplied in the exercise of governmental authority “only when it governmental authority “only when it is supplied neither on a commercial is supplied neither on a commercial basis nor in competition with one or basis nor in competition with one or more service suppliers”more service suppliers”

Regulation?Regulation?

GATS and domestic regulationGATS and domestic regulation

““GATS does not remove a GATS does not remove a governments right to regulate services governments right to regulate services in its country”in its country”

Government regulation of a service Government regulation of a service should be “not more burdensome than should be “not more burdensome than necessary to ensure the quality of the necessary to ensure the quality of the service” (possibility of necessity test)service” (possibility of necessity test)

Threat to democracy?Threat to democracy?

Future negotiationsFuture negotiations

To extend the number and To extend the number and extent of commitments madeextent of commitments made

To remove existing limitations To remove existing limitations on current commitmentson current commitments

To bind commitments so that To bind commitments so that they cannot be reversedthey cannot be reversed

GATS and Health Care Systems GATS and Health Care Systems (1) (1)

Modes of tradeModes of trade Health servicesHealth services

1. Cross border supply1. Cross border supply TelemedicineTelemedicine

2. Consumption abroad2. Consumption abroad Patients Patients seeking health seeking health care care in foreign countriesin foreign countries

Medical/health Medical/health educational educational services services provided to provided to foreign studentsforeign students

GATS and Health Care SystemsGATS and Health Care Systems (2)(2)

Modes of tradeModes of trade Health servicesHealth services

3. Commercial presence3. Commercial presence Foreign commercial Foreign commercial presence:presence:- in the hospital operation/ - in the hospital operation/ management management sectorsector- in the health insurance - in the health insurance / education sector/ education sector

4. Presence of natural persons4. Presence of natural persons Temporary Temporary movement of movement of medical/health medical/health professionals to professionals to provide provide services abroadservices abroad

GATS and Health Care Systems GATS and Health Care Systems (3)(3)

Commitmments to liberalize health servicesCommitmments to liberalize health services

Service categoryService category Total WTO Total WTO WTO developing WTO developing membersmembers country memberscountry members

Medical and dental servicesMedical and dental services 5454 3636

Hospital servicesHospital services 4444 2929

Nursing, midwifery servicesNursing, midwifery services 2929 1212

Other health servicesOther health services 1717 1515

ModeModess

OpportunitiesOpportunities RisksRisks

11 Increase care to Increase care to remote and under-remote and under-served areasserved areas

Diversion of resources Diversion of resources from other health from other health servicesservices

22 Generates foreign Generates foreign exchange earnings exchange earnings for health services for health services of importing of importing countrycountry

Crowding out of local Crowding out of local population and population and diversion of resources diversion of resources to service foreign to service foreign nationalsnationals

33 Creates Creates opportunities for opportunities for new employment new employment and access to new and access to new technologiestechnologies

Development of two-Development of two-tiered health system, tiered health system, with an internal brain with an internal brain draindrain

44 Economic gains Economic gains from remittances of from remittances of health care health care personnel working personnel working overseasoverseas

Permanent outflow of Permanent outflow of health personnel, with health personnel, with loss of investment in loss of investment in educating and training educating and training such personnelsuch personnel

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

Potential threats to health care Potential threats to health care systemssystems (1)(1)

Increase of the “cream skimming” practice by Increase of the “cream skimming” practice by private sectorprivate sector

- favours healthy and wealthy (- favours healthy and wealthy ( inequalities) inequalities)

- draw personnel away from public health - draw personnel away from public health servicesservices

- - support for universal public health programs support for universal public health programs Undermines public health systems denying the Undermines public health systems denying the

basic principles of cross-subsidisation and risk basic principles of cross-subsidisation and risk poolingpooling

Potential threats to health care Potential threats to health care systemssystems (2)(2)

Risk of domination by transnational Risk of domination by transnational corporations to the exclusion of corporations to the exclusion of domestic developmentdomestic development

Risks compromising the quality of health Risks compromising the quality of health care deliverycare delivery

National public health regulationsNational public health regulations

Liberalization of other sectors: water, Liberalization of other sectors: water, sanitation, education, environmentsanitation, education, environment

General Recommendations General Recommendations (1)(1)

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

Conduct a comprehensive ‘health Conduct a comprehensive ‘health check’ on any other GATS check’ on any other GATS commitments proposed by WTO trade commitments proposed by WTO trade negotiators, with the active negotiators, with the active involvement of health ministries and involvement of health ministries and civil society;civil society;

General RecommendationsGeneral Recommendations (2)(2)

Call a halt to the current WTO Call a halt to the current WTO negotiations on rules governing negotiations on rules governing domestic regulation;domestic regulation;

Call for a change to GATS rules Call for a change to GATS rules which restrict countries from which restrict countries from retracting commitments already retracting commitments already made under GATSmade under GATS

ConclusionConclusion

GATS is “first and foremost, an GATS is “first and foremost, an instrument for the benefit of instrument for the benefit of business, and not only for business, and not only for business in general, but for business in general, but for individual service companies individual service companies wishing to export services or to wishing to export services or to invest and operate abroad” invest and operate abroad” (European Comission)(European Comission)