by
Meri Koivusalo
The
issues GATS raises for health can be clearly seen in the various
fields of health services; however, as this article points out,
there are several related sectors that could be affected as well...
Benefit or threat
Benefits attributed to the General Agreement on Trade in Services
(GATS) are largely based on the assumption of positive effects
from commercialisation and the liberalisation of service provision.
Despite these assumptions, in health, education and social services
there is little if any evidence of any efficiency gains and benefits
from privatisation of service provision, including effects which
would result in substantial long-term savings while not compromising
the equity, continuity and sustainability of service provision.
This article primarily treats health issues in the context of
trade in health services, but it is important to highlight that
health policy issues raised by the GATS do not relate merely to
the health and social services sector, but also to regulatory
measures in other sectors, such as advertising of tobacco, alcohol
and infant foods. Grieshaber-Otto and Schacter have drawn attention
to the role of GATS in alcohol policies .
Alcohol may become an issue in the context of current GATS requests
as exemptions and monopolies of alcohol related services are challenged
during the negotiation process.
It is thus important to remember that GATS is a broad agreement
and covers all kind of services that can potentially relate to
health and health policies. While there are health-specific sectoral
commitments, one can also find health-related services under several
other categories. The most important are financial services (e.g.
health insurance), distributional services (e.g alcohol and medicines)
and professional services.
GATS and privatization
As public attention and sensitivity are drawn to the GATS negotiations,
it may be that the progress of privatization will be halted. At
the moment it is more likely that the European Union and the United
States will seek the continued opening of markets in so called
‘sensitive sectors’ as health, education and social
services through bilateral investment treaties rather than in
the multilateral GATS. It is also likely that GATS requests will
be increasingly made by the developing world.
The negotiation of trade agreements follows the policy agenda
of other organisations, such as the OECD, World Bank and IMF,
in ensuring that liberalization reforms take place within countries.
The OECD promotes such changes at a national level and makes GATS
possible through opening services to trade and pre-adjusting countries
to the new regulatory environment.
In the developing world, the role of the World Bank and the IMF
is to promote governance and sectoral reforms which lead to more
tradable services. In terms of privatisation of services, the
role of the GATS is currently more limited and so far lacks clout
in important areas of negotiation such as government procurement,
rules of domestic regulation and competition policies. This does
not mean that it is irrelevant in the process of liberalization,
just that focussing on GATS will not give one full answers as
to why and how countries have privatised their service provision.
The relevance of the GATS is also more long-term in the ways in
which the regulatory environment of public policy changes and
more essentially in the ways it may lock in commitments
to privatization. Reversing in GATS is in practice difficult,
although not totally impossible, and new or unfinished GATS agendas
include competition, government procurement and domestic regulation.
GATS and equity
 In
health systems the regulatory aims of governments may and often
should differ greatly from the needs of foreign investors, especially
if equity in access and public financing of services is of importance.
This means that any one regulation is
not good enough and that some regulatory measures – such
as those to ensure efficiency, cost-containment, quality in service
provision and access to services on the basis of need rather than
ability to pay - may be far more difficult to enact in a more
commercialised environment than other regulatory measures related
to competition and business interests. GATS tends to enhance the
rights of the commercial actors in comparison to governments.
As the agreement represents more regulation of government activities
for the sake of market opportunities, it is simply not appropriate
to the aims of public health systems and policies.
The GATS special provisions for public and non-profit service
have also been promoted as a tool to promote health and equity
in countries with already privatised services. However, it is
rarely recognised that in practice governments are able to make
these decisions without taking on GATS
commitments. Exemptions for public services or requirements for
non-profit status also become problematic in practice. It is crucial
to realise that such exemptions tend to be time-limited and that
under the GATS, governments run the risk of their health policies
being locked into a multilaterally-determined framework driven
by export and trade interests and having limited opportunities
to be altered if the policies prove to be disadvantageous.
Public health: something more than an
economic indicator
Health services have other more vital purposes than contributing
to the growth of the Gross Domestic Product (GDP). It has been
argued that health tourism (GATS: mode 2) and the export of health
personnel (GATS: mode 4) could be the way in which developing
countries benefit from international trade in health services .
However, this point of view tends to consider health services
mostly in the context of trade and the possibilities of increasing
GDP. Health services have other more vital purposes related to
the well-being of whole populations, including providing quality
care and providing preventive and promotional services to increase
wellness.
The GATS focus on generating GDP easily leads to a bias in priorities
and to ineffectiveness in service provision within the health
system as a whole. There is also a risk that enhancing markets,
profit incentives and health tourism in developing countries increases
the risk of problematic operations, creates black markets in organ
transplants and contributes to the loss of expensively trained
and vitally-needed health professionals.
In the case of India, with significant privatization of health
services, even relatively positive evaluations of the GATS process
show that there have been adverse effects on the public health
care system and on equity, and that benefits have been limited
to the affluent urban populations .
Educating health professionals is relatively expensive, and many
developing countries have a substantial lack of skilled personnel.
The export of an educated health workforce may appear to be a
desirable option for developing countries, however in reality
it has been a problem for many developing countries – one
that may significantly increase in the context of GATS. It has
been estimated that 56% of all migrating physicians come from
developing countries and that the figure for nurses is likely
to be higher. Among doctors it is often the categories that are
in short supply which migrate to other countries. Although skilled
labour tends to go to the industrialised countries in the North,
there is also a considerable South-South flow .
The ‘brain drain’ of skilled work force is problematic
even when these workers send remittances back home. In the case
of a highly educated work force the value of remittances remains
lower in comparison to skills and capacities lost.
Keep health out of the GATS
The simple conclusion seems to be that most countries would benefit
overall from keeping their health and social sectors outside of
GATS. Governments should exercise the freedom to manage and regulate
health services, including related matters like insurance, in
the interests of their own populations. They need not prohibit
foreign investment or trade, simply maintain their autonomy from
the GATS in managing the sector.
From a health policy perspective, this kind of approach is the
advisable one. But autonomy can’t be limited to health services.
It needs to affect and regulate a variety of other measures, including
advertising, research and development, distributional services
(i.e. medicines and alcohol), intellectual property (medicines
and patents), etc. Governments need to be alert to ensure that
the fullest scope of the GATS exemption of public services is
recognized and covers any present and possible future services
they might wish to maintain in the public sphere.
In domestic regulation necessity tests, proportionality or pro-competitiveness
requirements should be avoided in health and health services.
Additional clarity should be sought in terms of the role of non-profit
agencies and subsidies to local organisations and their work.
[see our publications section]
GATS stipulations and possible further negotiations on government
procurement, competition and investments should not limit the
options of governments to support and subsidize local civil society
and community organisations in health and social care. These issues
concern developed as well as developing countries, even though
the EU and the US have made their own exemptions to cover subsidies
to poverty reduction programmes and services of general interest.
Finally, the GATS negotiations tend to take place between representatives
of trade and industry departments of governments and in the context
of export interests and capacities. However, the impact of negotiations
goes far beyond these interests into the very social fabric of
nations. Debate over the implications of trade negotiations needs
to be opened up, made transparent, and taken out of a context
limited to the competitive interests of national or corporate
economies. It is thus important to ensure that health and social
policy concerns of trade agreements are discussed broadly and
in relation to the diverse implications of policies. Trade negotiation
is a political process and WTO agreements are negotiated agreements,
not natural laws. Trade rules, even if agreed internationally,
cannot override the legitimate concerns of governments for health
and social security.
Meri Koivusalo is a senior researcher in Globalism and
Social Policy Programme (GASPP) in STAKES, Finland. This article
is draws to a large extent from policy briefs by GASPP commissioned
by the Finnish Ministry of Foreign Affairs. The brief is available
from the GASPP website: www.stakes.fi/gaspp
as a shorter version. A longer version with several papers on
global social governance (Deacon B, Ollila E, Koivusalo M, Stubbs
P. Global Social Governance. Themes and Prospects. Hakapaino,
Helsinki, 2003) can be ordered from GASPP: minna.ilva@stakes.fi
or from the Ministry of Foreign Affairs of Finland.
1)
Grieshaber-Otto, J and Schacter N . Impacts of
the services treaty on the health-based alcohol regulation. Nordisk
alkohol& narkotikatidskrift, online: www.stakes.fi/nat/nat01/nr.3/
english/gats.htm. 2001:18:3
2) UNCTAD. International trade in health services:
difficulties and opportunities for developing countries. UNCTAD
TD/B/COM1/EM.1/2.7 April 1997. GE 97-50672. Geneva, 1997.
3) Chanda R. Trade in health services. CMH Working
paper series. PAper no WG 4:5. Commission on Macroeconomics and
Health, Geneva. 2001.
4) Adams O, Kinnon C. A public health perspective.
In Zarilli S, Kinnon C, (eds.) International trade in health services.
A development perspective. UNITED NATIONS/UNCTAD and WHO, Geneva.
1998.
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