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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,

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Presentation on theme: "The General Agreement in Trade on Services (GATS) and the Health Care Systems Miguel San Sebastián, MD, PhD International Peoples Health University, Cuenca,"— Presentation transcript:

1 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

2 The World Trade Organization (1) 1947: GATT (General Agreement on Tariffs and Trade) 1947: GATT (General Agreement on Tariffs and Trade) 1995: WTO (World Trade Organization) 1995: WTO (World Trade Organization) - trade in goods + agriculture + services + intellectual property - binding trade disputes procedure

3 The World Trade Organization (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 operations - directs the dispute settlement system - encharge of the trade policy review mechanism

4 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 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)

5 WTO: purposes (2) To serve as a forum for trade negotiations 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 To settle trade disputes based upon an agreed legal foundation

6 MLAs relevant to Public Health Agriculture Agreement Agriculture Agreement Agreement on Technical Barriers to Trade (TBT) Agreement on Technical Barriers to Trade (TBT) Agreement on Sanitary and Phytosanitary Measures (SPS) Agreement on Sanitary and Phytosanitary Measures (SPS) Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) General Agreement on Trade in Services (GATS) General Agreement on Trade in Services (GATS)

7 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) 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 WTO members make liberalization requests / offers of other member countries in bilateral secret meetings in Geneva

8 Scope of GATS 148 countries (all WTO members) 148 countries (all WTO members) Any sector (160) in any service except: Any sector (160) in any service except: - Services supplied in the exercise of governmental authority (fire, police, …) - Traffic air regulations

9 Key principles (1) Non discrimination 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) Market access (6 quantitative limitations)

10 Key principles (2) Transparency: all regulations accessible and open to appeal Transparency: all regulations accessible and open to appeal Temporary exemption: to MFN and NT i.e., on short-term economic crises 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 Lock-in effect: once a commitment is made, it is very difficult to withdraw it

11 MODEMEANINGEXAMPLE 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 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 Modes of trade

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13 Health related sectors and sub-sectors 1. Business services A. Professional services a. Medical and dental services b. Midwives, nurses, physiotherapists, paramedical services 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

14 GATS and public services GATS does not apply to services supplied in the exercise of government authority 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 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? Regulation?

15 GATS and domestic regulation GATS does not remove a governments right to regulate services in its country 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) 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? Threat to democracy?

16 Future negotiations To extend the number and extent of commitments made To extend the number and extent of commitments made To remove existing limitations on current commitments To remove existing limitations on current commitments To bind commitments so that they cannot be reversed To bind commitments so that they cannot be reversed

17 GATS and Health Care Systems (1) GATS and Health Care Systems (1) Modes of tradeHealth services 1. Cross border supplyTelemedicine 2. Consumption abroadPatients seeking health care in foreign countries Medical/health educational services provided to foreign students

18 GATS and Health Care Systems (2) Modes of tradeHealth services 3. Commercial presenceForeign commercial presence: - in the hospital operation/ management sector - in the health insurance / education sector 4. Presence of natural personsTemporary movement of medical/health professionals to provide services abroad

19 GATS and Health Care Systems (3) Commitmments to liberalize health services Service categoryTotal WTO WTO developing memberscountry members Medical and dental services5436 Hospital services4429 Nursing, midwifery services2912 Other health services1715

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

21 Potential threats to health care systems (1) Increase of the cream skimming practice by private sector 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 Undermines public health systems denying the basic principles of cross-subsidisation and risk pooling

22 Potential threats to health care systems (2) Risk of domination by transnational corporations to the exclusion of domestic development Risk of domination by transnational corporations to the exclusion of domestic development Risks compromising the quality of health care delivery Risks compromising the quality of health care delivery National public health regulations National public health regulations Liberalization of other sectors: water, sanitation, education, environment Liberalization of other sectors: water, sanitation, education, environment

23 General Recommendations (1) Make no GATS commitments in the health sector or other health-related sectors; 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; 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;

24 General Recommendations (2) Call a halt to the current WTO negotiations on rules governing domestic regulation; 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 Call for a change to GATS rules which restrict countries from retracting commitments already made under GATS

25 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) 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)


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