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1 Trade and Health and the Bretton Woods Family Trade and Health and the Bretton Woods Family David Legge International People’s Health University November.

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Presentation on theme: "1 Trade and Health and the Bretton Woods Family Trade and Health and the Bretton Woods Family David Legge International People’s Health University November."— Presentation transcript:

1 1 Trade and Health and the Bretton Woods Family Trade and Health and the Bretton Woods Family David Legge International People’s Health University November 2007

2 2 The Bretton Woods family (1944) International Monetary Fund (IMF) International Monetary Fund (IMF) World Bank (WB) World Bank (WB) World Trade Organisation (from 1995) World Trade Organisation (from 1995) replacing the General Agreement on Tariffs and Trade (GATT) replacing the General Agreement on Tariffs and Trade (GATT)

3 3 International Monetary Fund 1944+: created in order to lend to countries to prevent currency fluctuations due to short term imbalances in trade flows 1944+: created in order to lend to countries to prevent currency fluctuations due to short term imbalances in trade flows 1950s - 1980s: private sector international financial institutions take over short term trade financing (a fund without a function?) 1950s - 1980s: private sector international financial institutions take over short term trade financing (a fund without a function?) 1970s - 1980s: Third World Debt Crisis 1970s - 1980s: Third World Debt Crisis new role for IMF as lender of last resort and world economic policeman new role for IMF as lender of last resort and world economic policeman

4 4 The debt crisis and ‘structural adjustment’ 1973 OPEC oil price rises 1973 OPEC oil price rises 1973 - 1980 Loan salesmen on the loose (negative interest rates!) 1973 - 1980 Loan salesmen on the loose (negative interest rates!) 1981 Reagan, monetarism and interest rates 1981 Reagan, monetarism and interest rates IMF ‘structural adjustment packages’ IMF ‘structural adjustment packages’ The World Bank joins the Fund in policing the debt The World Bank joins the Fund in policing the debt 1999 Structural adjustment replaced by ‘Poverty reduction strategy papers’ 1999 Structural adjustment replaced by ‘Poverty reduction strategy papers’

5 5 Structural adjustment Cuts in public spending Cuts in public spending Removal of price controls Removal of price controls Freezing of wages Freezing of wages Emphasis on production for export Emphasis on production for export Import liberalisation Import liberalisation Incentives for foreign investment Incentives for foreign investment Privatisation of public sector services Privatisation of public sector services Devaluation (to make exports cheaper) Devaluation (to make exports cheaper)

6 6 Impacts of structural adjustment Widening of inequalities Widening of inequalities Reduced purchasing power for the poor (increased prices, withdrawal of subsidies, freezing of wages) Reduced purchasing power for the poor (increased prices, withdrawal of subsidies, freezing of wages) Downsizing of public sector Downsizing of public sector Lowering the safety net Lowering the safety net User pays in health care User pays in health care Reduced support for subsistence agriculture Reduced support for subsistence agriculture Economic growth (in some cases) Economic growth (in some cases)

7 7 Criticism of the impact of SAPs on health in developing countries Health dimensions of economic reform (WHO, 1992) Breman and Shelton (2001) Structural adjustment and health: a literature review of the debate, its role-players and presented empirical evidence http://www.cmhealth.org/docs/wg6_paper6.pdf

8 8 Poverty Reduction Strategy Papers SAPs reinvented SAPs reinvented Country governments required to devise their own SAPs Country governments required to devise their own SAPs IMF funding is still contingent on neo-liberal ‘reforms’ IMF funding is still contingent on neo-liberal ‘reforms’

9 9 World Bank 1944+: to fund large scale development projects (in developed world) 1944+: to fund large scale development projects (in developed world) 1950s - 1980s: private sector funding takes over long term capital funding (for developed world); WB attention shifts to developing countries 1950s - 1980s: private sector funding takes over long term capital funding (for developed world); WB attention shifts to developing countries 1980s+: WB joins IMF in managing Third World debt 1980s+: WB joins IMF in managing Third World debt 1990s+: WB becomes major development assistance funder (far surpasses WHO as a donor to health projects) 1990s+: WB becomes major development assistance funder (far surpasses WHO as a donor to health projects)

10 10 ‘Investing in Health’ (WB, 1993) Response to criticism of impact of SAPs on health Response to criticism of impact of SAPs on health Reconciling structural adjustment with health improvement? Reconciling structural adjustment with health improvement? health improvement despite poverty health improvement despite poverty proceeding with SAPs regardless proceeding with SAPs regardless

11 11 Trade regulation 1944 - 1995 GATT 1944 - 1995 GATT progressive re-negotiation of international agreements on tariffs progressive re-negotiation of international agreements on tariffs slow progress towards trade liberalisation (especially manufactured goods) slow progress towards trade liberalisation (especially manufactured goods) 1995: 1995: finalisation of the Uruguay Round of GATT negotiations finalisation of the Uruguay Round of GATT negotiations establishment of World Trade Organisation establishment of World Trade Organisation

12 12 World Trade Organisation Established 1995, based in Geneva Established 1995, based in Geneva 141 member countries 141 member countries Structures Structures Director-General Director-General Secretariat Secretariat Ministerial Conference Ministerial Conference General Council General Council specific councils specific councils Disputes Settlements Body (DSB) Disputes Settlements Body (DSB)

13 13 Agreements Multilateral Agreements on Trade in Goods (13) Multilateral Agreements on Trade in Goods (13) General Agreement on Trade in Services (GATS) General Agreement on Trade in Services (GATS) Agreement on Trade-related Intellectual Property Rights (TRIPs) Agreement on Trade-related Intellectual Property Rights (TRIPs) Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) Trade Policy Review Mechanism (TPRM) Trade Policy Review Mechanism (TPRM) (non mandatory) agreements (5) (non mandatory) agreements (5)

14 14 Agreements on Trade in Goods General Agreement on Tariffs and Trade (GATT) General Agreement on Tariffs and Trade (GATT) Agriculture (AoA) Agriculture (AoA) Sanitary and phyto-sanitary measures (SPS) Sanitary and phyto-sanitary measures (SPS) Textiles and clothing Textiles and clothing Technical barriers to trade (TBT) Technical barriers to trade (TBT) Trade Related Investment Measures (TRIMs) Trade Related Investment Measures (TRIMs) Anti dumping agreement Anti dumping agreement Rules of origin Rules of origin Import licensing Import licensing Subsidies and countervailing measures Subsidies and countervailing measures

15 15 Non-mandatory Agreements Trade in civil aircraft Trade in civil aircraft Government procurement Government procurement Dairy agreement Dairy agreement Bovine meat Bovine meat

16 16 Disputes between trading partners “Disputes” the heart of the WTO system “Disputes” the heart of the WTO system Member states can bring complaints before the DSB that one or more of its trading partners is violating some (of the 24,000 pages of) WTO agreements Member states can bring complaints before the DSB that one or more of its trading partners is violating some (of the 24,000 pages of) WTO agreements Penalties Penalties payment of compensation to the foreign government or corporation payment of compensation to the foreign government or corporation retaliatory trade restrictions on exports from the offending nation retaliatory trade restrictions on exports from the offending nation

17 17 Dispute resolution principles Least trade restrictive regulation Least trade restrictive regulation Voluntary rather than compulsory Voluntary rather than compulsory Consumer information rather than bans Consumer information rather than bans Individual rather than public responsibility Individual rather than public responsibility

18 18 Asbestos case (September 2000) January 1997. Ban on the manufacturing, processing and sale of asbestos within France January 1997. Ban on the manufacturing, processing and sale of asbestos within France Canada complains to WTO: ban is illegal because it damaged Canadian economic interests and was a barrier to free trade Canada complains to WTO: ban is illegal because it damaged Canadian economic interests and was a barrier to free trade September 2000. WTO rules that the ban is a barrier to free trade but that it is legal on health grounds September 2000. WTO rules that the ban is a barrier to free trade but that it is legal on health grounds

19 19 EC Sugar case (2005) Australia Brazil and Thailand complained that EC subsidising the production of sugar for export Australia Brazil and Thailand complained that EC subsidising the production of sugar for export Panel appointed by DSB under DSU Panel appointed by DSB under DSU EC appealed Panel decision EC appealed Panel decision AB supported Panel findings under AoA but criticised it for not determining challenge under SCM Agt AB supported Panel findings under AoA but criticised it for not determining challenge under SCM Agt AB finding supported by DSB AB finding supported by DSB

20 20 Agreements particularly relevant to health Agriculture Agriculture GATS GATS TRIPs TRIPs SPS SPS TBT TBT

21 21 Agreement on Agriculture Not focused on health Not focused on health But damaging to people’s health in agricultural exporting countries (including very poor countries) are: But damaging to people’s health in agricultural exporting countries (including very poor countries) are: agricultural barriers to rich country markets (Eu, Japan and US), agricultural barriers to rich country markets (Eu, Japan and US), subsidies in those markets to support local producers (and exporters) and subsidies in those markets to support local producers (and exporters) and dumping by rich countries in poor country markets including in producer countries dumping by rich countries in poor country markets including in producer countries

22 22 rich world protection, domestic support and export siubsidy loss of agricultural income over supply (push to export ag) low prices for dev country farmers weak demand low volumes rural poverty health effects of poverty (rural and urban) and displacement widening income inequalities weakening of social solidarity: public expenditure and public policy rural urban migration urban poverty (reserved army of unemployed) low wages cheap food in cities growth in unskilled labour intensive export processing rise of urban middle class business, skilled staff Impact of Rich World Dumping and Protection

23 23 Protección del mundo rico, apoyo doméstico y subsidio a exportaciones Pèrdida de ingreso por agricultura Sobre-abastecimiento (impulsa export. ag) Precios bajos para los agricultures PD Baja demanda Poco volumen Pobreza rural Efectos en salud por la pobreza (rural y urban) y desplazamiento Incremento de las inequidades en ingresos Debilitamiento en solidaridad: gasto público y política públicas Migración rural-urb. Pobreza urbana (ejército de desempleados) Salario bajo Alimentos baratos en ciudades Crecimiento en mano de obra no cualificada/intensiva y exportaciones Incremento en personal calificado de clase media Impacto del Dumping y protecionismo del Mundo Rico

24 24 GATS All services All services Most-favoured-nation (MFN) principle (allow one country in; allow all members in) Most-favoured-nation (MFN) principle (allow one country in; allow all members in) transparency (accessible data bases of laws and regulations) transparency (accessible data bases of laws and regulations) Specified services Specified services market access market access national treatment (eg subsidies) national treatment (eg subsidies) Ratchet function and schedule for extension Ratchet function and schedule for extension

25 25 What are services?? Trade and tourism Trade and tourism Business, professional and technical Business, professional and technical Telecommunications Telecommunications Asset management Asset management Education Education Medical services Medical services Energy Energy Construction Construction

26 26 ‘ Modes of supply’ (for specified commitments) Cross border supply (telemedicine) Cross border supply (telemedicine) Consumption abroad (patients travel abroad) Consumption abroad (patients travel abroad) Commercial presence (foreign owned health insurance, foreign owned health care corporations) Commercial presence (foreign owned health insurance, foreign owned health care corporations) The presence of natural persons (flying doctors) The presence of natural persons (flying doctors)

27 27 Australia’s health-related GATS commitments

28 28 The GATS renewal Criticisms of GATS 1994 by financial services industry Criticisms of GATS 1994 by financial services industry Article XIX. Commitment to renegotiation from 2000 Article XIX. Commitment to renegotiation from 2000 Current renegotiations Current renegotiations preparatory “issue identification” phase (from January 2000) preparatory “issue identification” phase (from January 2000) request / offer phase (30 June 2002 / 31 March 2003) request / offer phase (30 June 2002 / 31 March 2003) formalisation (1 January 2005) formalisation (1 January 2005)

29 29 Apprehensions about the renewal of GATS Non-democratic processes of the WTO Non-democratic processes of the WTO what is happening behind closed doors? what is happening behind closed doors? Privatisation of health care? Privatisation of health care? stratified health insurance arrangements stratified health insurance arrangements stratified health care provision stratified health care provision foreign owned corporate control of health care foreign owned corporate control of health care deregulation of environmental and food controls deregulation of environmental and food controls

30 30 TRIPs Agreement on trade related intellectual property rights Agreement on trade related intellectual property rights Principles of national treatment and MFN treatment Principles of national treatment and MFN treatment Uniform protection of IPRs Uniform protection of IPRs Patents (20 years +), trademarks, designs, trade secrets Patents (20 years +), trademarks, designs, trade secrets

31 31 Access to pharmaceuticals Brazil Brazil South Africa South Africa India India Thailand Thailand

32 32 Brazil Compulsory licences issued for generic equivalents of antiretrovirals Compulsory licences issued for generic equivalents of antiretrovirals Free care for all HIV+ people, AIDS-related deaths halved in four years, spread of the HIV reduced Free care for all HIV+ people, AIDS-related deaths halved in four years, spread of the HIV reduced Savings of half a billion dollars by producing the generic equivalent of the patented drugs, saved $422 million in hospitalisation costs. Savings of half a billion dollars by producing the generic equivalent of the patented drugs, saved $422 million in hospitalisation costs. Brazil taken to a WTO dispute panel by US over its patent legislation but not the issuing of compulsory licences Brazil taken to a WTO dispute panel by US over its patent legislation but not the issuing of compulsory licences

33 33 South Africa 1996 South Africa passes a new law for the procurement of medicines; sourcing brand name drugs internationally through cheapest supplier 1996 South Africa passes a new law for the procurement of medicines; sourcing brand name drugs internationally through cheapest supplier 1998 39 drug makers sued South Africa arguing that the law contravened international trade agreements 1998 39 drug makers sued South Africa arguing that the law contravened international trade agreements 2001 Medicins Sans Frontiers petition against the lawsuit collects 250,000 signatures 2001 Medicins Sans Frontiers petition against the lawsuit collects 250,000 signatures 2001 companies withdraw their lawsuit and agreed to pay the government's legal costs 2001 companies withdraw their lawsuit and agreed to pay the government's legal costs

34 34 Cipla (India) India - process-only patent laws India - process-only patent laws Cipla offers to sell (to MSF) a three-drug cocktail for AIDS treatment at $US350 per year (compared with $10,000 to $12,000 a year in western markets) Cipla offers to sell (to MSF) a three-drug cocktail for AIDS treatment at $US350 per year (compared with $10,000 to $12,000 a year in western markets) Cipla offers same cocktail to governments at $600 per year Cipla offers same cocktail to governments at $600 per year Cipla offers to pay the patent owners a 5% commission Cipla offers to pay the patent owners a 5% commission

35 35 Modifications to the Thai Safety Monitoring Program (SMP) Seeks advance notice of new drugs in the pipeline Seeks advance notice of new drugs in the pipeline Allows generic manufacturers to commence bio-equivalence studies during patent period Allows generic manufacturers to commence bio-equivalence studies during patent period Excludes drugs under review from the National List of Essential Drugs Excludes drugs under review from the National List of Essential Drugs

36 36 US response, 1991 US Threatens to put Thailand on the Priority Watch List under Section 301 of US Trade Act US Threatens to put Thailand on the Priority Watch List under Section 301 of US Trade Act Section 301 allows trade sanctions to be imposed if the USTR determines that an act, policy or practice of Thailand 'violates or is inconsistent with any trade agreement, denying the rights or benefits derived thereof to the United States, or is, unjustifiable and burdens or restricts United States commerce'. Section 301 allows trade sanctions to be imposed if the USTR determines that an act, policy or practice of Thailand 'violates or is inconsistent with any trade agreement, denying the rights or benefits derived thereof to the United States, or is, unjustifiable and burdens or restricts United States commerce'. See http://www.cptech.org/ip/health/c/thailand/thailand.html See http://www.cptech.org/ip/health/c/thailand/thailand.html

37 37 SPS (Sanitary and Phytosanitary Measures) Regulatory standards governing human, animal and plant health shall by default be based on recognised international bodies such as Codex Alimentarius Regulatory standards governing human, animal and plant health shall by default be based on recognised international bodies such as Codex Alimentarius More restrictive regulation must be based on scientific risk assessment More restrictive regulation must be based on scientific risk assessment EU ban of hormone-treated beef judged to be not supported by science and not addressing defined risks EU ban of hormone-treated beef judged to be not supported by science and not addressing defined risks

38 38 TBT (Technical Barriers to Trade) Encourages use of internationally agreed standards in product regulation Encourages use of internationally agreed standards in product regulation not necessarily intergovernmental bodies, not necessarily intergovernmental bodies, can be industry based bodies such as ISO can be industry based bodies such as ISO Regulations must be least trade-restrictive necessary Regulations must be least trade-restrictive necessary Implications for water supply, food production, labelling of foods and drugs Implications for water supply, food production, labelling of foods and drugs

39 39 Current trade issues with big implications for health Reform of AoA (protection from dumping, access to markets) Reform of AoA (protection from dumping, access to markets) Implementation of Doha principles with respect to access to pharmaceuticals Implementation of Doha principles with respect to access to pharmaceuticals Health service provision - privatisation, foreign ownership, stratification Health service provision - privatisation, foreign ownership, stratification Environmental standards and food standards Environmental standards and food standards NAMA and deindustrialisation (line by line tariff reduction or average; uniformly down or leave space for industry policy) NAMA and deindustrialisation (line by line tariff reduction or average; uniformly down or leave space for industry policy)

40 40 WHO Role in Advising on Trade and Health Secretariat paper on Trade and Health discussed at EB (27 May 2005) Secretariat paper on Trade and Health discussed at EB (27 May 2005) Draft resolution (Thailand + 13 others) calling for ‘policy coherence’ across trade and health and calling on WHO to advise and assist Draft resolution (Thailand + 13 others) calling for ‘policy coherence’ across trade and health and calling on WHO to advise and assist Opposition (US) plus watering down (Australia, France, Luxemburg) lead to deferral (to Jan 06) Opposition (US) plus watering down (Australia, France, Luxemburg) lead to deferral (to Jan 06) PHM calls for networks and organisations to support the resolution and resist the US PHM calls for networks and organisations to support the resolution and resist the US


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