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The General Agreement in

Trade on Services (GATS) and


the Health Care Systems
Miguel San Sebastin, MD, PhD
International Peoples Health
University

Ume International School
of Public Health, Sweden

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
The World Trade Organization (2)
151 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
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)
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
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)
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
Scope of GATS
151 countries (all WTO members)
Any sector (160) in any service except:
- Services supplied in the exercise of
governmental authority (fire, police, )
- Traffic air regulations
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)



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
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
Modes of trade
Health services Water & Sanitation Others



Medical & dental Hospital Nursing Others



Modes 1 2 3 4



Market access National Treatment

Types of commitments
Health related sectors and sub-sectors
1. Business services
A. Professional services
h. Medical and dental services
j. Midwives, nurses, physiotherapists, paramedical
services
7. Financial services
A. All insurance and insurance-related services
a. Life, accident and health insurance services
8. Health related and social services
A. Hospital services
B. Other human health services
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?

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?
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

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

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

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

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;

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

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)