Globalization, trade and health Nick Drager, WHObrain drain • Loss of subsidised training and...

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Trade in Health Services and GATSTrade in Health Services and GATS

Nick Drager M.D., Ph.D.Senior Adviser

Department of Ethics, Trade, Human Rights and Health Law

World Health Organization

Trade in Health Services and Trade in Health Services and GATSGATS

• Context: public health in a globalizing world ; trade agreements important for public health

• Trade in health services: risks and opportunities• GATS : a public health perspective• WHO’s role, work, products

Globalization, Trade & Health

Health and TradeHealth and Trade

• Effects of trade liberalisation on public health • Trade liberalisation: removal of impediments to

trade in goods and services• Public health: organised measures (whether public

or private) to prevent disease, promote health or prolong life of the population as a whole.


Public health issues and Public health issues and WTO rulesWTO rules

• Infectious disease control• Food safety• Tobacco• Environment• Access to drugs• Health services• Food security and nutrition• Emerging issues (biotechnology….)


WTO rules and Public healthWTO rules and Public health

• Goods: GATT• Technical barriers to trade: SPS, TBT• Intellectual property and trade : TRIPS• Services: GATS


Specific Health Issues and Specific Health Issues and Most relevant WTO AgreementsMost relevant WTO Agreements

WTO RULES SPS TBT TRIPS GATSHEALTH ISSUES

• Infectious Disease Control• Food Safety• Tobacco Control• Environment• Access to Drugs• Health Services• Food SecurityEmerging Issues• Biotechnology• Information Technology• Traditional Knowledge


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• Much common ground between trade and health

• Health concerns can take precedence over trade issues


Trade in Health Services and Trade in Health Services and GATSGATS

• Trade in health services: risks and opportunities

• GATS - a public health perspective

• WHO work; products


Trade in Health ServicesTrade in Health ServicesGlobalization of healthGlobalization of health

• Cross border delivery- telemedicine; e-health• Consumption abroad- patients travelling across

borders for diagnosis and treatment• Commercial presence- establishments of hospitals,

clinics through FDI, joint ventures, alliances, mergers

• Movement of personnel - doctors and nurses practising in other countries


Implication of globalisation of Implication of globalisation of health serviceshealth services

• Impact of liberalised trade in services on the access to cost, quality of services

• What policies, regulations should be in place to ensure that trade in health services increases Equity in health and is in the interest of those in greatest need

• What collective action across countries, at regional and global level is needed to take advantages of emerging global opportunities and mitigate potential risks : promote policy coherence


Cross border delivery of tradeCross border delivery of trade

• Shipment of laboratory samples, diagnosis and clinical consultations -mail

• Electronic delivery of health services• Telehealth- telediagnostic, surveillance and

consultation services (USA hospitals to CA and EM)

• Telepathology (India to Bangladesh, Nepal)• E-health - products and services available over

internetGlobalization, Trade & Health

Health implications of cross Health implications of cross border delivery of servicesborder delivery of services

Opportunities• Enable health care delivery to remote and

underserviced areas -promoting equity• Alleviate some human resource constraints• Enable more cost -effective surveillance of

diseases• Improve quality of diagnosis and treatment• Upgrade skills, disseminate knowledge through

interactive electronic meansGlobalization, Trade & Health

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Health implications of cross Health implications of cross border delivery of servicesborder delivery of services

Risks• Given lack of telecommunications and power

sector infrastructure - telemedicine may not be cost effective

• Capital intensive, possible diversion of resources from basic preventive and curative services

• Hurt equity if it caters to a small segment of the population - urban affluent


Consumption abroadConsumption abroad

• Movements of patients to the country providing the service for diagnosis and treatment

• Movement of health professionals for receiving medical education and training abroad


Health Implications of Health Implications of consumption abroadconsumption abroad

OpportunitiesFor exporting countries

• Generate foreign exchange earnings to increase resources for health

• Upgrade health infrastructure, knowledge, standards and quality

For importing countries• Overcome shortages of physical and human resources in

speciality areas• Receive more affordable treatment


Health implications of Health implications of consumption abroadconsumption abroad

Risks• Create dual market structure • May crowd out local population -unless these services

are made available t local population• Diversion of resources from the public health system• Outflow of foreign exchange for importing countries


Commercial presenceCommercial presence

• Establishment of hospitals, clinics, diagnostic and treatment centers and nursing homes and training facilities through foreign direct investment -cross border mergers and acquisitions- joint ventures and alliances

• Opportunities for foreign commercial presence in management of health facilities and allied services, medical and paramedical education, IT and health care


Health Implications of Health Implications of commercial presencecommercial presence

Opportunities• Generate additional resources for investment in

upgrading of infrastructure and technologies• Reduce the burden on public resources • Create employment opportunities• Raise standards, improve management, quality ,

improve availability, improve education (foreign commercial presence in medical education sector)


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Health Implications of Health Implications of commercial presencecommercial presence

Risks• Large initial public investments needed to attract

FDI• If public funds/subsidies used - potential diversion

of resources from the public health sector• Two tier structure of health care establishments• Internal brain drain from public to private sector• Crowding out of poorer patients, cream skimming

phenomenaGlobalization, Trade & Health

Movement of personnelMovement of personnel

• Includes doctors, nurses, paramedics, midwives, consultants, trainers, management personnel

• Factors driving cross border movementswage differentials between countriessearch for better working conditions and standards of livingsearch for greater exposure, training and improved qualificationsdemand and supply imbalances between receiving and sending

countries• Approach towards mode 4 trade in health services by exporting and receiving

countries varies - some countries encourage outflow, others create impediments


Health implications of movement Health implications of movement of personnelof personnel

Opportunities From sending country

• Promote exchange of knowledge among professionals• Upgrade skills and standards (provided service

providers return to the home country)• Gains from remittances and transfers

From host country• Meet shortage of health care providers, improve

access, quality and contain cost pressuresGlobalization, Trade & Health

Health implications of Health implications of movement of personnelmovement of personnel

RisksFrom sending country

• Permanent outflows of skilled personnel -brain drain

• Loss of subsidised training and financial capital invested

• Adverse effects on equity, availability and quality of services


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

• GATS is one of the most important trade agreements to emerge from the Uruguay Round negotiations that created the World Trade Organization (WTO)

Services are one of the fastest growing areas for many economiesServices of many kinds play important roles in the protection and promotion of healthGATS provides the multilateral legal framework for liberalizing international trade in services

• GATS creates numerous challenges for people working in public health

GATS is a complex legal agreement that borrows from existing international trade law to create new rules for servicesGATS has become the subject of significant controversy, especially with respect to how the Agreement will affect health-related services and health policy


““Tale of Two TreatiesTale of Two Treaties”” ProblemProblem

• Debate about GATS’ impact on health policy has created a “Tale of Two Treaties” problem for health policy communities

GATS is the worst of treaties—GATS undermines the exercise of national sovereignty for health purposesGATS is the best of treaties—GATS respects health sovereignty through its flexibility, which allows each WTO member to shape its obligations according to its national needs and interests

• The “Tale of Two Treaties” problem makes it difficult for the health policy communities to understand how the complex law of GATS may or may not affect their work


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GATS and Health Sovereignty: GATS and Health Sovereignty: Significant OverlapSignificant Overlap

Scope of GATS

Scope of health sovereignty

Health-related services

HealthProfessional

EnvironmentalDistribution

FinancialBusiness

R&D


Entering the House Entering the House that GATS Builtthat GATS Built

GATS(Services)

Health Sovereignty


The House that GATS BuiltThe House that GATS Built

GATS(Services)

Trade LiberalizationPreservation of the Right to Regulate Services

Multilateral Framework

Front Wall:General

Obligationsand

Disciplines

Side Wall:Market AccessCommitments

Side Wall:National Treatment

Commitments

Back Wall:Exceptions

Floor:Dispute SettlementGATS Council


Progressive Liberalization and Progressive Liberalization and Health PolicyHealth Policy

• WTO (WHO) members will face decisions whether to liberalize trade in services through market access and national treatment commitments, including trade in health-related services

• GATS 2000 round of liberalization negotiations potentially affects health policy in two areas:

Evaluating requests from other countries for, and offers to other countries of, specific commitments for market access and national treatmentNegotiations on GATS rules


Distribution of commitments Distribution of commitments across sectorsacross sectors

(Number of WTO members)(Number of WTO members)

0

50

100

TourismFinancial

Business

CommunicationsTransport

Construction

Recreation

EnvironmentHealth

DistributionEducation


Managing the GATS Process from a Managing the GATS Process from a Health Policy Perspective: PrinciplesHealth Policy Perspective: Principles

• Liberalized trade in health-related services should lead to an optimal balance between preventive and curative services

• Involvement of both private industry and civil society is important to ensure that liberalization of health-related services promotes participatory health policy.

• Improving access and affordability of health-related services should be a goal of liberalization of trade in health-related services.

• Developing countries, and least-developed countries in particular, deserve special consideration in the process of liberalizing trade in health-related services.

• The status of health as a human right should inform and guide proposals to liberalize trade in health-related services.


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Managing the GATS Process from a Managing the GATS Process from a Health Policy Perspective: Health Policy Perspective:

Key QuestionsKey Questions• To what extent is the sector already open to foreign service providers, and

what have been the regulatory concerns posed by existing foreigncompetition?

• Do the commitments fit the strategies and directions identified by national health policy?

• What effect would the commitments have on government-provided health services?

• What regulatory burdens would the commitments create for the government in health-related sectors?

• Would the commitments eliminate or weaken regulatory approaches necessary for the protection and promotion of health?

• What evidence and principles can be brought to bear to analyze the possible effect of the commitments?

• Can the commitments be crafted both to protect health policy and to liberalize trade progressively? Globalization, Trade & Health

Managing the GATS Process from a Managing the GATS Process from a Health Policy Perspective: Check ListHealth Policy Perspective: Check List

• Identify a focal point for trade in health-related services within the Ministry of Health

• Establish contacts and systematic interactions with trade and other key ministries and with representatives from private industry and civil society

• Collect and evaluate information on the effect of existing trade in health-related services within the country

• Obtain legal advice on GATS and other international agreements that may affect trade in health-related services

• Develop a sustainable mechanism for monitoring the impact of trade in health-related services

• Utilize the assistance provided by the WHO on matters concerning trade in health-related services

• Subject all requests for, and offers of, liberalization of trade in health-related services, to a thorough assessment of their health policy implications


Managing the GATS Process from a Managing the GATS Process from a Health Policy Perspective: WHO Health Policy Perspective: WHO

RecommendationsRecommendations

• Get Your House in Order: National stewardship of the health system in the context of GATS requires a sophisticated understanding of how trade in health-related services already affects and may affect a country’s health systems and policy.

• Know the Whole House Not Just Select Rooms: The GATS process can affect many sectors that related to health, which places a premium on health ministries understanding the importance of a comprehensive outlook on trade in health-related services.


Managing the GATS Process from a Managing the GATS Process from a Health Policy Perspective: Health Policy Perspective: WHO RecommendationsWHO Recommendations

• Remember Who Owns the House: GATS provides countries with choices and does not force them to make liberalization commitments that are not in their best interests. If a country is unsure about the effects of making specific commitments, it is fully within its rights to decline to make legally binding commitments to liberalize, or to liberalize unilaterally withoutmaking binding commitments.

• Home Improvement Means Health Improvement: Health principles and criteria should drive policy decisions on trade in health-related services in the GATS negotiations.


Globalization, Trade and HealthGlobalization, Trade and Health

WHO’s role, activities, products


GoalsGoals

Trade and Health• To achieve greater coherence between international trade and health

policy so that international and multilateral trade rules maximize health benefits and minimize health risks especially for poor and vulnerable populations

• To build the knowledge base and strengthen capacity in member states and in WHO itself to recognize and act on a better understanding of the public health implications of multilateral trade agreements

Globalization and Health• To support countries in measuring, assessing and acting on cross-

border risks to public health security in the context of globalization.


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Key products/activities 2004Key products/activities 2004

Knowledge base development• Legal reviews: GATS from a public health policy perspective; SPS from a

public health policy perspective• Trade and Health Notes for policy makers • Handbook on Trade in Health Services and GATS • Handbook on the Rapid Assessment of the Economic Impact of Public

Health Emergencies of International Concern - using SARS as a case study • Essential database for trade in health goods and services• Continuation of Working Paper Series including - Implementing Para 6 of

the Doha declaration - TRIPS and Public Health• Technical support for WHO's Commission on IP, Innovation, and Public

HealthGlobalization, Trade & Health

Key products/activities 2004Key products/activities 2004

Tools and training• Distance learning courses - Trade and Health ; Global Public Goods

for Health• Development of an assessment tool to identify key cross border risks

(communicable disease, macroeconomic shocks, environmental … ) to public health security

• Research and Training Initiative - Trade and Health - with selected universities

Country support• Interregional and national workshops on trade and health eg for

countries in WTO accession negotiations • Support for trade and health country analyses -(? as inputs into WTO

Trade Policy Reviews and Integrated Framework for LDC’s)Globalization, Trade & Health

Macroeconomic and Macroeconomic and trade environmenttrade environment

TIHS GATS

Current status

HealthPolicy

Capitalinfrastructure

Humanresources

Infrastructure &regulatory capacity

GATS TIHS

Impact ofcurrent trade

Data sources andavailability

Current data/info& evidence

Mode 1 Mode 2(as mode 1)

Mode 3(as mode 1)

Mode 4(as mode 1)

State of domestic health care system

Macroeconomic and trade environment


Scope of analysisScope of analysis

spec

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Cross-industrial commitment

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National treatment

Market access

1. CB 2. CA3. CP 4. PN

Stew

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Globalization, trade and health Nick Drager, WHObrain drain • Loss of subsidised training and...

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