1. Miguel San Sebastián, MD, PhD
The General Agreement in Trade on Services (GATS) and the Health Care Systems
Miguel San Sebastián, MD, PhD
International People’s 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)
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)
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

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
- Multilateral trade agreements (MLAs)

5. 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

6. 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)

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)
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)
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
- 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)

10. 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

11. Modes of trade 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
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

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

15. 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?

16. 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

17. 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

18. 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

19. GATS and Health Care Systems (3)
Commitmments to liberalize health services
Service category Total WTO WTO developing
members country members
Medical and dental services
Hospital services
Nursing, midwifery services
Other health services

20. Modes of services: opportunities and risks for the Heath Care Systems1
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

21. 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

22. 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

23. 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;

24. 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

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)