The General Agreement in

Trade on Services (GATS) and

the Health Care Systems

Miguel San Sebastián, MD, PhD

Umeå International School International People’s Health

of Public Health, Sweden University, Cuenca, Ecuador
 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)

 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
 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

 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
 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
 Modes of trade
MODE MEANING EXAMPLE
Mode 1 Trade takes place from the - Telehealth
Cross-border territory of country A into - Passing of information
by means of fax or email
trade that of B

Mode 2 Services consumed by - Tourism

Consumption nationals of country A in - Consumers who cross
borders to obtain
abroad territory of country B medical treatment

Mode 3 A service supplier of country - Establishment of a

Commercial A crosses the border to private hospital by a
European company in
presence establish and provide a
Ecuador
service in country B
Mode 4 Temporary movement from - Doctors moving to
Movement of country A to B to supply a another country to
temporarily provide
natural persons service their services
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
 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 of services: opportunities and risks
for the Heath Care Systems
Modes Opportunities Risks
1 Increase care to remote Diversion of resources from
and under-served areas other health services
2 Generates foreign Crowding out of local
exchange earnings for population and diversion of
health services of resources to service foreign
importing country nationals
3 Creates opportunities for Development of two-tiered
new employment and health system, with an internal
access to new technologies brain drain

4 Economic gains from Permanent outflow of health

remittances of health care personnel, with loss of
personnel working investment in educating and
overseas training such personnel
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)