International Trade in Services.pdf - DSpace at Khazar University

100 International Trade in Services
accordingly, a case for specialization in market niches on the basis of each country’s
resources and trade opportunities.
Medical tourism has received significant media attention. However, the trade
in health services is not limited to the crossborder movement of patients, which
represents Mode 2, only one of the four possible modes of service delivery identified
by the General Agreement on Trade in Services (GATS). Other key components
include the temporary movement of health professionals to deliver services
across borders (Mode 4, for example, the crossborder movement of doctors and
nurses), foreign establishment (Mode 3, for example, the opening abroad of a
branch of a clinic), and the crossborder provision of health services through technological
means (Mode 1, for example, telemedicine). In addition, a number of
other services and goods are traded at the margin of health services; it is a common
characteristic of many services that they enable trade in other sectors. Some
examples of the different modes are indicated in table 4.1.
The trade in health services has potentially significant effects on the availability
of these services, the quality of the health system, and the population’s health generally
in both the exporting country and the importing country. The effects of
trade in health services also vary considerably from one mode of delivery to
another, and imports often appear more important than exports in improving a
country’s domestic health system. An excessive enthusiasm for medical tourism
that is not backed by serious business plans or coherent government policies
could result in a low return on investment, lead to frustrated expectations, and
prejudice the local supply of health services. Not all countries have a comparative
advantage in the health service trade. While a carefully designed trade strategy in
the health sector could have significant positive spillover effects on the domestic
supply of and access to health services (in addition to the positive global impacts
of trade), a poorly designed strategy could divert already scarce resources from
people in need in developing countries.
Health is not a typical commodity or service; it is a public good. Trade in health
services could directly contribute to reaching—or missing, if negative effects prevail—health-related
Millennium Development Goals. 1 Trade objectives in the
health sector should be compatible with other legitimate social objectives (for
example, universal access). Health is also a highly regulated profession, for legitimate
purposes: even more than other professional services, medicine is characterized
by the asymmetry of information between the service provider (a doctor
trained in the practice of medicine) and the patient (seeking treatment). Regulation
of the health sector is necessary to protect patients against malpractice. Trade
promotion in the health sector therefore revolves not around deregulation, but
around more effective regulation and, sometimes, even more regulation, for
example, adopting better quality standards for hospitals and clinics. Similarly,