Congress report - European Health Forum Gastein

Forum II: Globalisation, World Trade and Health
The role of health issues in multilateral trade agreements
Rolf Adlung
Presentation was based largely on an article previously published in Issues in European
Health Policy, 5th Issues, July 2001.
THE GENERAL AGREEMENT ON TRADE IN SERVICES:
APPLICATION TO THE HEALTH SECTOR
The General Agreement on Trade in Services (GATS) is the multilateral trade agreement in the
area of services. Its entry into force in 1995 was one of the major achievements of the
Uruguay Round of trade negotiations (1986-1993) and a landmark event in the history of the
trading system, comparable to the inception of the General Agreement on Tariffs and Trade
(GATT) in 1948. While the GATT was initially conceived as a framework for merchandise trade
between the post-war economic powers, it has since achieved almost global coverage. The
World Trade Organization – its successor since 1995 – has 141 Members at present, including
some 80 developing countries and close to 30 least-developed countries. The WTO
comprises the GATT, as amended in eight successive rounds of trade negotiations, the GATS,
and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). All WTO
Members participate in, and have assumed obligations under, all three Agreements.
Despite many significant reforms since the late 1940s, core elements of the system have
remained unchanged. These include the consensus principle – i.e. no decision is taken as
long as even one Member objects – and Most-Favoured-Nation (MFN) treatment, i.e. a
requirement on all Members not to discriminate in their trade regimes between products and
producers of different foreign origin. The commitment to MFN treatment reflects not only
economic efficiency considerations but, more importantly, the system's exclusive reliance on
rules- as against power-based policies. All goods and services imported from abroad must
be accorded the same treatment, regardless of the economic clout of the originating country
and any specific policy considerations.
For decades, the non-existence of a services agreement had not been viewed as a
particularly pressing problem. Apart from international transport and communication,
services have predominantly been considered as domestic activities, requiring the
simultaneous presence of supplier (e.g. banks, hotels, hospitals and their staff) and
consumer (depositors, tourists or patients). However, this view has changed significantly in
recent years as a result of technical developments, including new communication
technologies enabling e-banking or tele-health services, as well as economic reforms that
have increased the "openness" of many services sectors. Although cross-border trade in
services is still dwarfed by merchandise trade, accounting for no more than 20 per cent of
total exchanges, it has grown faster over the past two decades.
While the emphasis of the Uruguay Round was on creating a comprehensive set of trade
rules, the liberalizing effects of GATS have remained limited to date. Most WTO Members
have confined their access commitments to binding status quo conditions in a limited
number of sectors. The ongoing services negotiations, launched in January 2000, offer them
a new opportunity to consider the advantages of internationally guaranteed, more open
access regimes. Increased foreign presence in a sector may help, for example, to fill
domestic supply gaps; to broaden a country's resource base (including capital and
expertise); to promote efficiency through competition; and, in infrastructural sectors such as
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