Fast track — Public HealthRewriting the regulations: how the World Trade Organisation could accelerate privatisation in health-care systems
Section snippets
WTO and its rules of trade
Established in 1995, the WTO is the most potent international organisation setting global rules of trade to expand markets. The agreements contain three basic principles. First, members are not allowed to discriminate between trading partners who are also members of the WTO, all of which are granted most-favoured-nation status. Second, under the national treatment principle, members must treat foreign firms in an identical way to firms in their own country. National treatment effectively bans
Why public services are important to the WTO
Services are now more important than manufacturing in the push for economic growth. A European Community assessment of the economic significance of service industries calculates that they account for “two thirds of the Union's economy and jobs and almost a quarter of the European Union's total exports and a half of all foreign investment flowing from the Union to other parts of the world.”4 The European Community reportedly stalled agreement on China's accession to the WTO because China failed
In the exercise of government authority?
The UK's Department of Trade and Industry and European Community officials have stated that public services are exempt from WTO rules because of GATS Article 1·3(b), in which the “services” covered are defined as “any service except services supplied in the exercise of governmental authority”. But the treaty defines a government authority service as: “a service which is supplied neither on a commercial basis, nor in competition with one or more service suppliers.” It is difficult to see how
How WTO is trying to lever open public services
The WTO acknowledges that the main barrier to trade in public services is the voluntary nature of GATS. Under the voluntary agreement, countries are free to retain national sovereignty over public services and to devise their own domestic regulations in the pursuit of public-policy objectives such as universal health care, public safety, and quality of service. It is these freedoms over domestic regulation that the WTO is now seeking to curtail. To this end, the Council for Trade in
The regulatory reform process
Regulatory reform has been strongly promoted by the OECD, which has issued a series of reports to help “governments improve regulatory quality” and remove “unnecessary obstacles to competition, innovation and growth”. It advocates “policy instruments that are competition neutral”. In its view, public ownership and economic regulations impede competition. For example, the OECD review of Spain states that efficient regulations are those that are “not more trade restrictive than necessary” (//www.oecd.org/publications/e-book/4200051e.pdf
Tightening up the necessity test
The key mechanism giving the WTO power over domestic regulation is the “necessity test”, which determines when a regulation is an “unnecessary barrier to trade”. Article VI.4 includes the principle of such a test but the Working Party on Domestic Regulation is currently considering importing more precise wording based on two other WTO agreements—the Sanitary and Phytosanitary Agreement and the Technical Barriers to Trade agreement. These agreements define least trade-restrictive as follows: “a
Practical implications of the necessity test
Opinions differ about the extent to which a reformed Article VI.4 will affect all public services. European Community negotiators at the WPDR have implied that Article VI.4 only applies to services that members have offered to liberalise, and that reforms to it will, therefore, not affect the voluntary character of GATS. However, the WTO Secretariat is adamant that nothing in the treaty suggests that the provisions only apply to services where liberalising commitments have been made. The issue
How the WTO will enforce regulatory reform
If the necessity test can be given legal force by tighter definitions of its meaning, the WTO's disputes settlement system can be brought into play. The disputes panel mechanism allows individual states to challenge the policy-decisions of other states and has already been used to influence domestic regulations. Between 1995 and 1999, 25 disputes adjudicated by the Disputes Settlement Body referenced WTO agreements dealing with regulatory standards.20 Of seven cases adjudicated, four challenged
Public-health implications
Globalisation, according to a UK House of Lords select committee, is effectively about “reducing the power of individual governments in the face of multinational corporations whose annual turnover may exceed the GNP of many WTO member countries”.22 If this is true, WTO regulatory reform proposals are a pure case of globalisation.
Most European health-care systems guarantee access to health care as a universal right. Because of this, health care is funded either through general taxation or social
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