Global Policy Forum

The WTO and Public Health


By Agnes Bertrand and Laurence Kalafatides

The Ecologist, London
October, 1999

For over fifty years, access to health-care for all has come to be regarded as a fundamental human right in many countries. Today, though, health-care is increasingly considered as a new field for commercial activity. Next month's meeting of the World Trade Organisation in Seattle is set to accelerate this creeping privatisation of public health-care.

The medico-pharmaceutical industry is one of the world's leading business sectors, and is increasingly seen by corporate leaders to be one with enormous potential for growth and profits in the coming century. For this to be possible, however, governments must fully co-operate with industry, and must refrain from holding back commercial developments in health-care. The major commercial players in the health sector tell us that the privatisation and globalisation of health-care is now inevitable. But if this is so, it is because powerfull lobby groups are hard at work worldwide struggling to accelerate this process.

As it happens, an extraordinarily-timely opportunity will present itself in Seattle at the end of November, at the World Trade Organisation (WTO). In this beautiful city, the 136 Trade ministers of the WTO member states will meet to launch the next wave of global trade liberalisation, under the grandiose title of the `Millennium Round'. On the agenda of the new Round are the revision of past agreements on agriculture, on services and on intellectual property, which were written into the Final Act establishing the WTO(1). Each of these agreements contains provisions which could allow further "roll-backs", i.e. further deregulation of any national legislation which is seen to be inimical to trade. This, in the jargon of the WTO, is referred to as the "built-in agenda". As well as this, fresh negotiations are tabled for agreements on Investment(2), on Public Procurement, on Competition Policy and on Trade Facilitation.

The Health `Service'

Top of the list for the Millennium Round is the revision of the General Agreement on Trade in Services (GATS). Needless to say, industrial interests played an unprecedented part in setting the agenda for this GATS revision, foremost among them the American Coalition of Service Industries (CSI) which sees it as providing great potential advantages: in their own words, "an opportunity for a quantum leap".(3)

The service sector, in which health-care is included, is as vast as it is undefined. It covers everything from telecommunications to transport, distribution, postal services, insurance, the construction industry, environment and real estate, as well as tourism and entertainment industries of all sorts, from the McDonalds in Moscow to the brothels of Bangkok. According to the WTO, services that fall within the scope of GATS cover no less than l60 separate sectors. Though there is no common view on what should be included as `service' industries, the WTO has taken care from its inception to ensure that health-care is included in the jumbled list of sectors earmarked for commercialisation and liberalisation. This, astonishingly, has given rise to no debate whatsoever, not even to a single article anywhere in the mainstream press.

While the issue of agriculture attracted a lot of attention when it became a battleground between the US and Europe, the GATS agreement as a whole passed by almost unnoticed. The Uruguay Round of GATT, coupled with the setting-up of the WTO, was signed under tremendous pressure from the leading industrial countries. When hurriedly ratified by the parliaments of the member states(4), very few MPs had the vaguest idea of the far-reaching implications of the GATS (or indeed of GATT/WTO agreements in general). One of the reasons for that, incredible as it might seem, is that the list of sectors affected by the agreement was never made available to them. Nevertheless, the then French Foreign Minister, Alain Juppe, even though he was an adherent of everything that smacked of 'free' trade, had to admit that "the definition of the sphere of applicalion of the GATS accord applies to all services in all sectors, with the exception of those provided by the state." This meant that "education and health are covered by the agreement when competition exists between at least two service providers".

The aim of all this is worryingly clear: after the liberalisation of telecomunications and financial services, and that of postal services and air transport currently underway, it is now the turn of the health sector to be opened up to competition and eventual takeover by corporations. This, we are assured, will enable it to benefit from economies of scale, and thereby become more `efficient'. All affiliated sectors are targeted: hospital care and other care services, ambulance services, care for the aged, social benefits. `telemedicine', and the highly-lucrative area of plastic surgery. Patients would henceforth become customers and hospitals health-care supermarkets. (One wonders when the first cut price sales will be held?)

Voodoo Economics

One must bear in mind certain obvious realities. First of all, in the logic of modern economics, it is not human needs that are taken into account but `effective demand': in other words, only those needs backed up by hard cash. Private companies catering for the market can indeed provide expensive high-technology care for wealthy customers, but everyone else will have to be satisfied with a considerably cheaper form of health-care, provided by hospital services operating under tight budgetary constraints. This will mean longer waiting lists, shortages of equipment, and of course the exploitation of the workforce, working longer hours for less pay. Indeed, to subject health-care to the laws of the market can only lead to increased inequity and tensions. (In Britain, a number of hospitals in the Greater London area have been closed recently. In France, hospitals like that of Ales in the Gard, have seen some of their services closed down as a result of budget cuts. Meanwhile, the huge company Vivendi has already acquired holdings in two clinics in the same area, and the same thing is repeated in other regions. Recently Le Monde announced that, as a result of hos- pital `reform', no less than 100 hospitals in the Paris region will he closed in the next five years."

Prevention or Cure?

In addition, it is important to remember that it is not health which makes money but ill health. That is why there is practically no move on the part of the medico-pharmaceutical industry to take prevention seriously. On the contrary, governments, egged on by industry, have declared war on alternative medicine. In France, homoeopathy is under attack. Twenty-seven medical preparations essential to the practice of homoeopathic medicine have recently been banned, under the ludicrous pretext that their sale should he discontinued pending their screening for content of residual animal products. The homoeopaths, like the herbalists, are competitors that a totalitarian medico- pharmaceutical industry cannot tolerate and must destroy. It is this sort of situation that makes a mockery of business and WTO claims that a commercialised medical system will he a `free' market.

With a little imagination one can also foresee the fate of medical research if the WTO is allowed to redefine the health-care sector. The press is currently full of promotional articles stressing the progress of science and the development of future high-tech therapies, with genetic engineering at the top of the list. State and European funding for research programmes in `genomics' and gene-therapy are massive, alhough it is the private sector that captures the bulk of it, leaving the taxpayers to foot the bill without any say over how the funding is used. Needless to say, scientific research also happens to be another `service' sector that the GATS has been careful to earmark for revision.

The Smokescreen

But the benefits corporations expect to derive from this revision are by no means in the bag. There are concerns that the fiasco of the Multiltateral Agreement on Investment (MAI)-the agreement that was torpedoed by public opposition - may be repeated. For this reason, the corporate lobby groups(7) see it as vital that neither national parliaments nor the public should be allowed to know exactly what is being negotiated next month. Hence the opaqueness of the preliminary confidential document prepared by the WTO Council on Trade in Services. The issues it raises are clouded and largely incomprehensihle - designed, among other things, to confuse the reader. Nevertheless, with patience, it is clear that the document is very comprehensive, not one issue having been overlooked.

The Coalition of Service Industries has persuaded the WTO to adopt a `flexible' and `innovative' negotiating strategy. In particular, it has advised it on how to classify the different service sectors, explaining, in its own words that they "need flex- ibility to include some services which may not be captured by (existing) definitions".(8) The Council on Trade in Services, which has already endorsed these negotiating positions, is ready to deal with any opposition that might arise to the commercialisation of any aspect of health-care.

In contrast with the USA, health is a sensitive issue for European voters. It is thus essential to maintain maximum secrecy as to the true nature of the Millennium Round negotiations to be approved at the ministerial meeting in Seattle in November, especially of the GATS revision, already scheduled to start as early as January 1st, 2000. Some of the measures proposed seem limited in their scope, but in reality this is only true in the short term. Admittedly, governments have placed restrictions on the liberalisation of some activities, but this has meant registering them for liberalisation in the longer term. In other words, by seeking, for instance, to protect hospitals from corporate encroachment, governments by the same token have in effect issued corporations with a licence to take them over later on.

The WTO Council on Trade in Services has already developed a method to achieve this. Thus, under article 1.3.C of GATS, for a service to be considered to be under `governmental authority' and hence exempt from `liberalisation', it is now argued that it "should be provided entirely free". However, since hospitals and clinics charge the patient or his insurance for the treatment provided, "it seems unrealistic in such cases to argue for continued application of article 13.C." In other words, if a treatment is free for the patient, but paid for by "subsidies or other similar forms of financial advantages" then not only must the sector be opened to competition, but the same "subsidies" should be offered to competing commercial suppliers (9)

To make matters worse, there is a proposal to adopt what is referred to as the "horizontal approach", which means that if a particular measure is agreed in one sector - say telecommunications - it is automatically applied as well to all other sectors, including health. In the case of the sub-sector of `telemedicine' for instance - which involves patient-customers consulting distant doctors and receiving prescriptions via video-phone - it will forcibly have to be liberalised, since member countries have already signed on to the Agreement on Telecommunications.

Even if this arsenal of provisions proves insufficient for assuring the liberalisation of health-care, other devices for doing so have been anticipated. For instance, the Agreement on Government Procurement, itself backed up by another proposed Agreement on Competition Policy, which the US and the European Union intend to table for negotiation in the Millennium Round, could perfectly well serve the same purpose.

Keeping it Simple

It is essential not to be intimidated by the technicality of these issues. In reality the situation is quite simple. The world's health budgets are massive, amounting to billions and billions of dollars. Why not then classify the health sector, not only as a service industry but also as a public procurement? One of the favourite methods used by the WTO to liberalise any sector is to reclassify it under a different category. In numerous countries, the CSI complains, "contracts are awarded by the state following closed procedures which run contrary to the interests of foreign suppliers". Clear rules are therefore essential for ensuring that all public procurement contracts, whether for road construction or, as they hope, for health too, are always awarded to the most "competent companies". But above all, redefining health-care as public procurement offers a huge advantage, that the funds spent - or rather redistributed - by governments, in this case social security contributions, can then be tapped by private companies, whether national or for- eign. In France, the AXA group has already bid for the management of health insurance in at least one region. The day this company obtains official consent, a precedent will have been set. Under the obligation to treat foreign companies and local firms alike (national treatment) the same conditions will have to be granted to whatever foreign corporation makes a similar bid. What is truly depressing is that the same thing is on the way with pensions, so as also to open up this sector to commercial competition.

As for the Agreement on Competition Policy, it does not involve reclassifying activities as in the GATS, but in establishing "constraining principles" and disciplines". As Robert Vastine, President of the CSI, explained in a recent speech in Tokyo, "the WTO members will be asked to consider making reforms to their regulatory regimes". National regulations, he tells us, should have four central attributes: "adequacy, impar- tiality, least intrusiveness and transparency". Needless to say, he is not demanding transparency of corporate practices, or non-intrusiveness of transnational companies over people's lives. What, in effect, he means, and what the Agreement on Competition Policy is about, is that parliaments, whatever legislation is under consideration, will have to issue regulations that are "adequate" and "impartial" towards business interests. The TABD further recommends that, with the Millennium Round, the Dispute Settlement Body of the WTO be strengthened. "Compensation is not enough," he declares. "The Dispute Settlement Body must insist on Members conforming to WTO rules." Clearly, this means that when a WTO panel ruling condemns the European prohibition of American beef treated with hormones, the raising of barriers by the US on European exports by US$ 114 million is not enough. Next time the EU refuses to import an American product of this sort, it must quite simply be made to open its market without any fur- ther delay and impose it on the people living within the Community, whether they like it or not.

Resistance is Vital

However, in Europe, people are no more willing to hand over the protection of their health to the uncaring forces of the market than they are to be force-fed with hormone-treated meat. This suggests that at Seattle the corporations and their allies will not have it all their own way, nor are they likely to meet with less opposition from Third World NGOs, and perhaps even from some official delegates. The economic globalisation that has already occurred under the auspices of the WTO is impoverishing and rendering destitute hundreds of millions of people, especially in the Third World. With this assault on public health, corporations are simply going too far, and no efforts must be spared to prevent them from going any further. Their attempts to commodify, privatise and globalise the world's health-care must be exposed, and stopped.

Agnes Bertrand is founder of The Observatoire de la Mondialisation, thc main NGO in France fighting the global economy. Laurence Kalafatides is a researcher and member of thc Institute fur Economie Relocalisation. Gard, France.

References: _

1. Thc negotiators signed the Final Act: concluding the Uruguay Round of GATT and establishing the WTO in Geneva in December 1993.

2. Even before the Multilateral Agreement on Investment negotiated at the OECD was officially declared dead (December 3, 1998), French Prime Minister Lionel Jospin had declared that the WTO was a better forum for an agreement on investment.

3. Stated by Robert Vastine, President of the Coalition of Service Industries, Oral Testimony before the Interagency Trade Policy Staff Committee, May 19th, 1999.

4. On April 15 in Marrakech, Prime Ministers or Trade Ministers of GATT member countries officially signed "The Final Act establishing the World Trade Organisation". By the end of that year ratification had been rushed through the national parliaments of memher countries which constitution required it, which is not the case of the United Kingdom.

5. It is interesting to note that thc health department of Axa is headed by Francois Hercereau, former director of the Securite Sociale.

6. Le Monde, August 1999.

7. For readers who wish to enquire further on these lobbies, their web-sites are: CSI, TABD, ESN

8. "Services 2000 : innovative approaches to services trade liberalisation". J R. Vastine, USCI, 13 May I999, Tokyo.

9. In scheduled sectors this suggests that subsidies and any similar economic benefits conferred on one group would he suhject to the national treatment obligation under Article XVII: In Council of Trade in World Trade Organisation RESTRICTED, S/C/W/50, 18 September (98-3558) Council for Trade in Services. In towards a Successful WTO Ministerial Meeting TABD, mid year report, May 1999.

More Information on Social and Economic Policy
More Information on the World Trade Organization
More Information on the World Trade Organization Meeting in Seattle

FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C íŸ 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.


FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.