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The Doctors Reform Society of Australia, Box 992 Gosford 2250 Phone 02 9264-9084 Fax 02 9267-4393. |
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Doctors Reform
Society
Box 14, 4 Goulburn St
Sydney NSW 2000
Tel 02 9264 9084
Fax 02 9267 4393
drs@nlc.net.au
www.drs.org.au
Submission to the
Department
of Foreign Affairs and Trade
ON THE PROPOSED
FREE TRADE
AGREEMENT (FTA)
BETWEEN AUSTRALIA
AND THE UNITED STATES
January
2003
The Doctors Reform Society (DRS) is an organisation of
doctors formed in 1973 to support the introduction in
Australia of universal health insurance, initially Medibank, now Medicare.
The DRS welcomes this opportunity to
contribute our views on a proposed Free Trade Agreement (FTA) between Australia
and the United States of America. We believe negotiations in FTAs should be
open to full informed public debate and scrutiny before agreements are made.
The DRS has addressed health implications of economic globalisation and the General Agreement on Trade in Services (GATS) in previous submissions to the Department of Foreign Affairs and Trade (DFAT) on World Trade Organisation (WTO) negotiations. In this submission, the DRS would like to highlight our concerns in relation to health care ramifications from FTAs in general and specifically a proposed agreement with the USA. We propose measures and guidelines to protect Australia’s Health Care System in the interests of the Australian population.
The DRS believes universal public health care,
Australia’s Medicare and the Pharmaceutical Benefits Scheme (PBS) are seriously
threatened by market driven principles which underlie FTAs. The free market
definition of health care as a tradable commodity is a relatively recent
concept which conflicts with an array of
international accords that construe access to health care as a basic
public health and rights issue. Protecting
population health requires adequate funding for public health systems and
universal coverage for individual medical care. There is sound international
evidence that universal health insurance schemes, such as Medicare, with risk
pooling across society in both funding and service delivery, provide the most
effective and efficient health systems (Blendon et al
2002, Chernichovsky 1995, Goldberg & White 1995, Saltman & Figuerus 1998, Schoen et
al 2000). The success of the
PBS has been recognised internationally and is highlighted in the Productivity
Commission’s 2001 research report International Pharmaceutical Price
Differences. The failure of market provision of health services is clearly
demonstrated in the USA (Anderson &
Hussey 2001, Goldberg & White 1995). Recent experience in Australia confirms the spiralling
costs associated with increased reliance on private provision of health care.
Prime objectives of FTAs are the liberalisation of
trade in goods and services and the protection of direct foreign investment and
intellectual property rights through limiting government regulation. FTAs
generally favour market-based, as opposed to
government-administered, structures in areas
of obligations. A serious threat of FTAs is reducing the right and power of
governments to regulate. FTAs equate government regulations and public services
with barriers to trade such as tariffs and as such they therefore warrant elimination.
From a public health perspective, the evidence
suggests the reverse, namely that privatisation
and deregulation from FTAs pose barriers to
population health. A UN report found a comparatively high level of government
involvement is required to ensure that health services are accessible,
efficient and adequately funded (Saltman &
Figueras 1998). Major health accomplishments are products of government
action, legislation and regulation (such as vaccination programs, access to
safe housing, food and water, education, safety regulations for work places, living spaces,
prescription drugs and consumer products) and not the result of unregulated
market forces. The free market notion that health is a commodity and, as such,
has a price and can be traded off against other commodities threatens public
health strategies, universal healthcare delivery and the concept that health is a human right.
Specifically in relation to an
FTA with the USA the DRS is concerned that Australia is in a position of
unequal bargaining power and US interests will be favoured at the expense of
our own. We believe that public services such
as health care and water services will be targeted and future policy
flexibility compromised. It is concerning that DFAT has stated that aims of an
FTA with the USA “will be to liberalise trade in goods and services, to
facilitate trade and investment and to address government-level impediments to
increased commercial exchanges”. US Trade Ambassador Robert Zoellick has
also stated that they seek "enhanced access for US services firms to
telecommunications and any other appropriate services sectors". As US
services firms already have access to commercial services in Australia the
targets would be public services such as health care services.
US firms have their sights on overseas service
industries including health. The free market system of providing healthcare has failed in the USA. The US healthcare industry is
being destabilised by falling profits (Levit et al
1998) and is intent on expanding its markets. Australia’s healthcare sector could be seen as a lucrative market. The Coalition
of Service Industries (CSI), a coalition of US service corporations, is
a powerful lobby group that has been intensively pushing US and other government representatives to decrease
barriers in trade in services and delivery of services. In relation to
healthcare, the CSI’s 1998 submission to US trade representatives before the
Seattle meeting stated:
“Three general objectives are to encourage
more privatization, to promote pro-competitive regulatory reform, and to obtain
liberalization. Specific objectives are:
·
Transparent
licensing of health care professionals and facilities, which do not place
unnecessary or discriminatory burdens on US providers.
·
Obtain
market access and national treatment commitments allowing provisions of all
health care services cross border.
·
Allow
majority foreign ownership of health care facilities.
·
Obtain
a commitment for the cross border provision and transfer of health care
information.
·
Seek
inclusion of health care in WTO government procurement disciplines.
·
Strengthen
international cooperation to promote pro-competitive reform across countries.
·
Negotiate
Mutual Recognition Agreements (MRAs) for licensing of professionals and
cooperative agreements on regulation of facilities.
·
Develop
principles to guide regulators so as to minimize unnecessary costs on trade and
investment in the health care sector.
·
Simplify
regulations and provide transparency for the movement of personnel, both
professionals and patients”.
There is growing consensus among economists that while
markets may be important for a successful economy, there is also a vital role for the state. Governments have
traditionally been responsible for distributing and channelling resources, for
instance via public services such as healthcare. The DRS believes there must be
adequate protection of public services and provision
for governments to determine issues of national concern in trade treaties. In
all trade treaties there should be adequate provisions for governments to
designate and maintain monopolies, provide subsidies to public services,
maintain public policy flexibility and regulate in the public’s interest.
Nebulous definitions that are open to narrow discretionary interpretation such
as in the GATS Article 1.3 c) should be excluded.
Services must not be traded off for agriculture gains.
Health care services must be exempted from international trade agreements.
Export interests in the health sector are minor in relation to the importance
of the domestic health care sector. Inclusions in health care services
definitions should be comprehensive to include professional services, health
insurance, electronic health services and research and development. There must
be evidence of benefit to economic growth and equitable distribution of wealth
before including any other services.
The Australian government should closely examine the
experiences of both Canada and Mexico as well as the
USA in the North American Free Trade Agreement (NAFTA). NAFTA has encompassed rules to open services markets, created legal
rights for foreign investors, adopted competition policies for government
monopolies and set rules for technical standards and recognition of
qualifications. The scope of bilateral or regional agreements such as NAFTA has been wider than that of
WTO agreements.
Chapter 11 of NAFTA has been of particular concern especially in relation to expropriation and compensation and the provision for investor/state dispute settlement procedures. This allows foreign companies to make claims for compensation for nationalisation or expropriation of their services directly to the relevant national government. NAFTA Article 1110 ‘Expropriation and Compensation’ with the enforceable requirement for compensation makes expansion of the public component of the health system expensive and impracticable and deregulation irreversible. This greatly diminishes policy flexibility as expansion of public services is only possible with compensation. If Australia had been privy to an agreement with such a provision and the accompanying investor/state dispute settlement procedures at the time, Medibank or Medicare would never had come into existence.
There have
been a number of cases where investors have challenged
non-discriminatory regulatory measures as expropriatory such as S.D. Myers
versus Canada; Metalclad Corporation versus Mexico; Pope and Talbot versus
Canada; Ethyl Corp versus Canada; Crompton Inc versus Canada; and Methanex
versus USA. In California a resolution regarding concerns with
international investment agreements such as Chapter 11 of NAFTA was passed in
the California legislature. This resolution serves as a strong statement from
the California legislature that investment agreements such as Chapter 11
threaten democracy and should not be included in future trade agreements.
In FTAs the Australian Government must protect
Medicare and the PBS allowing for policy flexibility and the right to regulate.
This should not be just to maintain Medicare and the PBS at their current state
but to allow for policy flexibility that enables expansion of services. The
right to regulate the price of all drugs including those subject to patents
should also be protected.
IN NEGOTIATING INTERNATIONAL FREE TRADE AGREEMENTS THE
DRS CALLS ON THE AUSTRALIAN GOVERNMENT TO ENSURE:
·
Greater
participation and full public scrutiny in the negotiating process. All
proposals and requests must be made public. Adoption of the UN treaty making
process in which negotiating sessions are open and all documents are public;
·
Health
care consumers, advocates, researchers and representatives from all major
sectors involved in Australia’s health care system are involved and informed;
· Safeguarding Australia’s public service sector including healthcare will take precedence over free market agreements and securing market access for Australian exports;
· Clarity of definitions and exemption of public services and “governmental authority” that are not open to discretionary interpretation such as in Article I.3 c) of the GATS;
·
Effective exceptions for health care systems are
incorporated into any treaties or trade agreements;
·
A
self-defining exemption for health policies in all international trade and
investment agreements similar to the national security exceptions in the GATT
(Article XXI) and the GATS (Article XIV bis);
· Inclusion in health care definitions are all health related fields such as professional services, health insurance, electronic health services, research and development;
· The protection of Medicare and the Pharmaceutical Benefits Scheme (PBS) are paramount and any possible ramifications for these are thoroughly investigated;
·
Public
health insurance is explicitly shielded from any commitments to health
insurance;
·
The
ability for governments to designate and maintain monopolies;
·
A
clear definition of subsidy such as in the Agreement on Subsidies and
Counterveiling Measures (SCM) of the WTO that excludes public health care
systems;
·
A
narrow definition of expropriation in any agreement so that public expansion of
Medicare or the PBS is not interpreted as an expropriation. This should not
include compulsory compensation;
·
There
are no investor-state dispute settlements procedures that allow investors to
directly challenge public policy measures;
·
Provisions for the ‘right to regulate’ should be
explicit and decisions on “legitimate domestic political objectives” should not
to be determined by trade tribunals;
·
Professional Qualifications and Licensing
standards rules should not be determined by trade tribunals;
·
That the necessity of any measures “necessary to
protect human, animal or plant life or health” should be determined by a
central, regional or local government body, or designated non-government authority
rather than a trade tribunal;
·
The primacy of international human rights law over
international trade and investment treaties is recognised;
· Support for measures to promote and protect the right to health.
The DRS welcomes the opportunity to
present our views but we hold concerns at the short time frame given for
submissions. Again we stress that FTAs should be open to full informed public
debate and scrutiny before agreements are made and we hope for
continuing discussion, clarification and feedback during this important
process. The potential ramifications to Australian society are huge. In the
long term interests of the Australian population, sovereignty and democracy we
hope that the issues raise in this submission are given proper consideration.
References
·
Anderson
J and Hussey P (2001) ‘Comparing Health System
Performance in OECD Countries’ in Health Affairs, 20 (3): 219-232
·
Blendon RJ, Schoen C, DesRoches CM, Osborn R, Scoles KL & Zapert K
(2002) 'Inequities In Health Care: A Five-Country Survey' in Health Affairs
21, 182-191.
·
Chernichovsky D (1995) ‘Health system reforms in industrialised
democracies: An emerging paradigm’ in The Milbank Quarterly Vol. 73, No.
3: 339-372
·
Goldberg
M A and White J (1995) ‘The Relation between Universal Health Insurance and
Cost Control’ in The New England Journal of Medicine, 332(11): 742-744
·
Levit K, Cowan C, Branden B, et al (1998)
‘National health expenditures in 1997: more slow growth’ in Health Affairs,
17: 99-111
·
Productivity
Commission (2001) International Pharmaceutical Price Differences
·
Saltman
R and Figueras J (1998) ‘Analyzing the evidence on European health care
reforms’ in Health Affairs, 17 (2): 85-108
· Schoen C, Davis K, DesRoches C, Donelan K, Blendon R, and Strumpf E (1998) ‘The Commonwealth Fund 1998 International Health Policy Survey: Health Insurance Markets and Income Inequality: Findings from an International Health Policy Survey’ in Health Policy April 2000
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The Doctors Reform Society of Australia, Box 992 Gosford 2250 Phone 02 9264-9084 Fax 02 9267-4393. |
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Articles Menu | What's New | Home Page | |
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