|
. |
|
. |
The Doctors Reform Society of Australia, Box 992 Gosford 2250 Phone 02 9264-9084 Fax 02 9267-4393. |
. |
|
|
||||
|
Articles Menu | What's New | Home Page | |
||||
Doctors Reform Society
Gosford NSW 2250
Tel 02 9264 9084
Fax 02 9267 4393
drs@nlc.net.au
www.drs.org.au
Submission
to the
Senate
Foreign Affairs, Defence and
Trade
Committee
on
The
General Agreement on Trade in Services (GATS) and
A
Proposed Australia-US Free Trade Agreement
April
2003
CONTENTS:
1. INTRODUCTION
2. BACKGROUND
2.1 Economic Globalisation
2.2 Inequality and Health
2.3 Government Regulation and Public Services
2.4 The Free Market in Health Care
2.5 Medicare and the Pharmaceutical Benefits Scheme (PBS)
3. THE GENERAL AGREEMENT ON TRADE IN SERVICES (GATS)
3.1 General
3.2 Exclusions and Exceptions
3.3 General Obligations with Specific Impacts on Health Care:
VI Domestic Regulation
VIII Monopolies
XV Subsidies
3.4 Specific Obligations:
XVI Market Access
XVII National Treatment
3.5 Progressive Liberalisation
3.6 The Right to Regulate and Dispute Resolution
3.7 Flexibility
4. A PROPOSED AUSTRALIA-UNITED STATES FREE TRADE AGREEMENT (FTA)
5. IMPACT ON DEVELOPING NATIONS
6. TRANSPARENCY, ACCOUNTABILITY, EVALUATION & CONSULTATION
7. CONCLUSIONS
8. REFERENCES
1. INTRODUCTION
The Doctors Reform Society (DRS) is an organisation of
doctors formed in 1973 to support the introduction in
The DRS has addressed health implications of economic
globalisation, the General Agreement on Trade in Services (GATS) of the World
Trade Organisation (WTO) and a proposed bilateral
free trade agreement (FTA) between
A free trade agreement (FTA) is an agreement between
two or more nations to remove 'substantial barriers to trade'. This may be in the form of bilateral, regional or
multilateral agreements. The prime objective of FTAs is to facilitate
international trade by private corporations. This is via the liberalisation of
trade in goods and services and the protection of direct foreign investment and
intellectual property rights by limiting government regulation. FTAs generally
favour market-based as opposed to government-administered
structures and promote privatisation.
International
trade in services has increasingly been included in FTAs and in 1994 within the
framework of the World Trade Organisation (WTO). Since 1995 the General
Agreement on Trade in Services (GATS), one of the free trade agreements of the WTO, has subjected
this significant sector, including health services, to multilateral trade rules.
“Barriers to trade in services” have become the subject of international trade
negotiation. Barriers to trade in
services in contrast to trade in goods are largely domestic regulatory barriers
rather than tariffs or barriers at the border (Sanger, 2001;
Shaffer et al., 2002).
The DRS believes universal public health
care,
The DRS believes economic
globalisation and the narrow free-market agenda of FTAs and the WTO is flawed. Narrow economic values have assumed
dominance at the expense of other values. This neo-liberalism of privatisation,
market and capital deregulation, tax cuts for the wealthy, reduced social
services and replacing the concept of ‘community’ with ‘individual responsibility’
have lead to increased inequality, social exclusion and poverty. Measurements
of benefit by Gross Domestic Product (GDP) do not take into account the costs
of economic growth and the distribution of benefits. Lack of government regulation and involvement in
resource distribution through socio-economic policies and delivery of public
services causes increasing socio-economic inequity. This contributes to poor
health outcomes and good health is
a prerequisite for human development and prosperous economies.
The DRS strongly believes health services should not
be negotiated in trade agreements. This submission will deal specifically with health
implications of economic globalisation and free trade agreements and the
ramifications on health care policy.
2. BACKGROUND
2.1 Economic Globalisation
Many
receive no benefit from
economic globalisation. Growing inequalities both between and within nations
cannot be ignored (Cornia, 1999; World
Bank, 1999; World Bank, 2000; UNDP, 2002; UNICEF, 2002). According to the
United Nations (UN), the gap between the rich and poor has been growing over
the last 50 years and the rate of growth has been greatest during the economic
liberalisation of recent decades. Although global wealth has never been
greater the distribution is ‘extraordinarily unequal’ (World Bank, 2000).
The ratio
between the average income of the world’s wealthiest five per cent of people
and the poorest five per cent increased from 78:1 to 123:1 in the five years
from 1988 to 1993 (UNDP 1999). The ratio
between the income of the richest 20% of the world’s population to the poorest
20% has increased from 30:1 in 1960 to 78:1 in 1994 (UNDP, 1999). In 1990 the annual income per person in
industrialised countries was 60 times greater than that in the least developed
countries; in 1999 it was almost 100 times greater (UNICEF, 2002). The gap between the average income in the richest
20 countries and the poorest 20 countries has doubled in the past forty years (World Bank, 2000).
Reports such as St Vincent de Paul’s Two Australias - Addressing Inequality and Poverty 2001 and Harding and Greenwell’s
Trends in Income and Consumption
Inequality in Australia highlight growing inequalities in Australia (St Vincent de Paul, 2001; Harding &
Greenwell, 2002). Poverty among adults has increased steadily during
the past decade (Harding et
al., 2001). Benefits from wealth generated in recent
decades has gone largely to the wealthiest in society. A comparison of data
between the 1993/4 and 1998/9 Household Expenditure Surveys by the Australian
Bureau of Statistics (Docs 6530.0) shows Australians in the lowest quintile of
household incomes in the five year period received an average weekly increase
of $9 - that is a 5% increase to $160 per week. In contrast, the top 20% of
income earners over that same period received an average weekly increase of
$343 (23.4%) to $1,996 per week.
Until the mid-1990s, rising market income inequalities
in many OECD nations were offset by progressive tax and public transfer systems
(UNDP, 1999). As public spending and investment
declines, post-tax and transfer income inequalities in several countries,
notably the US, are now growing more rapidly than market income inequalities
alone (Aba & Mintz, 2001). Many governments are actively
participating in globalisation's upward redistribution of wealth and power. The
'economic stimulus' tax packages in the United States have given three-quarters
of US$212 billion in tax relief over three years to the top 10 per cent of
taxpayers with six per cent going to the bottom three-fifths of the population.
More over, two-thirds of the tax breaks are destined for corporations (Borger, 2001). Thirty six per cent of the
most recent US $1.35 trillion tax cuts went to the richest one per cent of
taxpayers who have an average annual income of US $1.1 million and get tax
breaks to the tune of $80,000 each (Krugman, 2003; Weisbrot, 2003).
The neo-liberal, free market agenda may regard
inequality as a positive virtue (Margaret Thatcher’s
‘glory in inequality’), inevitable and/or necessary. The proponents may
support this with the claim that ‘there are
more winners than losers’ and see inequality both as a necessary by-product of
a well-functioning economy and as ‘just’, as one’s activities are related to
subsequent ‘rewards’ (Coburn, 2000). The ideology is that the free market will generate wealth by stimulating
economic growth so that both poorer nations and poorer people within nations
will generally be better off. Poverty is claimed to be best reduced through
growth-orientated rather than distributive policies.
Studies
by the United Nations University/ World Institute for Development Economics
Research (UNU/WIDER) and the United Nations Development Programme (UNDP) have
indicated that benefits and costs of market liberalisation reforms have not
been clear cut (Cornia, 1999; Jha,
2000; Singh & Dhumale, 2000; Taylor, 2000). Evidence suggests
that for most countries, the last two decades have brought about slow growth
and rising inequality (Braun, 1997; Shen
& Wiliamson, 1997; Beyer et al.,
1999; Cornia, 1999; Harrison & Hanson, 1999).
In a report on eighteen transitional and developing countries, evidence
indicated that few, if any, found a sustainable growth path, that employment
growth was slow to poor and that increasing income inequality was the rule (Taylor, 2000). Analyses have
indicated that, compared to the two earlier decades of 1960–1980, economic
growth over the last two decades of increasing trade liberalisation (1980–2000)
slowed dramatically, especially in the less developed countries. Two exceptions
were India and China where the increase in growth began a decade before their
opening to trade (Weisbrot et al., 2000). Real GDP per
capita in sub-Saharan Africa has halved in relative terms and in Latin America
has fallen by 30 per cent from 1971 to 1996 (Woodward, 1996). World Bank
evidence from poorer countries undergoing structural adjustment also points to
stagnating per capita income, rising poverty and or declining life expectancy (World Bank, 1999).
The free market offer of escape from
poverty through access to vast
export markets does not necessarily advantage small farmers and manufacturers
even where the markets are actually open to developing countries. Technologies
of large-scale farming and manufacture are reinforced through the conviction
that it is advantageous to only produce items you can produce more cost-effectively
than elsewhere in the world and then trade them for whatever else you need.
This benefits multinational corporations that are capable of investing in
large, centralised production facilities which are increasingly concentrated in
a few places like China where wages are low and regulations are lax and works
against anything that can be done on a small scale or locally. (Venkat, 2003)
The argument that free markets enhance
welfare by ensuring more efficient production ignores the fact that there are
vast multitudes of people with little or no ability to participate in market
processes. The
more unequal the distribution of income, the fewer are the benefits of growth
to poor people (UNDP, 2002). Social
factors such as education and health influence economic participation.
2.2 Inequality and Health
Increasing inequality
has serious ramifications for health, as inequality is the most powerful factor
affecting population health. Socio-economic
inequalities in mortality rates are observed in almost every country for which
data is available. These inequalities
are seen for over 75% of all causes of deaths and are found for all age groups (Najman & Davey Smith, 2000). The effect is linear rather than a
threshold effect (Adler et al.,
1993). Income inequality within a population is an
important determinant of both individual and population mortality (Davey Smith, 1996; Wilkinson, 1996; Davey Smith et al., 2002). Cross-national research shows that the
greater the degree of socioeconomic inequality within a society, the steeper
the gradient of health inequalities (Daniels et al.,
1999). In other
words, inequality causes ill health.
The US is the
‘richest country’ in the world, but it is not the whole country that is rich -
only the one per cent of the population who own 40 per cent of the wealth (Bezruchka, 2000). Of fifteen OECD nations, the USA has the
highest level of income inequality (Anderson & Poullier, 1999a) and worse health outcomes. In the USA,
life expectancy has consistently been lower and infant mortality higher than
other developed nations in the OECD. In ranking for life expectancy of nations
in 1997 the USA was 25th, behind all other rich nations and some poor nations (UNDP, 1999).
Kerala, one of India’s smaller and poorer states, provides an example of a poor community achieving
high health outcomes and literacy levels through redistributive policies such
as egalitarian social services and a land tenure system (Franke & Chasin, 1992; Kloos, 1994; Herring &
Knight, 1999). There has been radical land reform,
public food distribution, special measures for agricultural workers, employment
opportunities for low-caste people and health service availability of 100% for
urban and 91% for rural people. The literacy rate was around 90% (>86% for
women), life expectancy 72 years (national average 61 years) and infant
mortality rate of 17 per 1,000 in 1991. The life expectancy in Kerala
approaches that of the United States and is greater than that for Washington DC
(World Bank, 2000; Wilkinson & Bezruchka, 2002).
2.3 Government Regulation and Public Services
Resources generated through economic
growth do not automatically help the poor or disadvantaged (UNDP, 2001). The free market does not deal
with social justice, wealth distribution or inequities. Political, social and legal non-market forces do. Corporations are not society's custodians but
commercial entities that act in the pursuit of profit. Their business interests
may coincide with society's but this is not guaranteed. Governments are
supposed to respond to citizens and act on their behalf (Hertz, 2001).
There is an
increasing consensus among economists that while markets may be important for a
successful economy, there is an essential role for the state (Shaffer et al., 2002). Government regulation is seen to play a positive
role in economic growth. The
recent much publicised view of Joseph Stiglitz, ex-chief economist of the World Bank, that institutions
like the International Monetary Fund (IMF) and the WTO have mismanaged the
global economy and exacerbated poverty and hunger in developing countries are an example (Stiglitz, 2002).
Governments have traditionally been
responsible for distributing and channelling resources, for instance via public
services such as health care. The World Bank’s World Development Report
2000/2001 Attacking Poverty stresses
the importance of political, state and social institutions along with public
investment in education and health in dealing with poverty (World Bank, 2000).The basis of public services is redistribution. Risks are pooled
across society and entitlement is based on need not the ability to pay.
Government action is required to direct resources towards public social
services. FTAs, however, favour market-based
as opposed to government-administered structures (Johnson, 2002).
2.4 The Free Market in Health Care
There are individual
and social objectives in health care delivery. Health care reflects societal
values and its delivery is influenced by philosophical viewpoints. There may
arise a dichotomy between the view that health and health care are a shared
civic good with community responsibility and the view that it is an individual
responsibility best left to market influences (Siedlecky,
1999/2000). The
balance between individual and community responsibility, private and public
coverage and the extent of government involvement has been a matter for
national policy and debate.
There has been a
drive towards privatisation and market provision under the neo-liberal push of
economic globalisation (World Bank, 1993;
Buse & Gwin, 1998). The relatively
recent free market definition of health care as a tradable commodity threatens public health strategies and
universal health care delivery. It conflicts with public health principles and multiple international
accords that define access to health care a basic public health and rights
issue (United Nations,
1948; United Nations, 1969; United Nations, 1976; United Nations, 1979; United
Nations, 1990).
Privatisation and deregulation pose barriers to population health.
A UN report concluded that 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.
There are strong reasons why the public sector has
generally been the main contributor in the delivery of health care services.
These include market failure in the health care sector and that the competitive
market does not deal adequately with issues of public interest and equity. In
the delivery of health care there are often overriding benefits of public
interest that bring about a common good. These factors are not taken into
account in the private competitive market. The government has been considered
to be the best provider in these circumstances to ensure access and equity.
Other advantages of a public system are more effective controls of expenditure
limits; monopsonic buying power; low administrative costs; and the ability to
better serve population and public health needs as well as individual needs (Chernichovsky, 1995).
The situation seen in the USA indicates the failure of market provision of health services backed with only limited government subsidies and involvement. It is more expensive, less efficient, less equitable and has worse health outcomes