Posted by http://www.abc.net.au/rn/talks/8.30/helthrpt/stories/s267197.htm on May 18, 2001 at 22:40:46:
The World Trade Organisation
And Health Care Systems
Broadcast Monday 26 March 2001
with Norman Swan
Summary:
How the World Trade Organisation can influence
health care systems internationally.
Transcript:
Norman Swan: Medicare, the way we regulate
the introduction of new medications and the PBS
which sets prices for subsidised drugs, could be
seriously under threat if negotiations just started
at the World Trade Organisation go the way of
large private sector interests.
Under the banner of free trade, US managed care
organisations could find it a lot easier to gain
access to the Australian healthcare market, and
perhaps even force the dismantling of some
publicly funded services.
These are the allegations being made by a British
gkroup of health policy analysts.
It’s happening at a time when community concern
is very high about a world ruled by market
considerations. It brought out demonstrations in
Seattle, Melbourne and Davos. The South African
Government is being taken to the World Trade
Organisation over its attempts to make HIV drugs
more affordable.
And pharmaceutical companies are muttering
about hauling Australia before the World Trade
Organisation over our publicly funded and
regulated prescription scheme.
Professor Allyson Pollock runs the Health Policy
and Health Services Research Unit at University
College, London. The WTO takes her criticism so
seriously that they’ve devoted space to it on their
website.
Allyson Pollock: I think you have to go back to
the World Trade Organisation whose main remit is
of course the opening of markets, and I think the
other important thing to understand is that the
World Trade Organisation now is focusing on the
service industry, because of its growing
commercial importance.
One of the problems is that manufacturing has
declined because of international competition. The
big US and European corporations have had to
look at services and an alternative source of
profit, and by services I mean everything from
health and education to transport and prisons. So
this is the new profitable sector that they’re
targeting. And if you think about it, on average
most countries in the Western world are spending
anything between 8% and 13% of their GDP on
their health and perhaps the same on education.
So of course this has been considered the great
unopened oyster for the corporations, and that’s
exactly their rationale, is that they’re now
targeting the funds that governments were once
spending on public services and they see this as a
very important source of profits.
Norman Swan: Who are these faceless
corporations that you’re talking about? I mean is
this Ford Motor Company or General Motors
wanting to get into health care?
Allyson Pollock: Well yes, it’s a mixture. The
World Trade Organisation of course represents
134 nation states, so it represents the
governments. But of course you have to
understand that the transnational corporations sit
on the advisory committees and they’re part of the
sub-committees and they do extensive lobbying.
Indeed it’s been described the WTO trade
agreements as a Bill of Rights for corporate
business, and of course these are everything from
the great big US HMOs, the health maintenance
organistions and the pharmaceutical industry, and
includes Ford Motor Company if you like, or
British Telecom, you name it. You think of a
corporation and they’re there at the table, they’re
there lobbying either through, there’s actually a
European Services Network of multinational
industry represented, so they’re incredibly well
organised and they’re very well focused. And
indeed the US is a coalition of service industries
which actually lobby the US trade delegation.
Norman Swan: So what you’re saying is that with
rapidly changing markets that you’ve got around
the world, almost as soon as you produce a new
product it becomes a commodity, your margins
get lower and you start looking as these people
talk about moving up in the food chain, which is to
providing services which provide you a better
margin on your money?
Allyson Pollock: Yes. I mean with the decline in
manufacturing but of course the service sector
certainly in the European Union, accounts for
two-thirds of the economy and jobs, and similarly
in the USA more than a third of the economic
growth has been because of service exports.
Norman Swan: Do we know then what these
corporations would like to do?
Allyson Pollock: Yes, they want to open up what
we have traditionally considered as public
services to trade, that’s their remit, the
liberalisation as it’s called, or the opening to trade
of what has been traditionally the remit of
governments and under the control of government.
So really they’re looking for opportunities to
expand into health care and education which have
normally been under the control of government.
And the reason for that is of course they’re
targeting the money that government currently
spends on these services.
Norman Swan: So are we talking here about a
scenario like a health maintenance organisation
from the United States saying to the UK –
Allyson Pollock: Absolutely. And –
Norman Swan: Saying that the National Health
Service is illegitimate as far as the World Trade
Organisation –
Allyson Pollock: Yes, indeed. Well there are two
things. I mean the US is of the view that
commercial opportunities exist across the whole
spectrum of health and social care, everything,
hospitals, out-patients, clinics, nursing homes. And
then the second problem for them is how are they
going to target these services. So then what they
have to do is redesign the trade treaties, redesign
the rules so that they have openings into what has
traditionally has been public services under the
control of national governments. So what they
want to do is remove the control that national
governments have over their own services in order
to create the openings for the corporations.
Norman Swan: So let’s take the current Mark 2
of the World Trade Organisation set of
agreements. What’s in there at the moment that
allows governments to continue doing things like
providing public subsidy for pharmaceuticals, for
medications, and providing national health
insurance schemes like the NHS or Medicare in
Australia?
Allyson Pollock: Well the important trade treaty
with respect to public services is called the GATS,
the General Agreement on Trade and Services,
and indeed the GATS round started this week in
Geneva, and they’re anticipating settling on this
GATS round by the end of the year, because of
the disaster after Seattle, they want to make
significant progress. And they’ve basically put
together a committee to look at the reform of
domestic regulation, i.e. the rules which are made
by national governments like Australia, or the UK,
which actually protect their public services. So
they’re now trying to lever open public services by
reforming and changing the rules of the domestic
regulation of these countries. What they’re doing
is they’re trying to carve the domestic regulation in
such a way as it will outlaw all the traditional
mechanisms that governments use to protect their
services.
Norman Swan: That’s a very radical statement; I
mean what evidence do you have to back that up?
Allyson Pollock: Well there’s quite a lot of
evidence. One of the problems for the public is
that this is very technical, but what we’ve done is,
we’ve gathered together the evidence that we
have from the technical articles, so you would
have to look at something called Article 6.4, which
is part of that regulatory reform process, and it’s
the one that the WTO members are targeting
currently to try and limit the powers of government
to impose restrictions of commercialisation of their
services, because what they have to show in
future is that they’re operating least trade
restrictive policies, and it becomes very technical
because these organisations have to show, the
public sector now has to show that it’s operating
least burdensome regulations and that they’re
pro-competitive, and indeed there are specific
definitions of pro-competitive policies, and that will
now and in the definition in the GATS Article 6.4,
the working papers that inform that are saying
that there will be an outlaw of
cross-subsidisations, so for example Medicare
funds will be cross-subsidisation of your
population will be outlawed, and also the
cross-subsidisation of your public services.
Norman Swan: Now these are the amendments
that you’re talking about, these is not the existing
Article?
Allyson Pollock: No this isn’t the existing. One of
the problems is that the trade treaties at the
moment are not robust enough; they allow
governments to exclude their public services
voluntarily. This is the problem. So now what the
industry is doing is focusing on the GATS Articles
to actually make them so robust that they will then
apply top-down across all public sectors, across
all public services. So then governments will then
have to prove that they’re operating
pro-competitive and least restrictive to trade
policies. And if they can’t prove that, they then
face the risk of being taken to the WTO courts,
and the disputes panel mechanism.
Norman Swan: Now we’re already seeing some
examples of that, such as the Pretoria case
where I think 39 drug companies have taken the
South African Government to court; is that under
this Article at the moment, or not?
Allyson Pollock: No, it’s not under GATS at all. It
may well fall under something called the TRIPP,
which is related to intellectual property and
patents.
Norman Swan: This is about the generic drug
issue with HIV-AIDS and getting cheaper drugs
into South Africa.
Allyson Pollock: Yes, and that’s a separate
treaty and that may well fall under. So what you’re
seeing though in this interesting case of access to
essential medicines, is the same sort of
mechanisms being played out, where the
corporations lobbied hard to the WTO to get that
TRIPS agreement, that trade agreement
tightened in the interests of the corporations,
which now makes it increasingly difficult for
governments to actually fulfil their public health
functions, and to provide their populations in the
case of the developing world, with the drugs that
they need at affordable prices for example. Now
that’s a very good example of the way trade
agreements can operate against the public health
and the public at large.
Norman Swan: That’s probably a more difficult
area, where you’re dealing with intellectual
property and their profit is derived from intellectual
property and their ability to generate new
medications is derived from that, that’s probably a
harder area than in, say, the public sector where
it’s widely recognised around the world that in
health care and in education in particular, the free
market fails. So there is market failure and that’s
accepted by the World Bank, it’s accepted by
most international organisations. Is there any
concept of market failure in the World Trade
Organisation set of agreements?
Allyson Pollock: No indeed, and in fact there’s
now debate as to whether countries should be
offering universal health care services, at best
they can find new mechanisms. But in fact the
overall position is that nothing should obstruct
trade, that public health will be subsumed to
trade, and one of the best examples of that is in
the asbestos dispute that the WTO disputes panel
heard where France banned asbestos products in
public health grounds, but Canada complained
that the ban discriminated against their goods and
the disputes panel supported Canada’s
interpretation, ruling that goods cannot be
discriminated against on the grounds of health
risk. It wasn’t appropriate to apply a health risk.
So there you saw the trade organisations using
their own definitions to promote the interests of
trade rather than public health, and that’s one of
the problems, that the trade organisation will be
applying this thing called the necessity test, it
won’t be applied by outside bodies.
Norman Swan: And tell me about this necessity
test.
Allyson Pollock: Well the necessity test is
basically saying that the rule is that the burden of
proof means that you have to show that you’re
operating least trade restrictive policies, that
you’re actually operating in favour of least trade
restrictive policies.
Norman Swan: So that’s the criterion rather than
health or wellbeing?
Allyson Pollock: Well it’s the criterion and it’s in
whose hands that necessity test is. If the
necessity test is in public health hands you might
feel very comfortable that the public health would
be promoted. But it will of course be in the hands
of the WTO, World Trade Organisation disputes
panel. Of course they are there to promote trade
considerations. And I just want to refer back to
the pharmaceutical example, because of course
the pharmaceutical example is a very good
example of market failure, where 80% of the
people are not getting access to the essential
medicines and drugs they need because of
market failure, because of the pricing policies of
the pharmaceutical industry, and the ban on them
producing their drugs much more cheaply
themselves.
Norman Swan: And who sits on these
committees? I mean aren’t sovereign nations part
of the WTO and don’t they have the final say?
Allyson Pollock: Well the sovereign nations do,
but of course the very powerful alliances and
they’re both bilaterals and multinationals and the
US and the EU are incredibly powerful members
of the WTO. So they sit on these committees, the
governments have membership of these
committees, but also so do their trading partners
and the big multinationals, and they’re
represented on many of the sub-committees.
There’s a major issue for the developing world
because many of the countries in the developing
world don’t have either the necessary legal
apparatus but also they’re so tied into the actual
restructuring and they’re so in hock to the US and
the EU in terms of debt that it becomes very
difficult for them to be equal partners at the table.
Norman Swan: When will we know the answer
here?
Allyson Pollock: Well I think we won’t know the
answer; I mean one of the big problems of
accountability, this is in effect global government
at work, but with no democratic processes, and
actually what we saw in Seattle was the start of
mass movements now, trying to ask questions,
because most of what goes on is secretive, the
documents aren’t released into the public domain
and there’s very little scrutiny. So there’s a major
issue about public accountability, and I think one
of the effective things from Seattle is that the
WTO and the industry, are much more worried
and much more conscious of their role and the
distrust that the public has, I think over the next
year, is a very, very vital time for people to
become more interested in the World Trade
Organisation and especially in the General
Agreement on Trade and Services. But I actually
as it happens events will overtake themselves, I
mean I think the Pretoria South Africa case will be
a very interesting one, that’s mobilising global
public support for the developing world because
they of course are most vulnerable to trade in
public services.
Norman Swan: I must say though that with all the
threats to the World Trade Organisation around
the world, you’ve mentioned Seattle several times,
I’m surprised that these companies are going as
far as taking it to health and social services. I
mean they could risk the whole organisation
tumbling down because they’ve gone too far.
Allyson Pollock: Well as I explained, they’re now
targeting major portions of GDP. Now you have to
understand where the US is in this. Its health
maintenance organisations, its health care
industry is in financial crisis. It can’t squeeze any
more out of its government, nor can it squeeze
any more out of its employers. Its million-dollar
profits turned into nearly a billion dollar losses last
year. The major long-term care health chains are
now in voluntary liquidation as are many of the
HMOs, and the government’s having to bail them
out. They are now desperate for new markets
and new sources of profit, and for the US the
export of the managed care model, the HMO is
foreign policy. So you have to understand where
some of these influences are coming from; they’re
coming from the desperate search for new
markets to keep the economic stability of vibrancy
of say the US and Europe, and the US and
Europe are partners in crime in this, in that they’re
both competing for the same markets.
Norman Swan: But what you’re implying is that
the sovereign nations are just the pawns, I mean
it’s almost like an unreconstructed ‘60s lefty
argument that they’re all the pawns of the nasty
multinationals.
Allyson Pollock: Oh, it works both ways. The
symbiotic relationship: the corporations need the
government and the government needs the
corporations to bring in new sources of money
and new sources of profit so that they can
continue to sustain the economy basically.
Norman Swan: But when you say something like
this to at least the Australian government,
whichever shade it might be, they say ‘Look,
these things are excluded from GATS, don’t worry
about it, we’re not going to let them in to public
health or health care.’
Allyson Pollock: Yes, I mean that’s the
reassurance that they give, it’s a voluntary nature.
However then you have to understand that the
WTO negotiations which have just started this
week, have now set up a special committee to
look at the reform of domestic regulations,
because the major concerns for the WTO is the
voluntary nature, and the fact that countries have
been so slow to opt in their public services. So
they now want to have a degree of compulsion,
and they feel that by rewriting the trade treaties,
the Articles of the trade treaties, they will be able
to do that and take a top-down approach and
compel member states. And if members states
don’t oblige, they risk being taken to the WTO
court. They risk being taken to the court because
they risk being accused of being anti-competitive
and restricting trade.
Norman Swan: The World Trade Organisation
has a booklet which aims to refute many of
Professor Pollock’s allegations, which she has
outlined in considerable detail in a ‘Lancet’ article.
Allyson Pollock is Head of Health Policy and
Health Services Research at University College,
London.
REFERENCE: Pollock AM and Price D. Rewriting
the regulations: how the World Trade
Organisation could accelerate privatisation in
health-care systems. Lancet
2000;356:1995-2000.
Editorial: Trading public health for private wealth.
Lancet 2000; 356:1941