THE GENERAL AGREEMENT ON TRADE IN SERVICES (GATS)

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1 THE GENERAL AGREEMENT ON TRADE IN SERVICES (GATS) Application to Health and Social Services Trade in Services Division WTO 1

2 Structure of the WTO Goods Services Int. property Dispute settlement Basic principles GATT GATS TRIPs DSU Other instruments Other goods agreements and annexes 8 annexes Market access Tariff schedules Schedules of specific commitments 2

3 Scope, coverage, definition MEASURES AFFECTING TRADE IN SERVICES AT ALL GOVERNMENT LEVELS ALL SERVICES (except governmental services and air traffic rights) FOUR MODES OF SUPPLY - Cross-border supply - Consumption abroad - Commercial presence - Movement of natural persons 3

4 GATS definition of health services Health Related and Social Services Hospital services; Other human health services; Social services Professional Services Medical and dental services; Services provided by midwives, nurses, physiotherapists and para-medical personnel 4

5 Definition of services trade MODE Cross-border Trade Consumption Abroad Commercial Presence Movement of Natural Persons EXAMPLE (Health) Tele-diagnosis from abroad into country A A's residents obtain hospital treatment in a foreign country Foreign hospital operator has subsidiary in A Foreign nurse works in A 5

6 Liberalizing under the GATS means undertaking specific commitments on Market access (Article XVI) Absence of quotatype and similar restrictions National treatment (Art. XVII) Foreign services and services suppliers must be accorded treatment no less favourable than that accorded to nationals 6

7 Commitments are recorded in national schedules The GATS requires each Member to submit a Schedule of Specific Commitments that lists the sectors in which it grants Market Access and National Treatment. 7

8 To commit or not to commit? Members can choose the sectors in which they want to undertake commitments GATS does not require liberalization of health services Absence of commitments does not necessarily mean absence of trading opportunities! 8

9 What type of commitment? Commitments can range from Unbound to None for any individual mode of supply In-between... Limitations to market access Number of foreign services suppliers, foreign equity participation, economic needs test, etc... Limitations to national treatment Foreign hospitals are required to train local staff. 9

10 How GATS Schedules are structured Modes of supply: 1) Cross-border supply 2) Consumption abroad 3) Commercial presence 4) Presence of natural persons Sector or subsector Limitations on market access Limitations on national treatment Additional commitments Hospital Services (CPC 9311) 1) Unbound* 2) Unbound 1) Unbound* 2) Unbound 3) Only through incorporation with a foreign equity ceiling of 51 per cent 3) None 4) Unbound except as indicated in the horizontal section 4) Unbound except as indicated in the horizontal section *Unbound due to lack of technical feasibility 10

11 To be kept in mind: Commitments do not affect... Non-discriminatory domestic regulation (standards, licensing requirements, universal service obligations, etc.) Government procurement decisions Export-related measures Private commercial actions 11

12 and commitments may be renegotiated or, in certain circumstances, disregarded The GATS allows Members to Renegotiate their commitments against compensation Ignore them for health and other public policy reasons and introduce restrictions to protect the balance of payments. 12

13 GATS obligations in the absence of specific commitments Most-Favoured-Nation Treatment Transparency obligations Some other good governance provisions (availability of legal remedies, etc.) Note: There is no obligation to open markets! 13

14 Most-Favoured-Nation (MFN) Treatment each Member shall accord immediately and unconditionally to services and service suppliers of any other Member treatment no less favourable than that it accords to like services and service suppliers of any other country (Article II:1) 14

15 Governmental Services : outside the scope of the GATS Excluded from GATS coverage are services provided in the exercise of governmental authority which, in turn, are defined as services that are supplied neither on a commercial basis, nor in competition with one or more service suppliers. (Article I:3) 15

16 What are Governmental Services? Typical examples: Police, fire protection, monetary policy operations, customs administration, etc. and any other public service (health, education, social security schemes, public retirement plans, etc.) meeting the relevant criteria (!) 16

17 Sector focus of current commitments (Developed/Developing Country Members, August 2003) Developed Developing

18 Country Pattern of Current Commitments (Number of WTO Members, May 2004) Medical and dental services 62 (44)* Nurses, midwives, physiotherapists 34 (17)* Hospital services 52 (37)* Other human health services (ambulances etc.) 22 (20)* *Developing and transition economies 18

19 Progressive liberalization Article XIX of GATS Successive rounds of negotiations, starting in January 2000, with a view to achieving a progressively higher level of liberalization The rule-making negotiations Safeguard measures, subsidies, government procurement and domestic regulation The market access negotiations The request / offer process Where do we stand? 19

20 Liberalizing health services? Liberalizing health services is not an end in itself Questions What health policy do we want? Can commitments under the GATS contribute to this policy? Answering these 2 questions requires the involvement of trade and health policy makers! 20

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