BY SARAH SEXTON
Amid the shouts of demonstrators, the protests of Southern delegations and the disagreements between the United States and European Union, the World Trade Organisation failed to launch a comprehensive revision of international trade rules in November 1999 in Seattle. But talks have since begun to change one of the 28 agreements overseen by the WTO — the General Agreement on Trade in Services or GATS.
In new negotiations on the agreement which began on February 25, 2000, in WTO headquarters in Geneva, the US, EU, Japan and Canada are trying to revise GATS so that it could be used to overturn almost any legislation governing services from national to local level. Domestic policy making, even on matters such as shop opening hours or the height and location of new buildings, could, in effect, be turned over to the WTO. All legislation would primarily be aimed at increasing trade.
Particularly under threat from GATS are public services — health care, education, energy, water and sanitation, for instance. All of these are already coming under the control of the commercial sector as a result of privatisation, structural adjustment and reductions in public spending. A revised GATS could give the commercial sector further access and could make existing privatisations effectively irreversible.
Irreversible
Services first came under the rules of the world trading system in 1995 when the WTO came into effect. The ambitious and ambiguous General Agreement on Trade in Services sets out rules governing international trade in practically all services. A government provides the WTO with a "schedule of specific commitments" listing which services and the ways of supplying that service it is prepared to open up to competition under GATS.
The majority of the WTO's [142] member countries have so far committed themselves to liberalising just a small part of their services. Most commitments have been made in tourism, hotels and restaurants, computer-related services and value-added telecommunications. The least number of concessions have been made in river transportation, basic telecommunications, recreational and cultural services, education and postal services.
Although GATS encompasses all services, many civil servants and government ministers believe that it makes an exception for public services — those "supplied in the exercise of governmental authority" (Article 1.3b) — such as health care, education or utilities.
But GATS defines government services so narrowly — "any service which is supplied neither on a commercial basis, nor in competition with one or more service suppliers" (Article 1.3c) — that the exception could be almost meaningless.
As far as GATS is concerned, if a government contracts out any part of its public services, such as cleaning or catering, or if private companies supply services also provided by the government, then those services could be judged by a WTO dispute panel as not being a government service and thus subject to GATS rather than exempt from it, that is, subject to competition from operators from abroad.
Health care is just one example of a public service threatened by GATS. Commercial interests now provide some of the health services in many countries, sometimes in competition (albeit limited and regulated) with public providers.
This dual system gives the WTO a useful rationale for encouraging further competition and privatisation through GATS.
"The hospital sector in many countries ... is made up of government-owned and privately owned entities which both operate on a commercial basis, charging the patient or his [sic] insurance for the treatment provided ... It seems unrealistic in such cases to argue for continued application of Article 1.3 [that the service is a government service] and/or to maintain that no competitive relationship exists between the two groups of suppliers of services", says a September 1998 background note on the subject issued by the WTO's Secretariat.
Huge stakes
The stakes are huge: expenditure on health in OECD [Organisation for Economic Cooperation and Development] countries is estimated at more than US$3 trillion annually.
To date, however, GATS has not been instrumental in privatising health care services and opening them up to foreign competition.
As of 1998, 59 countries had put one or more aspects of their professional (medical, dental, veterinary, nursing, midwifery, physiotherapy) services or health-related and social services (including hospitals) under GATS. Medical and dental services had the highest tally with 49 countries while 39 countries had agreed to open up hospital services to foreign suppliers.
Even if they have made such commitments, however, such countries can still limit foreign suppliers' market access and specify which ways of supplying the service are open to competition.
During GATS 2000 talks, US negotiators have made health care a special target: "The United States is of the view that commercial opportunities exist along the entire spectrum of health and social care facilities, including hospitals, outpatient facilities, clinics, nursing homes, assisted living arrangements, and services provided in the home".
The US Coalition of Service Industries is calling for majority foreign ownership of all public health facilities to be allowed: "We believe we can make much progress in the [GATS] negotiations to allow the opportunity for US businesses to expand into foreign health care markets ... Historically, health care services in many foreign countries have largely been the responsibility of the public sector. This public ownership of health care has made it difficult for US private-sector health care providers to market in foreign countries."
The US private health care sector also wants to gain access to "rapidly expanding health care expenditures in many developed countries" experiencing "an increase in their aged population".
GATS could facilitate further privatisation and competition in health care services if more countries are pressured during GATS 2000 negotiations to list health care services on their schedules of commitments in all ways of supplying the service.
In the longer term, challenges under GATS to public services could be another way. The US could take Britain to the WTO disputes panel, for instance, if the British government or any other body refused a US multinational permission to buy a British public National Health Service hospital which had been financed through the Private Finance Initiative.
A third way GATS could facilitate privatisation and competition is if mechanisms and principles underpinning the design, funding and delivery of public services are in effect proscribed — for example, if the vague requirement for "domestic regulation" to be "least burdensome" to trade is defined as "pro-competitive".
US 'health market'
Changes in health care provision in the United States over the past two decades illustrate these trends clearly.
In the early 1990s in the US, a growing number of hospitals, health maintenance organisations (HMOs, or insurer-type intermediaries between employers and hospitals), nursing homes, home care services and hospices became for-profit companies publicly traded on stock exchanges. HMOs, transformed from a social form of medicine into multibillion-dollar businesses depending on a mixture of public funding, private health insurance and user charges, acquired non-profit hospitals cheaply and gained effective control over US hospitals.
The pursuit of market share, the search for profitable admissions and relentless cost-cutting came to dominate all aspects of health care, even that provided by socially oriented entities.
By the late 1990s, pressure to protect profit margins had led to insurers and hospitals avoiding sick patients, the micro-management of physicians, a worsening of staff-to-patient ratios, and the outright denial of care to many. Instead of exercising greater efficiency in the use of available resources and greater integration of preventive and treatment services, the industry merely tries to avoid costs.
Health care is the largest sector of the US economy; over $1 trillion is spent on it every year, 46% coming from government insurance programmes. Nonetheless, some 44 million US Americans — one in six people — do not have health insurance, while millions of others are underinsured.
Private insurers tend to select the "best risks", mainly young and healthy people. They reject those with chronic illnesses and leave behind those who cannot afford the insurance. Private companies tend not to operate in the countryside where health services have always been sparse. Yet private operators rely on the very state health and social services that they are undermining. They take trained and experienced staff from the state system, select patients whose needs the public services have already identified, offer only the (profitable) services they want to, and set up private facilities, ranging from laboratory analysis to residential care, which can be rented or contracted out to the public service.
Private provision is not an effective means to promote public health. Yet without good public health, the health of every individual is endangered. As food policy analyst Tim Lang points out, many public health gains such as clean air, clean water and food safety were won once the affluent and the middle classes recognised that they could not escape the consequences of unhealthy conditions and that it was in their interests to tackle the causes of ill-health together.
By means of GATS, the WTO is stage-managing a new privatisation bonanza. Multinational and transnational corporations, including pharmaceutical, insurance and health care companies, are lobbying hard to capture the chunks of gross domestic product that governments currently spend on public services such as health and education. Revisions to GATS are by and large being proposed by trade negotiators from countries bent on obtaining better market access to export markets for domestic industries.
A wide range of Southern governments, unions and NGOs contend that a thorough assessment, independent of the WTO and associated bodies such as the World Bank or IMF, of the health, social, environmental and cultural impacts of existing service liberalisation (and indeed of all the WTO agreements) must be conducted, with special reference to the poorest and to women, before negotiations continue on GATS.
[Abridged from a report by British research NGO Corner House. The entire report can be obtained from the group's web site, <http://cornerhouse.icaap.org>, or be emailing <cornerhouse@gn.apc.org>.]