Elsevier

The Lancet

Volume 362, Issue 9389, 27 September 2003, Pages 1072-1075
The Lancet

Viewpoint
The public health implications of world trade negotiations on the general agreement on trade in services and public services

https://doi.org/10.1016/S0140-6736(03)14419-4Get rights and content

Summary

Trade ministries from the World Trade Organization's (WTO's) 144 member states are presently deciding which public services to open to foreign competition under the complex liberalisation rules of the general agreement on trade in services (GATS). A frequent criticism of the WTO system is that it reduces national autonomy over public policy. However, respect for national sovereignty is asserted in the GATS treaty. Here, we examine claims made by the WTO and others that GATS exempts public services and does not require their privatisation. We discuss trade treaty processes that can subject public services to commercial rules, the treaty's flexibility with respect to national autonomy, and the effect of GATS in situations in which national autonomy is not protected. We conclude that national autonomy over health policy is not preserved under GATS, and that accordingly, there is a role for international standards that protect public services from the adverse effect of trade and market forces.

Section snippets

Are public services excluded from trade agreements?

National autonomy is affected by the scope of GATS. Article 1.3 states that “services supplied in the exercise of government authority” are exempt from the treaty, and it further defines government authority services as those that are neither commercial nor supplied in competition with other providers. But the treaty does not define commercial or competition, and it has frequently been pointed out that the exclusion could be ineffective because few public services are entirely free from

Does GATS require privatisation?

Privatisation is one of the most hotly contested issues to emerge in the debate about GATS and national autonomy. Defenders of WTO agreements have repeatedly rejected claims that GATS requires privatisation of public services.8 However, a condition of membership of the WTO is that market forces operate more widely after accession. For example, eastern bloc countries' accession to the WTO entails a programme of privatisation under accession agreements, and WTO members must be kept informed about

How WTO rules interact with other trade laws

The right of governments to control domestic policy— their right to regulate—is modified by the complex interaction between WTO rules and case law about what constitutes trade and therefore what is subject to trade rules. The European Court of Justice is an example of a regional trade court at which this issue is decided.

The European Court of Justice determines which activities are covered by European competition and trade rules, or open to competition, and which are reserved to the state or

Do limits on liberalisation commitments protect national autonomy?

WTO members can limit the effects of GATS on their autonomy by reserving certain policy areas for national rather than international control when they voluntarily liberalise service industries. Liberalisation promises consist of commitments to open services to markets (market access commitments) and to remove barriers to foreign suppliers (national treatment commitments). National treatment is a fundamental free-trade principle that outlaws discrimination against foreign suppliers when

The WTO's use of dispute settlement to judge the necessity of public policies

The most substantial power vested in the WTO when it was formed in 1994 was a dispute settlement mechanism, the findings of which are mandatory on member states. The WTO's forerunner, the general agreement on tariffs and trade (GATT), relied on consensus in dispute settlement. The necessity test is one of the key mechanisms available to WTO courts of the dispute settlement mechanism. The test allows the WTO to determine when a domestic policy that is discriminatory—as a WTO panel ruled in the

Conclusion

There is compelling evidence to show that GATS and the WTO involve national governments in trading some of their sovereignty for the putative economic gains of liberalisation. In the process, governments lose rights to regulate and to protect non-economic values and the principles that shape provision of public services. The claim that governments can completely protect the services they want to is undermined by the cross-cutting pressures of GATS and uncertainty about the exemptions,

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