Truth or Consequences? The Law and Politics of the GATS Health Care Debate

This posting includes an abstract and introduction to the peer-reviewed article,
"Truth or Consequences? The Law and Politics of the GATS Health Care Debate," Canadian Foreign Policy, Vol. 12, Nol. 2 (Fall 2005), pp. 97-133. To download the full text in pdf format, or read the entire article online, go to http://www.carleton.ca/cfpj/


TRUTH OR CONSEQUENCES?
THE LAW AND POLITICS OF THE GATS HEALTH CARE DEBATE

Mark Crawford


Abstract


The debate between critics and defenders of the General Agreement on Trade in Services (GATS) has drawn attention to the GATS, prompted greater government efforts at consultation, challenged the democratic legitimacy of the WTO, and led to an exploration of possible interpretations of GATS clauses that could impact on health and social policy. The article argues that defenders of the GATS are probably correct in their legal interpretations of the key protections of policy autonomy contained in the Agreement, most notably the Article 1:3 “governmental authority” clause. That is not the whole story, however: maintaining the conditions of policy autonomy in the health care sector will prove increasingly difficult in a liberalized trading environment.


Introduction
The Uruguay round of international trade negotiations that created the World Trade Organization (WTO) and the General Agreement on Trade in Services (GATS) not only extended international trading rules to services, an area that was mostly excluded from the General Agreement on Trade and Tariffs (GATT), but in so doing, actually redefined the scope of the international trade regime in a novel way to include not just traditional cross-border trade, but also three non-traditional modes of supply.[1] This suggested the potential for liberalization of health insurance and other health services, as well as escalating transformations of the broader economic, political, and regulatory context of health care. It is, therefore, unsurprising that the launch of the WTO’s initial round of negotiations under the GATS in February 2000 occasioned a good deal of critical commentary from Non-Governmental Organizations (NGOs) concerning the possible deleterious impacts of multilateral trade liberalization on public health systems and other public services. Predictably, trade negotiators representing Canada and most other countries have rejected many of the criticisms as being misinformed, speculative or alarmist.
How well public health care systems can be insulated from the effects of international trade agreements has become a litmus test for judging globalization in liberal welfare states worldwide. It has also been an especially important basis for evaluating Canadian services trade policy. Medicare is Canada’s most cherished and expensive social program, and its protection – including its express exemption from any offers Canada might make to liberalize services – is a high priority. Ministers of International Trade have repeatedly reassured Canadians since the formulation of Canada’s initial GATS bargaining position in 2000-2001 that health care is off the table.
Each side of the GATS health care debate is concerned with different aspects of Canada’s policy autonomy. For GATS defenders in the Canadian government and foreign policy community, the maintenance and extension of Canadian influence during the WTO’s formative stages is crucial. In order to capitalize on Canada’s comparative advantage in many service sectors, and for Canadian officials to continue to “punch above their weight”, Canadian interests must be actively asserted in the GATS negotiations. GATS critics, on the other hand, are far more worried about the potential threats to domestic policy autonomy to set and effectively enforce health and social policy standards, and about the democratic legitimacy of allowing the WTO to constrain elected national lawmakers.
Although a decade has passed since the inception of the WTO and the GATS, the debate continues to be conducted under conditions of extreme uncertainty. The thrust of many expressions of concern from civil society, labour, municipal, health, and education groups has been to urge caution on the part of the federal government, to advise the government not to make any commitments (even in apparently ancillary or unrelated services), nor to actively pursue GATS negotiations until there can be greater certainty about the consequences. The typical response on the part of trade ministers and officials has been to reiterate expressions of confidence about negotiated protections of health and social policy, and to point out that whatever certainty eventually does arise from the GATS/WTO negotiations and subsequent dispute settlement processes should reflect Canada’s interests having been vigorously represented at the bargaining table.
Underlying these contrasting attitudes toward autonomy and uncertainty is the common assumption that the debate turns on the likely legal interpretation of specific GATS provisions by future WTO dispute panels. While this legal discussion – in which critics and defenders of trade liberalization typically exchange very different interpretations of what the GATS and its various provisions will mean – is very important, a full understanding of what the liberalization of trade in services ultimately may mean for health policy requires that we also try to look to the broader political context. A formal legal analysis of Canada’s right to regulate cannot be expected to yield an appreciation of how a liberalized environment may affect various interests in society, or the choice and cost of health policy instruments. Nor can a public policy of relying on sectoral exemptions from trade treaty rules be expected to completely insulate Canadian health care from the effects of trade agreements.
This article seeks to clarify and advance the GATS debate through a mediation of law and politics. First, I examine the structure of the GATS debate, showing that a typical pattern is reliance by GATS defenders on the use of formal legal truth-claims, which do not fully respond to concerns about the implications of the GATS/WTO for policy autonomy and democratic legitimacy. This is not intended to deprecate the value of legal analysis, however. In the second section I try to show that the most recent and detailed work by legal academics can indeed be highly useful in reducing our uncertainty about some of the most contentious issues. I then conclude with a few observations about the tenuous nature of the legal separation between public health care and trade treaties, and how the GATS/WTO might be expected to affect decision-makers in the health policy community in the future.


[1] Thus, the GATS covers not just cross-border trade, such as (in the case of health services) provision of diagnosis or treatment planning services in country A by suppliers in Country B via telemedicine (mode 1), but also consumption abroad, e.g., movement of patients from Country A to Country B for treatment (mode 2); commercial presence in a country, e.g., establishment of, or investment in, hospitals in a country by foreigners (mode 3); and temporary presence of natural persons in a client/host country, e.g., service provision in Country A by health professionals from Country B (mode 4).