IPN Health Blog

Trade - a solution for healthcare

As healthcare inflation and rationing continue to burden governments in wealthier countries, this new report from ECIPE suggests a means of relief which could simultaneously help developing countries – trade.

This may hardly seem like a revolutionary idea – most industries have been reaping the benefits of trade for years. Yet healthcare remains conspicuously guarded from such benefits.

Ring-fenced by national governments, healthcare is too often restrained by state monopolies. However, recent rulings (such as by the European Court of Justice) are stipulating that people have a right to be treated outside nationalised systems, and even outside national borders.

The cost savings are obvious. A hip operation in Thailand costs one-sixth of the cost in the UK. If just 10% of US patients went abroad for just 15 types of treatment, the US economy could save $1.5bn a year, including travel costs.

Developing countries are supportive. In 2006 alone Singapore treated 500,000 foreign patients; India treated 600,000; and Thailand around 1.2 million.

Yet while countries such as Gambia, Jamaica, Malawi and South Africa have committed to healthcare liberalisation in the General Agreement on Trade in Services (GATS), most wealthier countries remain uncommitted. Their governments should ignore the siren voices of protectionism, and liberalise their healthcare for the good of patients everywhere.

Trade is good for your health, especially if you are poor

Anti-globalists frequently complain that increasing international trade is bad for the poor, as it leaves them at the mercy of international competition and ruthless multinationals.

New findings suggests that increased trade is actually very good for the poor, in particular their health.  Over at the Free Market Foundation, economist Jasson Urbach reports on this evidence that trade improves health through the twin mechanisms of economic growth and technology transfer.

I wrote a study on this theme a couple of years ago. I made the point that the massive increases in global life expectancy that characterised the 20th century were largely down to increased trade - this period saw the global spread of health knowledge such as sanitation, as well as technologies such as vaccinations and antibiotics.

How the Hong Kong text affects health

Here's a quick look at how the latest WTO draft agreement affects health.

Services. While the agreement doesn't seem to roll back liberalisation in services, neither does it do much to push it forward - particularly with regards to LDCs. 

I've already written about the huge benefits that LDCs could gain if they were to open up to genuine competition in services, so it's a shame the text is not more explicit. Moreover, the lack of positive movement on this issue is a depressing testament to the effectiveness of the ideological scaremongering undertaken by the NGOs.

Tariffs on drugs. I didn't see anything on this in the draft text. Admittedly, I only got to look at it for a few minutes before Julian swiped it (he's commenting live on CNN right about now)!

TRIPS and public health. This was done and dusted before the negotiators got together in Hong Kong this week, and is now effectively a dead issue.  This closure renders many of the activist campaigns that were set up to campaign against TRIPS null and void.

Is that why members of MSF's Access to Medicines campaign have been running around Hong Kong all week trying desperately, but unsuccessfully, to resurrect the issue? Hopefully we will be hearing a lot less from them in future.

I'll post more when I've given the text a closer inspection.

Bring on the GATS!

While much of the bluster in Hong Kong has been over agriculture, it seems that the General Agreement on Trade in Services (GATS) is rapidly becoming another controversial sticking point.

Left-wing activists and trade unions are pushing the line that the GATS will require wholesale privatisations of public services and utilities, bringing with it extortionate user charges and social chaos. This spin is being eagerly lapped up by certain developing countries.

This is misleading.  GATS retains flexibilities which allows signatories to opt in and opt out of what they choose.

But the real shame is that poorer countries stand to gain a great deal from the GATS.  Competition and private provision of utilities such as water would be a good thing . The majority of public utility monopolies in poorer countries provide a woeful service. Access to water is often determined by bribes or favour-calling from friends in the bureaucracy.

Where water has been privatised - such as in Chile and Guinea - both supply, quality and access rates have increased dramatically.

More broadly, it is worth pointing out that no country has ever got rich from agriculture alone. Services are where the money is.

Lower-income countries should be doing everything in their power to encourage the development of service sectors in order to provide both jobs and prosperity. The GATS is a useful tool for moving in this direction.

Free trade myths and realities # 2

Myth: The Agreement on Trade in Services (GATS) violates fundamental human rights to services such as water and healthcare.

Reality: GATS would not lead to the privatization of services, even though this would almost certainly be a good thing. Governments rarely supply services in a reliable, cost-effective manner. In poor countries, the often fail altogether to supply essential services, such as delivery of clean water. Private providers would at least supply these services.

If the service is privatized in a transparent and efficient manner, or if the government simply ceases to oppress private providers, it is likely that the poor will be far better off. Insurance systems in poor countries exist only for the very wealthy, and governments’ own barriers to healthcare provision present far more problems for access to healthcare than does competition by foreign businesses. Public health agencies in poor countries often suffer from corruption, bureaucracy, and lack of accountability to poor people who most need those services.

Free trade myths and realities # 1

Myth: Trade and globalization is causing the rampant spread of infectious diseases

Reality: Trade and globalization have significantly reduced rates of infant mortality and increased life
expectancy. Increased commerce and cheaper, faster transport means that there are more people are on the move now than ever before, which in principle could lead to increased spread of diseases such as SARS. However, increased commerce has also led to increased wealth and to improved technologies. As a result, the burden of disease has declined in both rich and poor countries. For much of human history, life expectancy was between 20 and 30 years. By 1998 it had increased to 66.9 years worldwide.

NEW PAPER: Free trade for better health

Things seem to be going fairly flatly over here in Hong Kong on the first day of the WTO meeting.  So far, most ministers have simply said that they are not especially hopeful that they will agree anything.

They should keep trying! Increased trade liberalisation could bring huge benefits for the poor of the world, especially with regard to their health.

This new CFD paper shows that the last 50 years of trade liberalisation has had a significant impact on global health, driving up life expectancies and reducing the burden of age-old diseases. 

This is because free trade is clearly linked with rising prosperity, which allows people to buy improvements in sanitation, nutrition and living conditions.

Secondly, free trade has helped spread health-related technologies all over the world from the countries in which they were first discovered.  In the years following the Second World War, the global spread of drugs such as penicillin – a medicine discovered and developed in Britain – had a massive impact on mortality in many poor countries. Similarly, the spread of other technologies developed in rich countries, such as DDT, have significantly reduced the incidence of malaria worldwide.

Click here to read the paper in full.