WTO DDA and Negotiations on Healthcare Servics

The multilateral trading system embodied in the World Trade Organization has contributed significantly to economic growth, development and employment throughout the past fifty years. We are determined, particularly in the light of the global economic slowdown, to maintain the process of reform and liberalization of trade policies, thus ensuring that the system plays its full part in promoting recovery, growth, and development. The negotiations on trade in services shall be conducted with a view to promoting the economic growth of all trading partners and the development of developing and least-developed countries. The General Agreement on Trade in Services (GATS) is among the World Trade Organization's most important agreements. The accord, which came into force in January 1995, is the first and only set of multilateral rules covering international trade in services. Ig has been negotiated by the Governments themselves, and it sets the framework within which firms and individuals can operate. The GATS has two part: the framework agreement containing the general rules and disciplines ; and the notional "schedules" which list individual countries' specific commitments on access to their domestic markets by foreign suppliers. Each WTO Member lists in its national schedule those services for which it wishes to guarantee access to foreign suppliers. All commitments apply on a non-discriminatory basis to all other Members. There is complete freedom to choose which services to commit. In addition to the services committed, the schedules limit the degree to which foreign services providers can operate in the market. For example, a country making a commitment to allow foreign banks to operate in its territory may limit the number of banking licenses to be granted (a market access limitation). It might also fix a limit on the number of branches a foreign bank may open (a national treatment limitation). The GATS covers all internationally-traded services with two exception : services provided to the public in the exercise of governmental authority, and , in the air transport sector, traffic rights and all services directly related to the exercise of traffic rights and all services directly related to the exercise of traffic rights. The GATS also defines four ways in which a service can be traded, known as "modes of supply" Services supplied from one country to another (e.g international telephone calls), officially known as "cross-border supply"; Consumers from one country making use of a service in another country(e.g tourism), officially known as "consumption abroad"; A company from ton country setting up subsidiaries or branches to provide services in another country (e.g a bank from one country setting up operations in another country), officially known as "commercial presence" ; and Individuals travelling from their own country to supply services in another (e.g an actress or construction worker), officially known as "movement of natural persons". Trade liberalization, and even economic growth, are not the ends in themselves. The ultimate aim of Government is to promote human welfare in the broadest sense, and trade policy is only one of many instruments Governments use in pursuing this goal. But trade policy is nevertheless very important, both in promoting growth and in preventing conflict. The building of the multilateral trading system over teh past 50 years has been one of the most remarkable achievements of international cooperation in history. The system is certainly imperfect, which is one of the reasons why periodic negotiations are necessary, but the world would be a far poorer and more dangerous place without it. In January 2000, WTO Member Governments started a new round of negotiations to promote the progressive liberalization of trade in services. The GATS agreement specifically states that the negotiations "shall take place with a view to promoting the interests of all participants on a mutually advantageous basis" and "with due respect for national policy objectives and the level of development of individual Members". The pace and extent of these negotiations are set by the WTO's 140 Member Goverments themselves according to their different national policy priorities. Recently, however, the negotiations and the GATS itself have become the subject of ill-informed and hostile criticism. Scare stories are invented and unquestioningly repeated, however implausible. It is claimed for example that the right to maintain public services and the power to enforce health and safty standards are under threat, though both are explicitly safeguarded under the GATS. How have serious people come to believe what is, on the face of it, out of the question? Why should any Government, let alone 140 Governments, agrees to allow themselves to be forced, or force each toher, to surrender of compromise powers which are important to them, and to all of us? Decision-making in open societies presupposes informed public discussion. It must be based on fact rather than fiction. The purpose of this booklet is to contribute to this discussion and to a greater public understanding of the GATS by correcting statements made in some recent publication which we believe are misleading the public and undermining support for international economic cooperation. It must not be assumed that becuase we have disputed some allegations we accept that others are well-founded: these are merely examples.

WTO DDA and lssues on Healthcare Services

The GATS is the first and only set of multilateral rules and commitment covering Government measures which affect trade in services. It has two parts-the framework agreement containing the rules, and the national schedules of commitments through which each Member specifies the degree of access and is prepared for foreign service suppliers. The GATS covers all services with two exceptions, i.e., services provided in the exercise of governmental authority and , in the air transport sector, air traffic rights and all services directly related to the exercise of traffic rights. Notwithstanding this very broad scope, the agreement and the negotiations taking place under it are one of the least controversial areas of the current work in the WTO. This is because of its remarkable flexibility, which allows Governments, to a very great extent, to determine the level of obligations they will assume. There are four main elements of flexibility: Member Governments choose those service sectors or subsectors on which they will make commitments guaranteeing the right of foreign suppliers to provide the service. Each Member must have a schedule of commitments, but there is no minimum requirement as to its coverage and some cover only a small part of one sector; For those services that are committed, Governments may set limitations specifying the level of market access and the degree of national treatment they are prepared to guarantee; Governments were able to limit commitments to one or more of the four re cognized "modes of supply" through which services are traded. They may also withdraw and renegotiate commitments ; In order to provide more favorable treatment to certain trading partners, Governments may take exemption, in principle limited to a 10 years’ duration, from the MFN principle, which is otherwise applicable to all services, whether scheduled or not. The agreement contains a number of general obligations applicable to all services, the most important of which is the MFN rule. But apart from these, each Member defines its own obligations through the commitments undertaken in its schedule. Because it is a basic principle of the agreement that developing countries are expected to liberalize fewer sectors and types of transactions, in line with their development situation, the commitments of developing countries are in general less extensive than those of more industrialized countries. It was this flexibility in the scheduling of commitments which put an end to the north-south controversy over services which marked the early years of th e Uruguay Round. So far, South Korea has been asked by 14 economies, including the U.S., EU, and China, to open its services market wider. According to the initial requests submitted to the World Trade Organization (WTO), these countries urged Seoul to grant greater access to the domestic medical treatment, legal services, education, finance, and distribution markets. The ministry of Foreign Affairs and Trade (MOFAT) plans to hold a related ministerial meeting today and roll out countermeasures by next March for follow-up negotiations with the nations concerned. In the initial requests, Korean newspapers reported that the U.S has demanded Seoul guarantee full access to the medical service markets and provide the same business conditions for American companies as local ones. This was, however, denied by the Korean government, while it accepted that fact that the China also called for the removal of barriers in the herbal medicine market as well as in the education. The WTO member economies have submitted initial requests for follow-up negotiations by sector to the new round of WTO talks in November last year. Thereafter, South Korea is required to come up with a response by next March to resolve the issues by the end of 2004. An agreement with the 14 countries should take effect from January 2005.

Progress of WTO Negotiation and KMA's Countermeasures

Although the issue on trade in professional services has been mentioned as one of the built-in agendas since 1995, the Ministry of Health and Welfare(MOHW) formed the committee on WTO DDA(New Development Agenda in Doha) last November and there is no countermeasure on a government level by the time. The Korean Medical Association(KMA) has been formed the WTO DDA committee composed of standing directors and experts on this last January and actively working at present. Last April, the WTO DDA Joing Committee of Associations of Healthcare Sectors has been established by six associations, such as the Korean Medical Association(KMA), the Korean Dental Association(KDA), the Association Korean Oriental Medicine(AKOM), the Korean Nurses Association(KNA), the Korean Hospital Association(KHA), the Korean Dental Hospital Association(KDHA), and they have closely collaborated. The WTO DDA Committee of KMA has submitted the request list to the government last May on the basis of results of four times meetings for special lectures and discussion, three times surveys, and the research paper. The request list of KMA includes the contents of mode 2(consumption abroad) and 4(presence of natural persons). For the mode 3(commercial presence), it is suspended because it is related with the permission of profit-making corporation on healthcare sector which is prohibited at present. The government announced 19 countries has submitted the request list to Korea as of august 1 and among them, the healthcare relevant requests are from China and Poland. Especially China is requesting as a whole, including the education sector on oriental medicine. On this point, the main subjects which the KMA should established its position urgently are the issues regarding the permission of profit-making corporation and who should give and manage the medical license. For this, the KMA will continue to collect and analyze the relevant information and will relay these information to the members.