LETTER/CORRESPONDANCEAuthor(s): Matthew HodgeSource: Canadian Journal of Public Health / Revue Canadienne de Sante'e Publique, Vol. 92, No.3 (MAY / JUNE 2001), p. 237Published by: Canadian Public Health AssociationStable URL: http://www.jstor.org/stable/41993316 .

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LETTER/CORRESPONDANCE

Letter to the Editor

Re: Ostry A. The new international trade regime: Problems for publicly funded health - care in Canada ? (Editorial) CJPH 2001 ;92( 1 ):5-6

The abovementioned editorial addresses an important issue but is disappointingly misinformed.

The TRIPS Agreement does not require 'WTO members to adopt US-style patent laws.' All WTO founding members, including Canada, agreed to 20-year patent duration. Seven developed countries need- ed to harmonize national legislation and their WTO obligations; only Canada had not, prompting the American complaint. US patent law was immaterial to the dis- pute. (Dispute reports available at http://www.wto.org/ english/ tratop_e/ dispu_e/distab_e.htm)

The discussion of the General Agreement on Trade in Services (GATS) is similarly misinformed. Through GATS' commitments, WTO members manage foreign access for four modes of services trade: cross-border supply, consumption abroad, commercial presence and presence of natural persons. Commitments apply to a specific mode and GATS obligation: market access, (Art. XVI: 'each Member shall accord services and service suppliers of any other Member treatment no less favourable than that provided for under the terms, limitations and conditions agreed and specified in its Schedule') and national treatment (Art. XVII: 'each Member shall accord to services and service suppliers of any other Member, in respect of all measures affecting the supply of ser- vices, treatment no less favourable than that it accords to its own like services and service suppliers).

Only 3 countries have scheduled com- mitments on 'health-related and social services-other', 12 on other human health services, 21 on social services, and 41 on hospital services. Many of these are devel- oping countries. In the hospital services subsector, fully 8 of 15 EU members and the USA have all limited market access to

foreign commercial presence with language permitting national governments to bar foreign investment through needs-based hospital planning - hardly evidence of wholesale 'volunteering' of these sectors. (Details at http://gats-info.eu.int/gats- info/swtosvc.pl?&SECCODE=08)

Furthermore, GATS Article 1.3 defines 'measures by members', 'services' and 'ser- vices supplied in the exercise of govern- mental authority' and says nothing of hos- pitals. Had the writer evinced even a pass- ing familiarity with the GATS, the editori- al might well have mentioned the relevance of the last of these three to health care financing and provision. (GATS text at http://www.wto.org/ english/ docs_e/legal_e /26-gats.pdf)

The GATS exempts all services 'supplied in the exercise of governmental authority', defined as 'any service which is supplied neither on a commercial basis nor in com- petition with one or more service suppliers' (Art. 1.3). This exemption's scope remains unclear. Yet even with full market access and national treatment, national govern- ment policy is vital - mandating universal insurance is not prohibited if applied to all suppliers regardless of origin. International trade obligations may even strengthen the need for more effective stewardship in place of the still-too-prevalent 'cash-in, cash-out; outcomes, what are they?' approach in Canada's health care system.

Canadians need and deserve informed leadership on these issues. It is a shame that the public health community's voice is not at least minimally informed on the facts of the matters under debate.

Matthew Hodge , MDCM, PhD, FRCPC Adjunct Professor , Department of Epidemiology & Biostatistics McGill University , Montreal

Author's response: Canada has had a strong generic drug

manufacturing industry which was supply- ing drugs at lower prices than brand-name manufacturers partly because of reduced patent protection. The US challenged

these Canadian patent laws through the WTO and won. Canada appealed and lost last year. We are now forced to extend patent protection for brand-name manu- facturers to 20 years.

According to the Globe & Mail (com- menting in September 2000), with the loss of this appeal, "the government is expected to make the required changes with the major effect being a delay in the introduc- tion of lower-cost no-name drugs to mar- ket."1 Jim Keon, president of the Canadian Drug Manufacturers Association, claims that this delay means that "Canadian con- sumers will pay an extra $200 million in prescription drug costs."2

Using my critic's own evidence (and assuming his health, social services, and hospital categories are separate and exclu- sive), at least 77 nations have voluntarily offered their health and social service sec- tors to free trade under GATS. This is strong evidence of wholesale and wide- spread volunteering of these sectors under GATS.

The argument that even after nations volunteer their health sectors under GATS, there are safeguards in place to ensure that national policy making can proceed unim- paired, requires enormous trust in the cur- rent GATS process. In terms of Article 1.3C of the GATS, it states that "for a ser- vice to be considered to be under govern- ment authority, it must be provided 'entirely free'." This means because no ser- vice sector is entirely commercial free, the government authority exemption may prove useless.

Finally, the Free Trade Area of the Americas (FTAA) negotiations are now underway and may supersede the GATS. The Canadian government's position in current FTAA negotiations is to further "liberalize" trade in services beyond current GATS provisions.

References

1 . Keon J. Bitter Pill: WTO's Ruling on Drugs is Patently Unfair. Globe and Mail, April 26, 2000, pg. A 13.

2. MacKinnon M. WTO Rejects Patent Law Appeal. Globe and Mail, Sept. 19, 2000, pg. BIO.

MAY - JUNE 2001 CANADIAN JOURNAL OF PUBLIC HEALTH 237

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