An unfair distribution of the benefits of trade
Trade is a powerful instrument but much of its potential to improve health, reduce poverty and stimulate development is being lost. This is because the benefits of trade are heavily skewed in favour of the wealthy countries.
When developing countries export to rich country markets, they face tariff barriers that are four times higher than those encountered by rich countries. Those barriers cost them US$100 billion a year - twice as much as they receive in aid, according to Oxfam. [1] Least developed countries, with 10% of the world’s population, account for only 0.3% of world trade. This represents only half of their share two decades ago when the push to global trade first began in earnest. [2]
Rich countries spend US$1 billion every day on agricultural subsidies. The resulting surpluses are dumped on world markets, undermining the livelihoods of millions of smallholder farmers in poor countries. [3]
Governments of the United Nations system have committed themselves to the "Millennium Development Goals" (MDGs). These include eradicating extreme poverty and hunger; reducing child mortality; improving maternal health; and, combating HIV/AIDS, malaria and other diseases. The MDGs also aim to "develop further an open, rule-based, predictable, non-discriminatory trading and financial system."
Trade should lead to better living conditions for all. If Africa, East Asia and Latin America were each to increase their share of world exports by one per cent, the resulting gains in income could lift 128 million people out of poverty. In Africa alone, this would generate US$70 billion - approximately five times what the continent receives in aid.
The negative environmental impact of trade on health
Between 25-33% of the burden of disease is environmentally related. The adverse effects on the environment resulting from increased trade therefore have consequences for health. For example, the huge increases in trade have meant more transportation, greater use of fossil fuels, more emissions of carbon dioxide and therefore more air pollution and climate change, including droughts, floods and rising sea levels.
The adverse effects of "trade miles" on the environment and health are not taken into account when measuring the benefits of international trade. Fuel prices do not reflect the environmental damage caused by transportation ("negative externalities"). One of the MDGs is to "ensure environmental sustainability". Yet, when efforts are made to implement Multilateral Environmental Agreements, they often face resistance including the accusation that they represent anti-trade "green protectionism".
Environmental protection is crucial to the health of any population. Women in Europe for a Common Future want the impact of environmental damage to be assessed and call for environmental health rights to be respected. The needs of the poor, 70% of whom are women, require particular attention, WECF says. Poor people suffer most from the consequences of environmental neglect because they cannot afford good treatment nor to move to cleaner areas. They also lack the power and education to defend their rights to live and work in a healthy environment. [4]
The European Commission has started a programme of Sustainability Impact Assessment. This is seen as a first step towards quantifying the health and environmental costs of international trade.
A growing trade in goods that are hazardous to health
Trade in commodities, such as firearms, landmines, tobacco and alcohol, has a negative impact on health. These goods are subject to the same rules as any others at WTO, even if it is clear that they are a menace to public health. Take the example of tobacco. The opening up of markets in poorer parts of the world has led to strong advertising and promotion of western cigarettes and a subsequent increase in global consumption.
In response, the World Health Organization has called for a Framework Convention on Tobacco Control. Many European health groups, including the European Cancer Leagues (ECL), the European Respiratory Society (ERS), the European Heart Network (EHN) and the European Network on Smoking Prevention (ENSP), have welcomed and supported the prospect of an international treaty to control cigarette promotion. They recognise the need for a global response. ECL and ENSP have regularly taken part in the negotiations of the treaty at WHO headquarters in Geneva. However, many advocates are concerned that commercial interests will prevent a final agreement being ratified and effectively implemented.
Previous attempts at implementing health agreements have met difficulties. For example, an International Code of Marketing of Breast-milk Substitutes was agreed by the World Health Assembly in 1981 as a response to widespread promotion of infant formula in developing countries. WHO estimates that approximately 1.5 million infants a year die because they are not breastfed. But the leading manufacturers of powdered milk have regularly violated the Code. Formal enforcement mechanisms are weak and it is left to health groups to "name and shame" irresponsible transnational corporations, such as Nestlé.
The regulation of food standards is another area of concern. The World Health Organization is no longer the only international body involved in standard setting. The World Trade Organization has charged Codex Alimentarius with this responsibility. The Wemos Foundation, which works to improve the health of men and women in developing countries, says that Codex is an example of an international body in which the private sector plays a major role. Wemos argues that international regulation processes should be open and transparent, and that WHO and Codex should work together for "coherence of policy in which health interests should always prevail over business interests".
Distortion in the implementation of the TRIPS Agreement
The World Trade Organization’s agreement covering intellectual property, including patents, has received much international public attention. The Trade-related aspects of intellectual property rights (TRIPS) agreement is ostensibly intended to reward innovation, yet the effect has been to price essential drugs beyond the reach of millions of people who need them.
Health groups such as Médecins sans Frontières and the Consumer Project on Technology have been particularly active in highlighting the relationship between the TRIPS agreement and access to AIDS drugs. When the South African government attempted to defend its right to buy non-patented medicines, international public opinion was so outraged that the companies fighting the case backed down.
At the fourth WTO Ministerial Conference in Doha in 2001, a declaration was agreed on TRIPS and public health. It states that: "The TRIPS agreement does not and should not prevent members from taking measures to protect public health." It adds that the Agreement should be interpreted and implemented in a manner, "supportive of WTO members’ right to protect public health and, in particular, to promote access to medicines for all."
Despite this, developing countries face an aggressive policy towards accepting the highest attainable intellectual property protection. Without major international efforts to counterbalance this pressure, the Doha declaration is unlikely to be made operational. Health Action International and others organised a meeting to highlight this problem in 2002. Currently, more than 90% of people suffering from AIDS in the world still have no access to the treatments they need to survive.
The more stringent protection of patents under TRIPS will also increase the costs of technology transfer. Oxfam estimates that developing countries will lose approximately US$40 billion a year in the form of increased licence payments to Northern-based transnational corporations, with the USA capturing around one-half of the total. [5] Ninety-five per cent of patents worldwide are granted to developed countries.
Current approaches to patenting also threaten the interests of small farmers. Northern governments have effectively authorised corporate investors to undertake acts of "bio-piracy", by permitting them to patent genetic materials taken from developing countries. To add to their problems, smallholder farmers could lose the right to save, sell, and exchange seeds. [6]
A positive development is that the European Commission has recently proposed that the World Health Organization become more involved in the interpretation of the Doha declaration.
Threats to health care and water services
The General Agreement on Trade in Services (GATS) covers twenty different areas including electricity, gas and telecommunications but also water and health care. The fear is that the opening up of some services to private competitors, including foreign companies, will undermine access to these public services. For example, privatisation in Puerto Rico in 1995 left poor people without water, while US military bases and tourist resorts had ample supplies, according to a report from the World Development Movement. [7]
The least regressive approach to providing public services is by paying for them out of general taxation. Health care is provided in this way in Britain and Canada. Provision of services by for-profit entities paid for by private insurance or out of patients’ own pockets is the most regressive, as in the US system. GATS may facilitate the development of health care markets in which health care services are bought and sold: bought by those who have the money to do so, and sold by those aiming to make a profit for their shareholders. Those who do not have the money - or whom insurers consider too risky, too old or too sick - lose out. [8]
If GATS is revised so as to require domestic regulations to be the least burdensome to trade, principles which underlie health care being accessible to all could be restricted. Cross-subsidising (through which one service effectively subsidises another) is one such principle. There would be no place for uncompensated health care, unprofitable admissions to hospitals, research, education or public health activities - all chronic losers from a business point of view. The Royal College of Nursing is concerned that the UK government should defend its capacity to allow one service to subsidise another. "One of the key features of the NHS is its ability to cross-subsidise services and this facility may be at risk through GATS proposals," they say. [9]
Where do governments agree to open markets under GATS, they can reduce potential problems by first undertaking impact assessments and then considering a phased introduction and a plan of remedial measures for those who do not benefit.
