Trade and Health: Seeking Common Ground 9780773574496

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TRADE AND HEALTH

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Trade and Health Seeking Common Ground Edited by CHANTAL BLOUIN, JODY HEYMANN, AND NICK DRAGER

Published for The McGill Institute for Health and Social Policy and The North-South Institute – L’Institut Nord-Sud by McGill-Queen’s University Press Montreal & Kingston London Ithaca G

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© McGill-Queen’s University Press 2007 isbn 978-0-7735-3281-6 (cloth) isbn 978-0-7735-3282-3 (paper) Legal deposit first quarter 2008 Bibliothèque nationale du Québec Printed in Canada on acid-free paper that is 100% ancient forest free (100% post-consumer recycled), processed chlorine free. McGill-Queen’s University Press acknowledges the support of the Canada Council for the Arts for our publishing program. We also acknowledge the financial support of the Government of Canada through the Book Publishing Industry Development Program (bpidp) for our publishing activities.

Library and Archives Canada Cataloguing in Publication Trade and health: seeking common ground / edited by Chantal Blouin, Jody Heymann, and Nick Drager. Includes bibliographical references and index. isbn 978-0-7735-3281-6 (bound) isbn 978-0-7735-3282-3 (pbk.) 1. Medical economics. 2. Medical policy – International cooperation. 3. International trade. I. Heymann, Jody, 1959– II. Drager, Nick III. Blouin, Chantal, 1971– IV. North-South Institute (Ottawa, Ont.) V. McGill University. Institute for Health and Social Policy. ra410.5.t73 2007

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c2007-904900-1

Typeset by Jay Tee Graphics Ltd. in 10.5/13 Sabon

To Jennifer and Bijit and to all those whose health is most deeply affected by trade and to those working on it

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Contents

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1 Creating Healthy Trade 3 Chantal Blouin, Jody Heymann, and Nick Drager part one intellectual property rights and health 9 2 Public Health and the Implementation of the trips Agreement in Latin America 11 Carlos M. Correa 3 A New Generation of Regional and Bilateral Trade Agreements: Lessons from the us-cafta-dr Agreement 41 Pedro Roffe, Johanna Von Braun, and David Vivas-Eugui part two trade in health services and health-related products 91 4 Trade Policy and Health Professionals’ Movements Rupa Chanda

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5 Rolling Back Malaria and the wto Doha Development Agenda Bijit Bora 6 Trade in Health Services in the asean Context 151 Cha-Aim Pachanee and Suwit Wibulpolprasert

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part three social determinants of health and trade 167 7 The Effect of Trade on Labour Conditions and Health Alison Earle, Anna Shea, and Jody Heymann

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8 Trade, Inequalities, and Health: Making the Important Measurable 202 Anna Shea, Nancy Ross, and Jody Heymann 9 Trade Policy and Health Equity: Can They Avoid a Collision? Ronald Labonte, Ted Schrecker, and David Sanders

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part four policy process at the national and global levels 263 10 Achieving Coherence between Trade and Health Policies: Selected Examples from Pakistan, the Philippines, Uganda, and Peru 265 Elisabeth Tuerk and Mina Mashayekhi 11 Achieving Coherence in Anarchy: Foreign Policy, Trade, and Health 294 David P. Fidler 12 Negotiating across Boundaries: Promoting Health in a Globalized World 325 Diana Chigas, David Fairman, Elizabeth McClintock, and Adil Najam Contributors Index 351

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This book is the product of a true collective effort to bring together people from a wide range of viewpoints to engage in a dialogue about trade and health. More than just representing countries from around the world, those who have participated represent wide-ranging perspectives on trade and health, their intersection, the extent to which they come into conflict, and what can be done about that conflict. Our profound thanks go to all who contributed their ideas, time, and energy, as well as to all the collaborating organizations and individuals involved in the preparation of this book. We would like to thank the following agencies who sponsored this project: the Canadian International Development Agency (cida), Health Canada, the International Development Research Centre (idrc), and the Department of Foreign Affairs and International Trade (dfait). The views and positions expressed in this book are the views of the authors and should not be seen as representing official policy of the organizations or governments that supported this project. Our thanks also go to the World Trade Organization (wto), the United Nations Conference on Trade and Development (unctad), and the Organization of American States (oas) for their contribution. We want to thank all of the sixty participants in the experts’ workshop Trade and Health: Policy Coherence for Human Development, hosted by the Institute for Health and Social Policy at McGill University. Their presentations and inputs and the discussions that ensued were at the centre of this project. These contributions are now reflected in the book. We want to thank the Canadian Public Health Association for planning the logistics of the Montreal workshop. Federico Paredes and his colleagues at the Costa Rican Public Health Association (acosap)

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coordinated a follow-up national workshop held in San Jose. Several participants graciously offered their time to review and comment on the draft chapters. We also benefited from the participation and comments of Luce Bourgault, Benedikte Dal, John Foster, Sharmila Matre, Natasha Parriag, and Maryse Robert. This book, like many others, would not have come to fruition without the tremendous editorial and staff contributions of Kate Penrose, Anna Shea, and Parama Sigurdsen, and Bryn Gay. We are deeply indebted to all of them and to Ron Curtis for copyediting the manuscript. Among many millions, two people’s lives that are deeply touched by trade represent its ties around the world. As this project was undertaken, Jennifer was working in a sweatshop whose owner was able to easily move from his own country to impose worse working conditions on Jennifer’s – working conditions that are threatening her health, and the health of her co-workers and of her family. At the same time, halfway around the world Bijit was working at the wto on the issue of how to make bednets to prevent malaria more affordable, among other issues, at the time of his far too early death. Seemingly unrelated, they both struggled with the economic and health impact of trade. This book tries to build the links. Trade and Health: Seeking Common Ground is dedicated to Jennifer and Bijit, to all those whose health is most deeply affected by trade, and to those working on it.

TRADE AND HEALTH

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hy lth Trade

1 Creating Healthy Trade CHANTAL BLOUIN, JODY HEYMANN, AND NICK DRAGER

The World Health Organization (who) estimates that about one-third of the globe’s population lacks regular access to essential medicines and vaccines and believes that 10 million lives could be saved annually if such medications were more readily available. At the same time, World Bank figures show that approximately 2.7 billion people live below the $2-a-day poverty line. Does international trade make world health and poverty better or worse? Intense public debate on the effects of trade agreements on health has been fuelled in recent years by the Agreement on TradeRelated Aspects of Intellectual Property Rights (trips). The agreement has created a new global regime of patent protection that can increase the prices of pharmaceutical drugs. Many experts worry that trips and other trade agreements may reduce access to medications in developing countries, especially among the poorest households. International trade’s impact on health systems is also a concern. For instance, should national governments open hospital services and health insurance to foreign investors and providers? Should “health tourism,” where patients travel abroad for medical care, be promoted as an export industry? What are the implications for the quality of health care for the poor? Beyond pharmaceuticals and health care delivery, the fundamental question becomes: how do global trade policies affect labor conditions and other social determinants of health? The World Trade Organization (wto) and who have recognized the critical questions surrounding trade and health. At its 2001 meeting in Doha, Qatar, the wto Ministerial Conference made clear that wto rules and health policies should go hand in hand. The Doha Declaration agreed: “the trips Agreement does not and should not prevent members from taking measures to protect public health.” who’s World

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Health Assembly also adopted a resolution, in May 2006 (wha59.26), calling for greater coherence in trade and health policies. Nevertheless, many health and trade issues remain unresolved. For instance, several bilateral and regional trade agreements are committed to patent legislation that could greatly limit a government’s ability to ensure medications are affordable. Furthermore, the liberalization of trade in health services also threatens universal access to affordable, good-quality health facilities. For example, promotion of health tourism can exacerbate the shortages of physicians in rural areas because of internal brain drain. Questions regarding the impact of trade policy on working conditions, income, and inequality, and thus on health, have been rising. While the need to deal with the effects of trade on health has been formally endorsed by global bodies such as the wto and the who, recognition alone is not enough. A transformation of the trade policymaking process is required. Trade and Health aims to help individuals and organizations transform this formal recognition into concrete policy change. In this book, experienced practitioners and leading experts examine the effects of trade policy on public health and ways to ensure that health objectives are fully considered when policy-makers commence trade negotiations or implement trade agreements. The book presents original material from around the world – from Central and South America, Eastern and Southern Africa, Asia, and North America.

project background Trade and Health builds on earlier work on this topic. In 2002, who and the wto Secretariat jointly published WTO Agreements and Public Health, which provided a first review of the relevant issues. However, countries expressed their needs for more in-depth understanding of the linkages between trade and health. who and its partners responded with a number of initiatives, including an international working conference held at the McGill University Institute for Health and Social Policy, in October 2005, where trade and health policy-makers, negotiators, and academic experts shared their perspectives. As part of the project, an international forum was held at the sustainable-development meetings, which paralleled the wto Ministerial Conference in Hong Kong. The forum also coincided with regional and national efforts, such as a workshop in Costa Rica where trade and health specialists reviewed the impact of recent trade agreements on the country’s access to drugs and health insurance. These meetings provided one of

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the few opportunities for direct dialogue between the two groups on the impact of trade on health.

book overview Part 1 of this book discusses how changes in intellectual property rights impact health. The wto’s agreement on intellectual property (trips) has created a new global regime of patent protection that, when applied to pharmaceutical drugs, can increase the prices of medications. Carlos Correa opens the issue in chapter 2 with an evaluation of how trips has been implemented in Latin America and looks at what happened when health ministries had little or no involvement in trade negotiations. Correa describes how this lack of participation resulted in failure by Latin American countries to take full advantage of trips provisions to ensure pharmaceutical drugs remained accessible. Pedro Roffe, Johanna von Braun, and David Vivas-Eugui show in chapter 3 that regional and bilateral trade treaties, such as the Central American Free Trade Agreement (cafta), may also threaten public health. According to the authors, recent agreements the United States has signed with Central America and the Dominican Republic contain patent and data protection that could be detrimental to the public health in those developing countries. Part 2 relates to trade in health services and health products. The trade commitments that governments make in health services and health products can affect the nature and supply of these goods; the subsequent shift in the quality of and access to health care has implications for population health. In chapter 4, Rupa Chanda discusses the possibility of using trade agreements to manage the migration of health care personnel and thereby mitigate the “brain drain” from developing countries. Chanda also reviews bilateral and regional labor arrangements, as well as ethical approaches to health workers’ mobility. A paradoxical divergence of trade and health policies is exemplified in chapter 5, which examines the decision by several developing countries to impose tariffs on malaria bed nets. Bijit Bora finds that inadequate product classification was often behind this move, because the nets were included in a generic textiles and clothing category subject to high tariffs. The chapter examines what trade measures could be adopted to facilitate access to health-related products. In chapter 6, Cha-aim Pachanee and Suwit Wibulpolprasert focus on trade in health services through the lens of foreign investment in hospitals in Thailand, a member of the Association of Southeast Asian Nations (asean). The

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ten asean countries have committed to liberalize the health sector by 2020, but the authors question whether the governments have considered the potential impacts on the public health care systems. In the third part of the book, the contributors explore the link between trade and the social determinants of health. Alison Earle, Anna Shea, and Jody Heymann review the evidence on the link between labour conditions and health and recommend ways, in chapter 7, to ensure that trade has positive effects on health. Whether the adoption of trade reforms improves working conditions has critical consequences for health, as labor conditions are among the most important structural determinants of health. Shea, Nancy Ross, and Heymann also investigate the effects of trade on poverty and inequality. They argue in chapter 8 that policy-makers must measure growth more accurately if trade is to benefit population health. What matters more for health than gdp is how this wealth is distributed – in other words, levels of poverty and inequality. The authors offer more accurate ways to measure how economic growth can reflect the social conditions of populations. Part 3 ends with an examination of how the global trade policy regime broadly influences social determinants of health. Ron Labonte, Ted Schrecker, and David Sanders demonstrate in chapter 9 that because of their impacts on social determinants, current trade policies often fail to contribute to improved health in developing countries. The fourth part of the book reviews experiences to date in attempting to find common ground between trade and health. In chapter 10, Elisabeth Tuerk and Mina Mashayekhi relate how a number of developing countries addressed challenges related to trade and health arising in the context of services trade liberalization and the protection of intellectual property rights. Again, the importance of consultation is shown in the formulation of trade policy relevant to health. During negotiations on the General Agreement on Trade in Services (gats), Pakistan’s Ministry of Health consulted various associations representing health professionals. In response to these discussions, Pakistan made a conditional offer on professional health services that excluded these services provided by public institutions. Similarly, advocacy by civil-society groups in Uganda highlighted the importance of trips flexibilities when translating the international agreement into national legislation. In chapter 11, David Fidler tells how health ministries have been historically marginalized through a double dose of “stove-piping,” i.e., exclusion from both the foreign policy and the domestic policy processes. Consequently, health ministry officials have often had more con-

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tact with their counterparts abroad than with trade or foreign ministry officials at home. Finally, in chapter 12, Diana Chigas and her colleagues look at the difficulties in negotiating across different sectors and show what can be learned from international negotiations in other areas, such as environmental policy. The authors stress that trade and health policy-makers come from different backgrounds than analysts and may not share the same beliefs and values. Therefore, formal and informal dialogue is needed at the national, regional, and global level to develop a common understanding of the key trade and health policy issues. Joint fact-finding exercises could help all parties understand the benefits, threats, and trade-offs in a policy under scrutiny.

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ation perty of Rights trips

P A RT O N E

Intellectual Property Rights and Health

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2 Public Health and the Implementation of the TRIPS Agreement in Latin America CARLOS M. CORREA

introduction The Agreement on Trade-Related Aspects of Intellectual Property Rights (the trips Agreement), adopted as part of the Final Act of the Uruguay Round in 1994, became binding for Latin American countries as of 1 January 2000. The agreement brought massive changes in intellectual property rights legislation in these countries, and the landscape in this field changed substantially, in particular in relation to the protection of pharmaceutical products. Although the trips Agreement requires compliance both with minimum substantive standards and with minimum enforcement standards,1 it left member countries some freedom to implement the obligations it provides for. The first section of this chapter briefly describes the flexibilities allowed by the agreement that are relevant to public health. Latin American countries, like any other World Trade Organization (wto) members, can use the trips flexibilities. The question explored in the second section of this chapter concerns the extent to which they have actually done so. The analysis is not exhaustive, but attempts to provide a broad picture of the current situation. The third section, finally, considers the problems of policy coherence involved in the implementation of the trips Agreement in the area of public health in developing countries.

the trips agreement and public health The adoption of the trips Agreement has had major implications for pharmaceuticals, particularly in developing countries. While more than

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fifty countries excluded pharmaceutical product patents in the 1980s, the trips Agreement mandated that such patents be granted, without discrimination, in all fields of technology (article 27.1). As a result, many developing countries were bound to change their legislation. Many also needed to change the term of protection, in order to comply with the minimum of twenty years (counted from the date of application) required by the agreement. Of course, patents are actively sought and enforced by the pharmaceutical industry mainly because they permit firms to charge prices above marginal costs. These prices have permitted the pharmaceutical industry to invest in r&d, as well as to become one of the most profitable industrial sectors.2 The drawback is that because prices are higher than those that would have existed in the absence of patent protection, access to medicines is more difficult or impossible, especially for the millions of poor living in developing countries. In addition to extending the scope of protection, the trips Agreement strengthens the rights conferred upon the title-holder. In the case of product patents, it specifies that they confer the right to prevent third parties not having the patentee’s consent from “making, using, offering for sale or importing for those purposes the product” (article 28.1.a).3 In the case of process patents, article 28.2.b defines the acts that can be prevented by the patent owner. It provides for the extension of the protection conferred on a process to the product “obtained directly by that process.” This extension implies a significant strengthening of patent rights derived from process inventions, since the patent owner may prevent the commercialization of products obtained with the patented process in the country of grant of the patent or in any foreign country. Moreover, article 34 provides for the reversal of the burden of proof in civil litigation involving process patents, on the basis of which the defendant would be the presumed infringer when an identical product was commercialized. Finally, article 39.3 introduced for the first time in an international agreement protection for “test data.” This article states that when a member requires, as a condition for approving the marketing of pharmaceuticals that utilize new chemicals entities, the submission of undisclosed test or other data, the production of which involves a considerable effort, members shall protect such data against unfair commercial use. In addition, members shall protect such data against disclosure, except where disclosure is necessary to protect the public or unless steps are taken to ensure that the data is protected against unfair commercial use. The protection conferred under this article is limited to cases of unfair competition,

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although, as discussed below, the European Union and the United States have promoted an overly broad interpretation of the provision that implies the granting of exclusive rights.

flexibilities in trips The requirements imposed by the trips Agreement substantially changed the patent situation regarding pharmaceuticals in the developing world. Although the extension of patent protection is not likely to increase the global r&d undertaken by the pharmaceutical industry4 – nor r&d for diseases prevailing in developing countries5 – it can contribute to its overall profitability. Developed countries, with the exception of the poorest countries, and the pharmaceutical industry have aggressively pursued the worldwide implementation of the new standards of protection for pharmaceuticals. Transitional Periods Many institutions6 and scholars7 have argued for differentiation in the requirements of intellectual-property protection in accordance with various levels of economic and technological development.8 In contrast, the trips Agreement did not include any special and differential treatment for developing countries. The only differentiation was the possibility, allowed to developing countries, economies in transition, and least-developed countries (ldcs), to apply transitional periods so as to delay the implementation of the obligations contained in the agreement. Developing countries could benefit from a general transitional period of five years, and they could delay up to ten years the recognition of product patent protection in areas that had previously been exempted from patentability. ldcs were originally given until 2006, but this term has been extended until 2013 in general9 and until 2016 for pharmaceutical patents in particular.10 Patentability Requirements Notwithstanding that the patent section is more detailed than other sections of Part II of the trips Agreement, it leaves a large number of issues at the discretion of national governments. Some of these issues are critical for the design of a patent regime, such as the definition of what an invention is, the patentability requirements, and what is deemed to belong to the “prior art.”

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Thus, wto members can determine what does not constitute a patentable invention, such as computer programs, substances found in nature (e.g., genes, even if isolated), or the use of known products. Further, members are not constrained to apply a particular concept of novelty. This has permitted, for instance, the United States to maintain its double standard, depending on whether the disclosure of the invention has taken place within or outside the territory of the United States (35 u.s.c. section 102(a)).11 The United States held in this regard that in the trips Agreement there was “no prescription as to how wto Members define what inventions are to be considered ‘new’ within their domestic systems” and, hence, that its legislation was “perfectly consistent with the provisions of the trips Agreement.”12 Most importantly, the agreement leaves members leeway to determine what is the level of inventive step that is required to obtain a patent. In the last fifteen years the courts in the United States have admitted a very low threshold of inventiveness, which has led to a proliferation of low-quality patents,13 but members, particularly developing countries, may opt for a high level of inventive step that limits the granting of patents to cases where there is a genuine contribution to the state of the art. Petty patents or utility models can be granted to protect incremental innovations (e.g., in the mechanical field) for a shorter period than the period provided by patents. The proliferation of low-quality patents has been particularly serious in the pharmaceutical field, where a large number of patents on minor or trivial developments (such as on salts, ethers, polymorphs, and so on) are filed and often obtained with the purpose of “evergreening” patents on active ingredients that would have expired earlier. This strategy of acquiring patents on minor or trivial developments to extend the length of exclusive rights beyond the original twenty-year patent term delays or impedes competition from generic products, with negative implications for public health. To avoid this, national laws may introduce specific provisions tightening the inventive step requirement that is applied to new forms or modifications of existing products, as was done by India in 2005.14 Exceptions to Patentability There are cases in which the trips Agreement authorizes member countries to exclude certain subject matter from protection. Under article 27.2 members may exclude from patentability inventions whose “prevention

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within their territory ... is necessary to protect ... health.” The actual scope of application of this exclusion is limited, since it would be viable only if the circulation of the relevant products was prohibited. Further, article 27.3(a) permits members to exclude from patentability therapeutic, surgical, and diagnostic methods. This exclusion, which is facultative, is important for public health, as it may prevent the monopolization of methods based on conventional or new techniques (such as genetic therapies). Moreover, the exclusion of methods of medical treatment implies that second indications of known pharmaceutical products are not patentable, since a claim on a new use of an existing product amounts to a claim on a method of medical treatment: doctors are just given indications about how to use a product for a particular disease.15 Most countries in the world exclude the patentability of methods of medical treatment. However, based on a legal fiction, some have accepted patents on new indications, that is, a new therapeutic use of a known pharmaceutical product, an approach that wto member countries are not in any way bound to adopt.16 Exceptions to Patent Rights In addition to subject matter that may be excluded from patent protection, limited exceptions to the exclusive rights may be adopted under certain conditions by national laws under article 30 of the trips Agreement. This article defines in very general wording the exceptions that members may allow.17 Under this provision, there is considerable freedom for national laws to define the kind and extent of the possible exceptions to the exclusive rights of patent owners. Based on comparative law, different types of exceptions may be provided for within the scope of article 30, such as G

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acts done privately and on a non-commercial scale or for a non-commercial purpose; use of the invention for research and experimentation on it in order to test or improve on it; use of the invention for teaching purposes; preparation of medicines under individual prescriptions; experiments made for the purposes of seeking regulatory approval for marketing of a product after the expiration of a patent (“early working”); and

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use of the invention by a third party that had used it in a bona fide way before the date of application of the patent.

Some of these exceptions, such as those relating to research or experimental use, and the “early working” exception, also known as the Bolar exception, are particularly important from a public health perspective. These exceptions are briefly considered below. Research and Experimental Use Exceptions relating to research and experimentation on the invention may be an important tool for creating a favorable context for innovation. The adoption of an experimental exception may permit innovation based on “inventing around,” or improving on the protected invention, as well as evaluating an invention in order to request a license, or for other legitimate purposes, such as testing whether the invention can actually be put to work. The European Patent Convention, for instance, provides that there is no infringement in the case of “acts done for experimental purposes relating to the subject matter of the patented invention” (article 27.b). Case law in European countries – which in all cases relates to pharmaceutical or agrochemical products – has accepted research done to find out more about a product, provided that it is not done, for instance, just to convince licensing authorities or customers about the virtues of an alternative product.18 This type of exception, properly formulated, may be of particular importance for the use of “research tools” such as gene sequences, if they are patentable, as well as for inventing around or improving on patented products and processes. Patents can create a serious barrier to research in the context of developing countries, as was revealed by a study undertaken in India. A survey of 103 Indian firms indicated that among thirteen variables that could determine the abandonment of r&d projects by the Indian pharmaceutical industry, restricted access to patented upstream technologies due to contractual difficulties was likely to have the biggest impact on a firm’s decision to abandon such projects.19 Early Working (the “Bolar” Exception) Another important exception, first introduced by the United States, deals with the use of an invention relating to a pharmaceutical product to conduct tests and obtain approval from the health authority before

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the expiration of the patent, in order to commercialize a generic version after the expiration of the patent.20 The United States, Canada, Australia, and many other countries have admitted this exception by statute or through case law.21 In exchange for this permission, the term of a patent may be extended for an additional period in some of those countries, but this is not a condition for the viability of the exception. The adoption of this exception is important for enhancing generic competition and thereby reducing prices and improving access to medicines. It is well proven that the prices of medicines fall substantially as soon as the patents that protected them expire. Canada adopted a Bolar-type provision in 1991, explicitly allowing a third party to produce and stockpile a product for release immediately after the expiration of the patent. In November 1998 the European Community and its member states filed a complaint under the wto Dispute Settlement Understanding arguing that such an exception was trips inconsistent. The panel found, however, that early working was compatible with trips, though it ruled that the clause allowing for manufacturing and stockpiling of pharmaceutical products during the six months immediately before the expiry was not.22 Although panel rulings do not create a binding precedent, the panel’s opinion in this case (which neither party appealed) provides a strong indication of the consistency of the “Bolar exception” with the trips Agreement that should encourage member countries to adopt a “Bolar”-like exception. Parallel Imports “Parallel imports” are products imported into a country without the authorization of the title-holder or its licensees when the products have been put on the market in the exporting country in a legitimate manner.23 Article 6 of the trips agreement recognizes the possibility of legally admitting parallel imports, based on the principle of “exhaustion of rights.” The principle was extensively developed in the framework of European integration in order to avoid the fragmentation of markets and the exercise of discriminatory pricing by title-holders within the European Community. While the ec adopted a principle of regional exhaustion of rights, other countries moved on to implement the same principle on an international basis. The principle of exhaustion of rights – which justifies parallel imports – is based on the concept that the title-holder has no right to control the

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use or resale of goods that it has put on the market or has allowed a licensee to market. According to a broad version of this doctrine, the consent of the title-holder in the exporting country would not be necessary to the extent that the product was otherwise lawfully put on the market (e.g., under a compulsory license). Parallel imports are not a means of ignoring the patentee’s right to remuneration (which is received with the first sale of the product) but a means of ensuring that patents work “to the mutual advantage of producers and users of technological knowledge” (article 7 of the trips Agreement) in a global economy. With progress in transportation and communications and with the steady reduction of tariff and non-tariff barriers on a worldwide scale, the boundaries of “national” markets are being diluted. From an economic point of view, the principle of exhaustion may contribute to the competitiveness of local companies and, most importantly, to the welfare of consumers, who may be thus able to purchase legitimate products at the lowest price from national or foreign sources. This result is particularly important in the case of medicines, since access to them can make the difference between life and death. The legitimacy of parallel imports under the trips Agreement has not been tested under the wto dispute settlement mechanism as yet. However, a number of multinational pharmaceutical companies challenged section 15e of the South African Medicines and Related Substances Control Act (1997), which stipulates that “the Minister may prescribe conditions for the supply of more affordable medicines in certain circumstances so as to protect the health of the public” and which stipulates, in particular, the conditions on which any medicine put on the market by the patentholder or with the patent-holder’s consent may be imported by a third party in South Africa. Despite the enormous pressure that multinational pharmaceutical companies and the us government put on the South African government to restrict parallel imports, the South African government, supported by a number of active ngos, defended its policy and eventually obtained the withdrawal of the legal proceedings that had been launched.24 In November 2001, the wto members’ right to admit parallel imports was expressly confirmed by the Doha Declaration on the trips Agreement and Public Health, as follows: Paragraph 5: Accordingly and in the light of paragraph 4 above, while maintaining our commitments in the trips Agreement, we

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recognize that these flexibilities include ... d. [t]he effect of the provisions in the trips Agreement that are relevant to the exhaustion of intellectual property rights is to leave each member free to establish its own regime for such exhaustion without challenge, subject to the mfn [Most Favoured Nation] and national treatment provisions of Articles 3 and 4. Compulsory Licensing A compulsory license is an authorization given by a government for use by a third party without the consent of the right-owner and without a patent or other intellectual property right. Article 31 of the trips Agreement expressly allows the granting of compulsory licenses on patents under certain conditions. No specification is made in the agreement, however, of the grounds under which such licenses can be granted.25 A particular, but not exhaustive, reference is made to cases of national emergency or extreme urgency, dependency of patents, licenses for governmental non-commercial use, and licenses to remedy anti-competitive practices. National laws can, however, provide for the granting of such licenses whenever the titleholder refuses to grant a voluntary license “on reasonable commercial terms” (article 31.a) and for other reasons as well, such as public-health reasons or public interests at large, arguably including lack of working of the patent. The text of the agreement is also open with respect to the rights that can be exercised by the licensee, including production or importation.26 As a rule, one needs to have previously requested a voluntary license in order to obtain a compulsory license. In some cases, for instance cases of emergency and public non-commercial use, a previous request is not required. Moreover, in the case of public non-commercial use, the patent-holder must be informed “as soon as [is] reasonably practicable” (article 31.b) that the use of the invention has taken place. Licenses to remedy anti-competitive practices are subject to special treatment with regard to the remuneration to be paid to the patent-holder.27 Article 27.1 of the agreement stipulates that “patent rights shall be enjoyable without discrimination ... whether the products are imported or locally produced.” Although article 27.1 has been understood as prohibiting any obligation to locally execute a patented invention, this interpretation is not unanimous. The Brazilian Industrial Property Code (1996), for instance, included an obligation to locally exploit patented inventions.28 In fact, the preamble to the trips Agreement, as

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well as articles 7 and 8, makes it clear that one of the objectives of the agreement is to promote technology transfer, which may be ensured in some circumstances by means of compulsory licenses. With regard to the granting of compulsory licenses to deal with anticompetitive practices in the United States, Scherer has noted that “compulsory patent licensing has been used as a remedy in more than one hundred antitrust case settlements, including cases involving Meprobamate, the antibiotics tetracycline and griseofulvin, synthetic steroids, and most recently, several basic biotechnology patents owned by CibyGeigy and Sandoz, which merged to form Novartis. My own statistical analysis of the most important compulsory licensing decrees found that the settlements had no discernible negative effect on the subject companies’ subsequent research and development expenditures, although they probably did lead to greater secrecy in lieu of patenting.”29 The us government has also made extensive use of compulsory licenses for governmental purposes, in a manner that has raised the complaints of the European Union.30 Despite the legitimacy of compulsory licenses, some countries that have provided for one or more of them in their legislation have been included in the United States Trade Representative (ustr) Special Section 301 lists of countries that may be subject to unilateral retaliations or have faced other forms of pressure by some developed countries. Of particular interest was the dispute between the United States and South Africa, mentioned above, which related to South African legislation aimed at allowing parallel imports and compulsory licenses for medicines. As a result of these tensions, developing countries sought confirmation of their right to use compulsory licenses in the Doha Declaration on the trips Agreement and Public Health, which stipulated the following in paragraph 5: “b. Each member has the right to grant compulsory licences and the freedom to determine the grounds upon which such licences are granted.” A number of countries (Indonesia, Zimbabwe, Malaysia, Thailand) have recently issued compulsory licenses or applied government use provisions. Other countries have threatened to grant such licenses in order to obtain substantial price reductions for medicines, as in the cases of Brazil and South Africa.31 It is noteworthy, finally, that on 30 August 2003 the wto approved a waiver to article 31(f) and (h) of the trips Agreement32 in order to allow for the granting of compulsory licenses in the exporting and importing country (unless the latter is a least-developed country or no patent is in force there) when an eligible importing country has, in

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accordance with its own assessment, insufficient or no manufacturing capacity in pharmaceuticals. The mechanism, however, is procedurally cumbersome and has raised little interest among potential beneficiaries, as well as suppliers,33 to the point that although some countries (Canada, Norway, Netherlands, and India)34 have amended their laws to permit exports, so far no developing country has notified the council for trips about its interest in using the system. Data Protection The trips Agreement has also left considerable room for national laws relating to the protection of test data that is required for the approval of pharmaceutical (and agrochemical) products against unfair commercial use, in accordance with article 39.3. The United States, the European Union, and their pharmaceutical industries have pushed forward the concept that such provision requires the granting of exclusivity over the use of test data. The direct implication of this position is that generic producers and national health authorities would have to obtain authorization to use such data, in the absence of which generic producers should be kept out of the market until the exclusivity provision expires (even if patent protection did not exist) or be forced to replicate the trials needed to produce the data. Of course, replicating clinical data would require substantial investment and long delays in the introduction of generic products, and hundreds or thousands of patients would have to be subjected to trials to obtain results that were already known, which would be ethically questionable. Article 39.3 of the trips Agreement, however, does not mandate the granting of exclusive rights; on the contrary, it is firmly based on the doctrine of unfair competition,35 which confers neither property nor exclusive rights but protects against dishonest commercial practices as defined under national laws. Under this interpretation, generic competition – which pushes prices down and increases access to medicines – is not unduly delayed when the products are off-patent and, hence, freely available for manufacturing and sale.

the use of trips flexibilities in latin america A recent study found that “overall, the use of trips flexibilities can promote access to medicines in developing countries.”36 In the light of the

22

Intellectual Property Rights

previous discussion, this section examines the extent to which trips flexibilities that are relevant to public health have been introduced in Latin American legislation and practice. Introduction of Pharmaceutical Patents The trips Agreement allowed members that did not recognize product patents for pharmaceuticals to delay the granting of such patents until January 2005. This was subject, however, to the possibility of filing an application for and eventually obtaining exclusive marketing rights for a period up to five years.37 Despite the right to delay the introduction of product patents for pharmaceuticals, most countries in Latin America, as well as in other parts of the developing world, anticipated the introduction of trips-consistent rules well before the expiration of the transitional period.38 Argentina, for instance, changed its patent law in 1995, Panama and Brazil in 1996. In the case of Brazil, moreover, pharmaceutical patent protection was introduced under the “pipeline” approach actively promoted by the us pharmaceutical industry and the us government, that is, with the retroactive recognition of patents based on applications made before the new law entered into force (provided that the covered products had not been previously commercialized). This was indeed an important concession to the us industry and the us government. There is no evidence suggesting that it was made against reciprocal concessions by the United States in other areas.39 By 2000 – the deadline for the general implementation of the trips Agreement in developing countries – the majority of countries in Latin America had already acceded to granting patents on pharmaceutical products. They had, hence, relinquished the right to postpone such granting till 2005 (as India, Egypt, and a few others did). Two relatively small countries formed the exception in the region. Uruguay decided to grant such patents as of 2002 and Paraguay as of 2003. The reasons for relinquishing the transitional period may have varied from country to country, but the pressures exerted by the us industry and the us government were possibly prominent among them, as illustrated by the Argentine case. On 30 March 1995 the Argentine Congress enacted a new patent law (No. 24.48). While the law included an eight-year transition period for pharmaceutical patent protection, the us Pharmaceutical Research Manufacturers Association (phrma) and the Office of the United States Trade Representative (ustr) exerted pressures to shorten the transitional period and lobbied for the introduction of retroactive

The Implementation of trips

23

(“pipeline”) protection for products patented in other countries but not marketed in Argentina. As a result, the Executive Power vetoed sixteen articles of the law and issued Decree No. 621/95, which essentially replaced the law, re-established revalidation patents (that is, patents granted in a foreign country could continue to be recognized and enforced in Argentina, even if the invention had lost its novelty), and provided for pipeline protection. In the context of a serious institutional conflict between the Executive Power and the Congress, the latter overturned the decree and passed the patent law in May 1995, which accepted a veto to only six of the articles questioned by the Executive Power. However, the Congress subsequently shortened, in September 1995, the transitional period from eight to five years (without any pipeline protection). Finally, on 20 March 1996, the Executive Power issued a new regulation (Decree No. 260/96) that was generally in line with the patent law (as amended).40 In 1997, the us government took direct action against Argentina and cancelled 50 percent of its benefits under the Generalized Preference System, vaguely alleging that Argentina did not comply with international standards of protection for test data. The Argentine government, at the time strongly linked to the us administration, did not take any action against this unilateral retaliation. It is also to be noted that even before the expiration of the general term for implementation of the trips Agreement (1 January 2000) pharmaceutical companies sought to anticipate the implementation of the agreement’s standards. Thus, judicial actions seeking the extension of the patent term to twenty years (counted from the filing date) were submitted by pharmaceutical companies, at least in Argentina41 and Brazil,42 before these countries were obliged to implement article 33 of the agreement. These attempts were, however, unsuccessful. Patentability: Law and Practice Latin American countries have excluded, consistently with the trips Agreement, the patentability of surgical, therapeutic, and diagnostic methods. The ways in which Latin American countries use other flexibilities permitted by the trips Agreement with regard to patentability are difficult to evaluate, since they depend heavily on practices by patent offices and on court decisions. Only a few patent offices in the region (such as the Argentine Instituto Nacional de Propiedad Industrial) have instituted public guidelines for the examination of patents.

24

Intellectual Property Rights

When they have done so, the guidelines are too general to permit specific conclusions about the standards actually applied to pharmaeutical patents. In some Latin American countries, typical cases of evergreening patents can be found, such as patents relating to the besilate of amlodipine and a polymorph of olanzapine, suggesting that patent offices have often applied low standards of patentability. Several laws in the region (such as Decision 486 of the Andean Community and the Argentine patent law) authorize third parties to file observations before the granting of patents. Monitoring patent applications in pharmaceuticals is difficult because of the large number of applications and the publication of abstracts without sufficient information,43 and because of the expertise that is necessary to monitor skillfully written applications. The associations of local pharmaceutical manufacturers have been active, however, in filing observations with varying degrees of success. In the case of Brazil, three years after the adoption of the Industrial Property Code, a provisional measure that became federal law (Law 10.196) in February 2001 introduced a mechanism of “prior consent,” according to which “the grant of patents for pharmaceutical products and processes shall be subject to prior consent by the National Sanitary Supervision Agency – anvisa” (Industrial Property Act, article 229-c). anvisa has developed guidelines for the granting of pharmaceutical patents that narrowed down the scope of patentability as understood by the patent office, leading to various cases of disagreement between the two governmental bodies.44 At least in Argentina and Brazil, national laws have been construed as excluding the patentability of second indications, even if framed under the so-called “Swiss formulation” (use of substance x to manufacture a product y to treat disease z).45 Decision 486 of the Andean Community, moreover, explicitly excludes the patentability of such indications.46 The Andean Community, in particular, challenged the granting of a patent over the second use of sildenafil (Viagra) by the government of Ecuador,47 and subsequently the Andean Court of Justice declared the patent invalid.48 Limited Incorporation of Exceptions to Exclusive Rights The room left by article 30 of the trips Agreement to carve out exceptions to exclusive patent rights has been exploited in a rather limited way in Latin American countries. A research or experimentation

The Implementation of trips

25

exception has been provided for in most patent laws in Latin America and the Caribbean. However, the exceptions are generally drafted in a narrow way and limited to non-profit academic or scientific research. They do not make explicit the possibility of using a patented invention for research or experimental purposes when a commercial intent is present.49 More strikingly perhaps, the early working exception has been provided for only in a relatively small number of countries in the region, namely, in Argentina (Law 24.766, 1996), the Dominican Republic (Law no. 20-00 on Industrial Property, April 2000), and Brazil (Law no. 10.196/2001). The absence of this exception, at least in an express form, in most countries in the region may be regarded as a strong indicator of the lack of or tenuous involvement of health authorities in the process of patent law design. The early working exception, as mentioned above, has already been legitimized by a wto panel ruling. Hence, wto members can adopt it without fearing complaints by other members.50 Increasing Competition through Parallel Imports The purchase of patented products wherever they are cheaper may help to improve access to medicines. Although there is not much evidence about the use of parallel imports in Latin America, the legal possibility of doing so may help to discourage high or abusive pricing. A number of Latin American countries, such as the Argentina, the Andean Community, the Dominican Republic, Honduras, and Panama,51 provided for the principle of international exhaustion of rights, thereby admitting parallel imports, although in some cases subject to some limitations.52 In Mexico, however, there is no such provision under the patent regime,53 and in Brazil parallel imports are not permitted, except in cases where a compulsory license to remedy anticompetitive practices has been granted (Industrial Property Code, article 68(4)). This limitation is in contrast with the position that Brazil has taken in international fora on the matter, particularly during the debates leading to the adoption of the Doha Declaration on the trips Agreement and Public Health.54 It is unclear why Brazil did not make full use of this flexibility: one possible explanation would be the government’s aim to adopt legislation that would not create tensions with the United States; another could be the idea that admitting parallel imports could have a negative impact on local production. This explanation would, of course

26

Intellectual Property Rights

Table 2.1 Grounds for Issuing Compulsory Licenses Grounds

Countries

Failure to exploit the patent Public interest National emergency Remedy anti-competitive practices, unfair competition Failure to obtain a license under reasonable terms Failure to produce locally Dependent patents Refusal to deal No apparent compulsory licence provision

Andean Community, Argentina, Brazil, Dominican Republic, Honduras, Mexico Andean Community, Brazil, Dominican Republic, Honduras, Mexico Andean Community, Argentina, Brazil, Dominican Republic, Honduras, Mexico Andean Community, Argentina, Brazil, Dominican Republic Andean Community, Argentina, Dominican Republic, Honduras Brazil Andean Community, Argentina, Brazil, Dominican Republic, Honduras Argentina, Dominican Republic Panama

source: Elaborated on the basis of Maria Auxiliadora Oliveira, Jorge Antonio Zepeda Bermudez, Gabriela Costa Chaves, and Germán Velásquez, “Has the Implementation of the trips Agreement in Latin America and the Caribbean Produced Industrial Property Legislation that Favors Public Health Policy?” WHO Bulletin, 82, no. 11) (November 2004), 819.

be a misunderstanding of the effects of such admission, since prohibiting parallel imports means only that the patent owner is guaranteed a monopoly on importation, and not that he could be induced or forced to locally execute the patented invention. Compulsory Licenses The possibility of granting compulsory licenses or allowing for the government use of patented inventions has been retained in almost all Latin American laws. In using the freedom left by the trips Agreement to determine the grounds for such licenses, the countries in the region have opted for different sets of reasons (see table 2.1). In several countries the lack of exploitation of a patent may constitute a valid ground for the granting of compulsory licenses, but the importation of the covered product is deemed to be exploitation. Local manufacturing, hence, is not required. Only Brazil has provided for the possibility of granting compulsory licenses in cases of a lack of local exploitation of the patent (article 68 of the Industrial Property Code). The United States requested a panel against Brazil under the wto Dispute Settlement Understanding in relation to this provision,55 arguing

The Implementation of trips

27

that it was inconsistent with article 27.1 of the trips Agreement. The complaint was, however, withdrawn by the us government before the panel was set up, when the Brazilian government agreed to inform the us government before granting a compulsory license on such grounds. It is also interesting to note that only Argentina and the Dominican Republic have explicitly allowed for the granting of compulsory licenses in cases of “refusal to deal,” that is, when the patent holder rejects, upon request, the granting of a voluntary license on reasonable commercial terms. This may be one of the most straightforward means of inducing voluntary licenses or obtaining a compulsory license. So far, no compulsory license has been granted or government use permitted in a Latin American country, even though problems with access to medicines have been identified in many countries.56 Brazil is the only country in the region that has openly used the possible granting of compulsory licenses in order to negotiate price reductions. Based on the local capacity to eventually reverse engineer some patented drugs and to estimate the production costs, the Brazilian health ministry was able to negotiate price reductions with foreign producers, backed by the credible threat of compulsory licensing. In 2001 the health minister used this approach with Roche and Merck for their drugs Nelfinavir and Efavirenz, eventually negotiating price reductions of 40 to 70 percent.57 Despite the wide room left by the trips agreement to provide for compulsory licenses, the ustr listed several Latin American countries under their Special Section 301 lists, alleging rights for the granting of such licenses that were too wide. The United States raised the complaint, as a part of a broader complaint against Argentina under the wto dispute settlement rules, that some modalities for compulsory licensing provided for by the patent law were trips-inconsistent. The dispute was settled, however, and the United States recognized the compatibility of the Argentine law with the agreement.58 Protecting Test Data against Unfair Commercial Use Data protection has been one of the most controversial issues emerging from the implementation of the trips Agreement in Latin America. Most countries have adopted a strict interpretation of article 39.3 and provided protection against unfair commercial practices without data exclusivity. The only exceptions have been Mexico (which is a member of the North American Free Trade Agreement), Guatemala, and Colombia.59

28

Intellectual Property Rights

Paradoxically, in 2000 Guatemala – one of the poorest countries in the region – adopted a period of fifteen years of data exclusivity for drugs (whereas the period lasts only five years in the United States). A turbulent legislative process subsequently led to the derogation of data exclusivity, its reinstatement for five years, and its derogation again in November 2004. This process, in which the us government openly acted on behalf of the us pharmaceutical industry, eventually ended up with the adoption of the Dominican Republic and Central American Free Trade Agreement, which provides for data exclusivity that, in practice, may last up to ten years from the date of approval of a medicine in Guatemala.60 Under pressure from the United States, which threatened the withdrawal of trade preferences, Colombia passed Decree 2085 in 2002, introducing data exclusivity. The Andean Court of Justice, however, found the decree a violation of Andean common law on industrial property and ordered the Colombian government to derogate the data exclusivity protection implemented through that decree.61 The us government also initiated a case under wto rules complaining about Argentina’s alleged failure appropriately to protect test data. The dispute was settled at the consultation stage after two years of discussions.62 Argentina did not accept the us claim that exclusive rights should be granted for test data and maintained its law unchanged. No further action in the framework of the wto has been taken by the United States against Argentina, or against any other country that does not recognize data exclusivity. However, the ustr has listed, under Special Section 301 of the Trade Act, a large number of countries that, according to the ustr, do not in their view confer adequate (i.e., exclusive) protection for test data.63 Compulsory Licenses for Exports/Imports Finally, it is worth mentioning that no Latin American country has so far implemented the wto mechanism that allows exports/imports in the case of insufficient or lack of manufacturing capacity in pharmaceuticals.64 Some countries (e.g., Argentina, Brazil, Mexico) could eventually become exporters under such a system, but most Latin American countries are likely to have insufficient capacity or to lack capacity to manufacture certain pharmaceutical products under compulsory license.65

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29

domestic processes and policy coherence A key question to consider when dealing with problems of policy coherence in intellectual property as it applies to public health is whether national health authorities were involved in the process of negotiation and, later, implementation of the trips Agreement at the national level. Although it is difficult to generalize, there is no evidence indicating that public health authorities were involved to any significant extent, on the one hand, in the negotiation of the trips Agreement and, on the other, in the incorporation of its minimum standards in national laws. Latin American countries participated in the Uruguay Round (with varying intensity) through foreign affairs, trade, and agricultural ministries, but there was little or no involvement from agencies in other areas, such as public health authorities. Although in some countries, inter-ministerial participation and coordination was sought in various forms,66 most Latin American countries (with a few exceptions) focused on the benefits they could get in the agricultural sector and paid marginal attention to developments in the area of intellectual property. The limited or complete lack of involvement of health authorities was probably a result of the very limited or nonexistent capabilities of public health ministries in intellectual property issues and their limited knowledge about the implications the new rules might have for access to medicines. In addition, even if those capabilities and knowledge did exist, ministries of health generally had little power to influence a process that was, formally, outside their specific competence. During the trips negotiations and the implementation of its obligations at the national level, there was no systematic assessment of the public health impact of the introduction of product patent protection and other rules. A number of studies conducted in the region warned, however, about the impact, especially on prices and access to medicines, that the new set of rules was likely to have.67 The domestic pharmaceutical industries also voiced their concerns through their local associations and the Latin American Association of the Pharmaceutical Industry (alifar). The low level of participation of ministries of health and other health authorities in the design and discussion of the legislation implementing the trips Agreement was matched by the similarly low level of participation of civil-society organizations, which had probably not realized at the time what the implications of the new trips rules were. Some foreign

30

Intellectual Property Rights

and local ngos became more active in intellectual property issues only after hiv-aids was perceived as a major threat to health. Some ngos mobilized, for instance, only when a provision of the Brazilian patent law allowing for compulsory licenses in cases of a lack of exploitation of a patent was questioned by the us government.68 In contrast to the low level of participation of health authorities and ngos, the foreign pharmaceutical industry, notably phrma and its associated local entities in Latin America, and the domestic pharmaceutical industries, particularly in the countries of the region where they were better organized, actively tried to influence the negotiation of the trips Agreement and the process leading to its implementation at the national level. The foreign pharmaceutical industry, particularly the us industry, influenced the trips negotiations through their delegations to gatt. The pharmaceutical lobby was, in fact, determinant in the articulation of the position of the us government and the governments of other developed countries during the Uruguay Round.69 In addition, these governments actively supported the interests and objectives of the foreign pharmaceutical industry during the implementation of the trips obligations at the local level. Their intervention was intended to accelerate the introduction of product pharmaceutical products and to limit the use of the flexibilities allowed by the trips Agreement with regard to, inter alia, exceptions, parallel imports, and compulsory licenses. As mentioned above, they succeeded to a great extent. The us ambassadors, for instance, often made public statements on the legislative processes relating to trips implementation and cooperated in the organization of seminars for lawmakers and of other activities, in order to promote the interests of the us industry. The organization of the domestic pharmaceutical industry and its capacity to influence the legislative process significantly varied across Latin American countries, depending on the size of the local companies, their participation in the local market, and the attitudes of their own governments. In some countries, such as Argentina, Colombia, and the Dominican Republic, the associations of domestic pharmaceutical companies warned about the reduction in competition and access to medicines that the new standards of protection would entail and attempted to preserve the room for maneuver left by the trips Agreement, particularly with regard to the use of compulsory licenses. However, in many instances they were unable to counteract the powerful lobby of the foreign industry and the influence that its governments exerted on the domestic legislative processes of Latin American countries.

The Implementation of trips

31

It is also worth mentioning that in the period when the trips Agreement was being implemented, international organizations such as wipo, which provided technical assistance, failed to support a broad use of the trips flexibilities. Moreover, there are indications that bilateral assistance, such as in the case of Guatemala, was ostensibly biased towards the interests of foreign pharmaceutical companies.70 In the light of this situation, it is not perhaps surprising that, as mentioned above, G

G

G

no country used to the full the transitional period allowed by the trips Agreement for the introduction of patents for pharmaceutical products; few countries provided for exceptions to exclusive rights, such as the early working exception; and many countries (including Brazil and Mexico) excluded or limited the possibility of parallel imports.

Most legislative changes implementing the trips Agreement took place in the region before the adoption of the Doha Declaration on the trips Agreement and Public Health, which may have helped to reassure the countries in the region that the use of the trips flexibilities was legitimate and necessary to protect public health. There is considerable room to improve Latin American legislation and make it more compatible with a public health perspective, but important obstacles seem to exist. On the one hand, many governments are reluctant to reopen the parliamentary discussion of patent laws, particularly in order to expand the use of the trips flexibilities, since they foresee pressures from us industry and the us government, as well as from the European Union, to maintain the status quo, or even worse, to further limit such flexibilities. The fact that no Latin American country has as yet implemented the mechanism – now provided for under article 31bis of the trips Agreement – to allow exports of medicines under compulsory licenses to countries without manufacturing capacity may be explained, at least partially, by such reluctance. On the other hand, Latin American countries, like other developed and developing countries, face the “trips-plus” activism of the us government, which, through a number of free trade agreements (such as those signed with Jordan, Chile, Singapore, Chile, Morocco, the Dominican Republic and Central American countries, and Bahrain),71 has succeeded in obtaining a significant expansion of intellectual-property protection for pharmaceuticals, notably on the basis of

32 G

G G

G G

Intellectual Property Rights

the extension of the patent term to compensate for delays in the examination of patents or the granting of marketing approval; requirements to protect second indications for existing medicines; a linkage between drug registration and patent protection (preventing registration where product patents exist); exclusivity for test data; and in some cases, limitations on the grounds for granting compulsory licenses.

This expansion represents a serious threat to the implementation of intellectual property laws that are sensitive to public health needs.72 Free trade agreements suppress the majority of trips flexibilities, thereby dramatically rebalancing the intellectual property regimes in favor of the large pharmaceutical companies. If policy coherence was already lacking in many cases in the implementation of the trips Agreement in Latin America, the acceptance of higher levels of protection for pharmaceuticals under free trade agreements introduced a much deeper asymmetry between public health and commercial interests than that brought about by the trips Agreement.

conclusions More than ten years after the adoption of the trips Agreement and almost five years after the Doha Declaration on the trips Agreement and Public Health, the relationship between the protection of intellectual property and public health is a matter of concern. The trips Agreement has left some room to develop intellectual property regimes that take, at least to some extent, public health interests into account, but the actual use of this room has been limited by various factors. Latin American legislation achieved only an imperfect balance between public health and commercial objectives. A review of the Latin American legislation indicates, in effect, that, perhaps with the exception of compulsory licenses, most countries have not provided in their national laws for the full range of flexibilities that the trips Agreement allows. This may be explained by the fact that the process of implementation of the agreement at the national level was characterized by low or marginal participation of health authorities and civil society, in contrast to the activism of the foreign pharmaceutical industry and the governments of some developed countries. Political considerations and

The Implementation of trips

33

concerns about reactions from developed countries seem to have influenced the process more decisively than considerations about the public health implications of the new rules. Although there is plenty of room for the actual use and expansion of the trips flexibilities under many national laws, the political will to do so seems to be lacking in most countries. Moreover, some of them have already accepted or are in the process of accepting trips-plus standards that may have significant implications for public health.73 In view of the trips-plus offensive led by the United States, to obtain significant increases in intellectual property protection, other countries (like the members of mercosur) are probably more concerned with preserving their current freedom to legislate than expanding it. It is unclear if and how the current situation could be changed and policy coherence in the area of public health enhanced. A first step obviously would be to keep the trips standards and avoid bilateral agreements that increase the levels of intellectual property protection in a manner that affects public health. In addition, governments should assess the public health impact of the standards of protection they currently apply and, consistently with the Doha Declaration on the trips Agreement and Public Health, introduce whatever flexibilities are missing in their national regimes without fear of retaliations that would be ostensibly illegal under wto rules.

notes 1 The enforcement standards may be seen, however, not only as minimum but also as maximum standards, since they aim at ensuring fair and equitable procedures for all parties involved in administrative or judicial processes (see article 41.2 of the trips Agreement). 2 See, e.g., Kaiser Family Foundation, Profitability among Pharmaceutical Manufacturers Compared to Other Industries, 1995–2003, http://www.kff.org/insurance/7031/ti2004–1–21.cfm. 3 Although this provision expressly refers to importation as one of the exclusive rights of the patent-holder, in a footnote to the same article a cross-reference is made to article 6 of the agreement, which allows members to provide for “parallel imports” under the principle of “international exhaustion of rights,” as discussed below. 4 See F. Scherer, “Global Welfare in Pharmaceutical Patenting,” The World Economy, July 2004.

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Intellectual Property Rights

5 See, e.g., P. Trouiller et al., “Drug Development for Neglected Diseases: A Deficient Market and a Public-Health Policy Failure,” The Lancet 359 (June 2002): 2188–94. 6 See, e.g., World Bank, Global Economic Prospects and the Developing Countries, 2002 (Washington, dc: World Bank 2001). 7 See, e.g., Lester Thurow, “Needed: A New System of Intellectual Property Rights,” Harvard Business Review, September-October 1997; Carlos Correa and Sisule Musungu, The WIPO Patent Agenda: The Risks for Developing Countries, Working Paper no. 12 (South Centre, Geneva: 2002). 8 See uk Commission on Intellectual Property Rights, Integrating Intellectual Property Rights and Development Policy (London: 2002) (available at www.iprcommission.org). 9 Decision of the Council for trips of 29 November 2005. 10 See Decision of the Council for trips of 27 June 2002, “Extension of the Transition Period under Article 66.1 of the trips Agreement for Least Developed Country Members for Certain Obligations with respect to Pharmaceutical Products” (ip/c/25). 11 According to this section, “A person shall be entitled to a patent unless the invention was known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the invention thereof by the applicant for patent, or the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States.” 12 See document ip/q3/usa/1, 1 May 1998. 13 See, e.g., Federal Trade Commission (ftc), To Promote Innovation: The Proper Balance of Competition and Patent Law Policy (2003). available at htpp://www.ftc.gov; Adam B. Jaffe and Josh Lerner, Innovation and Its Discontents: How Our Broken Patent System Is Endangering Innovation and Progress, and What to Do about It (Princeton, nj: Princeton University Press 2004). 14 Section 3(d) of the amended Indian Patent Act stipulates that the following shall not be treated as an invention within the meaning of the Act: “the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant. Explanation. – For the purposes of this clause, salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers,

The Implementation of trips

15 16 17

18 19

20

21

22 23 24 25

26

27

35

complexes, combinations and other derivatives of a known substance shall be considered to be the same substance, unless they differ significantly in properties with regard to efficacy.” See, e.g., Bengt Domeij, Pharmaceutical Patents in Europe (Stockholm: Kluwer Law International/Norstedts Juridik 2000), 178. See, e.g., Carlos Correa, Integrating Public Health Concerns into Patent Legislation in Developing Countries (Geneva: South Centre 2000), 22–3. During the Uruguay Round negotiations, more specific proposals were made (e.g., the eec submission contained in mtn.gng/ng11/w/26 of 7.7.88) but were not included in the final text. W. Cornish, Intellectual Property: Patents, Copyright, Trade Marks and Allied Rights (London: Sweet & Maxwell 1989) 736. See Gehl Sampath, “Breaking the Fence: Can Patent Rights Deter Biomedical Innovation in ‘Technology Followers’?”, unu/intech, Discussion paper series, 2005–10, 29). http://www.intech.unu.edu/publications/discussionpapers/2005–10.pdf. The early working exception is named Bolar after a case judged by us courts in Roche Products Inc. vs. Bolar Pharmaceutical Co. (733 f. 2d. 858, Fed. Cir., cert. denied 469 us 856, 1984), in which the court denied Bolar the right to begin the fda approval process before the expiration of the patent. In the European countries, an “early working” exception has been gradually admitted by case law on the basis of the already mentioned right by a third party to conduct experimentation without the authorization of the patent owner . See Report of the WTO Panel, Canada – Patent Protection for Pharmaceutical Products, wt/ds114/r (2000). This concept does not include imports of counterfeiting products. See, e.g., Susan Sell, Private Power, Public Law: The Globalization of Intellectual Property Rights. (London: Cambridge University Press 2003). The only case in which the agreement does restrict the freedom to determine the grounds for compulsory licenses relates to “semi-conductor technology,” which can only be subject to compulsory licenses for public non-commercial use and to remedy anti-competitive practices. The possibility of granting compulsory licenses solely for importation has been confirmed beyond any doubt by paragraph 6 of the Doha Declaration on the trips Agreement and Public Health and the subsequent wto decision of 30 August 2003, incorporated on 6 December 2005, into the trips Agreement as article 31bis. In the United States many compulsory licenses have been granted in order to remedy anti-competitive practices. In some cases, these licenses have been

36

28

29 30 31

32 33

34

35

36

36 37

Intellectual Property Rights

granted “royalty free.” See generally on this subject C. Correa, Intellectual Property Rights and the Use of Compulsory Licenses: Options for Developing Countries. Trade-Related Agenda, Development and Equity, Working Papers, (South Centre, Geneva 1999). The United States requested a panel against Brazil under the wto Dispute Settlement Understanding in relation to the Brazilian provision (article 68 of the Industrial Property Code) on compulsory licenses for cases of non-working. The complaint was, however, withdrawn by the us government before the panel was set up. F. Scherer, “The Patent System and Innovation in Pharmaceuticals,” Revue Internationale de Droit Economique, Special edition (2001), 107–20. See European Commission, Report on United States Barriers to Trade and Investment, Brussels.1997. See, e.g., Carlos Correa, “Refusal to Deal and Access to an Essential Facility: Balancing Private and Public Interests in Intellectual Property Law,” in Mélanges Victor Nabhan, ed. Yvon Blais, (Québec: Série les Cahiers de Proprieté Intellectuelle 2004). See the wto decision of 30 August 2003, incorporated on 6 December 2005 as article 31bis of the trips Agreement. See, e.g., Carlos Correa, “trips and Access to Drugs: Toward a Solution for Developing Countries without Manufacturing Capacity?” Emory International Review 17, no. 2 (summer 2003). Switzerland has also announced legislation, while the European Union is in the process of adopting a regulation on the matter. See “Position of the European Parliament adopted at first reading on 1 December 2005 with a view to the adoption of Regulation (ec) No .../... of the European Parliament and of the Council on compulsory licensing of patents relating to the manufacture of pharmaceutical products for export to countries with public health problems” (ep-pe_tc1-cod(2004)0258). See article 39.1 of the trips Agreement. For an analysis of this subject, see Carlos Correa, Protection of Data Submitted for the Registration of Pharmaceuticals: Implementing the Standards of the TRIPS Agreement, (Geneva: South Centre/who 2002). Sisule Musungu and Cecilia Oh, The Use of Flexibilities in TRIPS by Developing Countries: Can They Promote Access to Medicines? (2005), available at http://who.int/intellectualproperty/studies/trips_flexibilities/en/index.html. See article 70.9 of the trips Agreement. Other countries, like Mexico and the members of the Andean Community, had substantially modified their intellectual-property regimes even before the formal adoption of the trips Agreement in 1994.

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37

39 Governments’ concessions in the area of intellectual property have been linked in some cases to commitments from the beneficiary party. For instance, Canada accepted to abolish its system of automatic compulsory licenses for pharmaceutical products in 1991, in exchange for a commitment by the United States pharmaceutical industry to increase research and development (r&d) in Canada. Total r&d spending in Canada by brand name companies increased from $626 million in 1995 to $945 million in 2000, an increase of 51 percent. Despite this growth, Canada still ranks behind the other industrialized countries in r&d spending. In addition, most of this increase related to clinical research rather than to research on new molecules. See, e.g., Patented Medicine Prices Review Board, A Comparison of Pharmaceutical Research and Development Spending in Canada and Selected Countries (2002), pmprb Study Series s–0217, December 2002, available at www.pmprb-cepmb.gc.ca. 40 See, e.g., Florencio Sequelra, “Patent Protection for Pharmaceutical Products: The Argentinean Experience,” phd diss., University of Warwick, 1999. 41 See J. Kors, coordinator, Patentes de invención: Diez años de jurisprudenciaComentarios y fallos. (Buenos Aires: La Ley-Colección ceidie 2005). 42 See, e.g., E. I. Dupont de Nemours and Co. vs. INPI Superior Court of Justice (STJ), Third Jurisdiction no. 2004/0048736–1, Appellate Review no. 652172/rj – Superior Court of Justice, 3d Panel; Ministry Carlos Alberto Menezes Direito Federal Regional Court, 2d Region, Rio de Janeiro, 4th Panel; Federal Judge Rogério Carvalho, process of origin no. 98.0001955–3 (Origin: 14th Federal District), Patent no. 8401507–1. 43 Patent abstracts, which are drafted by the applicants themselves, often do not contain the International Nonproprietary Names for Pharmaceutical Substances (inn), making it difficult to identify applications that, if granted, may block competition in pharmaceuticals. 44 See Maristela Basso, “Intervention of Health Authorities in Patent Examination. The Brazilian Practice of the Prior Consent,” International Journal of Intellectual Property Management, vol. 1, no. 1/2, 2006. 45 In the case of Brazil, this has been one of the main areas of disagreement between the patent office and anvisa. The latter’s criterion has prevailed. See Maristela Basso, “Intervention of Health Authorities.” 46 Decision 486, article 21: “Products or processes already patented and included in the state of the art within the meaning of Article 16 of this Decision may not be the subject of new patents on the sole ground of having been put to a use different from that originally contemplated by the initial patent.” 47 See Resolution 476 of La Secretaria General de la Comunidad Andina (2001), available at http://www.comunidadandina.org/normativa/res/r476sg.htm.

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48 See Proceso no. 34-ai–2001, “Sumario por Incumplimiento de Sentencia” (2003), available at http://www.comunidadandina.org/normativa/sent/ 34-ai–2001s.htm. 49 See, e.g., Carlos Correa, International Dimension of the Research Exception (Washington, dc: sippi Project, aaas), available at http://sippi.aaas.org/ intlexemptionpaper.shtml. 50 After the case against Canada was settled, the European Union considered formally introducing an early-working exception under European law. 51 See Maria Auxiliadora Oliveira, Jorge Antonio Zepeda Bermudez, Gabriela Costa Chaves, and Germán Velásquez, “Has the Implementation of the trips Agreement in Latin America and the Caribbean Produced Industrial Property Legislation That Favors Public Health Policy?” WHO Bulletin, 82 (11) (November 2004). 52 In the case of Argentina, decree 260/96, which implements the Patent Law of 1995, restrains the scope of parallel imports as permitted by the law itself. The constitutionality of this restriction is, however, an open issue. 53 Parallel imports might instead be allowable under certain conditions in accordance with the trademark law. 54 See wt/min(01)/dec/w/2, 14 November 2001. 55 See Brazil – Measures Affecting Patent Protection, Request for the Establishment of a Panel by the United States, 9 January 2001, wt/ds 199/3. On 1 February2001, the dsb authorized establishment of a panel, but no panel members had been appointed by the time the complaint was withdrawn. Cuba, the Dominican Republic, Honduras, India, and Japan reserved thirdparty rights. 56 A number of Latin American countries jointly negotiated with twenty-six companies in 2005 in order to obtain reduced prices for the supply of antiretrovirals. The agreement reached included reductions from 15 percent to 55 percent. See http://www.paho.org/Spanish/ dd/pin/ps050805.htm. 57 See Commission on Intellectual Property, Integrating Intellectual Property Rights and Development Policy (2002) available at http:// www. iprcommission.org/papers/word/final_report/titlepageswordfinal.doc. 58 See Argentina, “Patent Protection for Pharmaceuticals and Test Data Protection for Agricultural Chemicals”, wt/ds171, 6 May 1999; Argentina, “Certain Measures on the Protection of Patents and Test Data,” wt/ds196, 30 May 2000; and “Notification of a Mutually Agreed Solution According to the Conditions Set Forth in the Agreement” (ip/d/18/Add.1, ip/d/22/Add.1), available at www.wto.org. 59 Brazil adopted data exclusivity, but only with regard to agrochemical products, not pharmaceuticals.

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60 See, e.g., Carlos Correa, “Bilateralism in Intellectual Property: Defeating the who System for Access to Medicines,” Case Western Reserve Journal of International Law 36, no. 1 (winter 2004). 61 Proceso 114-ai–2004, 8 December 2005. 62 See “Notification of Mutually Agreed Solution according to the Conditions Set Forth in the Agreement” (ip/d/18/Add.1, ip/d/22/Add.1), available at www.wto.org. 63 See http://www.ustr.gov/. 64 See article 31bis of the trips Agreement. 65 It is important to note that the manufacturing capacity in the importing country is to be assessed in relation to particular products, and not in general. See, e.g., Carlos Correa, Implementation of the WHO General Council Decision on Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health (Geneva: who 2004). 66 In Argentina, for instance, an Inter-Ministerial Group on Intellectual Property was established in 1987 to make recommendations for the trips negotiations. 67 See, e.g., Pablo Challú, Patentamiento de productos farmacéuticos: Consecuencias (Buenos Aires: Ed. Mercado 1991); A. Chambouleyron, “La nueva ley de patentes y su efecto sobre los precios de los medicamentos: Análisis y propuestas,” Estudios, año 18, no. 75 (1995) Córdoba; F.A. Coloma and C. Gabrielli y Willianson, Análisis del proyecto de ley industrial en relación a las patentes farmacéuticas, Universidad Católica de Chile, Instituto de Economía, Documento de Trabajo no. 124 (1987); Carlos Correa, “The Pharmaceutical Industry and Biotechnology Opportunities and Constraints for Developing Countries,” World Competition 15, no. 2 (1991); J. Nogués, “Patents and Pharmaceutical Drugs: Understanding the Pressures on Developing Countries,” Journal of World Trade, vol. 24, no. 6 (1990): 81–104; J. Nogués, “El rol de las patentes en la industria fannacéutica: El caso de la Argentina,” in El Comercio Exterior Argentino en la Década de 1990 (Buenos Aires: Ediciones Manantial 1991). 68 See, e.g., Oxfam, Local Working Requirements and the TRIPS Agreement: Using Patent Law as a Means of Ensuring Affordable Access to Essential Medicines, a Case Study from the US-Brazil Dispute (2001); available at www.field.org.uk/pdf/twrta.pdf. 69 See, e.g., Michael Ryan, Knowledge Diplomacy: Global Competition and the Politics of Intellectual Property (Washington, dc: Brookings Institution Press 1998); Sell, Private Power, Public Law. 70 See, e.g., Elena Ganotakis, ‘How the u.s. Interpretation of Flexibilities Inherent in trips affects Access to Medicines for Developing Countries,” Journal of World Intellectual Property 7, no. 4 (2004).

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71 United States–Jordan Free Trade Agreement (2001); United States–Chile Free Trade Agreement, signed at Miami, 6 June 2003, entered into force 1 January 2004 (Chile fta); United States–Singapore Free Trade Agreement, signed at Washington, 6 May 2003, entered into force 1 January 2004 (Singapore fta); United States–Morocco Free Trade Agreement, signed at Washington, 15 June 2004; entered into force on 1 July 2005 (Morocco fta); United States–Dominican Republic–Central America Free Trade Agreement, signed at Washington, 28 May 2004 and 5 August 2004, parties, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States (cafta); United States–Bahrain Free Trade Agreement, signed at Washington, 14 September 2004 (Bahrain fta). 72 trips-plus provisions in free trade agreements are examined in this volume in chapter 3. 73 In addition to Chile and the Central American countries, Peru and Colombia signed free trade agreements with United States that contain significant tripsplus standards. (Ecuador negotiated a similar agreement but did not conclude it). The ministries of health actively participated in the negotiations, but they lacked political weight to avoid a negative outcome in terms of public health.

tion pertyofRights Agreements

3 A New Generation of Regional and Bilateral Trade Agreements: Lessons from the US-CAFTA-DR Agreement PEDRO ROFFE, JOHANNA VON BRAUN, AND DAVID VIVAS-EUGUI

introduction In December 2003 the usa–Central America Free Trade Agreement was concluded following twelve months of negotiations. The original agreement included the United States, Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. When the agreement was finally signed in August 2004 the Dominican Republic became an additional party, the agreement, thus, now being referred to as the us-cafta-dr Agreement (henceforth cafta). In July 2005 the us Congress approved cafta by a narrow majority, signing it into law in August 2005.1 This process has been followed also by Guatemala, Honduras, El Salvador, the Dominican Republic, and Nicaragua.2 cafta brings the richest and some of the poorest countries in the Western Hemisphere into one free trade agreement (fta). It has received substantial media coverage and major criticisms from civilsociety groups for, among other things, its provisions on intellectual property rights (iprs) that go well beyond the minimum standards that are provided by the wto Agreement on Trade-Related Aspects of Intellectual Property Rights (trips). The main criticisms of the so-called trips-plus provisions have been mostly connected with concerns relating to public health in countries where no safety nets for access to medication exist for people who cannot afford to purchase them at market prices. It has been argued that trips-plus provisions prevent competi-

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tion and delay the entry of generics into the market, which keeps prices high. From this perspective, the provisions of the agreement will make access to medicines more cumbersome. Our aim in this chaper is to provide a better understanding of the implications of the new generation of ftas, particularly for public health.3 First, we illustrate how pharmaceutical protection has evolved through time and the importance of the trips Agreement in this respect. We then analyze the recent phenomenon of bilateral trade agreements and why countries negotiate these agreements in the first place. We also refer to some of the structural concerns inherent in ftas between large and small countries. It is our view that in order to understand what policy options exist to protect public health in developing countries in the context of recent fta policies, it is essential to comprehend their underlying dynamics. We furthermore describe the individual trips-plus provisions as they relate to public health and underline their legal and political effects. Finally, we make some suggestions on how policy coherence in trade and public health could be better achieved with respect to the challenges posed by the new generation of ftas in the intellectual property sphere. Throughout, references are made to cafta, as well as to some other fta negotiations.

from trips to bilateral free trade agreements – a historic overview Patent Rights and the Protection of Pharmaceutical Products in the Multilateral System Patent rights exclude third parties from access to the patented invention without the consent of the right-holder. Because of this exclusionary character certain socially sensitive industrial sectors were traditionally exempted from patent protection. At the commencement of the negotiations of the trips Agreement more than fifty countries did not grant patent rights to pharmaceutical products, including developed countries that for quite some time had excluded them from patentability (unctad-ictsd 2005, 33–4).4 This situation was fully compatible with the prevailing multilateral system on the protection of intellectual property. More precisely, the Paris Convention for the Protection of Industrial Property of 1883 left countries considerable freedom in the design of their patent policies. Any state party was free to exclude entire areas of

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technology or certain products or processes from patentability. The convention also left countries with the discretion to draft their own patentability criteria and define the grounds for the granting of a compulsory license, including for failure to work a patent.5 From this perspective, among others, the trips Agreement signalled a major change in intellectual property policy-making. First of all, the trips Agreement introduced the obligation to make patents available in all fields of technology, and for both products and processes. trips also mandated members to make available patents without discrimination as to the place of invention, the field of technology, or whether the products were imported or produced locally (unctad-ictsd 2005, chap. 25).6 On the other hand, the trips Agreement still leaves wto members with some discretion in the design of their national ip policies, namely, G

G

G

G

G

G

G

G

The agreement provides them with the freedom to define the criteria of patentability. This is an important tool in preserving a large public domain for follow-on research and the promotion of competing products to help maintain prices at modest levels. The agreement does not oblige them to protect new uses of known products (“second uses”). This may be a way of avoiding “evergreening” of patents by seeking additional protection for the same product. Members are authorized to control ipr abuses through competition laws and policies, in particular with licensing agreements.7 The agreement recognizes the possibility of establishing exceptions, under certain conditions, to the exclusive rights conferred by a patent.8 One relevant exception in the public health field is the regulatory (Bolar) exception. The agreement leaves members with discretion in the determination of the substantive grounds for the issuance of compulsory licenses.9 The agreement leaves members with discretion in the determination of the ipr exhaustion regime that best suits domestic conditions (national, regional, or international).10 It is left to each member to provide protection of pharmaceutical test data submitted to regulatory authorities for marketing approval purposes through exclusive or non-exclusive rights (i.e., through rules concerning unfair competition).11 ldc members are authorized to benefit from special transition periods for the implementation of the trips minimum standards (1 January 2006 in general; 1 January 2016 for the application of patent

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rights and rules on the protection of undisclosed information in the area of pharmaceutical products).12 This set of flexibilities was reaffirmed in the Doha Declaration on the trips Agreement and Public Health:13 “In this connection [i.e., regarding public health and access to medicines], we reaffirm the right of wto Members to use, to the full, the provisions in the trips Agreement, which provide flexibility for this purpose.”14 In many respects the adoption of the trips Agreement, with all the reservations manifested by developing countries, represented the success of the multilateral system in terms of the recognition of a new institutional trading system that would privilege international solutions over unilateral trade measures. The Shift to Bilateralism The impact of patents on public-health policies, in particular with respect to access to medicines, has been one of the most debated intellectual-property issues in the post-trips era. The adoption of the Doha Declaration on the trips Agreement and Public Health and the General Council decision for the implementation of paragraph 6 of that declaration marked a particular stage in this debate. But the focus of the discussion has started to shift away from the multilateral level to the regional and bilateral arena, where a number of post-trips free trade agreements have been signed. As far as substance is concerned, these ftas have added to traditional patent rights another form of protection that is relevant in the context of access to medicines: exclusive rights to pharmaceutical test data submitted to regulatory authorities in the course of marketing approval procedures. It should be noted that during the Uruguay Round negotiations, the United States already advocated a regime of exclusive protection (as opposed to the final outcome under trips).15 From this perspective, for major trading powers like the United States, the European Union, and Japan, bilateral or regional negotiations represent a welcome opportunity to achieve what has not been possible to negotiate successfully at the multilateral level. Thus, the widely shared concern is that developing countries, by signing trips-plus agreements, risk losing the very flexibilities they are granted through the trips Agreement and the Doha Declaration and its implementing decision.16 Since 2001, the United States has signed a con-

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Box 3.1 US FTA s FTA s in force Israel (1996), Jordan (2001), Viet Nam (2001), Singapore (2004), Chile (2004), Australia (2004) FTA s ratified Bahrain; CAFTA-DR , Morocco

FTAs under negotiation Andean countries, Thailand, Panama, SACU , FTAA , Egypt, UAE , Oman

Box 3.2 OVERVIEW OF US-C AFTA-DR COUNTRIES (2004)

GDP(PPP)

Country US

Guatemala Dominican Republic Costa Rica El Salvador Honduras Nicaragua

GDP(PPP)**

$11.7 trillion $59.5 billion $55.6 billion $38 billion $32.3 billion $18.8 billion $12.3 billion

p/c** $40,100 $4,200 $6,300 $9,600 $4,900 $2,800 $2,300

% of total export in goods, to US market * 36 40.2**** 52.8 40.6 60.9 45.3

% of total US*** export

in goods, to 0.21 0.38 0.28 0.16 0.27 0.05

*Including the value added aggregated by in-bond industries (Gonzales 2005). **PPP = Purchasing Power Parity (statistics from CIA World Fact Book). *** Calculated based on data provided by US Census Bureau, Trade Statistics. **** CEPAL/ECLAC Official Data Base; does not include in-bond industries.

siderable number of ftas, in particular with developing countries. An overview of those ftas, at time of this writing, can be found in box 3.1.

the political economy of ftas Many ftas include a very diverse mix of countries, often with both very large and very small economies. In the case of cafta, the asymmetry between the United States economy and the Nicaraguan economy, for example, is very large (see box 3.2). Their very diverse nature often makes it difficult to determine what the real overall interest is of the parties involved in signing these agreements. A further difficulty arises when analysts focus on individual aspects of such agreements. One

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could question, for example, what the fta will mean for market access, what its impact will be on the environment, what farm sectors will benefit most, or what it will do to the price of medicines in developing countries. However, it is important, particularly in the attempt to understand the underlying policy dynamics, to see each agreement as a single undertaking, one treaty that includes many different facets. There are many reasons why countries enter ftas, both developed and developing countries, and each fta is unique by nature. Nevertheless, as pointed out above, the ip chapter has a dominant role in ftas and is often the chapter that elicits the most controversy.16 The United States has been particularly forceful in advancing the ip agenda towards greater protection and enforcement over the world. Many developing countries do accept stronger ip provisions that go beyond the wto standards, in exchange for perceived benefits in other sectors. The following section will attempt to provide an overview of some of the most important reasons why countries enter into an fta.

developed-countries’ rationale for seeking ftas Disillusionment with the Multilateral Process The United States, as the biggest exporting country of knowledge-intensive products in the world, has been a critical player in pushing for the integration of iprs in international trade agreements. This strategy was initiated already in 1974 with the enactment of the us Trade Act. Industrial groups with a particular interest in stronger copyright protection, such as the media and information technology industries, played a dominant role in this important development. They were supported by the pharmaceutical industry with respect to strengthening patent protection in an area that, as explained earlier, had traditionally been exempted from patent protection. This effort resulted in the integration of iprs into the newly formed World Trade Organization Declaration on the trips Agreement and Public Health. However, the final trips Agreement did not fully meet the expectations of some industry groups (unctad-ictsd 2003).17 Furthermore, increasing political awareness of the issues surrounding ip among wto members that resulted, for example, in the drafting of the Doha Declaration on the trips Agreement and Public Health has additionally intensified this disillusionment.18 Aspirations to raise ip standards towards – and sometimes even

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beyond19 – the us domestic level of ip protection have been consistent in us foreign economic policy-making ever since. Additional disappointment has been expressed towards the World Intellectual Property Organization (wipo), the un-specialized agency that seeks the progressive development of global intellectual property law. Currently, one of its most crucial negotiations relates to the Substantive Patent Law Treaty (splt), a treaty that seeks to harmonize the substantive provisions on patent protection among member states. However, this process has been stagnant for the last couple of years (ictsd, 2005a), mainly because a number of developed countries would like to agree first on a selective list of issues that deal primarily with the harmonization of the patentability criteria, apparently a major concern for those countries. A number of developing countries, however, question this process for not taking into account the interests of technologyimporting countries. It is their view that there is too little overall emphasis on the development concerns of developing countries and that these have to be included in all of wipo’s activities, including international patent harmonization processes (Gabrieloni 2005). Another reason for the growing frustration with the shortcomings of the multilateral process is the perceived lack of enforcement at the national level. This problem was reiterated in 2004 in the Special 301 Report of the United States Trade Representative (ustr):20 “The most significant piracy and counterfeiting problems require measures that may go beyond the minimum standards of trips to ensure effective enforcement at the national and local levels ... This is why ustr seeks through our ftas and our bilateral consultations to ensure that criminal penalties are high enough to have a deterrent effect, both in the law and as imposed by the courts and administrative bodies, as well as to ensure that pirated and counterfeit products, and the equipment used to make them, are seized and destroyed” (ustr 2004).21 The Economic Rationale The economic value of bilateral and regional agreements from the perspective of a larger economy, such as that of the United States, is diverse and depends on the size and nature of the negotiating partner’s domestic market. Particularly when the fta involves a small and a large economy, the ip chapter is usually not reponsible for the biggest economic returns, since market access for agriculture and related products is more important.22 For example, the markets of the cafta countries are

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jointly worth us$15.7 billion per year in us exports, together the tenth largest export market for the United States, primarily due to its geographic proximity to the respective countries (ictsda 2005). The main export products stem from the farm and textile sector, the latter being of particular importance for the United States in light of the growing competition with China. While these factors matter, the relative importance of the cafta economies, however, remains small, accounting in total only for approximately 1 percent of total us exports (see box 3.2). With respect to ip, in many cases the biggest economic interest lies in strengthening some of the existing domestic ip provisions, as well as in providing for better ip enforcement. However, sound economic data on the economic value of ip legislation in regional and bilateral agreements is difficult to find. The ustr claims annual economic losses of us$200 to $250 billion (ustr 2004) in developing countries due to lack of enforcement.23 It is likely that the biggest share of these losses stems from countries with very big markets, such as China, rather than from small countries, such as Nicaragua. Therefore, the gains made from agreements such as cafta in strengthening enforcement provisions is likely to be of only marginal economic importance to us industries. Similar arguments can be made with respect to the extended protection of pharmaceutical products. The markets of the Central American countries are small in comparison to those of the United States or the eu and of marginal additional value. Thus, trips-plus provisions, such as provisions for data exclusivity or limitations on the use of compulsory licences, are likely to be of only limited economic value. It is therefore important to question why the United States places so much emphasis on these issues during the negotiation process. The best explanation is not necessarily that the United States is attempting to defend current economic value but that the provisions are symbolic and possibly that the country is motivated by estimates of future economic returns. The Political Rationale Another reason behind the emphasis on some of the trips-plus provisions in the bilateral agreements is likely to be the ustr policy of consistency, in that it attempts to bring international ip standards to its domestic level of protection. And while the cafta economies themselves do not necessarily justify the aggressive pursuit of, for example, data exclusivity from an economic perspective, the Free Trade Area of the Americas (ftaa) still under negotiation may be a justification, since it

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includes the bigger markets of Brazil and Argentina. In this sense the primary function of the ip provisions within cafta may be to function as a mini-ftaa, or a blueprint, as a precursor to other agreements,24 particularly since countries such as Mexico and Chile have already accepted stronger ip commitments. Indeed, frustration with the ftaa process was one of the initial drivers of the us-cafta negotiations (Lacs 2005).25 So while the importance of current economic value with respect to ip may be minimal, future political and economic returns are likely to be more important. Similar arguments can be made with respect to the advancement of multilateral negotiations. Coalition partners in bilateral agreements are likely to be political allies also during the respective multilateral negotiations, especially in a system that is based on minimum standards (Crawford and Fiorentino 2005; World Bank 2000). Once Guatemala, for example, has agreed to an increased level of data protection provisions, it is likely to defend a similar stance in the respective negotiations in the wto or in wipo. Furthermore, as mentioned above, it is important to pay attention to the power of industrial groups in the United States that have a strong advisory role in the us negotiation processes. This role has recently been highlighted by the Financial Times’ coverage of Microsoft’s campaign to lobby the us administration and other us businesses to intervene in the company’s battle with the eu on a major antitrust case. The memo that was distributed by the company explicitly calls for contacting two senior officials in the us government to express one’s own company’s support for Microsoft’s position (Buck 2005).26 One of the industries’ strongest influential groups is the Industry Trade Advisory Committee on Intellectual Property Rights (itac-15; previously referred to as ifac-3).27 This committee has great authority in international negotiations, including negotiations of ftas, and strongly supports a consistent policy of strengthening ip protection. For example, with respect to cafta it noted: ifac-3 welcomes the successful negotiation of cafta. While ifac-3 recognizes that the negotiation of ftas with individual countries and regions is labor-intensive, especially when compared with the negotiation of a multilateral agreement among the 146 Members of the wto, fta negotiations provide the most effective approach currently available to the United States for improving global intellectual property protection. The negotiation of an individual fta provides the opportunity to deal with specific intellectual property concerns that

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us industry may have in the particular negotiating partner. Our goal in the negotiation of an fta is to set a new baseline for all future ftas, including the ftaa. This baseline is continually reflected in the model fta agreements which are constantly changing based on what we learn through negotiating each of the ftas [emphasis added]. ... ifac-3 views the trips Agreement as reflecting minimum international norms of intellectual property protection that most countries should already have in place. The role of the ftas is to clarify, where necessary, those obligations and to improve upon them by enhancing the level of intellectual property protection in the negotiating partner. The ftas that the United States has negotiated since 1999 have facilitated national implementation of the trips obligations and have provided the vehicle both for improved standards of intellectual property protection and enforcement and for significant clarifications of trips obligations in the fta partners. The continuum of intellectual property protection that links these ftas has sent an important signal to future fta partners about us intellectual property expectations. (ifac-3 2004, 5)28 The importance of this matter has been reaffirmed by the us Congress, which directs negotiators in multilateral and bilateral trade negotiations to promote standards of protection similar to those found in United States law. The ip negotiating mandate includes the following objectives: to further promote adequate and effective protection of intellectual property rights, including through – (i)(I) ensuring accelerated and full implementation of the Agreement on Trade-Related Aspects of Intellectual Property Rights referred to in section 101(d)(15) of the Uruguay Round Agreements Act (19 u.s.c. 3511(d)(15)), particularly with respect to meeting enforcement obligations under that agreement; and (II) ensuring that the provisions of any multilateral or bilateral trade agreement governing intellectual property rights that is entered into by the United States reflect a standard of protection similar to that found in United States law. us Trade Promotion Act of 2002, section 2102.29 This mandate suggests that each fta negotiated, including cafta, clearly holds importance that goes far beyond the respective fta itself when it comes to the ip chapter.

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The United States may also engage in ftas with developing countries because of security considerations. It is likely to be of political interest for the United States to maintain tight relations with countries that are of geopolitical importance abroad. Examples are Morocco and Jordan, which, while arguably being of limited economic importance to the United States, are important partners because of geopolitical and security considerations. Similar arguments could be made with respect to the role of the Andean or Central American countries because of their role in the supply or trade of illegal substances. Improved economic relations are likely to contribute to greater intelligence cooperation to help reduce the entry of illegal narcotics into us territory. Finally, another insight into the political value of ftas can be gained by analysing the individual interest groups within the us domestic policy context. With respect to the cafta markets, for example, the most important export regions are some of the key states in the United States, such as Florida (us$3.2 billion, the biggest export market for the state), followed by Texas (us$1.8 billion), North Carolina (us$1.7 billion), Louisiana (us$1.2 billion), and Georgia and California (approximately us$660 million each).30 Some of these states, such as Texas, are either key political allies of the current administration or important “swing states” that are of substantial importance for future elections. Given the role of the state level in us policy-making, the importance of these issues should not be underestimated.

the developing-country rationale for seeking ftas The Economic Rationale Developing countries have considerable economic interests in signing an fta with a strong economic partner, such as the United States. Individual cases obviously differ from one another, but the sheer size of the us market and aspirations for preferential access to it make the prospects of a joint fta very attractive for most developing countries. In cases such as cafta (see box 3.2) and Chile, the United States already was a very important market for that country, and the bilateral agreements built on these economic ties with prospects of further preferential market access.31 Other countries, such as Morocco, were hopeful that the fta would increase its relatively small market share in the United States, as well as increase us direct investment.

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However, given that developing countries tend to be net technology importers, it is unlikely that they will benefit directly from the tripsplus standards that are an important component of the recent ftas. Instead, those chapters of the fta that relate to agricultural products, services, or textiles are more likely to be the main economic interests to developing countries. This factor has sometimes led developing countries either to fail to pay attention to the ip chapter, as in the case of Morocco, or to use the ip chapter for bargaining purposes in other fields. In addition, some countries may enter into an fta in order to maintain, rather than introduce, certain preferential trade frameworks; that is, in contrast to opening up new market access, some countries may seek to consolidate the preferential access they already possess. While this motive is rarely expressed in an official context, it is commonly known that the threat of denying the renewal of existing treatment is a major concern of developing countries. An example is provided by cafta, which builds on the already existing Caribbean Basin Initiative (cbi), which initially came into force in 1985 and includes the six cafta countries.32 Uncertainty with respect to the continuation of the preferential market access under the cbi certainly supported an argument for initiating cafta (ictsd 2005c). A similar negotiation technique has been used by Regina Vargo, who heads the us negotiations for the Andean fta. She has suggested that existing preferences under the Andean Trade Preference and Drug Eradication Act would not be renewed if the negotiations failed (Inside us Trade 2005). Countries that are receiving regular aid packages from the United States are likely to be in a similar situation. Colombia, which has been receiving substantial financial support as part of Plan Colombia, will take the maintenance of this package into consideration when deciding on whether to move ahead in the Andean–United States fta. This is also likely to be the case with Egypt, which next to Israel, is the largest recipient of us aid and which is at this stage only informally entering negotiations with the United States. However, not all market access granted through cafta was already in place in the cbi. Concessions in the field of textiles, sugar, and services certainly raise expectations of increased access to the us market. Furthermore, the locking in of existing preferences is an important political factor that should not be underestimated. The stability resulting from long-term secure market access is likely to attract foreign direct investment (Lacs 2005). While this result is being predicted, it is still too early

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to understand the real impact of the ratification of cafta on foreign direct investment. In fact, some experts suggest that it all will depend on the actual implementation of the agreement and related government policies (Acuna-Alfaro et al. 2005). Finally, entering cafta brings an additional benefit, namely, the levelling of the cafta economies with Mexico. Since the North American Free Trade Agreement (nafta) was signed, Mexico has enjoyed preferential market access that has gone well beyond what the cbi offered for the Central American economies, particularly in crucial sectors such as textiles and agriculture. cafta thus levelled some of the playing field between Mexico and the Central American economies in the region, particularly for important export products, such as sugar (Lacs 2005). The Political Rationale Like developed countries, developing countries have wider political interests in engaging in an fta with a strong partner such as the United States. First, throughout history, smaller countries have tended to ally themselves with a strong partner. The advantages included not only strong economic ties but also, for example, military security: Costa Rica does not even possess its own army. In addition, the political elites of developing countries, like those of developed countries, also need to deliver results to their own constituencies. Consequently, governments tend to focus more on immediate political success than on long-term economic or social implications. An interest in re-election and delivering results to domestic producers often predominates over concerns such as increasing long-term capacity in more technology-intensive industries or improving access to medication for marginalized parts of society. Although demonstrations against cafta were prevalent, they mainly represented small- and mediumscale enterprises, small-scale farming communities, or students and civil-society organisations opposing the agreement. In most countries, however, it is the producer lobbies, such as those of farmers’ or workers’ unions that tend to have a larger political influence than consumer groups and that are more likely to influence policy-making processes (Gerhart 2005). This generalisation explains not only why immediate market access in selected industries such as agriculture or services may receive more attention during the negotiations than issues related to the ip chapter but also the overwhelming majority with which the ftas are often approved by the respective parliaments (see box 3.3). Further-

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Box 3.3 PARLIAMENTARY VOTE FOR CAFTA Country Unites States Guatemala Dominican Republic Honduras El Salvador

Yes votes

No votes

217 126 118 100 49

215 12 4 28 34

more, governments often lack sufficient information to assess the impact of agreements or other studies to allow them to judge whether trade-offs are beneficial or not (ictsd 2005d). In addition, a so-called domino effect is taking place with respect to ftas. Countries fear the high opportunity costs that they may be subjected to if they are not part of a particular fta, particularly if the negotiated fta includes other countries in the region that are important for their own exports. Witnessing other countries in the region entering ftas could thus form the basis of a powerful argument for also joining, based on two factors: first, the fact that the other countries seem to benefit and, second, the fear that the negative results of non-membership will outweigh the potential short-term costs of joining the agreement (World Bank 2000).

forum shifting and policy coherence Apart from political and economic interests of both developed and developing countries, the very nature of the ftas in relation to iprs raises structural concerns that demand further attention. Identifying and changing fora in order to advance one’s political interest has been referred to as regime shifting, or forum shifting, in that it allows actors to move the negotiations from one forum to another, based on where political movement is most feasible. The method has been proven to be very effective in international ip policy-making.33 An example is the way developed countries led by the United States have skilfully moved global ip policy-making from wipo to the gatt on grounds that wipo was not properly equipped to enforce global ip standards. The shift from multilateral negotiations to bilateral negotiations signals another example of recent forum shifting. In addition to power shifts within the multilateral level, however, this particular shift raises

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some concerns. By definition bilateral and regional agreements reduce the number of negotiating parties at the table and thus the potential development of alliances among developing countries during the negotiations. Therefore, the bargaining power of small countries engaging with strong economies such as those of the United States or the eu is substantially decreased in this process. Although even within multilateral fora the negotiating power of states is uneven (Abbott 2003; Sell 2005), smaller countries can at least be part of broader groups such as the g20, the g77, or the wipo Group of Friends of Development (ictsd 2005e), which gives them a more powerful stand during the negotiations. Outside of such alliances small economies will find it more difficult to negotiate. ip negotiations in particular are grounded on concepts and traditions not common to developing countries, and thus they are confronted with poorer access to expertise and technical resources than are the negotiation teams of developed countries. The combination of asymmetry in resources with the unequal power balance between the negotiating partners leads to a biased framework for bilateral negotiations that is unlikely to produce a “fair” outcome. Further structural challenges emerge from the increasing complexity, partially owing to forum shifting, of ip policy-making and the level of policy coherence it demands from ip policy-makers. Such concerns emerge at both the national and the international level. At the international level, during the last ten years we have witnessed a proliferation of fora and processes that deal with ip policy-making in one way or another. Examples include not only the wto, wipo, and bilateral and regional agreements, as discussed above, but also other international bodies, such as the Convention on Biological Diversity (cbd), the United Nations Economic, Scientific and Cultural Organization (unesco), the Food and Agriculture Organization (fao), or the World Health Organization (who), and most recently, Interpol.34 This diversity of fora raises institutional and policy challenges for developing countries and demands substantial coordination skills to maintain policy coherence. Frequently, small countries find themselves overburdened with this task. Often negotiators for the same country that are responsible for different fora fail to communicate with each other to ensure that the positions they represent do not conflict (Abdel Latif 2005). This problem is aggravated by coordination challenges on the national level. Often, different ministries are responsible for national policy formulation in different fora. So while it is often the ministry of health that coordinates a country’s activities in the who, it is the ministry

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of commerce or of foreign affairs that governs the policies with respect to the wto and bilateral or regional agreements and the ministry of science and technology or the national patent office that determines national policy for wipo. Few countries, with the notable exception of India and Brazil, have so far established units of policy coherence that attempt to streamline national policy-making in this respect (Abdel Latif 2005). This challenge, in fact, is present not only in developing countries but also in developed countries. In contrast to many developing countries, however, developed countries often have systems in place that ensure a careful balancing act when it comes to the ratification of new laws. Frederick Abbott underlines this point: Differences in the capacity of the United States and many developing countries to create and manage legal ip infrastructure may lead to a disparity in the way fta rules are implemented. The United States already has in place a sophisticated system of checks and balances to offset the general intellectual property and regulatory standards which are reflected in the ftas. Historically, the internal law of the United States has reflected a careful balance between the interests of intellectual property rights holders and the general public. While over the past two decades the balance may have shifted in favour of ipr holders, nonetheless, u.s. law continues to reflect a balance. Developing countries may not have such checks and balances in place and may be limited in the technical capacity to implement such checks and balances effectively. Unless developing countries are effectively enabled to legislate appropriate checks and balances, they may find themselves with substantially stricter intellectual property systems than the United States. (Abbott 2006) When appropriately implementing ip policies, developing countries more commonly find problems with, among other things, the broader understanding of the implications of international obligations and with developing a clearer understanding of the relationship, in general, between ip and innovation policies and of the relationship with other complementary instruments, such as competition law. They also suffer from insufficient expertise, and a weak institutional base, including inadequate judicial systems. The actual language of the negotiations often creates a further burden. While most of the negotiations in Latin America take place in both

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English and Spanish, often the official drafting language is English only, as in the case of the cafta (Lacs 2005). In addition, many of the negotiations in Asia and the Arab world are conducted exclusively in English. Potential support from civil society groups is limited because of the general lack of transparency surrounding these negotiations until the process is terminated (Abbott 2004). A good example is provided by the negotiations that took place between the United States and Thailand, for which the United States required Thailand to sign a confidentiality agreement stipulating that the substantive content of the negotiations could not be disclosed to the public until the negotiations were finalised. These negotiations have also been conducted only in English (Srethasirote and Klomtong 2005). This section has suggested the various political, economic, and strategic reasons why countries may decide to enter into fta negotiations. It shows that the ip chapter is of principal importance to countries like the United States for reasons that go beyond the particular fta itself. In the case of cafta it was made clear by the United States during the negotiations that the ip chapter was not negotiable.35 At the same time the particular chapter is often only of secondary importance for technologyimporting countries in the light of larger concerns about market access, political security, and investment interests. It is unlikely that a small country, after intense months of negotiations that are both financially and politically very costly, would walk out of the negotiations because of a disagreement over certain trips-plus provisions. The following section will lay out those provisions that are most likely to affect public health in countries where safety nets for access to medicines are limited.

the main features of the ftas All the us free trade agreements that have been signed include provisions on patents and data protection that go beyond the minimum standards established by the trips Agreement. In the appendix to this chapter, a comparative table highlights the main features of these agreements with respect to health. The table focuses on the trips Agreement, comparing it with the ftas signed by the United States with, respectively, Chile, cafta, and Morocco. The rest of this section will analyze some of these features, which distinguish the recently signed agreements with the minimum standards stipulated in trips.

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Patent Term Extensions Under article 33 of the trips Agreement, the minimum term of patent protection is twenty years from the filing date. However, the period during which the patentee may actually take advantage of the exclusive rights may be affected in two ways. First, it may take several years for the patent to be granted, thus reducing the effective term of protection. Second, in order to market a patented pharmaceutical product, the right-holder still needs marketing approval by the competent regulatory authority, which may eventually reduce the effective term during which the patentee may benefit from exclusive rights. On these bases, cafta, as well as the other us ftas, provide for the possible extension of the patent term both in cases of unreasonable delays in the granting process for the patent and in cases of curtailments of the patent term as a result of the regulatory approval process for the marketing of the product or process.36 The number of years required for such delays to be regarded as “unreasonable” varies with the particular fta.37 Patentability Criteria As opposed to the trips Agreement, cafta contains a definition of what constitutes “industrial application,” referring to the us legal concept of “utility.”38 This concept prevents parties from adopting narrower definitions, like the concept of “industrial applicability” as applied in European countries. The difference may be considerable. As opposed to the concept of industrial applicability, the utility approach permits the patentability of business models and purely experimental inventions that do not produce any technical effects and cannot be made or used in an industry. It may result in the patenting of research tools needed for the development of competing products (unctadictsd 2005, 361). Compulsory Licenses cafta does not refer specifically to the issue of compulsory licenses, and thus the general provisions of trips apply. It should be noted, however, that in some of the us ftas (namely, agreements with Australia, Jordan, Singapore, and Vietnam) there is a trend to limit the grounds for the use of compulsory licenses to cases of, for example, anti-competitive behavior, public non-commercial use, national emergencies, or

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other circumstances of extreme urgency.39 On the other hand, the agreements mentioned contain no definition of such cases, leaving it to the parties to define, for instance, what constitutes a case of national emergency.40 It should also be noted that in the agreements listed in the appendix to this chapter there is a reference to national emergencies. But the reference is made following a different approach in each case. In the fta between Chile and the United States the reference is made in broad terms in the preamble to the chapter with specific reference to the Doha Declaration on trips and Public Health, but the Doha Declaration is not mentioned in the other two agreements. However, reference is made, in cafta, in a separate understanding, to the need “to take necessary measures to protect public health by promoting access to medicines for all, in particular concerning cases such as hiv/aids, tuberculosis, malaria, and other epidemics as well as circumstances of extreme urgency or national emergency.” The same is done in a side letter in the case of the agreement with Morocco.41 Note that the reference, as quoted, to national emergencies is more restricted than the contents of the Doha Declaration referred to specifically in the fta with Chile. (For further discussion, see later in this chapter.) Parallel Imports cafta and the fta with Chile do not refer to the question of parallel imports, leaving the parties with the same freedom they have under the trips Agreement. However, under the agreement with Morocco (and also with Australia and Singapore), the patent owner is authorized to prevent parallel imports through the use of contracts or other means.42 In these ftas, in theory the parties keep the freedom to maintain or introduce a patent exhaustion regime that fits their interest. In case purchasers of a patented product do not agree on a territorial restriction for the resale of the products, they preserve their right to resell them anywhere in the world, in parallel to the patent-holder. However, it is unusual for an international treaty to make such an attempt to induce private parties to prevent parallel imports. The us House of Representatives report of Representative Henry Waxman (2005) warns of this trend: making this policy permanent in trade agreements prevents countries that do not currently restrict parallel importation from reconsidering their national policies. Even in the United States there is

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great support for a form of parallel importation: both the house and the Senate have measures that would allow the importation of lower-priced patented drugs from Canada. The trade agreement language would make it difficult for the United States or other nations with current restrictions on importation to revisit their national policies. Regulatory Exceptions Article 30 of the trips Agreement authorizes members to provide, under certain circumstances, limited exceptions to exclusive patent rights. One of these exceptions, as endorsed by a wto panel43 and available in many domestic laws,44 authorizes third-party competitors to use patented subject matter to generate the information required to support an application for marketing approval of a pharmaceutical or agrochemical product (the Bolar exemption). The purpose of this exception is to accelerate market entry of generic competitors after the expiry of the respective pharmaceutical or agrochemical patent. Because marketing approval may be time consuming, the generic producer is accorded the possibility to produce and submit for approval the patented substance during the patent term, in order to assure regulatory approval is available by the end of the patent term. Otherwise, delays in approving competing products would amount to a de facto extension of the exclusivity period accorded by the patent. This type of regulatory exemption is provided in the us ftas under scrutiny in this paper. However, the fta with cafta contains a particular provision in this respect.45 The agreement authorizes early working of patented material for the purpose of meeting approval requirements to market the product “once the patent expires”.46 This provision has been interpreted as limiting generic-drug approvals to the time after the expiry of the patent, thus ignoring the approval requirement for medicines produced under compulsory license for export under, for example, the Decision on the Implementation of Paragraph 6 of the Doha Declaration (Abbott 2004, 4–5). It could be argued, however, that in the publichealth context, the authorization of third parties to produce the patented drug under compulsory license amounts to the expiry of a patent, as in both cases the patentee loses its monopoly position. Such interpretation would be in line with the requirement for wto members to implement the trips Agreement in a manner supportive of members’ right to promote public health47 and members’ right to issue compulsory licenses.48

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A provision in an fta that denies the effectiveness of marketing approvals in cases of compulsory licensing would negate these agreed rights and would therefore be “contrary to the letter and spirit” of paragraph 4 of the Doha Declaration (Abbott 2004, 12).49

the trips-plus provisions on data protection Extension of the Obligations Provided under Article 39 of the TRIPS Agreement As to the protection of test data submitted to regulatory authorities in the context of marketing-approval procedures (concerning the safety and efficacy of pharmaceutical and agrochemical products containing new chemical entities, so-called “regulated products”), the trips Agreement, in article 39.3, as mentioned earlier, leaves members with the discretion whether such data should be protected through exclusive rights or through a system of rules against unfair competition.50 Under the latter, the data originator may prevent third-party competitors from submitting the original test data for marketing approval if the third party has obtained the data by dishonest commercial means. On the other hand, and contrary to an exclusive-rights regime, unfair competition rules do not prevent the regulatory authorities themselves from relying on the original data to assess submissions by third-party competitors relating to similar products.51 This considerably facilitates market entry by competitors, as they are not obliged to repeat the same clinical and toxicological tests that have already been undertaken by the data originator. Such tests are time-consuming and expensive, and often represent insurmountable barriers to market entry for small producers of generic pharmaceutical products. The ftas of the United States that have been examined here introduce a regime of exclusive rights to the test data, providing that once a company has submitted original data on a pharmaceutical product, regulatory authorities will not permit competing producers to rely on these data for a period of five years from the date of marketing approval for the data originator (ten years in the case of agricultural chemical products).52 This provision effectively requires generic producers to come up with their own test data, which very often is not economically feasible. It thus provides the data originator with a period of exclusivity. It is important to note that this exclusivity applies to both patented and non-patented pharmaceutical or agrochemical products, thus creating a

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new form of exclusivity not required by trips (Abbott 2004, 7).53 As also noted earlier in this chapter, this form of exclusivity was actually proposed by the United States during the Uruguay Round negotiations of the trips Agreement, but it was not accepted by other delegations (unctad-ictsd 2005, chap. 28). In this sense, the ftas fulfill important complementary functions in us intellectual property policy.54 As for the scope of the obligation to provide for exclusive rights, the ftas examined here vary (see the details in the appendix to this chapter). The agreement between the United States and Chile refers to “undisclosed information,”55 reproducing the trips standard. The cafta-dr Agreement uses similar language (“undisclosed data,” chapter 15, article 15.10.1(a)),56 which seems to indicate that the obligation for regulatory authorities not to use such information or data as grounds for marketing approvals does not apply in case the information or data has become public (Correa 2004; Roffe 2004, 4). By contrast, the us agreement with Morocco refers more broadly to “information” (chapter 15, article 15.10.1), implying that reliance on original data is precluded even when the information has become public.57 While article 39.3 of the trips Agreement applies to “new chemical entities” (nces), the ftas do not follow a uniform approach in this respect. While exclusive protection under the usa-Singapore fta is not limited to products containing nces; the ftas listed in the appendix (with Chile, cafta, and Morocco) replicate the terminology of “nces” found in trips, but with some important qualifications. For example, the agreement with Morocco provides the opportunity for protecting new uses of known products by defining an nce as a new product “that has not been previously approved in the Party’s territory.” A similar formulation is provided in cafta. This affords patent-holders with the opportunity to “evergreen” existing patents, adding another further protection on the already patented pharmaceutical product. Similar provisions are found in ftas signed by the United States with Australia and Bahrain, respectively.58 The provisions help data originators evergreen their exclusive rights by preventing the market entry of generic competitors. Data originators might claim overlaps of usages between the generic products and their own, newly approved uses, even when the generics are intended only to cover old uses (which is possible after the expiry of the original five-year period of exclusivity). Legal proceedings to dismiss such claims and to distinguish between old and new uses are likely to create further delay for market entry of generic competitors.

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Some ftas oblige the parties in certain cases to recognize the decisions of foreign authorities. This is the case, for example, when test data is submitted by companies seeking marketing approval for a pharmaceutical product under the us-Singapore fta or the us-cafta-dr Agreement. Usually, regulatory authorities may base their own marketing approvals on the approvals granted by foreign authorities for the same or similar products in their own countries. In such cases, a submission of data for marketing approval in a third country would impede the use of previously submitted data by non-authorized producers for five years after the initial submission. The recognition of the data by foreign health authorities is made dependent on the consent of the data originator in the other country.59 Without the originator’s consent, domestic approvals based on foreign approvals may only be granted five years after a pharmaceutical product has been approved for the data originator in the foreign country or domestically.60 Thus, the data originator is protected in a country that is a party to the fta even when the only marketing approval the originator has received was in a country that was not party to the fta. However, this does not prevent domestic regulatory authorities from examining test data originally submitted to foreign authorities. The United States-Singapore fta only prevents automatic recognition of foreign approval decisions. It does not prevent domestic authorities from independently examining submissions by generic producers that are based on data submitted earlier by data originators abroad. The provisions on exclusivity only prevent reliance by regulatory authorities on original data submitted in the domestic context, but do not apply to data originally submitted abroad. In this respect, the usa-Singapore fta still leaves a possibility for domestic regulatory authorities to facilitate the market entry of generics through reliance on original foreign data. This possibility, however, is not available under cafta,61 which not only prevents recognition of foreign marketing-approval decisions but also expressly prohibits reliance by regulatory authorities on “the safety or efficacy information submitted in support of the prior marketing approval in the other territory.” Thus, reliance on relevant test data is rendered illegal as soon as the originator has submitted the data anywhere in the world. At the same time, in order to be protected the data originator need not request marketing approval for at least five years in a country that is party to cafta. Thus, the originator cannot be prevented from keeping the market of a party to cafta without a supply of

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the products eligible for data protection (Correa 2004). By contrast, the originator of the data can request marketing approval at any time during the five-year period, which has been considered as a ground for any third-party request for marketing approval to be rejected or its supply contracts to be rendered unlawful (Abbott 2004, 7). If the data originator requests domestic approval at the end of the five-year exclusivity period generated by the earlier request abroad, another term of protection of five years will be triggered, extending protection effectively to ten years (fifteen in the case of agrochemicals) (Abbott 2004, 7; Correa 2004, 4). The Linkage between Regulatory Procedures and Patent Rights While the above observations concern non-patented pharmaceutical and agrochemical products, most of the ftas also contain a provision that is likely to have an important impact with respect to patented pharmaceutical and agrochemical products. The agreements listed in the appendix establish a link between the regulatory-approval procedure and the patent right covering a particular product. For instance, chapter 15, article 15.10.3(a) of cafta provides that 3. Where a Party permits, as a condition of approving the marketing of a pharmaceutical product, persons, other than the person originally submitting safety or efficacy information, to rely on evidence or information concerning the safety and efficacy of a product that was previously approved, such as evidence of prior marketing approval in the Party or in another territory, that Party: (a) shall implement measures in its marketing approval process to prevent such other persons from marketing a product covered by a patent claiming the product or its approved use during the term of that patent, unless by consent or acquiescence of the patent owner; and (b) if the Party permits a third person to request marketing approval of a product during the term of a patent identified as claiming the product or its approved use, it shall provide that the patent owner be informed of such request and the identity of any such other person. In other words, the decision by regulatory authorities to grant marketing approval is made dependent on the will of the patent holder (paragraph (a), as quoted above), thus linking the separate realms of safety

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regulations and patent rights. Thereby, the term of data protection is effectively extended to the full term of a patent, which is not required under trips.62 Next to the difficulties created for regulatory authorities in determining the validity of patents, this provision has been interpreted as possibly precluding governments’ ability to use compulsory licensing as a means of making available low-priced pharmaceutical products (Abbott 2004, 8). Since marketing approval is independent of patent law, the third party authorized to produce a patented product under compulsory license would arguably depend on the patentee’s consent or acquiescence for the actual marketing of the product (unctad-ictsd 2005, chap. 28).

legal effects of the new generation of ftas The previous section looked into the specific provisions of the ip chapters of the ftas, with particular reference to health issues. But the ip chapters and the trips-plus provisions already described cannot be analyzed in isolation. As noted earlier in this chapter, the ip chapters comprise only one aspect of a comprehensive trade agreement constituting a “single undertaking” between the trading partners. But in the case of ip they, like any other regional or bilateral treaty, are subject to the principles of the trips Agreement and subsequent declarations, decisions, and panel interpretations. There are various particular features of the trips Agreement that generate diverse legal and political effects when they enter into interaction with the new rules in ftas. These particular features include the following: G G G

The most-favoured nation (mfn) clause; The availability of non-violation complaints; and The existence of parallel understandings or side letters.

The effects generated by these features include the expansion of the rights granted in a particular fta to other members of the wto, a political “chilling” effect that occurs when national health regulations are designed and implemented, and the incorporation of new limitations on the public health flexibilities that are built into the trips Agreement. The new ftas not only affect substantive commitments under ip law but they also produce a set of legal and political effects oriented toward stricter and deeper implementation of ip obligations.

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The Expansive Effect of the MFN Clause of the TRIPS Agreement on Regional and Bilateral IP Obligations With respect to ip, all ftas relate to two overarching principles: the mfn principle and the national treatment principle underlining the tenet of non-discrimination in trade relations. The mfn clause basically suggests that “any advantage, favour, privilege, or immunity given to any member should be extended to other members.” Contrary to the national treatment principle, the incorporation of the mfn clause in the trips Agreement was an innovation in the multilateral context, and knowledge of and precedents regarding its effects are therefore limited (unctad-ictsd 2005). In wto law, the mfn principle can be subject to certain exceptions. One of the most common exceptions to the mfn principle is the existence or adoption of regional trade agreements or customs unions that fulfill certain conditions. This is, for example, the case with article XXIV of the gatt and article V of the General Agreement on Trade in Services (gats), which contain exceptions to the mfn principle for future regional-integration agreements. In the case of the trips Agreement, the exception for regional integration is limited in time to agreements adopted before the trips Agreement entered into force (1995). The exception to the mfn principle contained in article 4(d) of the agreement provides the following: Exempted from this obligation are any advantage, favour, privilege or immunity accorded by a Member: (d) deriving from international agreements related to the protection of intellectual property which entered into force prior to the entry into force of the WTO Agreement, provided that such agreements are notified to the Council for trips and do not constitute an arbitrary or unjustifiable discrimination against nationals of other Members. (emphasis added.) The main difference between the trips mfn clause and those of the gatt and the gats is that it applies to nationals (the right-holders of iprs) and not to products or members, owing to the intangible and private nature of iprs.63 The inclusion of an mfn clause in the trips Agreement that is without exceptions for future regional and bilateral agreements generates an expansive effect on new ip commitments in ftas. It obliges parties to ftas to extend any advantage, favor, privilege,

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or immunity to other members of the wto without giving any compensation. Additionally the mfn clause also discards ip as a bargaining tool in the wto and in other bilateral negotiations, most notably with the eu and Japan (Drahos et al. 2004). Because cafta is a bilateral agreement signed after 1995, it is subject to the mfn clause, and the cafta-dr countries will have to expand certain rights granted to the United States to other trade counterparts.64 Therefore, no discrimination among wto members is allowed. This situation will clearly apply to all trips features of cafta and will generate a new minimum floor of ip obligations imposed on all wto members without any further formalities. The Regulatory Chilling Effect of Non-violation Complaints: The Debate in the WTO and Recent Incorporation in FTAs In the General Agreement on Tariff and Trade (gatt) of 1994 there is a special type of legal remedy that deals with situations where there has not been a violation of the agreement per se but where a benefit derived from it has been nullified or impaired. This remedy, which has rarely been applied, permits a wto member to challenge another member’s measure, not because it contravened any agreed obligation (violation), but on the basis that a benefit arising under a wto agreement has been “nullified or impaired” by an otherwise wto-consistent measure.65 Article xxiii(b) and (c) of the gatt establishes the basic rules for the application of such a remedy If any contracting party should consider that any benefit accruing to it directly or indirectly under this Agreement is being nullified or impaired or that the attainment of any objective of the Agreement is being impeded as the result of ... (b) the application by another contracting party of any measure, whether or not it conflicts with the provisions of this Agreement, or (c) the existence of any other situation. There have been only a small number of cases under the gatt where this remedy has been applied in practice. Most of them were linked with the use of subsidy complaints that affected the benefits generated by tariff reductions agreed to under the framework of the gatt. While there is a clear set of criteria for a non-violation complaint to be triggered, one important criterion is the fact that the expected benefits must

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be impaired or nullified by the application of a measure or any other situation after the adoption of the particular agreement. Therefore, a nonviolation complaint may not be invoked if the measure or situation existed previously or could have been anticipated by the parties. For many countries, the purpose of article xxiii is strictly limited to protecting the balance of tariff negotiations by addressing the misuse of non-tariff and other trade-restrictive measures that, while consistent with basic gatt disciplines, may have affected agreed market-access commitments (Roffe 2004). In the particular case of the trips Agreement, non-violation complaints have not applied automatically, owing to a moratorium contained in article 64, which provides the following: 2. Subparagraphs 1(b) and 1(c) of Article xxiii of the gatt 1994 shall not apply to the settlement of disputes under this Agreement for a period of five years from the date of entry into force of the WTO Agreement. 3. During the time-period referred to in paragraph 2, the Council for trips shall examine the scope and modalities for complaints of the type provided for under subparagraphs 1(b) and 1(c) of Article XXIII of the GATT 1994 made pursuant to this Agreement, and submit its recommendations to the Ministerial Conference for approval. Any decision of the Ministerial Conference to approve such recommendations or to extend the period in paragraph 2 shall be made only by consensus, and approved recommendations shall be effective for all Members without further formal acceptance process. (Emphasis added) Because of the lack of specific results or recommendations after the fifth wto Ministerial Conference in 2003, the wto General Council explicitly extended the moratorium of article 64.2 of the trips Agreement until the Sixth Ministerial Conference of December 2005. While the application of non-violation complaints in the context of the trips Agreement is still a negotiating issue, in recent ftas non-violation complaints are included in the chapters on dispute settlement and are thus an integral part of the agreement. This is particularly the case in recent ftas between the United States and Chile, cafta, and Morocco, respectively. In these ftas, non-violation complaints are included among the remedies that could be invoked by the complaining party in a dispute. As an example, article 20.2 of cafta states: “Except

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as otherwise provided in this agreement, the dispute settlement provisions of this chapter shall apply: (c) Wherever Parties consider that an actual or proposed measure of another Party causes or would cause nullification or impairment” (emphasis added). This type of provision expands the scope and applicability of non-violation complaints as included in the gatt 1994 in three main ways. First, it applies to all provisions and chapters of the ftas, including those on intellectual property and investment. Second, it not only covers actual measures but also proposed measures that have not yet been adopted by national authorities (i.e., proposed bills or draft regulations). Third, the legal remedy is triggered by the existence of a nullification or an impairment but also in case of a potential nullification or impairment. Future application of non-violation complaints under the trips Agreement already generates serious concerns among most wto members over the potential abuse of this type of remedy. In the case of a nonviolation remedy with a broader scope in the context of ftas, as is the case with cafta, those concerns are even greater. Provisions like the one in cafta will basically give further advantage to the party with the stronger litigation capacity and will generate an even higher degree of regulatory uncertainty for weaker parties. The simple act of initiating a non-violation complaint could generate a chilling effect on regulatory design and the implementation of new health policies, even in cases where such measures are consistent with the obligations incorporated in the fta. Some examples of possible regulatory measures that could be affected by this chilling effect are new measures related to national preferences in government procurement of medicines, procurement of generics over branded pharmaceuticals, safety regulations applicable to pharmaceutical products, and subsidies to national pharmaceutical companies, generic producers, or research institutions. Parallel Understandings and Side Letters on Certain Public Health Measures Concerns surrounding the impact of trips-plus provisions on public health, as identified earlier in this chapter, constitute an important factor in most of the fta-negotiations, including those for cafta. The dilemma has been how to preserve the parties’ rights and flexibilities built into the trips Agreement to undertake any measures to protect public health, as recognized in the wto Doha Declaration on the trips Agreement and Public Health, in the light of trips-plus (Fink and

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Box 3.4 MAIN FEATURES COVERED BY THE LATEST UNDERSTANDING OR SIDE LETTER IN RECENT FTAS RELATED TO HEALTH

1 A statement that obligations under the IP chapters do not affect a party’s ability to take necessary measures to protect public health by promoting access to medicines for all. 2 An emphasis on particular cases such as HIV/AIDS and malaria and other epidemics, as well as circumstances of extreme urgency or national emergencies. 3 An explicit recognition of the commitment to the interim solution for countries without manufacturing capacity under the 30 August decision on paragraph 6 of the Doha Declaration on TRIPS and Public Health and the chairman’s statement accompanying the decision. 4 Follow-up consultations in case any amendment of the TRIPS Agreement could or would affect the IP chapter. Reichenmiller 2005). The impact of the ip chapters of these ftas on public health was recognized in the report Trade Agreements and Access to Medications under the Bush Administration (Waxman 2005), prepared by Representative Waxman of the United States House of Representatives, which was mentioned earlier in this chapter: “contrary to the Doha Declaration the u.s. Trade negotiators have repeatedly used trade agreements to restrict the ability of developing nations to acquire medicines at affordable prices.” Being aware of the nature and type of standards included in recent ftas and their potential impact on public health policies, the United States has agreed to state in “side letters” or parallel “understandings” that such standards do not affect the parties’ ability to protect public health, without referring, however, to the Doha Declaration (Correa 2004). The side letters and understandings constitute one option for including a consideration of how to protect public health without changing the nature of the ip provisions that are part of the agreement. However, these instruments have to be utilized with care. Their content and legal value is controversial, especially because of the limited nature of the text and its partial recognition of the contents of the trips Agreement and the Doha Declaration. The best-known instances where such instruments have been used include those attached to cafta and the us-Morocco agreements. The main features covered by those side letters

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are listed in box 3.4 (see also the appendix to this chapter). They find their source in paragraph 4 of the Doha Declaration on trips and Public Health and make reference to the decision of 30 August. The understandings or side letters do not reaffirm or even mention the declaration and omit most of its contents. The danger is that these instruments may end up reinterpreting the original Doha Declaration by adding a necessity test for measures to be taken to protect health. In the wto context the necessity test has been interpreted many times by panels and the appellate body. It basically implies that a “necessary measure” should achieve the policy objective in the least trade restrictive-manner. Finally, because the content of the understandings or side letters does not limit or soften the new obligations imposed in the ip chapters of the recently signed ftas, their actual effect is questionable. In contrast is the formula used in the United States–Chile fta. The mechanism was not an understanding or a side letter but a direct reference in the preamble that recognizes the principles set out in the Doha Declaration on trips and Public Heath. This solution does not place limitations on the content of the original declaration, and arguably has stronger legal value, since it is directly incorporated in the body of the fta, rather than added as a side letter. Understandings and side letters, on the other hand, can be understood as “subsequent agreements between the parties regarding the interpretation of the treaty or the applications of its provisions” that should “be taken into account together with the context” (article 31.3(a) of the Vienna Convention on the Law of the Treaties) (Correa 2004). This means that understandings and side letters provide subsidiary means of interpreting the ip chapter of the particular fta but do not change existing obligations. Finally, there are some formal differences between the understanding and the side letter in the respective cases of cafta and Morocco. The understanding with respect to cafta was signed on behalf of the governments of all the parties, and the side letter, in the case of Morocco, was signed by the respective trade representatives. While this may have some relative importance in a broader political context (i.e., by showing broader governmental support), the relevant factor when assessing the legal value of such agreements should be the value they add in terms of the specific substantive obligations of the ftas, particularly with respect to possible health exceptions applicable to the new standards. This seems not to be the case in the agreements under examination.

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conclusions This chapter has attempted to provide an overview of the complexities of policy coherence in trade and public health, given the integration of new obligations concerning ip and health-related issues into an increasing number of regional and bilateral ftas. An understanding of why countries enter into ftas is essential in this process. Emphasis has been put not only on economic and political considerations but also on some of the structural challenges that arise from the perspective of developing countries when they enter into such agreements. However, one must not forget that each fta is unique and that the possibility of preferential market access and foreign direct investment prospects are powerful arguments that few developing countries can afford or are willing to resist – even if these advantages translate into trade-offs in other fields such as public health. This also may explain why it is often developing countries that are the original demandeurs for fta negotiations in the first place (Inside US Trade 2005). In the present situation, with the experience gained by countries that have already negotiated ftas and the great debate that has emerged with respect to these agreements, it would be naive to say that developing countries negotiating ftas are not fully aware of their costs and benefits. Governments entering into those agreements do so for a number of important reasons, some of which were examined earlier in this chapter. For a good number of them, an fta is seen as an important step in the process of reform and modernization, since it improves, among other things, the competitiveness of local firms. Those governments do understand also that the regulation of ip is the price to pay for entering the “select club.” As for the us government, it has reiterated on several occasions that it is unwilling to reduce the level of protection afforded by the ip chapter, particularly the level of data protection, in current or any future fta negotiations. This position could be explained by a number of considerations. An important one relates to the powerful influence of the industrial sectors that are interested in expanding the protection of ip in comparison to other sectors that are less enthusiastic about liberalization and trade expansion: in this context, the ip industries appear to be keener to support ftas. Consequently, the relative success in limiting the integration of trips-plus provisions, as in the case of the us-Chile fta, is unlikely to be repeated. This substantially reduces the policy space available for developing countries to align the ip chapter with

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domestic health policy-making if they decide to enter into the respective agreements. Thus, a lack of agreement with respect to the ip chapter could even result in the termination or stagnation of negotiations, as in the case of the Southern Africa Customs Union (sacu). The political pressures exerted to cancel or halt negotiations creates further difficulties for national public health policy-making, as does the failure to adequately integrate national health authorities into the actual negotiation process. Therefore, assuming that data protection, among other things, does indeed have a negative impact on public health, the possibility of achieving policy coherence between trade and health within the negotiation of ftas seems limited. Clearly, this should not imply that no attempts should be made to negotiate for ip provisions that reflect the domestic public health concerns. However, it does point to the urgency of also looking at policy options that go beyond the fta negotiations per se – primarily because of two factors. First, ftas are not written in stone, and with sufficient political will certain aspects can potentially be challenged or better calibrated at the domestic level, especially with respect to the protection of public health. Second, and more importantly, the ip chapters in ftas are still work-in-progress, meaning that some of the concerns related to the trips-plus provisions could be attenuated by making it explicit that they should not prevent parties from taking measures to protect health. This holds true particularly for the promotion of access to medicines for all segments of society, including through the use of flexibilities such as compulsory licenses. Not enough research has been done so far on the available mechanisms to safeguard public health following the actual negotiation of ftas and on the options entailed in the intelligent implementation of these agreements. Another consequence that calls for better understanding is the actual economic and social impact of the new ip commitments, especially with respect to the availability and accessibility of medicines at affordable prices. For improving trade and health policy coherence, these are tasks of utmost importance.

appendix Table 3A Overview of trips-Plus Provisions in Selected us ftas Feature Duration of patent protection Patent term extension at the request of the patent owner, to compensate for unreasonable delay in granting Patent term extension to compensate the patent owner for delays caused by regulatory approval Regulatory exemption: Bolar

TRIPS

US-Chile

US-Morocco

US-CAFTA+DR

Minimum of twenty years, based on trips standard No provision

No provision

Limited exceptions principle under article 30

Unreasonable delay shall be understood as a delay of more than five years from filing or three years after request for examination.

Unreasonable delay shall be understood as a delay of more than four years from filing or two years after request for examination

For unreasonable curtailment of the patent term

For purposes of marketing approval or a sanitary permit. If export is permitted product shall be exported only for purposes of meeting requirements for marketing approval or sanitary permits in exporting party.

Same as Chile, but emphasis is placed on the phrase “for approval to market the product once the patent expires.”

As in Chile

Table 3a continued Feature

TRIPS

Compulsory licenses Parallel imports

US-Chile

US-CAFTA+DR

US-Morocco

Criteria of trips, article 31, apply

Members free to determine their own regime of exhaustion of rights

ip competitionrelated policies

Appropriate measures may be needed to prevent the abuse of intellectual property rights (articles 8 and 40).

Nothing in the agreement prevents the adoption of measures necessary to prevent anticompetitive practices that may result from the abuse of iprs.

Protection of undisclosed information: test data

Members, when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural chemical products which utilize new chemical entities, the submission of undisclosed test or other data, the origination of which involves a considerable effort, shall protect such data against unfair commercial use. In addition, members shall protect such data against disclosure, except

If a party requires the submission of undisclosed information concerning the safety and efficacy of a pharmaceutical or agricultural chemical product which utilizes a new chemical entity, which product has not been yet previously approved, to grant marketing approval or a sanitary permit for such product, the party shall not permit third parties not having the consent of the person

Nothing in the agreement prevents the adoption of measures necessary to prevent anticompetitive practices that may result from the abuse of iprs, provided such measures are consistent with the chapter. 1(a) If a party requires, as a condition of approving the marketing of a new pharmaceutical or agricultural chemical product, the submission of undisclosed data concerning safety or efficacy, the party shall not permit third persons, without the consent of the person who provided the information, to market a product on the basis of (1) the information, or (2) the approval granted to the per-

A party may limit parallel imports to cases where the patent owner has placed restrictions on importation by contract or other means. No specific provision

1 If a party requires, as a condition of approving the marketing of a new pharmaceutical or agricultural chemical product, the submission of (a) safety and efficacy data, or (b) evidence of prior approval of the product in another territory that requires such information, the party shall not permit third persons not having the consent of the person providing the information to market a product on the basis of the approval granted to the per-

Table 3a continued Feature (Protection of undisclosed information: test data continued)

TRIPS

where necessary to protect the public, or unless steps are taken to ensure that the data are protected against unfair commercial use.

US-Chile

providing the information to market a product based on this new chemical entity, on the basis of the approval granted to the party submitting such information. A party shall maintain this prohibition for a period of at least five years from the date of approval for a pharmaceutical product and ten years from the date of approval for an agricultural chemical product. Each party shall protect such information against disclosure except where necessary to protect the public.

US-CAFTA+DR

son who submitted the information for at least five years for pharmaceutical products and ten years for agricultural chemical products from the date of approval in the party. 1(b) If a party permits, as a condition of approving the marketing of a new product, third persons to submit evidence concerning the safety or efficacy of a product that was previously approved in another territory, such as evidence of prior marketing approval, the party shall not permit third persons, without the consent of the person who previously obtained such approval in the other territory, to obtain authorization or to market a product on the basis of (1) evidence of prior marketing approval in the other territory, or (2) information concerning safety or efficacy that was previously submitted to obtain marketing approval in the other territory, for at least five years

US-Morocco

son submitting that information for at least five years for pharmaceutical products and ten years for agricultural chemical products from the date of approval in the party’s territory. For purposes of this paragraph, a new product is one that pharmaceutical or agricultural chemical contains a new chemical entity that has not been previously approved in the party’s territory. 2 If a party requires the submission of (a) new clinical information that is essential to the approval of a pharmaceutical product (other than information related to bioequivalency), or (b) evidence of prior approval of the product in another territory that requires such new information, the party shall not permit third persons not having the consent of the person providing the information to market a pharmaceutical product on the basis of such new information or the approval granted to the person

Table 3a continued Feature (Protection of undisclosed information: test data continued)

TRIPS

US-Chile

US-CAFTA+DR

for pharmaceutical products and ten years for agricultural chemical products from the date approval was granted in the party’s territory to the person who received approval in the other territory. In order to receive protection under this subparagraph, a party may require that the person providing the information in the other territory seek approval in the territory of the party within five years after obtaining marketing approval in the other territory. (c) For purposes of this paragraph, a new product is one that does not contain a chemical entity that has been previously approved in the territory of the party. (d) For purposes of this paragraph, each party shall protect such undisclosed information against disclosure except where necessary to protect the public, and no party may consider information accessible within the

US-Morocco

submitting such information for at least three years from the date of approval in the party. A party may limit such protection to new clinical information the origination of which involves considerable effort.

Table 3a continued Feature (Protection of undisclosed information: test data continued)

TRIPS

US-Chile

US-CAFTA+DR

public domain as undisclosed data. Notwithstanding the foregoing, if any undisclosed information concerning safety and efficacy submitted to a party, or an entity acting on behalf of a party, for purposes of obtaining marketing approval is disclosed by such entity, the party is still required to protect such information from unfair commercial use in the manner set forth in this article. 2 Where a party permits, as a condition of approving the marketing of a pharmaceutical product, persons, other than the person originally submitting safety or efficacy information, to rely on evidence or information concerning the safety and efficacy of a product that was previously approved, such as evidence of prior marketing approval in the territory of a party or in another country, that party: (a) shall implement measures in its marketing approval

US-Morocco

Table 3a continued Feature

TRIPS

US-Chile

(Protection of undisclosed information: test data continued)

Protection of chemical entities

New chemical entities

Linkage between regulatory process and patent rights

No provision

US-CAFTA+DR

process to prevent such other persons from marketing a product covered by a patent claiming the previously approved product or its approved use during the term of that patent, unless by consent or acquiescence of the patent owner; and (b) shall provide that the patent owner shall be informed of the request and the identity of any such other person who requests approval to enter the market during the term of a patent identified as claiming the approved product or its approved use. A new product is one that does not contain a chemical entity previously approved in the territory of the party.

US-Morocco

A new product is one that contains a new chemical entity that has been previously approved in the party’s territory. Parties should not grant marketing approval to any third party prior to the expiration of the patent term, unless by consent or acquiescence of the patent owner. A new chemical entity, which product has not been previously approved

Table 3a continued Feature Health and ip

TRIPS

US-Chile

Reference in preamble to ip chapter to the Doha Declaration

US-Morocco

US-CAFTA+DR

Understanding regarding certain public health necessary measures to protect public health by promoting access to medicines for all, in particular concerning cases such as hiv/aids, tuberculosis, malaria, and other epidemics as well as circumstances of extreme urgency or national emergency.

Side letter

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notes

1 2 3

4

5 6

7 8 9 10

11

The authors work for the International Centre for Trade and Sustainable Development (ictsd), Geneva. The views expressed in this chapter are their own and do not necessarily reflect the views of the institution. The end date for data collection for this chapter was November 2005. See ustr official website and www.bilaterals.org. The highest attainable standard of health is one of the fundamental rights of every human being and is incorporated in article 12 of the International Covenant on Economic, Social and Cultural Rights. This principle stands above the rights embodied in international trade agreements. For further reading on international trade, intellectual property, and health see, for example, uk Commission, Report on IPRs and Sustainable Development; the Commission on Intellectual Property Rights (2002), and the Commission on Intellectual Property Rights, Innovation, and Public Health (2007). The patentability of pharmaceutical products was introduced as late as 1960 in France, 1968 in Germany, 1977 in Switzerland, 1978 in Italy and Sweden, and 1992 in Spain. For an historical overview of the development of the international patent system, see Roffe, Spennemann, and von Braun (2006). See article 5, par. 2 and 4, of the Paris Convention. Article 27.1, trips Agreement. This raises questions about the flexibility countries have today in establishing “local-working” requirements for patents (providing compulsory licensing or revocation of the patent if the protected product is not produced locally but is imported). See articles 8.2, 40, trips Agreement. See article 30, trips Agreement. See article 31, trips Agreement. Through an international exhaustion regime, developing countries may facilitate parallel imports of low-priced drugs from abroad. In this context, see Commission on Intellectual Property Rights (2002), recommending that “Developing countries should not eliminate potential sources of low cost imports, from other developing or developed countries. In order to be an effective pro-competitive measure in a scenario of full compliance with trips, parallel imports should be allowed whenever the patentee’s rights have been exhausted in the foreign country. Since trips allows countries to design their own exhaustion of rights regimes (a point restated at Doha), developing countries should aim to facilitate parallel imports in their legislation” (42). See article 39.3, trips Agreement. According to another view, this article does not leave members with the discretion to choose but obligates them to

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12 13 14 15 16

17 18

19 20

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provide for exclusive rights in the test data. For a discussion, see unctadictsd (2005), chap. 28, section 3. See article 66.1, trips Agreement, and paragraph 7 of the “Declaration on the trips Agreement and Public Health,” wt/min(01)/dec/w/2. wt/l/540 of 2 September 2003. See paragraph 4, in fine, of the “Declaration on the trips Agreement and Public Health.” For more details on the negotiating history of the relevant provisions on data protection and patents, see unctad-ictsd 2005. One has to differentiate at this point between the different ftas. It is primarily the us bilateral and regional agreements that place particular emphasis on iprs. For further information on the role of industry during the negotiation of the trips Agreement, see Drahos, and Braithwaite (2003) and Sell (2003). Similar arguments have been made with respect to the other wto sectors. The unwillingness of wto members to increase liberalisation further has led to a growing demand for ftas, where easier agreement can be found. See, for example, Crawford and Fiorentino (2005). There is, of course, a principal difference between the ip sector and other trade sectors: whereas in all other sectors the trend is towards further liberalisation, in the field of ip the trend is towards increasing protection. For further information on the inconsistencies between us domestic law and us ftas please refer to Abbot (2006). Special Report 301 is “a statute that requires the us Trade Representative to identify, on an annual basis, those foreign countries that deny adequate and effective protection of intellectual property rights or fair and equitable market access for Americans relying on intellectual property protection. Section 182 of the Trade Act of 1974, added by section 1303 of the Omnibus Trade and Competitiveness Act of 1988, is intended to present a comprehensive approach to intellectual property and market access and to enhance the administration’s ability to negotiate improvements in foreign intellectual property regimes through bilateral and/or multilateral initiatives. On the basis of the ustr’s review, countries not making significant progress or not entering into good faith negotiations may be placed in one of three categories – Priority Foreign Country; Priority Watch List; and Watch List. Priority Foreign Countries are subject to investigation under Section 301 conducted on an accelerated time frame. In addition, ustr makes “other observations” about the situation in certain counties, including noting growing concern about piracy, highlighting recent developments, or identifying expectations for fur-

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21 22 23 24

25

26 27 28 29

30

31 32

33

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ther progress, where this is appropriate.” See http://usinfo.state.gov/ products/pubs/trade/glosssz.htm. See http://www.ustr.gov/assets/Document_Library/ Reports_Publications/ 2004/2004_Special_301/asset_upload_file16_5995.pdf; 2. This would be different in the case of, for example, the us-Australia fta. The accuracy and usefulness of this data has to be questioned, since the actual methodology for calculating these figures is not displayed. In fact the cafta-dr agreement clearly states in the preamble that the signatory governments resolve to “Contribute to hemispheric integration and provide an impetus toward establishing the Free Trade Area of the Americas” (cafta-dr 2004). The latest sign of the stagnated ftaa process was the recently held Summit of the Americas in November 2005. For further information, see http:// www.ictsd.org/weekly/05-11-09/story4.htm. The memo can be found at: http://news.ft.com/cms/ f76f9e6e-52e411da-8d05-0000779e2340.pdf. For a full list of members of itac-15 see http://www.ustr.gov/assets/ Who_We_Are/Advisory_Committee_Lists/ asset_upload_file517_5754.pdf. See also http://www.ustr.gov/assets/Trade_Agreements/Bilateral/cafta/ cafta_Reports/asset_upload_file571_5945.pdf. The last point of the mandate emphasizes the importance of the Doha Declaration. The ustr has attempted to include this through its policy of side letters, as mentioned in an earlier section of this chapter. However, as noted, the legal and political value of side letters is questionable and their use should thus be exercised with care. Textiles comprise the largest (us$2.6 billion) and fastest-growing export sector, followed by computers and electronics (us$2.2 billion), apparel products ($1.6 billion), chemical products ($1.2 billion), and petroleum and coal products ($961 million) (ustr 2005); see http://www.ustr.gov/assets/Trade_Agreements/Bilateral/cafta/Briefing_Book/asset_upload_file118_7180.pdf; see also us Department of Commerce (2005) and http://www.ita.doc.gov/td/industry/otea/docs/cafta-dr_finalweb.pdf. For further information on the us-Chile fta, see Roffe (2004). Under the Caribbean Basin Initiative and the Trade and Development Act of 2000, approximately 75 percent of goods from cafta-dr and 99 percent of agricultural products already enter the market on a duty-free basis. See www.uscafta.org. For further reading on the logic behind regime shifting please see Helfer (2004), 29; also see Abdel Latif (2005), 24; and Sell (2005).

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34 See, for example, http://www.ip-watch.org/weblog/ index.php?p=135&res=1024&print=0. 35 Anonymous, communication from senior official of the generic industry in Central America. 36 This is also the case with the trade agreement between efta and Chile. The usa-Chile fta, however, does not specify the limits of such compensatory extension (see Roffe 2004). On the other hand, the efta ftas with Lebanon and Tunisia do not include any reference to compensatory extension. 37 In the case of the Chile fta, a delay is “unreasonable” if the patent is issued either after more than five years from the date of filing or three years after a request for examination of the application has been made, whichever is later (article 17.9). In the cases of Australia and Singapore, these time lines are four and two years, respectively, while cafta’s time line is identical to that of the Chile fta (Roffe 2004, 26). 38 See ibid., 20. 39 See, e.g., article 4, paragraph 20 of the usa-Jordan fta. 40 In the case of the trade agreements between efta amd Tunisia and Lebanon, respectively, the grants of compulsory licenses refer to the conditions laid down in article 31 of the trips Agreement. See annex V, article 3(b) of the Lebanon fta and annex V, article 3(b) of the Tunisia fta. 41 See the discussion later in this chapter on the nature of these instruments. 42 From a technical point of view, such authorization does not amount to a general exclusion of international patent right exhaustion. It is important to distinguish between intellectual-property rights, on the one hand, and the law of contract, on the other. The concept of ipr exhaustion only affects the existence of a particular ipr but does not limit the discretion of the parties to a sales contract to exclude certain countries from the geographical area where the purchaser of a patented product may resell that item. See, e.g., chapter 15, article 15.9.4, of the usa-Morocco fta, and chapter 17, article 17.9.4 of the usa–Australia fta. 43 See Canada – Patent Protection of Pharmaceutical Products, wt/ds114/r of 17 March 2000. 44 For an overview, see unctad-ictsd (2005), chap. 23, 443ff. 45 This is also the case for the fta with Bahrain. 46 See chapter 15, article 15.9.5, of cafta and chapter 14, article 14.8.5, of the usa-Bahrain fta. The other us ftas do not include a comparable qualification. 47 See paragraph 4 of the Doha Declaration on trips and Public Health. 48 See paragraph 5(b) of the Doha Declaration on trips and Public Health. 49 See Abbott (2004), 12.

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50 For an analysis of article 39 of the trips Agreement, see unctad-ictsd (2005). 51 Ibid., 531. In this context, see Meitinger (2005), who argues that free reliance on original test data by second-comers would be unfair. In order to be tripscompliant, second-comers relying on original data should compensate the first applicants. On the other hand, Meitinger considers a regime of data exclusivity as trips-compliant, but not mandatory. 52 See, e.g., chapter 15, article 15.10.1(a), of cafta and chapter 15, article 15.10.1, of the usa-Morocco fta. 53 Abbott (2004, 6) also observes that such exclusivity renders illegal the registration of generic drugs for public non-commercial use. 54 As far as the approach followed by efta in its free-trade agreements is concerned, the treaties with Tunisia and Lebanon show some particularity: data exclusivity and non-reliance are waived if the data originator is “adequately compensated.” See annex V, article 4 of the Tunisia fta and annex V, article 4 of the Lebanon fta. The Chile fta does not include a comparable exception to its regime of data exclusivity. While both the Chile and the Tunisia agreements provide for five-year exclusivity, the Lebanon fta requires parties to adopt a minimum period of protection of six years. 55 See chapter 17, article 17.10.1 of the usa-Chile fta. 56 This will also be the case with the Australia and Jordan ftas (“undisclosed test or other data,” chapter 17, article 17.10.1(a), and article 4, paragraph 22, respectively). 57 This is also the case with the ftas with Singapore (chapter 16, article 16.8.1). 58 On top of the five-year exclusivity period as described above, the fta with Morocco (as is also the case with Bahrain) requires the parties to accord another three years of data exclusivity for “nces,” such as previously unapproved uses of approved products. See chapter 15, article 15.10.2, of the usa-Morocco fta and chapter 14, article 14.9.2 of the usa-Bahrain fta. See also Abbott (2004), 11, and Mellouk (2005). 59 See chapter 16, article 16.8.2. 60 For agrochemical products, the period is ten years. 61 A similar approach is followed in the ftas between the United States and Australia and Bahrain, respectively. See chapter 14, article 14.9.1(a)(i) of the usa-Bahrain fta. Similar language can be found in chapter 15, article 15.10.1.(b), of cafta and chapter 17, article 17.10.1(c), of the usa-Australia fta. 62 Abbott (2004), 8. Roffe (2004), 26, observes that under the usa-Chile fta, the link between marketing approval and the consent of the patent holder is less explicit and, unlike the cafta-dr Agreement, does not include references to marketing approvals in other countries.

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63 For intangible goods such as intellectual objects or expressions, you can only protect the person who holds the right (the title-holder). 64 It may be noted, however, that the trips mfn clause applies to rights “specified” in the agreement and that some rights in ftas (such as data protection and linkage) are “trips-extra” rather than trips-plus. 65 See ip/c/w/385 of 30 of October 2002.

bibliography Abbott, F. 2003. “Trade Diplomacy, the Rule of Law and the Problem of Asymmetric Risk in trips.” In IPRs, Trade and Challenges for Development Trade and Development Symposium. Cancun, Mexico: Quaker United Nations Office. – 2004. The Doha Declaration on the TRIPS Agreement and Public Health and the Contradictory Trend in Bilateral and Regional Free Trade Agreements. quno Occasional Paper, 14. – 2006. Intellectual Property Provisions of Bilateral and Regional Trade Agreements of the United States in Light of U.S. Federal Law. Geneva: ictsd. Abdel Latif, A. 2005. “Developing Country Coordination in International Intellectual Property Standard-Setting.” Trade-Related Agenda, Development and Equity 24. Acuna-Alfaro, J., J. Nowalski-Rowinski, and D. Osterlof-Obregon. 2005. “Reformas necesarias para optimizar los beneficios y reducir los perjuicios del cafta,” Centroamerica en la economia mundial del siglo 21. www.asies.org.gt/ca. Buck, T. 2005. “Microsoft Seeks us Support in eu Antitrust Battle.” Financial Times, 14 November 2005. See also http://news.ft.com/cms/s /37b7160a-5484-11da-826c-00000e25118c.html. cafta-dr. 2004. The Central America–Dominican Republic–United States Free Trade Agreement. Commission on Intellectual Property Rights. 2002. Integrating Intellectual Property Rights and Development Policy. Report. London: dfid. Commission on Intellectual Property Rights, Innovation and Public Health, Public Health, Innovation and Intellectual Property Rights. Geneva: who 2007. Correa, C.M. 2004. “Protecting Test Data for Pharmaceutical and Agrochemical Products under Free Trade Agreements.” In UNCTAD-ICTSD Dialogue on Moving the Prodevelopment IP-Agenda Forward: Preserving Public Goods in Health, Education and Learning. Bellagio, Italy: ictsd.

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Crawford, J.-A., and R.V. Fiorentino. 2005. “The Changing Landscape of Regional Trade Agreements.” wto Discussion Paper, 8. Drahos, P. 2004. “Intellectual Property Engineering.” In B. Ong, ed., Intellectual Property and Biological Resources. Singapore: Marshall Cavendish International Private Ltd. Drahos, P., and J. Braithwaite. 2002. Information Feudalism: Who Owns the Knowledge Economy? New York: New Press. Drahos, P., B. Lokuge, T. Faunce, M. Goddard, and D. Henry. 2004. “Pharmaceuticals, Intellectual Property and Free Trade: The Case of the us-Australia Free Trade Agreement.” Prometheus 22 (September 2004). Fink, C., and P. Reichenmiller. 2005. “Tightening trips: The Intellectual Property Provisions of Recent us Free Trade Agreements.” Trade Note 20. Gabrieloni, M. 2005. “Establishing a Development Agenda for the World Intellectual Property Organisation.” Bridges Monthly, September 2004. Gerhart, P.M. 2005. “The Tragedy of trips.” Unpublished manuscript. Gonzales, A. 2005. “cafta/nafta: Hacia la consolidacion de una unica zona de libre comercio.” Puentes – Entre el comercio y el desarrollo sostenible 6, no. 3 (August–October). Helfer, L. R. 2004. “Regime Shifting: The TRIPs Agreement and New Dynamics of International Intellectual Property Lawmaking.” Yale Journal of International Law 29. ictsd. 2005a. “cafta-dr Narrowly Wins House Vote, Signed into Law.” Bridges Weekly Trade News Digest, 3 August 2005. – 2005b. “wipo Members Fail to Reach Agreement at Patent Harmonisation Meeting.” Bridges Weekly Trade News Digest, 8 June 2005. – 2005c. “us Congress Passes cafta-dr after More Concessions.” Bridges Monthly, August 2005. – 2005d. “Meeting Report.” In ictsd, ed., Regional Arab Dialogue on Intellectual Property Rights (IPRS), Innovation and Sustainable Development. Alexandria, Egypt: ictsd. – 2005e. “Governments Meet in Geneva to Discuss wipo Development Agenda.” Bridges Weekly Trade News Digest, 13 April 2005. ifac-3. 2004. “The u.s.–Central American Free Trade Agreement (fta) – the Intellectual Property Provisions – 12 March 2004.” Industry Functional Advisory Committee on Intellectual Property Rights for Trade Policy Matters (ifac-3). Inside us Trade. 2005. “u.s., Andean Negotiatiors Demand Changes in Negotiating Stances.” Inside US Trade, 9 September 2005. Lacs, Enrique. 2005. “Las Negociaciones del cafta: Principales Difficultades, Principales Resultados y Lecciones Para Futuras Negociaciones,” Programa

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Regional de Centroamerica en la Economia Mundial del Siglo XXI, in www.asies.org.gt/ca. Meitinger, I. 2005. “Implementation of Test Data Protection according to Article 39.3 trips: The Search for a Fair Interpretation of the Term ‘Unfair Commercial Use.’” The Journal of World Intellectual Property Rights 8 (March 2005): 123–39. Mellouk, O. 2005. “Struggling to Balance Free Trade with Access to Medicines in the post-trips Era throughout the Arab World.” UNCTADICTSD Regional Dialogue on Intellectual Property Rights, Innovation and Sustainable Development. Alexandria, Egypt: ictsd. Public Citizen. 2004. “cafta by the Numbers: What Everyone Needs to Know.” Public Citizen’s Global Trade Watch. Roffe, P. 2004. “Bilateral Agreements and a trips-plus World: The Chile-usa Free Trade Agreement.” TRIPS Issue Papers, 4. Roffe, P., C. Spennemann, and J. von Braun. 2006. “The wto Doha Declaration on the trips Agreement and Public Health: A Historical Analysis.” In P. Roffe, D. Vivas-Eugui, and G. Tansey eds., Negotiating Health: Intellectual Property and Access to Essential Medicines. London: EarthScan. Sell, S.K. 2003. Private Power, Public Law: The Globalization of Intellectual Property Rights. Cambridge: Cambridge University Press. – 2005. “The Quest for Global Governance in Intellectual Property and Public Health: Structural, Discursive, and Institutional Dimensions.” Temple Law Review 77: 363–400. Srethasirote, B., and C. Klomtong. 2005. “Public Policy Process in Free Trade Agreements of Thailand.” In Health Systems Research Institute, ed., Towards Healthy Society: Healthy Public Policy and Health Impact Assessment in Thailand. Nonthaburi, Thailand. unctad-ictsd. 2003. Intellectual Property Rights – Implications for Development. Geneva: unctad-ictsd. – 2005. Resource Book on TRIPS and Development. Cambridge: Cambridge University Press. us Department of Commerce. 2005. “cafta-dr, A State Export Overview, 2000–2004.” In us Department of Commerce, ed., International Trade Administration. Washington, dc: us Department of Commerce. ustr (2004) Special 301 Report. – 2005. “cafta Facts.” CAFTA Policy Briefs. Washington, dc: ustr. Waxman, H. 2005. Trade Agreements and Access to Medications under the Bush Administration. Committee on Government Reform – Minority Staff

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Special Investigations Division, ed., United States House of Representatives. World Bank. 2000. “Trade Blocs and the World Trading System.” In The World Bank, ed., Trade Blocs. Washington, dc: World Bank.

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4 Trade Policy and Health Professionals’ Movements RUPA CHANDA

introduction Migration, both permanent and temporary, has been a long-standing feature of the health care sector. In the 1950s and 1960s, many countries expanded their welfare states and used recruitment of international health workers to staff their health systems. A who study conducted in the late 1970s found that in 1972, 6 percent of the world’s physicians and about one-eighth of the world’s medical-school graduates, estimated at 140,000, were located in countries other than their country of origin. About 86 percent of all migrant physicians were working in five countries, namely, Australia, Canada, Germany, the United Kingdom, and the United States, with the United States, the United Kingdom, and Canada accounting for over three-fourths of all migrant physicians. An estimated 4 percent of the global stock of nurses was outside their country of birth or training, with destination countries similar to those for physicians.1 The main source countries reflected colonial and linguistic ties. Some countries, like Canada, Germany, and the United Kingdom, were both recipient and donor countries. Migration patterns were complex, including direct country-tocountry migration, migration in stages, in which some countries acted as intermediate destinations, and circular migration, whereby migrating workers in some countries were replaced by fresh inflows and recruitments from other countries. Since the who study, the overall demand for health professionals has gradually increased. Today, 31 percent of the United Kingdom’s health workforce and approximately 20 percent of the permanent medical

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workforce in Canada, Australia, and the United States is of foreign origin. About one-quarter of Canada’s hospital-based physicians are of foreign origin.2 The pattern of migration today involves a much larger number of countries and regions, both as sources of and destinations for health workers. Migration flows have also become more multidirectional, with movement occurring not only between developing and developed countries but also between developing countries and within developed and developing country groupings or regions. Certain countries have also adopted explicit policies of exporting health workers and have been pushing for increased market access in developed countries for their health care professionals, while others have adopted various kinds of policies to stem or delay outflows of health workers. Health care migration has also become the focus of various bilateral agreements between countries at the governmental, institutional, and private-agency levels and is increasingly becoming an element of bilateral and regional trade and economic cooperation agreements. Such migration has for the most part benefited the individual migrant health workers by affording them higher wages, better working conditions and opportunities, and a higher standard of living, and it has also benefited the recipient countries by alleviating domestic shortages and enabling savings on training costs. However, permanent outflows have had adverse effects on the source countries, especially when the migrants have constituted a significant share of the domestic supply of health care workers. The outflows have resulted in domestic shortages, especially in the public health system, loss of public investment and fiscal revenues, and reduced capacity for public-health interventions. Where such outflows have been temporary, however, migration is likely to have been mutually beneficial, enabling the source countries to benefit from the exposure and training gained overseas by returning health care workers. With the greying of populations in the developed world, owing to declining fertility rates and rising longevity, and with continued disparities between developed and developing countries in terms of wages, working conditions, career advancement opportunities, and the quality of life, health care migration is likely to grow in future. It is projected that an additional one million nurses will be needed over the next ten years to meet nursing shortages in the us market alone. Given the inevitability of such flows because of social, political, and economic factors and given the potential adverse consequences of health care migration on source economies, better management of this migration seems to be the only way to create a win-win situation between source and destina-

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tion countries. A recent quote from the Commonwealth Secretariat’s Joint Learning Initiative Report highlights the need for such an approach when it states that “in recent years, international migration, fuelled by many factors, has grown to such proportions that it is affecting the sustainability of health systems in some countries. While both developed and developing countries are experiencing the negative impact of loss of skills, such loss is more keenly felt in developing countries which are finding it increasingly difficult to compete for skilled human resources in the existing global market.”3 According to this report, “the mobilization and strengthening of human resources for health, neglected yet critical, is central to combating health crises in some of the world’s poorest countries and for building sustainable health systems in all countries.” Managed migration would require both sending and receiving countries to coordinate their training, recruitment, and immigration policies with regard to health care. Evidence clearly shows that government policies and institutional frameworks can make a difference, since health care migration is highly dependent on the regulatory environment, i.e., regulatory incentives or disincentives to migration and the capacity to regulate migration flows. Changes in immigration and labour market legislation, changes in recruitment practices, and institutional arrangements between governments, as well as public sector agencies, have been shown to significantly facilitate or impede the movement of health care workers, as well as to shape the direction, duration, and pattern of this migration. In recent years, there has been growing discussion about a managedmigration approach in health care, in recognition of the combination of pull and push factors that drive migration flows. From an emphasis only on retention and improvement of health systems in source countries, the focus has shifted towards policies that respect the individual’s right to migrate for better opportunities and career advancement, while also linking the gains due to such movement to the health policy goals of individual states. Countries are increasingly entering into bilateral agreements that include policies on return, ethical codes of practice, measures to cap active recruitment from selected countries, and even proposals for compensation to source countries, in order to address the adverse consequences of the large-scale migration of health workers from certain countries and parts of the world. Thus far, however, trade agreements, whether at the bilateral, regional, or multilateral level, have not been used specifically towards this purpose.

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This chapter explores the possibilities for managing health worker migration in the context of trade and economic cooperation agreements, while fully recognizing that trade agreements are not necessarily intended or designed to “manage” international migration in general or in any specific sector and that these agreements are all-encompassing, covering issues as diverse as investment, intellectual property, and competition policy. The main focus of this chapter is the potential role of trade agreements, and in particular of the General Agreement on Trade in Services (gats), in addressing health worker migration. However, it must be stated at the outset that this focus on the gats is not meant to undermine the role that can be played by general temporary-entry regimes or bilateral and other initiatives in managing health worker migration. In fact, the discussion of the gats is exploratory and indicates the possibilities for multiple approaches that can be taken simultaneously to address this issue. Policy intervention of various kinds and at various levels is required to address the migration of health workers and its associated adverse consequences on source countries.4 Policies are required at the national level within individual sending and receiving countries for the health system as a whole and specifically for the public health system and marginalized areas. As there are driving forces on both sides, the solution cannot lie in concentrating on only one set of forces and putting the onus on only one side of the flows. What would these policies involve nationally and internationally? On the pull side, national policies would be required to develop educational capacity and self-sufficiency in developed countries through investments in training and improved human resource management for more effective deployment and retention of health professionals in the health system. On the push side, this approach would include national policies to achieve similar goals of increasing human resource capacity and improving the work environment and remuneration, in order to more successfully retain and attract back health professionals. Policy coordination would involve technical, financial, and regulatory (immigration, labour market, and professional associations) cooperation and joint initiatives between sending and receiving countries that would develop human resource and regulatory capacity, harmonize and develop international standards, and introduce codes of ethics regarding the recruitment and use of foreign health personnel. There may also be scope for using bilateral, regional, and multilateral trade and economic cooperation agreements to manage labour mobility in general, and specifically

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in the health sector, as has been tried in a limited manner in some agreements. The following discussion provides an overview of existing initiatives and assesses their effectiveness where evidence is available. It is evident from this overview that the scope for using trade agreements to manage health migration remains untapped.

ethical approaches to health worker migration Commonwealth Code of Practice One of the best-known initiatives regarding health worker migration is the Commonwealth Code of Practice for the International Recruitment of Health Workers.5 In May 2001, the Commonwealth ministers called for the development of a code of practice for the health sector. In May 2003, the Commonwealth health ministers adopted this code along with a companion document.6 This code relies on an ethical, conductbased approach by destination countries in recruiting health workers from other countries and is an explicit recognition by the Commonwealth Secretariat of the potential negative impact of health worker migration on the delivery capabilities of source country health systems. The code is significant because it is applicable to some of the main destination countries for health worker migration, countries like the United Kingdom, and because there is considerable migration of health workers among Commonwealth countries, driven by shared language, common educational curricula, post-colonial ties, and diaspora communities. Specifically, the code provides guidelines for the international recruitment of health workers and aims at discouraging the targeted recruitment of health workers from countries that are themselves experiencing shortages. It also calls for safeguarding the rights of the recruits and the conditions relating to their profession in the receiving countries. The guiding principles of the code are transparency of recruitment, fairness, and mutuality of benefits, and it covers selection procedures, registration and the license to practice, workforce planning, and compensation. Transparency of recruitment normally involves an agreement between host and home countries. Fairness implies that host countries would not seek to recruit physicians who have an outstanding obligation to the home country and would inform migrants of their rights and job requirements. Mutuality of benefits ensures that both

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source and recipient countries should experience the benefits of international recruitment. In this regard, the code proposes that recruiters consider ways in which they can assist source countries, such as by providing financial and technical assistance and access to specialist training, by helping with the repatriation of skilled personnel (for example, by providing air tickets and other incentives as part of a recruitment package), and by ensuring that the skills and knowledge of international recruits are upgraded and that they are trained so that upon their return home they can enhance the value of their national health systems. The code also addresses the issue of compensation and proposes that recruiting developed countries compensate source countries for their loss of personnel. The compensation could be financial, or it could be provided through training programs and capacity-building in training institutions and re-insertion training. The code also calls upon governments to enter into bilateral agreements to better regulate the recruiting process, agreements in which both countries would have responsibility for ensuring compliance with the code, thus enabling more systematic recruitment. The code also calls for governments to encourage the adoption of good practices by private recruitment agencies by only dealing with those that comply with the code. It also proposes the establishment of systems to monitor compliance by private agencies and to detect non-compliance at any stage. The strategy further calls upon member countries to develop good retention policies, use bilateral and multilateral agreements, use return migrants in a better way, and improve human resource planning. It has been suggested that the code be made binding on all Commonwealth member states and further developed into a declaration and international code of ethical guidelines, in order to encourage broader acceptance and adoption by non-Commonwealth countries. Wider adoption would be important because of the recruitment activities and policies of several non-Commonwealth countries, especially the United States, Saudi Arabia, and other Middle Eastern countries, policies that directly or indirectly affect the pattern of health worker flows among Commonwealth countries. NHS

Code of Practice

In response to concerns about active recruitment from developing countries, the Department of Health of the United Kingdom issued guide-

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lines on international recruitment in 1999.7 These guidelines required National Health Service (nhs) employers not to actively recruit from the West Indies and South Africa. In September 2001, the Department of Health adopted a detailed code of practice that aimed at coordinating the activities of nhs trusts and encouraging them to recruit within an ethical framework. The adoption of a code of practice by the United Kingdom is an important development because the country has used overseas recruitment as an integral part of its policy to increase the nhs workforce and address shortages. The code applies to the appointment of all health care professionals, including medical staff, nurses, dentists, radiographers, physiotherapists, occupational therapists, and all other allied health professionals. It also applies to all permanent, locum, and temporary employment. The code requires the nhs to deal only with approved recruitment agencies that adhere to the specified guidelines and neither directly nor indirectly (through subcontractors) to charge fees to the recruits. The nhs trusts are not allowed to target recruitment at developing countries unless the Department of Health has a formal agreement with a particular country. The code specifically states that the nhs is “sensitive to the rights of all people to have access to quality health care in their own community. Therefore, applications from the countries identified on the Code list of prohibited countries will not be considered without prior approval from the respective government.”8 There are dedicated sections on the government website for India, Philippines, and Spain, countries with which the nhs has agreements. Moreover, while “the nhs should welcome international recruits, employers should only consider international recruitment when its professional and service value can be clearly demonstrated, and when it will have no adverse effects upon the recruit’s home healthcare system.”9 There is, however, no quantitative limit on the number of foreign health personnel that can be employed. A full list of proscribed countries was made publicly available in 2003. In the case of nurses the code requires all nhs employers to ensure that they do not actively recruit from developing countries that are experiencing nursing shortages of their own. Specifically, the code does not permit nurses to be recruited from South Africa or Caribbean countries. It also does not permit employers to seek contracts with nurses or midwives from the latter countries through private recruitment agencies. The only exceptions to this policy occur, first, if “nurses or midwives from these countries are seeking an opportunity for development, as part of a recognized programme which is approved by the relevant Governmental

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Table 4.1 Nursing Registrants in the United Kingdom from Selected Countries, before and after Implementation of the Ethical-Recruitment Guidelines in November 1999 Percentage Change Country South Africa West Indies Zimbabwe Ghana India Nigeria Philippines Total non-eu registrants

1998/99

1999/2000

2000/1

599 221 52 40 30 179 52 3621

1460 425 221 74 96 208 1052 5988

1086 261 382 140 289 347 3396 8403

1998/99 to 1999/2000 2000/1 to 1999/2000 to 2000/01 2001/02 +144 +92 +325 +85 +220 +16 +1923 +65

–25 –39 +73 +89 +201 +67 +223 +40

+95 –5 +24 +39 +244 +25 +113 +63

Source: Stilwell et al. (2003; based on data from ukcc/ Nursing and Midwifery Council).

authorities in the country concerned” or, second, if nhs employers consider “unsolicited applications for advertised posts directly from international recruits.” There are clear guidelines on the issuance of work permits. For instance, employers are required to apply for a work permit for a nurse no more than six months before they expect to bring the recruit into the United Kingdom, and when making a work permit application, they must explain how long they need to employ the nurse for. Work permits can be issued for up to four years but will be issued for the period only if a clear business case to justify employing the person for this length of time can be provided. Ghanaian nurses are permitted to stay for only three years, following which they are required to return home. Evidence must be provided of unsuccessful recruitment within the United Kingdom when employers recruit from abroad, except in the case of certain nursing specialties, such as pediatric and geriatric nursing, nursing for the disabled, and intensive-care nursing where there are nationally declared shortages in the United Kingdom. It is still too early to draw definitive conclusions about the impact of these guidelines. But there appears to have been a decline in the number of nurses registered from the West Indies and South Africa following the introduction of this code, which might indicate some impact on employer behavior, as shown in table 4.1. The data on registrant trends shows that in the first year following implementation of the code, in the 1999/00–2000/1 period, there was a shift in recruitment, away from South Africa and the West Indies

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towards other developing countries, some of which, like the Philippines and India, are not on the code’s proscribed list and with which the Department of Health has signed bilateral agreements (discussed later). In fact, between 2001/2 and 2002/3, more than half the new international registrants in each year came from India and the Philippines. In particular, there was a significant increase in the number of registrants from the Philippines – from 52 in 1998/9 to 3,396 in 2000/1. However, the number of nurse registrants from other African developing countries, such as Ghana, Nigeria, and Zimbabwe has continued to increase. Overall, there was a 40 percent increase in registrants from non-eu countries over the period from 1999/2000 to 2000/1. One-fourth of the total inflow, at least 3,500 nurses in 2002/3, came from other developing countries, which are on the list of proscribed countries, like those in sub-Saharan Africa. Between 1999 and 2004, the total number of doctors registered in the United Kingdom and trained in Ghana, for instance, doubled from 143 to 293, and in the case of nurses, compared to 40 new registrations for Ghanaian nurses in 1998/99, the cumulative number of registrations had increased to 1,021 by 2003/4.10 Registration data further reveal that overall, there has been a significant upward trend to international recruitment activity by the United Kingdom and a broadening of recruitment activity to a wider range of source countries. Also, there have continued to be new registrants from South Africa and the West Indies who are being recruited by private-sector employers or recruitment agencies. The trends indicate that overall, the code was ineffective and had a limited impact. The data provided in table 1 suggest that the 1999 guidelines may have just displaced some of the recruitment activity directed at South Africa and the West Indies towards other developing countries. The continued trends in recruitment reflect several weaknesses in this code of practice. The main weakness is that the code applies only to nhs employers in the United Kingdom and not to the recruitment practices of the private sector or private recruitment agencies. The latter have remained active in developing countries and continue to recruit from countries on the proscribed list. Although the private sector agencies were asked to adopt the code of practice in 2001, to date only 68 out of about 115 agencies have done so. A second weakness is that although nhs employers are not permitted to actively recruit health professionals from shortage countries, they can continue to do so passively, i.e., if the employment is unsolicited. Independent employers have targeted overseas nurses from India, Africa, and the Philippines,

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charging fees and offering adaptation courses to enable them to gain United Kingdom registration and get employment with the nhs. The continued inflow of nurses and doctors from developing countries in part also includes entrants coming for education purposes, voluntary applications by individual health workers, and internet-based recruitment of foreign residents and refugee health workers in the United Kingdom. Such non-active types of recruitment are not covered by the code. 11 More generally, while codes of practice serve a useful function by publicizing good practice for employers on issues such as induction and training and by ensuring a greater level of transparency in the requirements on employers, they suffer from certain problems. They are voluntary and thus relatively weak regulatory mechanisms that have no legal basis. There are also no mechanisms for enforcement and monitoring. The nhs has, for instance, been criticized on the grounds that its code of practice helps promote its image as an ethical employer, even while its reliance on overseas recruitment continues. Thus, codes of practice will need to be supported by a high degree of government supervision of the financing, provision, and regulation of health care so that the health department can exercise tight control over international recruitment practices. South Africa’s Ethical Recruitment Code In 1995, South Africa’s government issued a mandate prohibiting the recruitment of health workers from fourteen member countries of the sadc, to be implemented with the aid of professional registration controls.12 The code tries to balance the country’s need to alleviate a shortage of health professionals in rural and disadvantaged areas of South Africa with the ethical concern of doing so without draining the health resources of other countries in Africa. Specifically, it states that South African employers should refrain from recruiting from other developing countries, especially other African countries, and it permits such professionals to enter only under government-to-government agreements. The guidelines state that recruitment of individual applicants from any developing country, in particular from another sadc country, will not be supported.13 In accordance with this mandate, private recruitment agencies can be asked to report their practices publicly. An independent watch agency has been established to oversee the recruitment process and to monitor compliance with the code; sanctions include arresting

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employers and recruitment agents who imported medical workers without following the code. The thrust of the code is, first, on trying to meet health sector requirements, especially in rural areas, through national resources before turning to overseas recruitment and, second, on ensuring foreign health professionals stay only temporarily, especially those from African countries. Various explicit guidelines indicate this thrust. For instance, the policy states that if there is an adequate supply of trained South African health professionals, recruitment and employment of foreign health professionals should not occur, applications by foreign health professionals for permanent residence should not be supported, the continuous employment of foreign health professionals should be duly managed, and applications for permanent residence should not be supported. Employment must not be offered to a foreign applicant if a South African citizen or permanent resident is available for the post in question, and the practice of employing foreign health professionals must at no time displace a South African citizen or permanent resident from a post in which s/he is currently employed. A person who is in South Africa on a temporary residence permit in order to complete a course of study in health care offered by a South African institution is not entitled to seek or to be offered employment or to work in South Africa and must leave the country when the permit period expires. As for the employment of health professionals by the Department of Health, such persons may enter the country in order to perform a specific contract or academic intervention with the definite understanding that s/he may not abuse that opportunity to seek employment. The contract must be bounded in terms of duration and purposes; i.e., it must address a temporary and specific human resource need. Applicants who received support towards such opportunities must leave the country upon expiry of the agreement, although they are allowed to take up employment outside the scope of their registration status and employment contract. The code also requires employers not to make openended and permanent job offers of long duration (five to ten years). Migration of a foreign health professional from one employer to another or between provinces and applications by foreign health professionals to change the purpose of entry or extend their stay or employment in South Africa or to migrate to urban areas are not allowed. Registration of foreign health professionals with statutory health professional councils in the country is a means to monitor compliance with these policies.

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The policy guidelines also include a fast-tracking process for employment of foreign health professionals in the public health service for a period up to three years, subject to sufficient evidence being provided of non-availability of nationals. The policy states that “all the relevant Professional Health Councils should exempt foreign health professionals with qualifications obtained in those countries that meet the minimum requirements of training and education of the relevant health professionals category in South Africa from writing the Council’s examination in order to obtain registration for employment in the Public Service only.” However, the guidelines also note that to “prevent the depletion of the health professional workforce of developing countries, recruitment of individual applicants of developing countries will not be considered. Applications for fixed-term employment from foreign health professionals who are citizens of developed countries will be considered subject to their meeting specified criteria.”14 Hence, even in the fast-tracking process, ethical considerations are incorporated and individual recruitment from developing countries is discouraged.

regional agreements Health worker migration has been specifically addressed as an issue in the context of a few regional trade and economic cooperation agreements in various parts of the world,15 although none of these agreements has been specifically designed to alleviate this problem. Some of these regional agreements are highlighted in the following discussion. The Caribbean Region Two agreements deal with health worker migration in the Caribbean region,16 namely, the Caribbean Community Agreement, or caricom, and the Caribbean Free Trade Agreement, or carifta. These agreements focus on regional collaboration and regionally managed migration in the health sector. This includes a nursing campaign within the Caribbean to increase the supply of nurses within the region and measures to improve human resource management so as to retain and attract back nurses. In order to augment the regional supply of nurses, there is collaboration among the member countries on training capacity, including collaboration on distance education programs at the bsc and msc levels in nursing, a mentorship program directed at recruitment and retention of nurses, and a regional training program for

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nurses. In order to improve human resource management of nurses, there is a regional convention on nursing to address issues of the work environment. There are also regionally coordinated incentives to value nursing and to improve the utilization and deployment of nurses through a workload measurement system. There is a regional managed migration program between countries like St Vincent that train for export and others like Jamaica and Trinidad and Tobago that have shortages. Skilled professionals across many sectors, including health care, are encouraged to work in other countries of the region on a rotational basis for three years, and then return. In order to ease the movement of health professionals within the region without compromising quality, initiatives have been launched, with the involvement of nurses’ associations and regulatory bodies in member countries, to harmonize educational standards and entry requirements in the profession. For instance, nurses in the English-speaking Caribbean sit for the same registration examination.17 The program involves various bodies across the member countries, as well as attachment and exchange arrangements between exporting and importing countries in the region. In addition, there are training partnerships and return migration programs for “brain gain.” An initiative titled Training and Temporary Movement: Towards a Trade and Development Approach in the Caribbean Region, has been launched. It seeks to counter the adverse domestic effects of the permanent migration of nurses from the region. The project intends to establish a program to (1) increase the supply of nurses for both local and overseas markets and to change their migration patterns from permanent to temporary movement to developed countries; (2) improve the terms and conditions of work for nursing professionals from the region in host and home countries; and (3) introduce training and professional-development programs. The project views the nursing profession not only as an independent service activity but also as an integrated component in developing the region’s health care system and in realizing the region’s potential in exporting health tourism services. Of course, the success of such initiatives is also shaped by temporary-entry rules in developed host countries, along with good policy decisions in the health care sectors of the source countries. Other proposals and initiatives are also under consideration. For instance, it has been proposed that the caricom Single Market and Economy (csme) provide an avenue for keeping nurses within the region, by allowing them to move freely across the member countries.

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The Caribbean countries have also established a regional commission on health and development to determine the extent to which trade in nursing services and migration are indicative of the wider socio-economic situation. The aim is to identify ways of regulating trade in nursing services in a manner that reconciles the interests of all stakeholders, including the nurses themselves. Overall, the Caribbean strategy is multifaceted. It covers aspects such as recruitment, retention, training, utilization, deployment, work terms and conditions, management practices, and long-term human-resource development in the health sector. It also attempts to pool regional resources in the health sector and to address human resource imbalances within the region through managed migration policies, supplemented by efforts to develop regional capacity through training programs (with the aid of technology) and improved human-resource management. These strategies are to be effected through institutional cooperation among regulatory bodies in the region. NAFTA

The North American Free Trade Agreement (nafta), facilitates the movement of sixty-three professionals, including nurses and other health professionals, among the member countries.18 Temporary work permits, referred to as tn visas in the United States, are issued to professionals without requiring a labour market assessment or economicneeds test. Canadian nurses working in the United States need to meet additional certification requirements before a work permit is issued. nafta has encouraged movement between Canada and the United States. Canadian medical graduates can apply for a us residency-training program and then become licensed for practice in the United States. Nurses registered in Canada can work there as well. Data show a growing trend in the number of Canadian nurses seeking verification for the United States since the introduction of this facilitation mechanism, rising from 1,466 in 1990 to 3,108 in 2000 and peaking at over 5,000 in 1996.19 The nafta visa provided the main method of entry for Canadian nurses into the United States. The number of tn visas increased from 2,195 in 1991 to over 9,000 in 1998, before declining to 4,380 in 2001 (though this number is not accurate, since it counts documents, not people). The increase was also partly driven by budget cuts in Canada’s health care system and the subsequent reduction in positions in the early 1990s. The combination of

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poor domestic labour market conditions and labour mobility provisions under nafta has resulted in a net loss of nurses in Canada since 1992, despite the growing numbers of foreign nurses taking the licensing examination and registering to practice. The case of nafta illustrates how trade agreements can facilitate health worker migration between member countries through special temporary-visa arrangements, especially when there are strong pull and push factors due to labour market conditions in member countries and when the usual health sector barriers, such as recognition requirements and economic-needs and labour market tests are minimal. But it also highlights how trade agreements that merely address health worker mobility through administrative mechanisms (such as visa schemes) but do not incorporate a human resource management or planning dimension can end up exacerbating shortages in member countries and skewing resource distribution within a region at a cost to some member countries. These agreements are not aimed at managing migration in the sense of creating labour market conditions that encourage a rotational, as opposed to a unidirectional, pattern of health worker flows among member countries. Of course, it is well recognized that the primary goal of such trade agreements goes much beyond “managing” migration generally or in any specific sector, although they may affect migration.

bilateral agreements Health worker migration has also been addressed by bilateral agreements, which include bilateral labour agreements and, more recently, a few bilateral trade and economic cooperation agreements. They contain provisions on labour mobility and recognition of qualifications in the health sector, and they also contain bilaterally coordinated capacitybuilding initiatives. Some of them are outlined here. Bilateral Labour Agreements The United Kingdom has signed bilateral agreements with several countries to enable its nhs to recruit directly from the countries concerned, in line with the aforementioned ethical code of practice, which prohibits active recruitment from developing countries unless there is a government-to-government agreement with the source country. At present, the United Kingdom has recruitment agreements with India, the

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Philippines, and China. All three are examples of countries that want to export manpower in the health sector. The bilateral agreement with China permits the United Kingdom to recruit Chinese health professionals, except for professionals from small rural areas in China, and permits them to stay for as long as two years.20 Medical professionals are to be sent to England for training purposes. In the case of India, the agreement permits the recruitment of health professionals from India to the United Kingdom, except for professionals from four states that receive dfid assistance. The memorandum of understanding with the Philippines is very elaborate in terms of institutional mechanisms and regulatory cooperation between the two countries. The agreement permits the recruitment of nurses, as well as other medical professionals (physiotherapists, radiographers, occupational therapists, and so on), by the United Kingdom without any prohibition on regions or categories of health workers. It also nominates the Philippines Overseas Employment Administration to undertake preliminaries to recruitment, to be followed by interviews of candidates by nhs employers in the Philippines.21 Following the enlargement of the eu, some members, such as the Netherlands and the United Kingdom, are entering into bilateral agreements with the newly acceding countries for recruitment of health professionals. Recently, the Netherlands signed an agreement with Poland offering fifty Polish nurses workplaces each year in the Netherlands. Germany made ten thousand green cards available to Slovakian and Polish nurses for home care in Germany (although only half were taken up, possibly for language and social reasons). The United Kingdom and the Netherlands are discussing an agreement with Hungary on health worker recruitment. While Norway’s public health sector limits recruitment from most developing countries, it has signed an agreement with the Philippines government allowing health professionals from the Philippines to work in Norway.22 Cuba has signed bilateral agreements with various countries in the Caribbean and in Africa. It provides doctors to these countries in order to address domestic shortages in underserved areas, such as rural districts and the public health system. It also sends health personnel to these countries to help enhance host country capacity through the provision of training to local personnel. Cuba has such agreements with Botswana, South Africa, Namibia, and Zimbabwe. The agreement between Cuba and Guyana involves broad cooperation in terms of manpower deployment and educational exchange in the health sector.

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For example, for over twenty years, a Cuban medical brigade has provided its services in Georgetown, Guyana, and other locations of that country. In fact, Cuban specialists founded the medical school in Georgetown. Currently, thirty-eight Cuban doctors and health care technicians are providing their services in eleven cities in Guyana, including Georgetown, and an educational-cultural program provides scholarships for human resource training, including training in health care. Under this program, a number of Guyanese doctors, dentists, and other health care specialists have graduated from Cuban schools. Of some 2,900 scholarship students from the region studying in Cuba, close to 1,300 are enrolled in health care programs.23 Thus, such bilateral labour agreements go beyond recruitment and manpower planning to cover skill development and local-capacity creation. Cuba similarly provides medical training to South African students from underserved communities in rural and urban South Africa who are sent under South African government scholarships. On graduation, these students are required to return to South Africa and serve the public health sector for as many years as they studied in Cuba. Overall, bilateral labour agreements covering the health sector tend to go beyond international recruitment to include cooperation in the development of health systems and best practices in the induction, training, and treatment of foreign health professionals. These agreements reduce the need to use commercial recruitment agencies by including cooperation between recognized agencies and institutions in sending and receiving countries, hence narrowing the scope for the exploitation of migrating professionals, enabling greater transparency in the migration process, and shifting much of the migration cost from the migrating individual to the client. Bilateral Trade and Economic Cooperation Agreements In recent years, there has been a surge in bilateral ftas and ptas, as well as in comprehensive bilateral economic cooperation/partnership agreements that go beyond traditional issues of liberalizing trade in goods to include trade in services. In some of these agreements, the role of the movement of natural persons (temporary cross-border labour mobility) has been specifically addressed in the context of trade in services. These agreements typically try to facilitate the mobility of service providers in selected sectors, such as accountancy, health, information technology, and engineering services, through visa arrangements, mutual-recogni-

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tion arrangements, and mechanisms to establish the equivalence of qualifications, the elimination of economic needs, and other labour market tests, and also to relax other entry requirements such as wage parity. A few recent examples of ftas and economic-cooperation agreements highlight the importance of health worker migration in bilateral economic relations. The governments of Japan and the Philippines reached a basic political agreement on a bilateral fta (the Japan-Philippines Economic Partnership Agreement, or jpepa) in November 2004. Clauses related to the movement of natural persons are one of the main components of this agreement, and one of the major issues during the negotiations was easing restrictions in Japan’s labour market to accommodate more health care professionals from the Philippines. That country is interested in sending its health care workers, especially nurses and caregivers, to Japan. However, Japan was reluctant to accept health workers from the Philippines for fear that they would take away jobs from Japanese or result in a decline in pay rates in the health care sector. Finally, following difficult negotiations on this issue, Japan has agreed to allow a limited number of nurses, one hundred in the first year, to stay beyond the current four-year limit if they acquire a Japanese licence. Caregivers will have to undergo vocational training and also acquire a licence. It is too early to say how this agreement will affect nursing flows between the Philippines and Japan. Moreover licensing requirements, and in particular, Japanese-language proficiency requirements would continue to pose an impediment to access to the Japanese market.24 Another trade and economic-cooperation agreement that has specifically addressed health worker mobility is the recently signed IndoSingapore Comprehensive Economic Cooperation Agreement (ceca), which took effect in August 2005. Under this agreement, visa restrictions have been eased for Indian professionals in 127 categories, including medicine and nursing (in addition to engineering, accountancy, and university lecturing).25 The two governments have decided to mutually recognize degrees granted by specified universities and technical-education boards of both countries in these occupations, for the purposes of issuing multiple-entry visas. Hence, the agreement would address a major regulatory hurdle for the cross-border mobility of labour. In addition, wage parity conditions have been relaxed by allowing the salaries of Indian professionals to be calculated inclusive of allowances paid in India and Singapore over and above the basic pay, thus enabling them to meet the benchmark criterion of equivalent wages. Earlier, pro-

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fessionals seeking visas to Singapore were required to demonstrate equivalence of salary with professionals based in Singapore, and cases of non-compliance had led to the denial of visas by Singapore. The decision to mutually recognize degrees of medical and nursing professionals and ease visa requirements for this category of professionals reflects a synergy of interests in both countries regarding the mobility of health workers. India is interested in the overseas deployment of its health care professionals as a form of services export and in the associated foreignexchange earnings, while Singapore needs foreign health personnel to meet local requirements and to realize its objective of becoming a medical tourism hub.

state-managed migration of health workers As has been highlighted earlier, certain countries manage the outflow of their health workers through government agencies and regulatory mechanisms. Prime examples of such state-managed migration are provided by Cuba and the Philippines, and to a lesser extent by India. In the Philippines, a specialized agency, namely, the Philippines Overseas Employment Administration (poea), formulates and oversees migration policy. The agency markets Filipino workers to potential employers, counters illegal migration, negotiates agreements with other governments, regulates private-sector recruitment agencies, and protects Filipino workers by assessing employers, inspecting employment contracts before departure, and conducting orientation seminars and information collection about working conditions overseas. In order to prevent a conflict between its policy of exporting nurses and its domestic priorities of ensuring an adequate supply of nurses, the Filipino government has adopted a human resources health master plan for 2005–30, which includes workforce planning and migration management for 2005–10. One of the primary objectives is to prevent excessive fluctuations in migration trends for Filipino health care workers resulting from changing labour market requirements and immigration policies in destination markets, which would hurt the national health system. Under this long-term plan, the Human Resources for Health Systems pilot development plan looks at issues such as local health systems development, recruitment, retention, career development, returnee provisions, education requirements of receiving countries, and remittance management to better enable job creation.26 The Filipino government is also looking at regional policies, including entry

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into Mutual Recognition Agreements under asean and bilateral policies and partnership arrangements with selected recipient countries (such as the aforementioned agreement with Japan). In India, a state overseas manpower corporation is responsible for overseas deployment of health workers, mainly nurses. The Cuban government has engaged in bilateral technical-assistance and cooperation agreements with various developing countries under which it sends medical personnel abroad to alleviate shortages in local markets and to help in human-capacity building. This strategy has been implemented through collaborative and coordinated efforts of the Cuban Ministry of Health and various public institutions involved in migration and commerce and industry.

multilateral agreements: gats and mode 4 The wto’s General Agreement on Trade in Services, or gats, provides another multilateral mechanism to facilitate the mobility of health workers. Mode 4 of the gats refers to the temporary movement and presence of natural persons (as distinct from juridical entities). In the health sector, mode 4 constitutes the temporary flows of doctors, nurses, and other health personnel from one wto member country to another, either in an independent capacity or as part of a commercial establishment from the host or the source, or from a third country.27 The key issue here is temporary movement, in that mode 4 does not cover the movement of personnel intending to enter the permanent labour market of the host country or to become permanent residents or citizens of the host country. But temporary is defined rather ambiguously as that which is not permanent, and thus no particular duration is specified to explain temporariness. The individual who moves is deemed to be a service provider rather than an entrant into the labour market. Again, it is well recognized that the gats is much broader in its scope and objectives and does not merely address temporary labour mobility, but some of its provisions certainly bear on this issue and the potential to affect the temporary movement of service providers in areas like health care. Liberal commitments in mode 4, both horizontally across different services and sectorally within the health sector, backed by adequate monitoring and enforcement mechanisms can work to the benefit of both source and destination countries. Such commitments could enable the temporary movement of health workers to alleviate shortages in

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receiving countries and at the same time also enable technology transfer and the upgrading of skills in source countries through the return of migrants, and they could create incentives for aligning competencies and recognition requirements across countries. Proponents of mode 4 have also argued that easier entry for temporary stays would help reduce incentives for permanent migration and encourage more circular and repeatable migration flows. Moreover, they argue that such commitments could take into account ethical considerations and that they could still be subject to government regulations to address domestic priorities in the health sector, since the gats recognizes the right of governments to regulate and choose the form of commitments. On the other hand, critics have argued that given the ambiguous nature of what constitutes temporary movement and the practical difficulties of distinguishing between and enforcing temporary and permanent migration, mode 4 commitments would mainly fuel permanent movement and aggravate the brain drain in sectors like health services. They also argue that harmonization of standards under the gats would lower standards across receiving and sending countries. While there is merit in the arguments on both sides, given the existing commitments in mode 4 and in the health sector under the gats, it seems premature to argue for either type of impact. Very few countries have scheduled the health sector in the gats negotiations. Except for education services, the health services sector has been the least-scheduled sector.28 Even where commitments have been made, they have not been in mode 4 but in the other three gats modes of supply.29 There are no binding sectoral commitments in mode 4. Also, the horizontal commitments in mode 4 are binding only for limited categories of service providers, namely, business visitors and intracorporate transferees, and very few countries have made commitments for specialty occupations, which would be the category relevant to health professionals. Temporary entry and stay of independent health professionals are generally not covered by the gats commitments. While a few commitments do apply (e.g., the eu has included medical, dental, and midwifery services; and nurses, physiotherapists, and paramedical personnel and other professionals in its schedule), these commitments are limited to intracorporate transferees and subject to various conditions, such as conditions on nationality, authorization requirements, economic-needs tests, and manpower planning requirements. The conditions are often more restrictive than those that prevail in practice and that are agreed to under bilateral and regional agreements containing labour mobility

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provisions. There has also been little progress to date on other issues that are relevant to health worker migration, such as on disciplines relating to domestic regulation and recognition requirements (i.e., on guidelines for professional occupations other than those in the accountancy sector). Thus, the gats is at present not particularly relevant to the movement of health care workers. However, provided more countries schedule the health services sector and make commitments, the gats could be used as a legally binding instrument for managing health worker migration.

trade agreements to manage health migration: possible approaches What role can be played by multilateral trade agreements like the gats in managing health migration and human resource planning for health? Again, as noted at the outset, this focus is not meant to underplay the important role that can be played by general temporary-entry regimes, and changes in national immigration policies have been very influential in shaping the pattern and volume of health worker flows from developing to major host countries. Here I am attempting to explore the idea that the gats could become a tool to ensure that the movement of health professionals is more temporary than permanent, the assumption being that temporary movement is more likely to be beneficial to developing source countries. The gats has thus far played no role in this process, owing to the minimal and restrictive commitments in mode 4 and in the health sector. However, there is scope to use the gats framework to address the wide range of issues that are currently being tackled under national, bilateral, and regional initiatives, through legally binding commitments, as opposed to recommendations, proposals, and voluntary guidelines. It may be possible to incorporate the many elements in these other initiatives, given the flexible commitment structure of the gats and the right it gives to member governments to regulate their service sectors. More liberal gats commitments in mode 4 can help in facilitating “temporary,” as opposed to permanent, movement of health workers between countries and in encouraging a more rotational pattern of health migration across countries. Temporary flows are more desirable, because they provide sending countries with foreign exchange earnings, upgraded skills, and technology without undermining their long-term human resource capacity, while also providing receiving countries with

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much-needed human resources and, in addition, while not violating the right of individuals to move to another country, thus enabling a winwin situation. The key problem here is to separate temporary from permanent movement of health workers, not only conceptually but also through legally enforceable administrative and institutional mechanisms. The main problem in making this distinction is that the gats itself does not clarify what is meant by “temporary.” The gats framework can also be used to deal with regulatory problems pertaining to health worker migration, in particular, problems of recognition and qualification, and of the transparent and non-discriminatory application of administrative procedures and licensing requirements, which are covered under the respective gats disciplines on recognition and domestic regulation. The following discussion highlights how the gats framework can be used to ensure temporary, as opposed to permanent, flows of health workers. It also outlines the form in which mode 4 commitments need to be scheduled for categories relevant to health workers in order to make this temporary-permanent distinction operational. Ensuring Temporariness through the GATS: A Service Provider Visa One proposed way to help distinguish between temporary and permanent movement of service providers is to introduce a separate visa altogether for service providers moving under mode 4 commitments. This could take the form of a gats, or Service Provider, Visa (spv), which would be distinct from other immigration visas and could not be used by foreign service providers towards permanent residence and entry into the permanent labour market of the host country. This visa could be made applicable to select categories of service providers, including health workers, and could be made operational through a model schedule of mode 4 commitments.30 The introduction of such a visa would help separate temporary and permanent movement from an administrative point of view, since existing immigration regulations do not make such a watertight distinction and permit those entering on temporary non-immigrant visas to change status by transferring to other visas once they are in the host country. The gats visa, or spv, would not be transferable in this manner. This last feature is important as often many immigration regimes in host countries favour temporary entry of skilled workers and then permit such workers to apply for permanent resi-

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dence, thus giving foreign workers an incentive to use the temporary route as a means to enter the permanent labour market. As currently proposed, the spv would be applicable to natural persons with professional skills and a specified minimum level of educational (typically a bachelor’s degree) and other formal qualifications who are on short-term intracompany visits (category 1) and on shortterm visits to fulfil contracts either as part of juridical entities (category 2) or independently (category 3). The spv would thus cover intracorporate transferees (icts) and establishment-based and independent contractual service suppliers (css), but it would not cover employmentbased movement.31 A “short-term stay” would be uniformly defined as a stay of less than one year for all three categories. The proposal also specifies various administrative elements and criteria for operationalizing the spv.32 For instance, the scheme would be extended strictly to persons with the requisite qualifications to fill positions responsible either for the management of operations or the provision of services at a level of complexity and specialty that would require, at a minimum, a diploma or university degree or demonstrated experience. The spv proposal is pertinent to health workers in many respects. However, certain changes may be required to cater to the characteristics of health migration. For instance, the proposed duration of one year for a single stay under the spv may not be appropriate for health personnel, as the latter may need to undergo a period of training and adaptation before being able to actively perform their duties in the host country. Thus, an exception could be made for health services for the terms and conditions regarding the duration and renewal of the spv in the case of health personnel (and for other types of service providers where similar considerations could apply). The duration could be raised to a maximum of three years at one time, following which the health worker would be required to return to the home country and serve there for some period before being allowed to re-enter the same or another host country on a service provider visa. Such a system would facilitate shortterm flows in a rotational manner and provide health personnel with an opportunity to upgrade their skills and knowledge and thus to benefit their national health systems upon their return. But the source and host country health and immigration authorities would need to be jointly responsible for ensuring compliance with the spv requirements. Similarly, instead of the applicant being solely responsible for providing supporting information, it is important that private and public recruiters in the host country and the individual health worker and,

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where applicable, the concerned state agency deploying the worker (in the case of state-managed migration) share the responsibility for providing relevant documentation about the contract. Relevant documentation would include proof of the contract, information about the terms and conditions and monetary value of the contract, a declaration of intent by the individual not to stay for longer than the duration of the visa and proof of educational qualifications, a declaration of intent by the recruiter not to use the services of the foreign health worker beyond the duration of the visa and not to issue an spv unless return and stay requirements in the source country are satisfied when the individual is already on an spv, certification by source country authorities of the individual’s qualifications, and documentation of any other technical and financial issues relating to institutional cooperation between the sending and receiving countries. Hence, the spv conditions would apply to a wide range of contractual arrangements in health migration, including contracts involving public and private recruitment agencies, state agencies, and professional bodies across sending and receiving countries, thus helping to ensure greater uniformity in practices. A lack of uniformity was one of the main drawbacks of the Commonwealth and nhs codes of practice: they did not cover private recruitment. A Proposed Format for Commitments in Mode 4 The proposed Service Provider Visa would, however, need to be supported by an improved framework of commitments in mode 4. The existing proposal for a model schedule in mode 4 would facilitate the introduction of the spv, as well as a broader and deeper level of horizontal and sectoral commitments in mode 4.33 As currently proposed, the first part of the model schedule would deal with market access and national treatment commitments for selected categories of service providers, who would be subject to the spv. The model schedule proposes broad horizontal commitments in mode 4, so as to ensure a basic minimum level of access to foreign service suppliers across all sectors. The latter would be supplemented by sector specific commitments in mode 4 where further liberalization was desired and feasible. While the horizontal commitments might apply only above a threshold minimum skill level, such as a bachelor’s degree or high-school graduation, the sectoral commitments could lower the acceptable skill threshold in certain sectors, for instance by covering

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diplomas or certificates for training programs of shorter duration. Thus, the horizontal and the sectoral commitments in mode 4 would supplement each other, with the sectoral commitments addressing sector-specific characteristics and interests. The schedule could be supplemented by sectoral schedules where more liberal commitments could be made in mode 4 for services and categories where further liberalization was feasible. Alternatively, in sectors where there were specific regulatory issues and sensitivities, additional market access and national treatment limitations could be scheduled, limitations not otherwise listed in the horizontal schedule. In the case of the health sector, the latter approach would need to be taken if the aforementioned ethical and other regulatory considerations that were present in bilateral and regional health sector initiatives were to be incorporated in the gats commitments. In other words, the generic horizontal commitment structure given above would be supplemented by the sectoral schedule of commitments in health services, which would address national health interests, equity, welfare, and other such considerations pertinent to health worker migration. Hence, three improvements are required in the structure of commitments: first, countries must schedule improved horizontal commitments in mode 4; second, countries must table the health sector for negotiations (which, as noted earlier, has not been subject to scheduling by many countries thus far); and third, countries must make binding sectoral commitments in mode 4 with whatever market access and national-treatment conditions and additional conditions are required, as opposed to the currently unbound entries in mode 4 at the sectoral level. Provided that the first two conditions were met, the sectoral commitments in mode 4 could take various approaches. First and foremost, it would not be advisable to allow unrestricted market access under mode 4 for health services, as doing so could exacerbate the brain drain and have a negative impact on the national health systems of the small and poor countries. Hence, it would be appropriate to schedule certain restrictions on market access for health services in the sectoral commitments in mode 4. One restriction that could be scheduled would be sector-specific quantitative limits on the entry of foreign health care workers, with specified limits on individual categories of health personnel (for example, nurses, doctors, physiotherapists, pharmacists). Such a ceiling would be similar to the approach taken in some destination countries to voluntarily limit the use of foreign health personnel without completely eliminating the scope for movement. It

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would also provide a stable demand environment for source countries. While host country labour market conditions might require changes in this quantitative limit, the sectoral commitment in mode 4 could bind host countries to providing sufficient prior notice before introducing any changes in entry limits and to granting a particular market access quota for a specified duration, in order to signal the predictability of policies and ease human-resource planning (including planning related to deployment, training, and return issues) in the source countries. In addition to or in lieu of quantitative restrictions, the market access commitments could also include an explicit condition that entry by a foreign health worker would be permitted only if the movement was occurring under a government-to-government agreement or under contracts with bona fide and approved private recruitment agencies in the host and source countries. Concerned governments could be required to furnish a list of approved recruitment agencies, in order to provide evidence of compliance. In this manner, the ethical code of practice could be legally extended to cover a wider set of agents. The market access commitments could also subject the entry of foreign health personnel to certification of their credentials and qualifications by specified agencies in the host and/or source countries and clearly specify screening and qualification requirements, thus reducing uncertainties and costs for migrating individuals. Under the national treatment commitments, only those conditions that would apply differently to foreign health workers and to domestic health personnel would need to be inscribed. While for the most part, policies regarding the work environment, pay, and worker welfare would apply equally to both foreign and domestic health care providers and would thus not need to be inscribed in the schedule, the aforementioned conditions regarding the maximum duration of stay under the spv, and of not extending the services beyond this period, and the requirement to return to the source country and stay there for a minimum prescribed period following expiry of the spv, would need to be inscribed as a national treatment limitation in the sectoral schedule. Differential conditions could also apply in the case of foreign health workers who were sponsored under government-government agreements, such as those who came for further training under state scholarships; there might be differential service conditions that applied to their stay in the host country (like serving the public health system or being required to return for a minimum specified period before being allowed re-entry into the host country). Again, the idea would be to use some of

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the elements of existing bilateral and regional initiatives to integrate health worker migration with larger human resource planning and national health system objectives and to inscribe these elements in a legally binding form through sectoral commitments in mode 4. Countries might also consider taking mfn exemptions in mode 4 in the health sector, so as to prevent the draining of human resources from countries facing severe shortages of health personnel. Thus, market access might be restricted for a specified list of countries or specified criteria (like a threshold personnel-to-population ratio for different categories of health providers). Alternatively, quantitative limits might be made applicable only to a selected list of countries, based on considerations of shortage or low personnel density in the source country. This mfn exemption would be subject to review and the list could be modified, depending on changes in the health capacity of the source country in the future. Also, an mfn exemption could be taken for providing differential treatment between source countries on matters such as financial and technical assistance. For instance, there could be a commitment to provide financial compensation or training assistance or educational scholarships to selected source countries in the health sector, again based on criteria such as shortages of health personnel or a low density of health personnel in the latter countries. Once again, these kinds of collaborative features, which are present in existing bilateral and regional initiatives, would be incorporated under the mode 4 commitments. The proposed framework of mode 4 commitments would also need to be supported by discussions about the classification of service providers more generally, and specifically in the health sector. The objective would be to achieve greater clarity, uniformity, and disaggregation of service provider categories and related qualification and other requirements. Developing countries have noted a number of occupations in which they already are supplying services internationally and have specific interests in liberalizing market access in the context of the gats. It should be possible to use the International Standard Classification of Occupations (isco-88) of the International Labour Office (ilo) to arrive at the list of categories and skill levels that can be negotiated and to incorporate these categories into the wto Services Sectoral Classification List.34 In the case of medical and dental services, a long list of specific and detailed professionals is contained in the isco-88 classification. This disaggregated list would serve as a good reference and specific categories of interest could be incorporated into the health ser-

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vices commitments in mode 4. Again, the process would involve some degree of cooperation between professional and regulatory bodies and associations in different countries in order to arrive at a common understanding of different health provider categories. As a first step, these bodies could provide a detailed listing of categories of service providers for their respective sectors, along with the qualifying workrelated and educational criteria for designation under this category. Discussions could then take place to determine the equivalence of categories across countries and to come to some consensus on definitions, terminology, and classification for greater transparency in the commitment process. It is evident that the operationalization of the proposed framework of mode 4 commitments will pose many challenges to member countries. It will require changes in immigration and labour market legislation, for instance to make a clear distinction between permanent and temporary movement and to introduce a new visa altogether. It will require the establishment and strengthening of institutional mechanisms on both sides to ensure compliance with the spv requirements. This change poses questions about the administrative capacity of member countries at very different levels of development to introduce and administer such schemes, the costs this may impose, and whether these costs would be commensurate with the benefits realized. Would source country governments or manpower agencies, especially in ldcs, have the regulatory capacity to certify and track health workers engaged in service contracts in other countries and ensure compliance with the spv requirements? Also, would a “one-stop shop” for a gats visa or an spv be possible to implement in countries where different departments, agencies, and regulatory bodies may be dealing with visas and work permits, and what kinds of coordination mechanisms would be required between immigration and health authorities to ensure commitments in the health sector are not violated?35 Might the administration of a new set of visas impose an additional burden on scarce institutional and human resources in source countries? There are no clear answers to these questions, but they do highlight the fact that the absence of adequate regulatory frameworks and enforcement capacity in both host and source countries could place a major constraint on implementing the spv. On the other hand, the need for collaborative approaches and joint responsibilities of sending and receiving countries in managing health migration is clear.

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Economic Needs Tests Movement of health workers is often subject to economic-needs tests (ents).36 Again, if the idea is to facilitate the mobility of health workers between countries, albeit on a temporary basis, then such tests need to be subject to accepted guidelines to prevent their non-discriminatory and non-transparent application to foreign service providers. Two issues need to be addressed in the context of ents. The first is to limit the number of service categories permitted for their use and to reach agreement across member countries on the criteria for selection of these categories. One possibility is to eliminate ents for only those covered by the spv. Thus, if health workers were covered by mode 4 commitments in the health sector and were eligible for an spv, the ent requirement would not apply. A more selective approach would be to eliminate this requirement for only specific categories of service providers under the health sector commitments (which could be specified in the schedule) rather than for the sector as a whole. The second issue to be addressed is the development of some multilateral standards to reduce the arbitrariness and discriminatory scope in the application of ents. There is no common definition of an ent, no clearly set criteria for their use, and no clearly established procedures for their administration. Thus, some guidelines need to be set up for applying ents, starting perhaps with a sector like health, where such measures are commonly used, and then extending these guidelines to additional sectors, in order to eventually develop a multilateral framework for the use of ents.

conclusion Although several agreements and initiatives are in place to manage health migration and minimize the adverse impact on source countries, they have had limited effect. Some have tended to be narrow in their objectives (such as only addressing issues of entry and recruitment norms) and narrow in their scope (such as only being applicable to government agencies and not the private sector), and they have been framed more in the form of intentions and recommendations than as legally binding commitments. The discussion has also indicated that the integration of trade policy with health human resource planning cannot be based on negative or restrictive policies alone, such as policies to stem outflows of health personnel in source countries and policies to voluntarily limit inflows of health personnel in destination countries.

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Instead, positively oriented policies that are broad in scope and objectives, that integrate multiple dimensions of health migration and address the causes and not only the symptoms of health migration, and that are embedded in some form of legally binding framework are likely to be more effective. These policies would consist of (a) investments in training and infrastructure; (b) improvements in the work environment and human-resource management policies to induce return migration and the retention of health professionals; (c) more effective channeling of foreign exchange earnings arising from exports of health personnel back to the source country’s health sector; and (d) policies to reintegrate returning health personnel and use their upgraded skills more effectively in the source country; and they would need to be undertaken at multiple levels, unilateral, bilateral/regional, and multilateral. International organizations such as the who, the ilo, the iom, and unctad can play an important role by assisting source countries with workforce planning, capacity building, evidence gathering, data collection, and impact analysis. The discussion has taken an exploratory approach to outline the potential for using the gats as a framework to shape health migration for mutual benefit to host and source countries. There has been little progress in mode 4 discussions under the gats, and there are many well-recognized difficulties in moving these negotiations forward. But it may still be worth considering some of the options outlined in this chapter. The main benefit of using the gats is that it covers the temporary movement of service suppliers and health services, which thus provides countries with an avenue to make commitments on the temporary movement of health personnel, provided both health sector and mode 4 commitments are forthcoming and sufficient progress is made in supporting gats disciplines that bear on health worker migration. The gats architecture also gives countries autonomy to regulate their service sectors, thus providing scope for introducing conditions on market entry and the operation of foreign health workers, so as to address the needs of those countries most affected by health personnel shortages and development of their health systems. Thus, the flexible and discretionary structure of gats commitments enables countries to reflect the ethical, welfare-related, regulatory, and human resource development aspects of health migration in their commitments and to adopt an integrated approach to addressing this problem. Alongside the gats, bilateral or regional economic-cooperation agreements, bilateral labour agreements, bilateral compensatory, training, and immigration-related

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schemes, and well-designed home country policies to retain and motivate health workers can go a long way towards managing health worker migration in the larger interests of development.

notes 1 See, Bach (2004) and Martineau et al. (2002) for statistics on health worker migration. 2 Padarath et al. (2003). 3 Commonwealth Secretariat (2003), 1. 4 Dovlo and Martineau (2004) discuss various approaches to managing health worker migration. See table 7, 42–4. 5 This section is based on the Companion Document to the Commonwealth Code of Practice for the International Recruitment of Health Workers (18 March 2003). 6 Peggy Vidot, Commonwealth Secretariat, Commonwealth Policies on Migration of Health Professionals. 7 Much of the discussion in this section is based on Buchan and Dolvo (2004), 10; http://wwww/dh.gov.uk/asset/Root/04/09/77/34/04097734 and http://www.dh.gov.uk/PolicyAndGuidance/HumanResources AndTraining/MoreStaff/InternationalRecruitmentnhsEmployers/ CodeOfPracticeArticle/fs/en?content_id=4043625&chk=d2Ojcv; http://www.dh.gov.uk/assetRoot/04/09/77/34/04097734.pdf; http://www.dh.gov.uk/assetRoot/04/07/16/80/04071680.pdf; http://www.dh.gov.uk/assetRoot/04/07/95/82/04079582.pdf. 8 Save the Children (2005), on the nhs code of practice. 9 See Buchan and Dovlo (2004). 10 Save the Children (2005). 11 For more information on the limitations of the nhs code, see Buchan and Dovlo (2004) and Bach (2003). 12 This section is mainly based on http://www.rudasa.org.za/worksa.php, “Policy: Recruitment and Employment of Foreign Health Professionals in the Republic of South Africa; Guidelines for the Recruitment of Foreign Health Professionals.” 13 South Africa, Department of Health (2004), Forcier et al. (2004), and http://www.rudasa.org.za/worksa.php. 14 http://www.rudasa.org.za/worksa.php. 15 Salmon and Yan (2005).

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16 Much of this discussion is based on Buchan and Dovlo (2004), Richards (2005), and the Commonwealth Secretariat (2005). 17 Similarly, the countries of central, southern and eastern Africa, working through the East, Central, and Southern African College of Nursing, are drawing up common standards and competencies to ease the movement of health professionals within the region by developing mutual recognition and harmonization of standards. 18 Most of the discussion in this section is based on Blouin (2005). 19 Ibid., table 1, 14. 20 Hamilton and Yau (2004). 21 See Bach (2003) and http://www.up.edu.ph/forum/2005/Jul-Aug05/ brain_drain.htm. 22 Hamilton and Yau (2004). 23 http://www/cubanembassy.org.gy/Documents/Bilateralrelations/ Cuba-Guyana.doc. 24 Sieg (2004) and Burgos (2004). 25 See Chanda (2005). 26 Bach (2003) and Lorenzo-Elgado (2005). 27 See wto (1994). 28 Countries have the discretion to choose which service sectors they wish to table in the gats negotiations. Hence, services where there are domestic sensitivities tend to be scheduled less, health services being one such, because of public good and equity considerations. 29 These modes are, cross-border supply, consumption abroad, and commercial presence, which refer to the physical movement of a service across borders, the movement of consumers to the service supplier, and the setting up of commercial establishments in another country, respectively. 30 Much of the discussion in this section is based on Chaudhuri et al. (2004). 31 An establishment-based contractual service provider is a person who is a regular employee of a home or third-country establishment and is deputed abroad by this establishment to render services for a short period, on the basis of a contract signed between the host country client and the sending firm and where remuneration is paid to the employer. Independent contractual service providers include self-employed, independent professionals (such as free-lancing architects or consultants) whose services are contracted or solicited by a client firm, an individual, or a professional organization based in the host country. 32 See Chaudhuri et al. (2004) for details on the administrative and other operational aspects of the Service Provider Visa.

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33 See Hatcher (2003) and Chaudhuri et al. (2004) for further details and an indicative model schedule. 34 See s/css/w/12, Communication from India (24 November 2000). 35 Some experts have noted that the United Kingdom’s experience could be worth replicating in other developed countries. The United Kingdom has established a gats visa for contractual workers to facilitate the implementation of its commitments under the gats. The procedure is simple, efficient, and transparent and facilitates quick decision making that can be done by one person in cases where the requesting party meets all the requirements. 36 The discussion in this section is largely based on Chanda (May 2004).

bibliography Bach, Steven. 2003. International Migration of Health Workers: Labour and Social Issues. Working Paper. Geneva: International Labour Office, July. – 2004. “Migration Patterns of Physicians and Nurses: Still the Same Story?” Bulletin of the World Health Organization (August). “Bilateral Agreement to Control Migration of Health Professionals Mooted.” Johannesburg 12 May 2002. Sapa (www.doh.gov.za/docs/news/ 2002/nz0512.html). Blouin, Chantal. 2005. “nafta and the Mobility of Highly Skilled Workers: The Case of Canadian Nurses.” Journal of International Law and Trade Policy 6, no 1: The Estey Centre. Buchan, James. 2005. UK and the Migration of Nurses. Bellagio Conference, July. Buchan, James and Delanyo Dovlo. International Recruitment of Health Workers to the UK. dfid Health Systems Resource Centre: February. Buchan, James, Michelle Kingma, and F. Marilyn Lorenzo-Elegado. 2005. “International Migration of Nurses: Trends and Policy Implications.” The Global Nursing Review Initiative no. 5. Buchan, James, Tina Parkin, and Julie Sochalski. 2003. International Nurse Mobility: Trends and Implications. World Health Organization. Buchan, James; and Julie Sochalski 2004. “The Migration of Nurses: Trends and Polices.” Bulletin of the World Health Organization (August). Burgos, Arlene. 2004. “fta Could Exacerbate Philippine Nurse Drain.” Japan Times, 22 September. Chanda, Rupa. 2005. “Benefits and Synergies under the Indo-Singapore ceca.” Diplomatist Supplement. New Delhi: Singapore High Commission.

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– 2004. Movement and Presence of Natural Persons and Developing Countries: Issues and Proposals for the GATS Negotiations. Trade-Related Agenda, Development and Equity Working Papers, no. 19. Geneva: South Centre. Chaudhuri, Sumanta, Aaditya Mattoo, and Richard Self. 2004. Moving People to Deliver Services: How Can the WTO Help?. Washington: dc: World Bank. Commonwealth Secretariat. Deputy Secretary-General Winston Cox. 2005. “What Direction and In Whose Interest? Towards a Trade and Development Approach in the Caribbean Region.” Sherbourne Conference Centre, Barbados, 30–31 March. Commonwealth Secretariat. 2003. Companion Document to the Commonwealth Code of Practice for the International Recruitment of Health Workers (adopted at pre-who meeting of Commonwealth health ministers). Geneva: 18 March. Dovlo, D. 2005. “Taking More than a Fair Share? The Migration of Health Professionals from Poor to Rich Countries.” Public Library of Science Medicine 2, no. 5 (May). – 2005b. “Migration of Nurses from Sub-Saharan Africa: A Review of Issues and Challenges.” Bellagio Conference, 5–10 July. Dovlo, D., and T. Martineau. 2004. “A Review of the Migration of Africa’s Health Professionals.” A Joint Learning Initiative Working Paper 4-4. January. Forcier, Melanie Bourassa, Steven Simoens, and Antonio Giuffrida. 2004. “Impact, Regulation, and Healthy Policy Implications of Physician Migration in oecd Countries.” Human Resources for Health 2. Hamilton, Kimberly, and Jennifer Yau. 2004. The Global Tug-of-War for Health Care Workers. Migration Policy Institute. Migration Information Source: 1 December. Hatcher, Mark. 2003. “Draft Model Schedule of Mode 4 : A Proposal.” In Aaditya Mattoo and Antonia Carzaniga, eds. Moving People to Deliver Services. Oxford: Oxford University Press. International Organization for Migration. 2005. Health and Migration: Bridging the Gap. International Dialogue on Migration. – 2004. Cross-Border Movement of Natural Persons: Economic Partnership Agreement and Acceptance of Foreign Workers. A Background Paper on Labour Migration Management. Tokyo. 27 July. – 2004. The Migration of Health Care Workers: Creative Solutions to Manage Health Workforce Migration. International Organization for Migration’s International Dialogue on Migration.

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Lorenzo-Elegado, Fely Marilyn. 2005. Philippine Case Study on Nursing Migration. Institute of Health Policy and Development Studies. Bellagio Conference, 10 July. MafuBelu, Daisy. 2004. “Using Bilateral Arrangements to Manage Migration of Health Care Workers: The Case of South Africa and the United Kingdom.” International Organization for Migration, Seminar on Health and Migration, 9–11 June. Martineau, Tim, Karola Decker, and Peter Bundred. 2002. “Briefing Note on International Migration of Health Professionals: Leveling the Playing Field for Developing Country Health Systems.” Liverpool School of Tropical Medicine. Mensah, Kwadwo, Maureen Mackintosh, and Henry Leroi. 2005. The “Skills Drain” of Health Professionals from the Developing World: A Framework for Policy Formulation. London: Medcat. Padarath, Ashnie, Charlotte Chamberlain, David McCoy, Antoinette Ntuli, Mike Rowson, and Rene Loewenson. 2003. Health Personnel in Southern Africa: Confronting Maldistribution and Brain Drain. equinet Discussion Paper 3. Pang, Tikki, Mary Ann Lansang, and Andy Haines. 2002. “Brain Drain and Health Professionals: A Global Problem Needs Global Solutions.” British Medical Journal: 2 March. Richards, Peter. 2005. “Exodus of Nurses Costs Region Millions.” Port of Spain, 6 April. Salmon, Marla, and Jean Yan. 2005. “The Caribbean Context: Prelude to Regional Strategies.” Bellagio Conference, 5–10 July. Save the Children. 2005. “Whose Charity? Africa’s Aid to the nhs.” Briefing Note. Sieg, Linda. 2004. “Japan, Philippines fta Shows Foreign Workers Hurdles.” Bilaterals.org, 29 November. South Africa. Department of Health. 2004. Recruitment and Employment of Foreign Health Professionals in the Republic of South Africa. Foreign Workforce Management Program, 1 April. Stilwell, Barbara. 2004. Understanding and Influencing the International Migration of Health Workers. San Diego. Stilwell, Barbara, Khassoum Diallo, Pascal Zurn, Mario R Dal Poz, Orvill Adams, and James Buchan. 2003. “Developing Evidence-Based Ethical Policies on the Migration of Health Workers: Conceptual and Practical Challenges.” Human Resources for Health, 1, no. 8. http://www.humanresources-health.com/content/1/1/8.

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Stilwell, Barbara, Khassoum Diallo, Pascal Zurn, Marko Vujicic, Orvill Adams, and Mario Dal Poz. 2004. “Migration of Health Care Workers from Developing Countries: Strategic Approaches to Its Management.” Bulletin of the World Health Organization (August). Wickramasekara, Piyasiri. 2002. Policy Responses to Skilled Migration: Retention, Return and Circulation. International Migration Programme. Geneva: International Labour Office, http://www.ilo.org/public/english/ protection/migrant/download/pom/pom5e.pdf. World Health Organization. Executive Board. 2004. Recruitment of Health Workers from the Developing World. Geneva: who. wto. (1994). “The General Agreement on Trade in Services and Related Instruments.” In The Legal Texts of the Uruguay Round of Multilateral Trade Negotiations. wto: Geneva. Yan. 2005. “Human Resources for Health Crisis.” Bellagio Conference, 5–10 July.

Malaria h Services and Products

5 Rolling Back Malaria and the WTO Doha Development Agenda BIJIT BORA

introduction The disastrous effects of malaria are well known. It is estimated that 40 percent of the world’s population is at risk from the disease and that malaria causes more the one million deaths per year.1 The economic and social burden of the disease is so extensive that eradicating malaria was one of the Millennium Development Goals endorsed by world leaders in 2000.2 The United Nations has also declared 2001–10 the decade to roll back malaria in developing countries, particularly in Africa.3 Meeting this challenge will be difficult. A study completed for the un Millennium Project estimates the annual cost of eradicating malaria to be $3 billion until 2015 (un Millennium Project 2005). That study, along with the Africa Malaria Report 2003 and the World Malaria Report 2005, which are published by the World Health Organisation (who), also identified the components of intervention strategies that could be used to control malaria. Of these, perhaps the most obvious and relevant would be a disease prevention strategy designed to curtail the capacity of mosquitoes to transmit infection. One of the most effective measures of this type would be to increase the use of insecticidetreated mosquito nets (itn). Since malaria is transmitted predominantly through mosquitoes that bite at night, itns can provide protection to people while they are sleeping.4 Given the simplicity of the solution, the international community has responded to the situation by increasing the funding available to purchase more itns.5 International organisations such as the World Health

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Organisation, the United Nations Children and Education Fund (unicef), and the Global Fund are all at the forefront. Their efforts include a number of initiatives that form part of a broader vector control strategy designed to reduce or interrupt transmission of the disease. One of these is to increase access to and usage of itns by simply purchasing more mosquito nets and distributing them to the most vulnerable areas, perhaps by dropping them from helicopters. However, nets dropped by helicopters may not be effective, simply because they may not be used. Stewart and Marchand (2002) conclude that human and social factors are key elements in determining the utilisation rate.6 Thus, the overall impression is that if at least one life could be saved, it would be worthwhile to put in place a number of complementary initiatives, such as education programs, to assist in increasing the utilisation rate. Another problem created by the helicopter-drop strategy, which seems to have received little attention, is its impact on the private sector. Publicly funded nets can crowd out the private sector. Although a substantial increase in public funding has increased the supply of nets, private supply and the normal market process still appear to be important for vector management. But one must conclude that, this situation is unlikely to be sustainable, especially if one examines the long-term development of the mosquito net industry in places such as Africa, and indeed globally. Consequently government policies towards the industry need to be examined as a complementary initiative to raising funds globally, purchasing the nets, and distributing them. Key industrial policy tools available to national governments for developing their industries include tariffs on imported goods, and trade policy in general. While it is generally agreed that combating the incidence of malaria and other communicable diseases is good health policy, universal agreement on whether or not trade policy can assist or thwart health measures has yet to be achieved. Part of the problem in answering this question resides in the ongoing debate of what constitutes good trade policy. In November 2001 the members of the World Trade Organisation (wto) committed themselves to further liberalising world trade in goods and services and strengthening the rules that govern trade policy in what is known as the Doha Round of negotiations. Christened the Doha Development Agenda, in the hopes that the final package will prove to be development-friendly, the negotiations are still ongoing in 2007, missing many deadlines and still encountering important stumbling blocks. To date, the precise definition of what would be

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a “development” round has eluded negotiators. Instead, the negotiations are caught in the middle of a debate as to whether or not further liberalisation can in fact enhance the prospects for development or whether, on the contrary, it will act as an anchor that restricts the efforts of developing-country governments. This chapter argues that trade liberalisation and development, at least in the case of combating communicable diseases, are not always and everywhere mutually conflicting goals.7 It shows, by way of example, that trade liberalisation and the multilateral negotiations within the context of the Doha Development Agenda can enhance the efforts to combat the spread of malaria. In particular, malaria-endemic countries that belong to the wto can exploit two areas of the negotiations: first, by offering to provide a precisely defined tariff line for itns in their tariff structure through the ongoing trade facilitation negotiations, and, second, by taking the offensive in the non-agricultural market access negotiations on sectoral tariff initiatives. Instead of arguing against a sectoral tariff elimination initiative on ideological grounds, malariaendemic countries could propose an elimination of all duties on the newly created tariff line for itns, which they defined through the Trade Facilitation negotiations. All wto members could consider endorsing this initiative. The following section describes the pattern of trade in mosquito nets and provides some insights into the relative costs of African and Asian producers, in order to show that the African producers are not competitive. The subsequent section examines how tariffs are applied on mosquito nets when they enter into a market and how some African countries have already changed their tariff policy to ease their entry into their markets. Leveraging the wto is the topic of the section after that, while the final section discusses some of the implications of the proposals in this chapter in the wider context.

production and international trade in mosquito nets The production of a mosquito net, like the production of most manufactured products in today’s globalised world, involves multiple stages.8 At the first stage, either synthetic or natural fibres in the form of yarn are required.9 Next, the yarn is warped, knitted, and dyed. The third stage involves cutting and sewing the net and the final packaging. In a

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separate process, or fourth stage, the net is impregnated with an insecticide to better protect against mosquitoes. Very little research has been done to outline the landscape of the international production and distribution of bednets. Most of the available research employs data that is to some extent anecdotal.10 Despite these deficiencies, a broad picture of the salient international trade patterns and the implications of tariff policy can be painted. The World Health Organisation has identified manufacturers of mosquito nets around the world and classified them as either “qualified” suppliers or “potential” suppliers. Ten manufacturers in Africa have met the standard “qualified”; three are in Nigeria, three in Tanzania, and two in Zimbabwe, and one each is in Kenya and Namibia. Another fourteen manufacturers on the continent have been classified as potential suppliers. Four of these are in South Africa, three in Kenya, two each in Angola, Eritrea, and Mozambique, and one in Cameroon. None of these production establishments process the synthetic materials to produce the yarn, which is either imported or produced from imported polyester chips that are warped to make the yarn. This arrangement is understandable, given the labour-intensive nature of the third stage, which involves cutting and sewing the net and then packaging it. Outside Africa, mosquito nets are produced in China, Indonesia, Thailand, and Vietnam. Treated mosquito nets are also exported from the European Community. However, once again, given the labourintensive nature of this part of the production stage, it is unlikely that the entire production process would take place within the ec. Instead, the nets are probably imported, treated, and then re-exported to Africa. International production probably takes place in a number of other countries, given that the production structure for nets is almost identical to that for apparel. Countries with apparel production capacity could quite easily manufacture nets.11 In order to assess the comparative cost structure across countries, import volume and value data that are specific to mosquito nets are required. Fortunately, one African country collects such data, which are reported in figure 5.1.12 The figure shows that Kenyan producers are clearly outliers in cost competitiveness. The average cost per unit, excluding Kenyan suppliers, is $2.20 per kilo. Kenya, on the other hand, supplies nets into this market at $21.17 per kilogram. Low per unit costs in China and Indonesia could explain why together these two countries account for 72 percent of the total import market based on

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Fig. 5.1 Per kilo cost of importing mosquito nets from selected countries based on import data, 2003. source: wto Integrated Data Base.

volume. If Thailand is added to this total, East Asia accounts for 79 percent of the total market by volume. Although the per unit costs of nets coming from the ec are slightly higher than those of nets produced in Indonesia, the ec ranks third in terms of import supply. While figure 5.1 clearly shows Kenyan suppliers at a cost disadvantage, it is hard to believe that the difference would be as great as ten times that of some other suppliers. However, the data of Larson and Rosen (2002) on the prices of mosquito nets in Kenya supports the view that the cost structure reported in figure 5.1 would not allow them to sell within Kenya. Table 5.1 presents a detailed breakdown of the cost structure of producing mosquito nets in Vietnam compared to that of production by an African producer. The table is adapted from data that was collected through survey work across a number of African countries. Granted, it is difficult to generalise across all African countries, but again, the availability of such data helps shed some light on the pattern of production and trade in bednets. Table 5.1 shows the costs of the three stages associated with producing an untreated bednet. Transport costs within Africa are added at the fourth stage. In stage 1 both African and Vietnamese manufacturer can purchase yarn at the same world price from Asian suppliers. African suppliers, however, have to pay for the transport of the yarn and the associated agent fees and insurance in order for the yarn to be landed at their home part. African manufacturers are, therefore, at a disadvantage

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Table 5.1 Comparative Costs of Net Manufacture in Vietnam and Africa, in $us African producer making African producer conventional nets Vietnamese making conwith new equipment producer making ventional nets with imported yarn, and conventional nets, new equipment, production conditions using existing imported yarn, equipment, local identical with Vietnam and selling at a and selling at a price labour, and yarn commercially competitive with purchased in the sustainable price Vietnamese production local market

Cost Yarn or compound import price (fob) Sea freight (Asia to Africa) Transit agent fees and insurance Yarn or compound price (cif) Tariff on imported yarn Transport from port and associated charges Warping/Knitting/Sewing Other charges Equipment depreciation Loan repayment Profit mark-up (netting stage) Cost of producing netting material from yarn Cutting/sewing/packaging Wastage (4% of netting material) Profit mark-up Cost of producing net from material Ex-works price (sum of steps 1–3) Transport to port and associated charges Sea freight (Vietnam to Africa) Sea freight (from African port to African port) Cost and freight price

Stage 1: Producing Yarn 0.63 0.63

0.63

n/a n/a

0.06 0.01

0.06 0.01

0.63

0.71

0.71

Stage 2: Production of Netting Material 0 0.02

0 0.02

0.35

0.35

0.32

0 0

0.15 0.26

0.15 0.26 0.15

0.35

0.77

0.90

Stage 3: Cutting, Sewing and Packaging 0.22 0.22 0.04 0.06 included above .26

included above 0.28

Stage 4: Transport to Distributor .09 .09

0.20 0.07 .03 0.29

.09

.20 .20

.20

.20

1.53

sold at 1.53

2.26

source: Adapted from table 15 of Management Sciences for Health (2004).

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after the first stage. In the second stage the evidence indicates that African and Vietnamese companies incur the same costs for the warping, knitting, and sewing of the yarn to obtain the netting material. Nevertheless, at this stage there is a substantial divergence in production costs due to differences in production capacity. Vietnamese manufacturers have already installed capacity and need not pay for additional equipment. African manufacturers, however, have the costs of loan repayment and the depreciation of new equipment. The addition of this cost clearly means that African suppliers could not possibly be cost-competitive. Leaving aside the significance of the expenditure on new equipment still allows for an insightful comparison of cost structures. For the cutting and sewing of the net from the netting material, African companies are again cost-competitive. Only two areas can be identified where African companies would be at a disadvantage. The first is that of the tariff on imported yarn. Table 5:1 has set the tariff at zero in order to focus on the comparative cost structures between the two types of companies. The second area is that of internal African transport costs. Table 5.1 shows that the cost of transporting nets from Vietnam to Africa is the same as the cost of shipping nets within Africa. To summarise, the pattern of African international trade in mosquito nets and related materials consists of a relatively small volume of intraregional trade of relatively low value by a small number of countries manufacturing the nets. There appears to be no capacity to export nets beyond Africa. Imports include imports of intermediate products such as yarn and untreated nets, but it is possible that the dominant import is the final net. Available evidence on cost structures indicates that African manufacturers are competitive with Thai or Vietnamese manufacturers, but only for small and limited supplies.

trade restrictions The importance of tariffs and trade restrictions as a barrier to access to bednets was recognised in the Abuja Declaration on Roll Back Malaria in Africa (25 April 2000). The declaration specifically states that the African heads of state and governments pledge to “reduce or waive taxes and tariffs for mosquito nets and materials, insecticides, antimalarial drugs and other recommended goods and services that are needed for malaria control strategies.” The complexities of trade policy dictate that the reduction or elimination of tariffs will always be diffi-

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Table 5.2 Classification of Textiles in the Harmonised System Division Section 11 Chapter 63 Heading 63.04 Sub-heading 63.04.91

Description Textiles and textile articles Other made-up textile articles: worn clothing, and worn textile articles, rags Other furnishing articles excluding those from 94.04 Knitted or crocheted

source: World Customs Organisation, Harmonised System, cd rom, version 1.2.

cult. Nevertheless, the spirit of the declaration accepts that substantial trade liberalisation would increase the effectiveness of malaria control strategies. Trade may be restricted either by tariff or by non-tariff barriers, or both. Tariffs are straightforward: they are taxes on imports. Identifying or defining non-tariff measures, however, is more difficult. Part of the difficulty in recognising ntms is distinguishing between measures that are imposed for legitimate social reasons and those that are designed to protect domestic industry. Measuring the extent to which tariffs are imposed on the import of mosquito nets and related material is not an easy task. Trade economists have historically experienced great difficulty in accessing reliable data that meets their research needs. One of the fundamental problems in this regard is classification. This chapter has been discussing bednets at length, with the presumption that the reader has some idea of the product. Classifying bednets in the international trade context, however, appears to be problematic. All international trade is classified under what is known as the Harmonised Commodity Description and Coding System, or Harmonised System for short. The system classifies all traded products into twentyone sections, ninety-eight chapters (divisions of sections), then headings (divisions of chapters) and then sub-headings. A chapter is defined by two digits and is less detailed than headings, which are defined by four digits; headings, in turn, are less detailed than sub-headings, which are defined by six digits. The latest revision of the Harmonised System that is in use was done in 2002 and is known as hs2002. It contains approximately 5,100 lines at the six-digit level. Unfortunately, although the classification system seems comprehensive, mosquito nets are not explicitly specified in it. They are, however, grouped with a number of articles. In simple terms, mosquito nets are classified as knitted or crocheted “other made-up textile articles” (table

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Trade in Health Services and Products Nigeria, 2002 Sudan, 2002 Ethiopa, 2002 Burundi, 2002 Gabon, 2002 Congo, 2002 Chad, 2002 Central African Republic, 2002 Cameroon, 2002 Zambia, 2003 Rwanda, 2002 Mozambique, 2002 Kenya, 2004 Mauritania, 2001 Madagascar, 2001 Democratic Republic of Congo, 2003 Tanzania, 2003 Malawi, 2002 Togo, 2004 Senegal, 2004 Niger, 2004 Mali, 2004 Guinea-Bissau, 2004 Cote D’Ivoire, 2004 Bukina Faso, 2004 Benin, 2004 Uganda, 2004 Angola, 2002

0

10

20

Percentage

30

40

50

Fig. 5.2 Average tariff rate for hs 63.04.91 for selected African countries, latest available year. source: wto and unctad.

5.2). The difficulty, however, is that mosquito nets are lumped with a number of other products under this general heading. The official description of the sub-heading, from the World Customs Organisation is as follows: “These articles include wall hangings and textile furnishings for ceremonies (e.g., weddings or funerals); mosquito nets; bedspreads (but not including bed coverings of heading 94.04); cushion covers, loose covers for furniture, antimacassars; table covers (other than those having the characteristics of floor coverings – see Note 1 to Chapter 57); mantelpiece runners; curtain loops; valances (other than those of heading 63.03).” Such a broad heading implies that the duty that applies to this particular sub-heading will take into account the considerations of manufacturers of all the articles listed in the definition. Figure 5.2 provides average tariffs for sub-Saharan African countries at the six-digit sub-heading 63.04.91. These averages are calculated as averages across all the tariff lines below the sub-heading. The table shows every country has an average above zero. This would be fine, on its own, but the problem is that tariffs applied at this level are designed to cover the broad definitions of products. The positive duty could be applied for any reason, from revenue purposes to purposes of protection. One way around this problem would be to develop a finer product definition, which would be specific to mosquito nets. Under the existing hs

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Table 5.3 Countries with Specific Tariff lines on Mosquito Nets HS Classifi-

cation

Year

Tariff line

Benin

hs 96

2003

6304910010

Malawi

hs 96

2003

63049110

Sierra Leone

hs 96

2004

63049910

Sierra Leone Senegal

hs 96 hs 96

2004 2002

58041020 6304910010

sacu

hs 96

2002

63049110

Tanzania Togo

hs 96 hs 96

2003 2004

63049110 6304910010

Country

Tariff line description Treated mosquito nets Mosquito and sandfly nets Mosquito nets and sandfly nets Mosquito nets Treated mosquito net Conical bednets solely containing yarns of multifilament polyester Mosquito nets Treated mosquito nets

Duty (percentage) 0 10 5 5 0 34, with a maximum of 3000 c/kg 0 0

Note: Benin, Senegal, and Togo classify the product in French as moustiquaires imprégnées. sacu stands for the Southern African Customs Union, which consists of Botswana, Lesotho, Namibia, Swaziland, and South Africa.

system this change could be made unilaterally. The product definitions at the six-digit (or sub-heading) level are common to all countries. One country, however, can choose to open a tariff line with eight digits, or even ten digits. The number of tariff lines it chooses to open and for which products is entirely up to the country itself. Some African countries, listed in table 5.3, have already taken advantage of this flexibility in the case of mosquito nets. Within this list, Benin, Senegal, and Togo have opened up ten-digit lines and defined the products as treated mosquito nets. Malawi, Sierra Leone, Tanzania and the members of the Southern African Customs Union (sacu) have opened up eight-digit lines.13

opportunities in the context of the doha development agenda The previous section highlighted two problems for policy coherence – the first is the classification of mosquito nets, which makes it difficult to ensure that they pass smoothly through customs. The second is that, despite the commitment made by African leaders to reduce or waive tariffs on mosquito nets and related materials, the duties on the nets remain positive. This section argues that the current Doha Develop-

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ment Agenda negotiations provide an opportunity for African countries to remedy these two problems, while at the same time making a positive contribution to ensuring that the development dimension of the dda is fulfilled. Trade Facilitation Facilitating trade has long been an important aspect of the international trading system. Article 5 (Freedom of Transit), article 8 (Fees and Formalities Connected with Importation and Exportation) and Article 10 (Publication and Administration of Regulations) of the General Agreement on Tariffs and Trade (gatt) deal with some of these aspects. In December 1996 wto Members agreed to examine the issue in more detail. Their work was subsequently intensified with the launching of formal negotiations in July 2004 as part of the Framework Package.14 Progress in the negotiations is not as advanced as in other areas of negotiation, despite the expectation that all negotiating groups will finish at the same time. To date, the trade facilitation negotiations have focused on assessing the various issues and ensuring that each and every aspect of the mandate is adhered to. A recent secretariat paper divides the various proposals into thirteen distinct areas.15 While a number of these can be identified as being relevant to expediting the passage of mosquito nets through customs, one simple and straightforward proposal in particular is directly relevant to this paper – the proposal to establish objective criteria to classify products. Objective criteria and a separate classification for insecticide treated-nets could help avoid the problem that arises when customs officials are uncertain about which tariff to apply, as was highlighted in the previous section. A proposal could be made through the World Customs Organisation to have a separate classification at the hs6 level, but this change would take too long to implement. The current system of classification will be revised for 2007. Given that a number of developing countries have yet to fully implement the hs2002 system, it is highly unlikely that a separate line for itns would exist globally until 2010. A number of other customs issues related to aid shipments could also be raised within the trade facilitation negotiations. Various aid shipments, such as shipments of essential medicines, are sometimes exempt from duties and other charges related to their importation. Since the trade facilitation negotiations are covering most of these shipments, countries that are highly dependent on health and medical

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aid could consider a specific initiative within the negotiations related to health products. Negotiations to facilitate trade should also be seen in a wider context. Table 4.1 highlighted the point that shipping costs within Africa are estimated to be as high as the cost of shipping products from East Asia to Africa. This handicap has serious consequences for industrial development beyond the problem of distributing mosquito nets. The available research, which is indeed a principal driver for the trade facilitation negotiations, suggests that the wto negotiations present an opportunity for developing countries, especially those in Africa, to make intra-African trade easier. Non-Agricultural Market Access Negotiations Duties on mosquito nets, regardless of their classification, fall under the non-agricultural market access negotiations (nama). The negotiations started in November 2001 and were to conclude by 1 January 2005. Even now, however, in 2007 the negotiations are barely at the mid-way point. wto members agreed in July 2004 to a Framework Package on the various parts of the negotiations. Annex b, which is the part of that package, covers nama. The annex is quite detailed and delves into a number of technical negotiation issues. For the context of this paper it is important to note that members have agreed to examine a formula for tariff reduction that reduces tariffs on a line-by-line basis.16 Such a formula, if agreed in this format, would cut every tariff by an agreed amount. Developing countries, however, are eligible as a group for something known as less than full reciprocity (lfr). This concept can be interpreted in many different ways. In general, it means that developing countries do not have to take on the same level of obligations as those taken on by developed countries. As a result – and this is still up for negotiations – developing countries could either be exempted from tariff cuts in general or exempted from specific tariff lines. Annex b also proposes a second modality by which tariffs should be cut to meet the mandate – this is a sectoral initiative that could reduce or eliminate tariffs on agreed products.17 The wording of the language is vague, indicating that members are far from agreeing on whether or not a sectoral initiative should be part of the final package and, if it should, which products should be included and how deep the cuts should be. A number of developing countries are stridently opposed to

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the concept of any type of sectoral initiative. Included in this group are some key non-ldc African countries, such as Kenya and Nigeria. They are also supported by a number of ngos, such as the Third World Network. Ostensibly, their argument is that a sectoral initiative would not be development-friendly. Such general policy advice goes against the possibility of identifying certain products or areas where liberalisation could prove to be development-friendly under any definition. As illustrated in the previous sections, African leaders themselves have recognised the development dividend resulting from reducing or waiving tariffs on mosquito nets, but they have yet to deliver on the commitment to do so. The dda negotiations provide an excellent opportunity for these leaders not only to deliver on this commitment but also to use this commitment as a contribution to, or concession in, the negotiations. Such an approach need not be confined to non-ldc African countries. African ldc countries are not expected to make concessions beyond binding their duties.18 As evidenced by the actions of Benin, Senegal, Sierra Leone, and Mali, who have opened up tariff lines with a zero duty, other African ldcs can follow suit. Implementing sectoral tariff elimination on mosquito nets is relatively straightforward, even though malaria-vulnerable countries are, for the moment, interested only in lowering the duties on mosquito nets. Two precedents exist. The first is the Information Technology Agreement (ita), which liberalises tariffs on agreed products. In this case, difficulties of product definition allow participants in the ita to agree to binding duties at zero for an hs sub-heading and to exempt specific tariff lines below that heading (Bora 2005). The current discussions on liberalising duties on environmental products provide the second example. In this case product definitions at the tariff-line level are also problematic (Bora and Teh 2005). However, as in the case of the ita, members have proposed hs sub-heading definitions with the option of exempting specific tariff lines.

implications of a sectoral initiative on mosquito nets In the context of the dda, a number of sub-Saharan African countries have already voiced their opposition to sectoral initiatives of any kind. Most of their arguments rest on the line of reasoning that can be found in the writings of prominent ngos.19 Because trade liberalisation, in

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their view, will lead to de-industrialisation, developing countries should not liberalise their tariffs. This argument is also extended to support a circumvention of the rules-based system by arguing that developing countries should also have the right to exceed their tariff bindings and that tariff reductions should not be exchanged for access opportunities in other markets. The initiative proposed in this chapter – to open a new tariff line for insecticide-treated mosquito nets and to bind the tariff of that line at zero – would run counter to the views of this group. This is not the place to debate the relative merits of the broad view on tariff liberalisation and development. Whether or not tariff liberalisation is good for development is a question that economists have been trying to answer for two hundred years.20 However, one aspect of this debate is important, namely, the infant-industry argument in the context of itns and whether or not the argument is robust enough to frustrate an itn tariffelimination initiative. From the information presented in this chapter so far, the response to this question has to be no. Technically, as illustrated in the previous sections, there is no reason why the policy prescription of protection could not apply to the mosquito net industry. The domestic capability exists in some African countries, not to mention the demand for itns. A tariff on imported nets would make them more expensive relative to domestically produced nets, thereby encouraging consumers to buy domestic nets. A similar policy could be adopted for itns bought by aid agencies. Instead of buying the least expensive nets for reasons of budget efficiency, they could purchase locally produced nets. One could envisage a situation where the entire demand for itns could be satisfied locally; however, time constraints create a problem. A fundamental aspect of the infant-industry argument is the time required to protect domestic firms from import competition and to allow them to grow and develop their capabilities. Once they achieve international competitiveness, the protection is lifted.21 Most of the arguments against this theory do not deny the importance of learning by doing, but they focus on the short-term economic losses while the protection is in place and the problem of finding suitable firms to support. To the external observer, the debate may seem intractable since two different things are being compared – the short-term losses are welfare losses, while the long-term losses are losses of employment. But presumably, a policymaker, despite being unable to compare abstract concepts such as welfare to tangible concepts such as employment, will, after taking into

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account the relevant political considerations, perform the necessary calculus to make a final decision. In the specific context of itns, however, the calculus should not be so complicated. The first section of this chapter summarised the dire economic and social costs arising from malaria. But it is widely agreed that itns can be effective in stopping and rolling back malaria. Accordingly, it is incumbent on policy-makers to try to get itns to malaria-infected population areas as quickly and as cheaply as possible. In essence, the most fundamental requirement for the infant-industry argument to work – time – is simply not available to combat malaria. The situation nakedly illustrates the trade-off between consumer interests (a malariainfected population) and domestic-producer interests. Instead of governments spending years subsidising inefficient domestic producers until they can produce the products at a world-competitive price, consumers require access to itns immediately in order to meet the mdgs. It should be noted that this claim is not particularly new. African leaders recognised the simplicity of this argument in 2000 when they signed the declaration to “reduce or waive taxes and tariffs on mosquito nets and materials.” They could just as easily have argued for those susceptible to malaria infection to be protected with African nets. Instead, in recognition of the international structure of costs, they appealed simply for an adequate supply of nets. A parallel implication of the proposed itn initiative is the contribution of the wto and the multilateral trading system. A non-trade specialist could point to the unilateral actions of a number of countries and rightly query whether or not the wto, or the dda, is actually relevant. Responding to this query requires a sense of the broader value of the multilateral trading system and its rules. In its most basic form the system is designed to deliver stability and predictability to international markets, since wto members agree to bind their tariffs at a level that should not be exceeded. These benefits are not restricted to duties applied on itns. They apply to all duties for all products. Bindings send a signal of credibility to traders and investors by indicating that the duties will not be raised beyond the bindings. Being a member of the wto allows countries to benefit from this system of bindings. Extracting the benefits, however, is not that easy. They are usually delivered through a set of reciprocal negotiations, such as the type that wto members are currently engaged in. To date, most of the sub-Saharan African countries have offered little in the way of concessions. Some actually argue that the status quo is the preferred

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Table 5.4 Average Applied and Bound Tariff Rates for 63.04.91, Selected Countries Member Argentina Australia Brazil Canada China European Community Iceland India Indonesia Japan Korea, Republic Mexico Pakistan Thailand United States

Year

Number of Tariff Lines

2001 2003 2004 2004 2004 2005 2004 2002 2002 2004 2004 2004 2002 1999 2004

0 0 0 2 4 0 2 0 0 2 0 0 0 0 0

Average Applied Average Bound Rate Rate (Percentage) (Percentage) 22.5 10 20 17 16.8 12 10 30 15 10 13 35 25 30 5.8

35 25 35 17 14 12 16.5 35 30 10 13 35 25 30 5.8

source: Applied tariff rates are sourced from the wto idb. Bound rates are taken from the wto Consolidated Tariff Schedules. note: Bound rates are final bound rates; hence, China’s applied tariff rate is higher than its bound rate, since its implementation period has yet to expire.

option, since their own tariff liberalisation would not assist development and since the liberalisation by developed countries of products for which they provide non-reciprocal market access would also affect developing countries. In this case, however, only African countries need not accomplish implementation of the Abuja declaration. In order to ensure that the most efficient producers of itns are producing the nets, all wto members should be part of the itn initiative. Table 5.4 shows the applied tariff averages for sub-heading 63.04.91 of selected non-African wto members, in order to obtain a perspective on the type of concessions that they would have to make in order to implement the initiative. Only Canada, China, Japan, and Iceland have created tariff lines, which would indicate that they probably have a specific sector that they would like to protect. The remaining countries in the table use the sub-heading on a general level. The table also shows that in some cases the values are quite high in absolute terms (India) and in some cases high relative to their average tariff levels (Canada and the ec). Interestingly enough, some of the countries that are exporters of itns have quite high tariffs. Two such examples are China and Thailand. China has four tariff lines, none of which appear to be specific to mosquito nets.

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Implementing the initiative does not appear to be difficult. One model could be to borrow from the ita example and ensure that a minimum threshold of trade is covered. This would imply that not all wto members need to adhere to the initiative: only members required to meet the threshold would be included. However, given the positive public signal associated with this health initiative, a strong imperative exists for all members to sign onto it. Malaria endemic countries in Africa would sign on, since they are predominantly the consumers of the itns, while the countries that are net exporters of itns would accede to the initiative as part of a reciprocity arrangement in the context of the negotiations. Countries that are neither exporters nor importers of the nets could sign as a show of support.

conclusions and observations The social and economic costs of malaria have been documented extensively and in recent years have galvanised the international community into rising to the challenge of controlling this disease. Numerous studies have identified several measures that could be designed to prevent malaria from spreading. One of the simplest and most practical would be to increase the access of the population in malaria-endemic areas to insecticide-treated mosquito nets. But as the African leaders recognised in the Abuja Declaration, duties on imported nets could inhibit distribution efforts aimed at ensuring that the nets reach the people with the most need. The Abuja Declaration is important in the wider debate on the role of trade policy in development. It recognises that, at least in this context, trade liberalisation is an effective tool for reaching a desirable health objective and that there is scope for achieving coherence between health and trade policies. The evidence to date, however, suggests that although the effort to reduce tariffs is under way, not all countries in sub-Saharan Africa have done so. Implementing national policies in the health or trade area, or in any policy area for that matter, is not easy. However, some of the malariavulnerable countries are members of the wto, and they are in the midst of negotiations. This chapter has argued that these countries therefore have the opportunity to leverage the wto process to implement the proposed policies. In the case of customs classifications, they can accomplish this in the trade facilitation negotiations. Not too controversial a step, one would hope, would be for malaria-endemic countries to pro-

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pose a sectoral tariff elimination in the non-agricultural market-access negotiations. This strategy would give these countries a chance to take the offensive in the negotiations and to balance this concession against other demands. In addition to the problem of liberalising tariffs, this chapter has also addressed the problem of customs clearance. Even if adequate funds are raised to purchase nets and even if the import duty on these nets is zero, an ambiguous customs classification could result in distribution delays and sometimes in the imposition of a duty. Redressing this problem does not require a great deal of effort. It also does not require a commitment from international partners. This chapter has proposed that malaria-vulnerable countries need only to open up an eight- or ten-digit tariff line in their customs nomenclature. By doing this, customs officials will be easily able to classify itns and apply the applicable duty.

notes

1 2

3 4

5

The author is in the Economic Research and Statistics Division, World Trade Organisation, Geneva, Switzerland. The opinions expressed are solely those of the author, and as such, should not be attributed to the wto Secretariat. I am grateful to my colleagues Dayong Yu, Nora Neufeld, and Jurgen Richtering for their assistance and to Nico Drager, Cham Mohammadou, and Nadim Mohr for stimulating and useful discussions on the topic. Helpful comments were also received, especially from Mark Warner, when the paper was presented at the World Health Organisation and North-South Institute workshop entitled Trade and Health: Policy Coherence for Human Development, 5–6 October 2005, McGill University, Montreal. See Basic Facts about Malaria, published by the World Health Organisation, for more information: http://www.who.int/malaria/docs/Basicfacts.pdf. The declaration states that “we resolve further ... to have, by then, halted, and begun to reverse, the spread of hiv/aids, the scourge of malaria and other diseases.” This objective has been transformed into goal 6 of the Millennium Development Goals (http://www.un.org/millenniumgoals/). Resolution a/res/55/284. If bednets are treated with insecticides, they can also kill the mosquitoes, thereby protecting a perimeter of approximately 300 metres around the bednet. The press reported widely the story of the actress Sharon Stone at the January 2005 World Economic Forum Meeting held in Davos, standing up and donat-

148

6

7

8 9

10

11

12

13

14

15 16

Trade in Health Services and Products

ing $10,000 in response to chiding from Jeffrey Sachs about the apathy of the international community in raising enough funds. Within ten minutes, $1 million was raised through similar responses (http://www.who.int/malaria/docs/ newsletter1_eng.pdf). A number of people that I have discussed this issue with have commented on a story about the mosquito nets being cut up and used for hats, wedding veils, and ornaments. See chapter 4 of the recently released undp Human Development Report. Two of the more prominent ngos that hold a similar position are Oxfam and the Third World Network. This section draws heavily on Management Sciences for Health (2004). Apparently, the most commonly used fibre is polyester. Some cotton nets are manufactured, but these are produced locally for the local markets. The market penetration of the cotton nets is fairly low. On the other hand, data on medical indicators is very good. See the country profiles contained in World Health Organization/unicef, The Africa Malaria Report 2003 (Geneva: 2003). Management Sciences for Health (2004) concludes that “Today, sub-Saharan African net manufacturers’ capacity for polyester yarn extrusion is almost nonexistent.” The import data was obtained from the wto Integrated Database. Dissemination restrictions prevent users from disclosing data below the hs six-digit level. The data reported in figure 1 is at the tariff line level. Kenya, Tanzania, and Uganda are members of the East Asian African Community eac, and hence, should have the same tariff lines for all products. The Common External Tariff Handbook of the eac specifies the line as indicated in the entry in table 3 for Tanzania. However, discussions with customs officials in one of the other two countries indicated that treated nets are imported under hs56.08, which is “other made-up nets.” Paragraph 1 of annex d reads as follows: “Negotiations shall aim to clarify and improve relevant aspects of Articles V, VIII and X of the gatt 1994 with a view to further expediting the movement, release and clearance of goods, including goods in transit.14 Negotiations shall also aim at enhancing technical assistance and support for capacity building in this area. The negotiations shall further aim at provisions for effective cooperation between customs or any other appropriate authorities on trade facilitation and customs compliance issues.” wto document tn/tf/w43 Rev.2 (15 September 2005). Paragraph 4 of annex b reads as follows: “We recognize that a formula approach is key to reducing tariffs, and reducing or eliminating tariff peaks,

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18 19

20 21

149

high tariffs, and tariff escalation. We agree that the Negotiating Group should continue its work on a non-linear formula applied on a line-by-line basis which shall take fully into account the special needs and interests of developing and least-developed country participants, including through less than full reciprocity in reduction commitments.” Paragraph 7 of annex b reads as follows: “We recognize that a sectorial tariff component, aiming at elimination or harmonization is another key element to achieving the objectives of paragraph 16 of the Doha Ministerial Declaration with regard to the reduction or elimination of tariffs, in particular on products of export interest to developing countries. We recognize that participation by all participants will be important to that effect. We therefore instruct the Negotiating Group to pursue its discussions on such a component, with a view to defining product coverage, participation, and adequate provisions of flexibility for developing-country participants.” Paragraph 8 of annex b. For example, Khor and Yen (2005) state that “Domestic industries in many developing countries are already facing problems including closure and loss of jobs due to tariff reductions. There is an additional problem of loss of government revenue. It is thus of the highest priority that the outcome of the nama negotiations does not further worsen the basis for industrial development in developing countries.” For an overview of the debate on the effectiveness of industrial policy, see Bora, Pangestu, and Lloyd (2000). Akyuz (2005) illustrates this concept using a diagram. He differentiates production by technology intensity and shows that even labour-intensive production requires a certain amount of time before the domestic firm is able to compete. However, he is silent on how much time is required.

references Akyuz, Y. 2005. “The wto Negotiations on Industrial Tariffs: What Is at Stake.” Third World Network, Mimeo. http://www.twnside.org.sg/ akyuz.htm. Bora, B. 2005. “The wto Information Technology Agreement.” Geneva: World Trade Organisation. Bora, B., M. Pangestu, and P. Lloyd. 2000. “Industrial Policy and the wto.” World Economy 23, no. 4, 543–59. Bora, B., and R. Teh. 2005. “Trade Liberalisation and Environmental Goods.” Geneva: World Trade Organisation.

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Khor, M., and G.C. Yen. 2005. “The wto Negotiations on Non-agricultural Market Access: A Development Perspective.” Third World Network. Mimeo, accessible at http://www.twnside.org.sg/title2/mkcy.htm. Larson, B., and S. Rosen. 2002. “The Retail Market for Bednets in Kenya: How Well Is It Working?” Mimeo, University of Connecticut. Malaria Consortium. 2002. “Review of the Processes and Nature of Effective Policy Change for Tax and Tariff Rationalisation on Nets, Netting and Insecticides in Ghana, Senegal, Mali, Nigeria, and Tanzania: Country Synthesis Report.” Mimeo. Management Sciences for Health. 2004. “Strategic Plan for Stimulating the Development, Manufacturing and Widespread Distribution of LongLasting Insecticidal Nets.” Mimeo, Ferney-Voltaire, France. Stewart, S., and R. Marchand. 2002. “Factors That Affect the Success and Failure of Insecticide Treated Net Programs for Malaria Control in South East Asia and Western Pacific.” Mimeo, World Health Organisation. un Millennium Project. 2005. Coming to Grips with Malaria in the New Millennium, New York: Millennium Project. World Health Organisation (who). 2002. Scaling Up Insecticide Treated Netting Programs in Africa. Geneva: World Health Organisation.

ntext h Services and Products

6 Trade in Health Services in the ASEAN Context CHA-AIM PACHANEE AND SUWIT WIBULPOLPRASERT

a history and profile of asean The Association of Southeast Asian Nations (asean) was established in 1967 in Bangkok by the five original member countries, namely, Indonesia, Malaysia, the Philippines, Singapore, and Thailand. Brunei Darussalam joined on in 1984, followed by Vietnam (1995), Laos and Myanmar (1997), and Cambodia (1999). The purposes of the association are to accelerate economic growth, social progress, and cultural development and to promote regional peace and stability. The asean region has a population of about 500 million, with a population growth rate of 1.5 percent in 2004, a total area of 4.5 million square kilometres, a combined gross domestic product of us$737 billion, and a total trade of us$720 billion.1 When asean was established, trade among the member countries was very limited. Thus, some of the earliest economiccooperation schemes of asean were aimed at addressing this situation. One scheme was the Preferential Trading Arrangement (pta) of 1977, which granted tariff preferences for trade among asean economies. The Framework Agreement on Enhancing Economic Cooperation was adopted at the Fourth asean Summit in Singapore in 1992, which included the launching of a scheme toward an asean Free Trade Area (afta). Within three years of the launching of afta, exports among asean countries grew from us$43.26 billion in 1993 to almost us$80 billion in 1996, an average yearly growth rate of 28.3 percent. The share of intra-regional trade from asean ’s total trade rose from 20 percent to almost 25 percent. In 1997, the asean leaders adopted the asean Vision 2020, which called for an asean Partnership in Dynamic Development,

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aiming at forging closer economic integration within the region. The vision statement also resolved to create a stable, prosperous, and highly competitive asean economic region in which there was a free flow of goods, services, investment, and capital, and equitable economic development and reduced poverty and socio-economic disparities.

the asean framework agreement on services The asean Framework Agreement on Services (afas) was agreed upon and signed by the asean economic ministers (aem) on 15 December 1995 during the fifth asean Summit in Bangkok, Thailand. The framework agreement aims at substantially eliminating restrictions on trade in services amongst member countries by expanding the depth and scope of liberalization beyond that undertaken by member states under the General Agreement on Trade in Services (gats), agreed to under the wto. The goal is to achieve free trade in services by the year 2020. afas adopted the structure and the approach of the gats. Seven sectors were selected for priority in negotiations: business, construction, the maritime sector, telecommunications, tourism, the financial sector, and health services. asean countries that are members of the wto also decided to extend their commitment in each service sector to the asean countries that are not wto members. afas provides the broad guidelines for asean member countries to progressively improve market access and ensure national treatment for service suppliers among asean countries in all four modes of services, which are specified as cross-border trade, consumption abroad, foreign commercial presence, and movement of natural persons. In addition, afas also provides rules for related aspects of trade such as mutual recognition and institutional mechanisms for dispute settlements, as well as other areas of cooperation in services. In fact, the liberalization of trade in services under afas is to be directed towards achieving commitments beyond member countries’ commitments under the gats; this goal is known as the gats-plus principle. Later, afas also adopted the so-called asean-minus-x model, which allows some asean countries to enter into agreements that others are still not ready to commit themselves to. Following the signing of afas in 1995, officials of the asean countries immediately started negotiations to achieve the objective of afas of creating freer trade in services within the region. To date, asean has concluded five packages of services commitments, through four rounds

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Table 6.1 Progress of Negotiations under afas Round

Period

1

1996–98 1996–98 1999–2001 2002–4 2005–6

2 3 4

Package Signed First package Second package Third package Fourth package Fifth package (health care included)

Date of Signing 15 December 1997 16 December 1998 31 December 2001 3 September 2004 8 December 2006

of negotiations (table 6.1).2 No part of the package signed in the first three rounds includes a commitment on trade in health services. The fourth round of negotiations, begun in January 2005, is expected to include a gats-plus commitment on the health care sector. Initial offers for commitments on health care services have been formulated by six member countries since February 2006. During the third round, the asean Coordinating Committee on Services established a new sectoral working group in health care services, in response to the decision of the asean leaders to include health care as one of the eleven priorities for the integration of asean. Members of the Health Sectoral Working Group are from the ministries of health and councils of health professionals of the member countries. This working group discusses and agrees on the health service sector commitments and mutual-recognition arrangements (mras). The target of the mras is to achieve the free movement of professional, skilled workers by 2008. The establishment of professional exchange programs will also facilitate professional movements.3 For the fourth round, there are five priority service sectors to be negotiated, namely medical and dental services, health-related and social services, tourism and travel-related services, computer and related services, and telecommunication services. The objective is to achieve free trade in services by 2020; thus, member countries need to progressively liberalise the various service sectors. An assessment of the progress of regional services negotiations after ten years of afas found an increase in commitments from 795 subsectors in the gats to 1,255 subsectors in the afas, or a 58 percent increase in the coverage.4 The depth of liberalization (as measured by the number of commitments with no limitations or only some limitations) also increased from 1,915 under the gats to 2,777 under the afas, an increase of 45 percent. However, the number of subsectors and the modes of supply that are still unbound, i.e., in which there are com-

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Table 6.2 Comparison of Sectoral Coverage and Depth of Commitment in the gats and afas Depth of Commitment Sectoral Coverage

Liberalisation (None + Partial)

GATS + Percentage AFAS GATS

Brunei Cambodia Indonesia Lao pdr Malaysia Myanmar Philippines Singapore Thailand Vietnam

26 146 61 – 122 36 36 102 127 139

88 177 95 90 154 108 109 111 172 151

238 21 56 – 26 200 203 9 35 9

Total

795

1255

58

1–4

GATS + Percentage AFAS

Increase GATS

Country

Unbound

1–4

Increase

63 343 119 – 275 72 126 288 334 295

154 415 276 – 314 216 313 310 498 281

144 21 132 – 14 200 148 8 49 –5

1915

2777

45

GATS + Percentage AFAS

1–4

Increase

41 241 125 – 213 72 18 120 174 261

198 293 104 – 302 216 123 134 190 323

383 22 –17 – 42 200 583 12 9 24

1265

1883

49

GATS

source: V.T. Thanh and P. Bartlett (2006); see note 4. note: Lao pdr is not a member of the wto.

mitments for liberalization, increased from 1,265 in the gats to 1,883 in the afas (table 6.2). In summary, after ten years of negotiations, there has been disappointing progress in the liberalization of trade in services under the afas.

motivations for the liberalization of trade in health services among asean countries Generally, asean countries can be divided into two groups: countries that export health services and countries that import health services. Some countries in asean, particularly Singapore, Thailand, and Malaysia, have been aggressively exporting their health care services. The competitive advantage of each country, as well as of India and Hong Kong, is shown in table 6.3.5 The number of foreign patients in these countries has been increasing, particularly in Thailand, where the number increased from 550,161 in 2001 to 1,103,095 in 2004, an average annual increase of almost 30 percent. The main countries of origin of these patients were Japan, the United States, the United Kingdom and countries in the Middle East.

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Table 6.3 Competitive Advantage of Asian Health Facilities in Health Tourism Health Care Component Service and hospitality High-technology hardware hr quality Internationally accredited hospitals Pre-emptive moves Synergy/strategic partners Accessibility/market channels Reasonable costs

Thailand

Singapore

India

Malaysia Hong Kong

***** ** **** **

** **** **** **

* ** ** –

* * ** *

** ** *** *

** * ** ****

*** ** *** *

* * * ****

* * ** ***

* * ** *

source: Modified from Private Hospital Association and Business Council of Thailand (2004) note: * is the score of competitive advantage. The number of * indicates the level of competitive advantage in each area, hence the greater the number of *, the higher competitive advantage, i.e., * = very low, *** = medium, **** = high, and ***** = very high.

Although the Middle East’s share of the patients is still small, it is increasing rapidly. Recently, 250,000 patients per year visited Singapore, and almost half of them were from the Middle East. The number of foreign patients in Singapore is increasing at an average rate of more than 20 percent per year. Table 6.4 shows the number of foreign patients entering Thailand during 2001–4.6 It is estimated that 60 percent of these foreign patients were expatriates who worked in the country or the nearby countries where health services were inadequate. Ten percent of them were tourists who were sick and needed health care. Those who travelled to Thailand specifically for health services accounted for about 30 percent of all foreign patients, but they are becoming increasingly more common. In addition, investors from Singapore, Malaysia, and India move into other asean countries to invest in health care. For example, investors from Thailand and Singapore have established health care services in Indonesia, Cambodia, and Vietnam. Currently, one of the biggest private hospital chains in Thailand, Bangkok General Hospital, is building a hundred-bed hospital in Siem Reap, Cambodia. The chain has also established twelve branches in South and Southeast Asian countries. In 2003, Bumrungrad Hospital, another big private hospital chain, signed two five-year contracts with hospitals in Myanmar and Bangladesh for hospital management services. It is also beginning to invest in building private hospitals in the Dubai/uae and China. This aggressive export of and foreign direct investment in health care services requires the movement of health professionals, both internally and externally. It has also

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Table 6.4 Number of Foreign Patients Entering Thailand, by Country or Region, 2001–4

Country / Region

2001

2002

2003

2004

Percentage of change 2001–2

Percentage of change 2002–3

Percentage of change 2003–4

Japan usa uk Taiwan Germany asean India Middle East Bangladesh France Australia Scandinavia South Korea Canada Eastern Europe Others

118,170 49,253 36,778 26,898 19,057 n.a. 20,310 n.a. 14,547 15,102 14,265 n.a. 14,419 n.a. n.a.

131,684 58,402 41,599 27,438 18,923 n.a. 23,752 20,004 23,803 17,679 16,479 n.a. 14,877 n.a. n.a.

162,909 85,292 74,856 46,624 37,055 36,708 35,528 34,704 34,051 25,582 24,228 19,851 19,588 12,909 8,664

247,238 118,771 95,941 57,051 40,180 93,516 n.a. 71,051 n.a. 32,409 35,092 n.a. n.a. n.a. n.a.

11.44 18.58 13.11 2.01 –0.7 n.a. 17 n.a. 63.63 17.06 15.52 n.a. 3.18 n.a. n.a.

28.81 43.88 79.95 69.92 95.62 n.a. 49.56 73.49 43.08 44.70 47.02 n.a. 31.67 n.a. n.a.

51.8 39.3 28.2 22.4 8.4 154.8 n.a. 104.7 n.a. 26.7 44.8 n.a. n.a. n.a. n.a.

320,367

234,460

315,018

204,219

26.82

34.86

–35.2

Total

550,161

630,000

973,532 1,103,095

14.51

54.52

13.3

source: Department of Export Promotion, Ministry of Commerce (2005). note: n.a. = not available.

resulted in a shortage of health professionals for the local people of the countries involved.7 These countries would like to rapidly liberalize the health services trade in all modes, except mode 4 (the movement of natural persons or the migration of health care personnel), in order to be able to invest freely in private hospitals in member countries. They also want patients to move freely for health services without needing a visa. In addition, these countries may also want to import good quality health professionals from asean member countries into their own countries to serve the increasing number of foreign patients, as well as into the countries where they have invested in private hospitals. However, their professional councils may not support such approach regarding mode 4. In addition to countries exporting health services under mode 2 (consumption abroad or movement of patients) and mode 3 (commercial presence of foreign investment in health services), some countries have trained more health professionals than they can absorb, and have engaged, as a result, in an aggressive export strategy for health profes-

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Table 6.5 Interests of asean Countries in the Different Modes of Health Service Trade Mode

Export

1 Cross-border trade 2 Consumption abroad (movement of patients) 3 Commercial presence (foreign investment)

– Singapore, Malaysia, Thailand, Philippines Singapore, Malaysia, Thailand

4 Movement of natural persons (migration of health care personnel)

Philippines, Indonesia

Import Singapore Indonesia, Cambodia, Laos, Brunei, Myanmar Thailand, Indonesia, Philippines, Vietnam, Laos, Cambodia Singapore, Brunei, Thailand

sionals. For example, the Philippines, which has 30 medical schools and 350 nursing colleges, mostly private, producing 2,000 medical doctors and 10,000 nurses per year,8 has been the most successful country in exporting health professionals, because of their English proficiency. The remittances from health personnel working in other countries are one of the main sources of income of the Philippines. Consequently, many nurses from the Philippines are working in the United Kingdom, the United States, and other countries. In recent years, thousands of doctors in the Philippines attended nursing schools in order to obtain a degree that would enable them to easily find a job in other countries. The Philippines Department of Health has the mandate to facilitate and support the outflow of health personnel. Indonesia is producing around 18,000–20,000 nurses per year, but the country can only absorb less than 6,000 per year, that is, 3,000 in the government and public sectors and 2,500–3,000 in the private sector. The government fully supports the export of health professionals, and the Ministry of Health has established the Center for Empowering Professionals and Human Resources for Health for Foreign Countries to facilitate nursing export. Nevertheless, because of language limitations, the export of health professionals from Indonesia is not as successful as it has been for the Philippines.9

the current situation regarding the liberalization of trade in health services under afas The health care sector in the asean countries provides a picture of contrasts. Some countries can provide world-class health care services and

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facilities, while others are simply trying to strengthen their basic health care systems.10 In November 2000, asean entered into the e-asean Framework Agreement to facilitate the establishment of the asean Information Infrastructure and promote the growth of electronic commerce in the region. Despite the revolution in information and communications technologies, estimates indicate that in 1999, the combined individual Internet users in five asean countries (Indonesia, Malaysia, the Philippines, Thailand, and Singapore) were only 3.74 million, or 1 percent of their population. In order to sustain economic growth and remain competitive in the global marketplace, the asean leaders have agreed to promote collective efforts to complement national development strategies in this sector. The e-asean initiative establishes a region-wide approach to making comprehensive use of information and communications technologies in business, society, and government. During the tenth asean Summit on 29–30 November 2004, in Vientiane, Laos, e-asean and health care were listed as two of the priority sectors under the asean Framework Agreement for the Integration of Priority Sectors. This agreement recognised the need for accelerated service liberalization by 2010 and mutual recognition arrangements (mras) by 1 January 2008. The Roadmap for Integration of the Healthcare Sector was also approved at this meeting. On 16 January 2004 Singapore hosted a meeting on the health care industry where it was agreed that by 2005 patients would be allowed to travel for health care services without requesting a visa. However, given that not all member countries would have been ready at the same time, the negotiations were to be started using the asean-minus-x formula, which, as mentioned, allows some asean countries to enter into agreements that others are still not ready to commit themselves to. It was also agreed that foreign investors could hold a 70 percent share in health service businesses, including drug stores, by the end of 2008. However, several countries did not agree with the time frame but proposed to wait instead for the negotiations under the Coordinating Committee on Services (ccs). The establishment of a one-stop centre in each country by 2008 to provide assistance for investment in health service businesses was also proposed. The members also supported more capacity building for weaker asean countries (see table 6.5, on the involvement of asean countries in service trade). The members of the Healthcare Sectoral Working Group agreed that they would not target modes 1 and 2 for liberalization in their discussions, but that mode 3, commercial presence, and mode 4, movement of

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natural persons, should be liberalized progressively to achieve free, or at least freer, flow of trade in services by 2010. The participants also agreed to focus first on private hospital services as one of the subsectors to be liberalized further in the current round of negotiations, since it was subject to many restrictions. It can be concluded that after ten years of afas and many rounds of negotiations on the health services trade, there has still been no significant progress in the liberalization of trade in health services. Only one mutual-recognition arrangement on nursing services has been concluded, and even then without real and concrete mutual recognition (see the next section). No commitments beyond those in the gats have yet been agreed to. Interviews with participants in the Healthcare Sectoral Working Group found that a majority of the working group members have insufficient knowledge regarding international trade in health services.11 There is only a limited understanding of market access and national treatment under all four modes of trade in several sub-sectors, including a limited understanding of the implications of liberalizing health care services. Despite the high priority accorded to afas by the asean leaders and despite the sensitivity of the health sector, there has been surprisingly little analysis of the precise consequences of various potential trade agreements for the member countries. This lacuna can also be observed in the current trade negotiations at the wto. The absence of this type of analysis raises the question of what is driving the negotiations for trade liberalization, other than a mélange of prevailing orthodoxies and the momentum of special interest groups.12 The sensitivity of the health sector and an insufficient understanding of potential agreements has led to a protective stance among all negotiators. It is thus to be expected that progress on the liberalization of health services trade will be slow and the target of the free flow of health professionals in 2008 will not be easily achieved.

the movement of health care personnel within asean through mutual-recognition arrangements Within Asia, and especially East Asia, the movement of skilled and professional workers peaked in the 1990s and the early twenty-first century, owing to increased demands for the highly skilled in the more developed countries, such as in Japan, South Korea, Taiwan, Singapore,

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and Malaysia. Both an increased demand for high-quality service at home and more intensive trade in goods and internationally traded services have contributed to this movement. The imbalance between the demand for and the supply of services has been driven partly by the aging of populations in the more developed countries.13 The first systematic attempt to deal with temporary-migration issues in asean came as part of the negotiations on the services trade through afas. The principle of mutual recognition was envisioned, initially in the eu, to facilitate the implementation of regional liberalization and harmonization as an alternative to the complexities and diversity of national laws.14 Mutual recognition has become a crucial instrument for enhancing free trade at the regional or the international level, and it is now pursued by various parties at regional, bilateral, and plurilateral levels. The asean Framework Agreement on Services encourages members to enter into agreements or arrangements to recognize education or experience obtained, requirements met, or licenses of certification granted in another asean country, the country of residence of the service providers (see box 6.1). The draft mutual-recognition arrangement (mra) for nursing services within asean was approved at the tenth meeting of the Healthcare Services Sectoral Working Group and signed on 8 December 2006;15 a draft mra on medical practitioners had been proposed at the sixth meeting and had been considered since then. However, careful analysis of the most recent draft of the mras found that these mutual- recognition arrangements do not really facilitate the movements of health professionals. Doctors and nurses from the countries of origin still have to comply with the requirements of the domestic laws and regulations of the host countries. Moreover, there are additional requirements that may impede mobility, such as the requirement of at least three years working experience in the country of origin for the mra on nursing services, even though there is no such requirement in the current nursing service regulations of any countries in asean. This mra, if applied by member countries, will only facilitate the movement of experienced nurses. There are several issues affecting the mra on nursing services in asean, such as education standards and programs, the scope of nursing practice, the level of entry into a nursing program, the level of standardized nursing definitions, continuing competence, the regulatory system and licensing for practice, and language barriers and cultural sensitivities. Personnel involved in the negotiation of mras for health professionals are from the professional councils of each country, or they are repre-

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Box 6.1 ARTICLE V : MUTUAL RECOGNITION, ASEAN FRAMEWORK AGREEMENT ON SERVICES

1 Each Member State may recognise the education or experience obtained, requirements met, or licenses or certifications granted in another Member State, for the purpose of licensing or certification of service suppliers. Such recognition may be based upon an agreement or arrangement with the Member State concerned or may be accorded autonomously. 2 Nothing in paragraph 1 shall be so construed as to require any Member State to accept or to enter into such mutual recognition agreements or arrangements. These agreements or arrangements are concluded for Member States only. In the event a Member State wishes to join such agreements or arrangements, it should be given equal opportunity to do at any time. sentatives of the ministries of health of the countries where professional councils do not exist. The representatives from the professional councils of most countries tend to be conservative regarding mras, owing to their concerns regarding cross-national differences in the quality of education and professional standards.16 If future mras are to be established in the health sector in asean, as they have been in the European Union, the countries in asean will have to start standardizing and harmonizing their systems of professional health education and their licensing standards. Knowledge management, knowledge sharing, and capacity building, including extensive upgrading of educational institutions in many countries, have to be accomplished. Unless these factors are taken into account and substantively improved, the mras among asean countries will only be pieces of paper. Those countries that may go with the asean-minus-x formula, including Singapore, Thailand, Malaysia, and Brunei, also have to harmonize and standardize their systems before real mras can be effectively implemented. Because of language limitations and differences in income, the mras for health professionals, particularly the mras for nursing services, may not benefit some countries, such as the Philippines, that export nurses to other countries. The nurses from the Philippines will continue to travel to the United States or to European countries, rather than working within asean countries. Furthermore, Malaysia and Myanmar

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already have a memorandum of understanding between their governments that allows nurses from Myanmar to work in Malaysia.

the possible impacts of the liberalization of trade in health-related services under afas The liberalization of trade-in health-related services under afas will generate both positive and negative impacts on the health sector.17 However, so far there has been little analysis to inform policy-makers and negotiators about these possible impacts. Cross-border trade (mode 1) may create internal brain drains for some specific medical specialties, like radiology. Sending radiological images from one country to be read by radiologists in another country is now possible through the efficient telecommunication links. The consumption of health services abroad (mode 2) can bring in revenue from foreign patients, but it can also result in a dual-market structure and a poorer distribution of health resources. An inflow of foreign patients into private hospitals can attract doctors and nurses from public rural hospitals to private urban hospitals, thus widening the salary gap and the internal brain drain. This has already happened in Thailand. Although a foreign commercial presence (mode 3) can increase the supply of health services within the country and investment in advanced health technology in the private sector, it can lead to a tiered health care system and an increasing inequality of services between urban and rural hospitals. Careless liberalization may result in a situation where foreign investments bring in foreign providers and all the profits are sent back to the countries of origin, with minimal benefits to the host countries. While the migration of health care personnel (mode 4) may create opportunities for developing countries to increase remittances from abroad, the effect of a brain drain may seriously constrain the development of the national health care system. The trade in health services will change the provider-patient relationship from one of a patronclient relationship to a contractual relationship, which will foster mistrust and an increase in medical litigation, as has happened, for instance, in Thailand, where the rate of medical malpractice litigations increases constantly.18 The liberalization of trade in services under afas will continue in order to establish the asean Economic Community (aec) before 2020, within which there would be a free flow of goods and services. For

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health care services, mode 1 (cross-border trade) will not progress in the near future, since there is no real capacity or demand for it among asean countries. For mode 2 (the movement of patients), the visa requirements, which have been abolished for citizens of most asean countries to allow a limited period of stay of seven days, will be lengthened to facilitate longer stays. For mode 3, an agreement to allow for up to 70 percent foreign direct investment from member countries has already been established in some countries and will extend to others in the near future according to the 2008 target. Mode 4 (the migration of health care personnel) will be the most difficult area. Although discussions will continue in this area, the mras will move slowly as member countries await the gradual harmonization and standardization of education and licensing procedures. Even when the mras are put in place, language will still create an important barrier.

recommendations For the sustainable success of the liberalization of trade in health services among asean countries, the following points are recommended. Strengthened national public health care systems. There is an urgent need to strengthen national health policies towards the goal of health equity and universal health insurance coverage, in order to provide universal access to essential health services, particularly for the poor and the underprivileged. Such policies must be formulated with the serious implementation of sustainable health care systems for local people as the overriding goal. Thus, any negative impact from trade in health services on access to essential care for local people must be met with a prompt reaction. The shortage of doctors and health personnel in the rural areas in Thailand provides a good example. Financial incentives, as well as non-financial incentives – for instance, compulsory public service – and better opportunities for career development have been implemented in order to retain medical doctors in the public sector, particularly in the rural areas.19 Massive increases in the education of medical doctors, to compensate for their loss through international trade, have also been implemented. The target is the additional supply of 10,000 medical graduates in the fifteen years starting from 2005. In February 2006, the cabinet of Thailand approved an additional annual increase of 750 medical students. They will be trained under a specific

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curriculum and recruitment processes to ensure that the graduates will be able to work happily in their home provinces. Capacity building for research into and monitoring of the possible implications of international trade agreements for health services. The appropriate mechanisms should be created to link researchers closely with the negotiators and policy-makers and with the public. Moreover, capacity building for negotiation skills should also be strengthened. Policy coherence among concerned agencies should be developed through wide-ranging consultations about the negotiations. Representatives should also be trained to develop their knowledge in the area and their negotiation skills. The asean secretariat responsible for trade in services should provide information on steps to be taken into consideration before making a commitment under the afas. The paper “Ten Steps to Consider before Making Commitments in Health Services under the gats” provides a good example.20 Such an approach will enable countries to assess positive and negative consequences from their commitments and from liberalisation. The asean secretariat should have the responsibility to support member countries in this kind of research, in order to promote evidence-based decision making in the negotiations. Capacity building should also include sharing of knowledge and experiences, particularly with other regional trade agreements on health services, such as are found in the European Community and the Caricom.

notes 1 asean Secretariat, ASEAN Statistical Year Book 2004 (Jakarta, Indonesia: asean Secretariat 2004). http://www.aseansec.org/syb2004.htm. 2 asean Secretariat: http://www.aseansec.org/19087.htm. 3 Y. Chalamwong and P. Tansaewee, “Movement of Health Care and Information Technology Professionals in Thailand: Impact Implications of afas,” TDRI Quarterly Review 20, no. 2 (2005). 4 V.T. Thanh and P. Bartlett, Ten Years of ASEAN Framework Agreement on Services (AFAS): An Assessment (2006). http://www.aadcp-repsf.org/ 50–004-FinalReport.pdf. This report is a publication of the Regional Economic Policy Support Facility (repsf) under the asean-Australia Development Cooperation Program (aadcp), the asean Secretariat, Jakarta, Indone-

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6

7

8

9

10

11

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sia. All documents produced by this program are accessible online at http://www.aadcp-repsf.org/publications.html. Private Hospital Association and Business Council of Thailand, Competitive Advantage of Private Health Facilities in Southeast Asia (2004). From a presentation jointly made by the Thai Chamber of Commerce and Board of Trade of Thailand, and the Private Hospital Association, Thailand. Department of Export Promotion, Thailand, Number of Foreign Patients Entering Thailand by Country, 2001–2004 (Ministry of Commerce 2005). These figures are collected by the Department of Export Promotion, Ministry of Commerce, Thailand, and we retrieved them through a formal communication between officials from the Ministry of Public Health and the Ministry of Commerce. C. Pachanee and S. Wibulpolprasert, “Incoherent Policies on Universal Coverage of Health Insurance and Promotion of International Trade in Health Services in Thailand,” Health Policy and Planning, 21 (2006): 310–18; C. Manning and P. Bhatnagar, Liberalising and Facilitating the Movement of Individual Service Providers under AFAS: Implications for Labour and Immigration Policies and Procedures in ASEAN. (Canberra: The Australian National University 2004). K. Ronquillo and F.R.N. Elegado-Lorenzo, “Human Resources for Health Migration in the Philippines: A Case Study and Policy Directions,” Philippines country paper presented at the workshop Asian Action Learning Network on Human Resources for Health, 3–5 August 2005, Bangkok, Thailand. A. Suwandono, Achadi A. Muharso, and K. Aryastami, “Human Resources for Health for Foreign Countries: A Case of Nurse ‘Surplus’ in Indonesia,” country paper presented at the workshop Asian Action Learning Network on Human Resources for Health, 3–5 August 2005, Bangkok, Thailand. asean-anu Migration Research Team, “Movement of Workers in asean: Health Care and it Sectors” Regional Economic Policy Support Facility, June 2005. http://www/aadcp-repsf.org/40-00-FinalMainReport.pdf. This article was published by Regional Economic Policy Support Facility (repsf) under the asean-Australia Development Cooperation Program (aadcp), the asean Secretariat, Indonesia. All of documents produced by this program are accessible online at http://www.aadcp-repsf.org/publications/html. Personal communication with Dr Thiri Tun Myint, Ministry of Health, Myanmar; personal communication with Ms Net Ny, Bureau of asean Affairs, Ministry of Health, Cambodia; personal communication with Dr Orasa Kovindha, Ministry of Public Health, Thailand; personal communication with Dr Rodel G. Nodora, Department of Health, Philippines.

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12 J. Stiglitz and A. Charlton, Fair Trade for All: How Trade Can Promote Development (Oxford: Oxford University Press) 2005. 13 Y. Chalamwong and P. Tansaewee, “Movement of Health Care and Information Technology Professionals in Thailand: Impact Implications of afas,” TDRI Quarterly Review 20, no. 2 (2005). 14 L. Thanadsillapakul, “Mutual recognition under afas.” CEPMLP Internet Journal (2000): 6–16b. 15 The mra for nursing services was signed on 8 December 2006 by the asean Economic Ministers during the Twelfth asean Summit held in Cebu, the Philippines (http://www.aseansec.org/19210.htm). 16 Personal communication with Dr Tassana Boontong, president of Nursing Council of Thailand. 17 S. Wibulpolprasert, C. Pachanee, S. Pitayarangsarit, and P. Hempisut, “International Service Trade and Its Implications for Human Resources for Health: A Case Study of Thailand,” Human Resources for Health (29 June 2004): 2, 10. http://www.human-resources-health.com/content/2/1/10. 18 Medical Council of Thailand, “Rate of Medical Malpractice in Thailand Filed at the Medical Council.” Nonthaburi: Medical Council of Thailand 2005, unpublished paper. 19 T. Noree, H. Chokechaichan, and V. Mongkolporn, “Abundant for the Few, Shortage for the Majority: The Inequitable Distribution of Doctors in Thailand,” Thailand country paper presented at the workshop Asian Action Learning Network on Human Resources for Health, 3–5 August 2005 20 J. Nielson, “Ten Steps to Consider before Making Commitments in Health Services under the gats,” in C. Blouin, N. Drager, and R. Smith, eds. Trade in Health Services and the GATS: Current Issues and Debates. (Washington, dc: World Bank 2006).

nants Conditions, and Health

P A RT T H R E E

Social Determinants of Health and Trade

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7 The Effect of Trade on Labour Conditions and Health ALISON EARLE, ANNA SHEA, AND JODY HEYMANN

introduction Economic globalization is typically understood as the increasing flow of capital, labour, and goods across borders and the liberalization of trade between nations worldwide. Trade agreements that have emerged over the last decade or so include detailed protections for capital, while the so-called side agreements on labour and environmental impacts have struggled to get on the agenda. What is the current impact of trade on labour? If current trade does have an impact on labour conditions, what is the impact on health and development of trade liberalization? We do not have good answers to these questions, because insufficient monitoring of labour conditions and how they are changing in the midst of marked changes in trade policies is being done. What we do know is that labour conditions do matter; in fact their impact on health is well documented and occurs on multiple levels. We begin in the first section of this chapter by reviewing some of the many examples of evidence on the link between working conditions and health. Given this centrality of labour conditions to health, we next examine what we know about changes in global labour conditions in an era of trade liberalization. Next we review a range of initiatives to monitor and improve labour standards globally. We conclude with recommendations for promoting a positive impact of trade on health.

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labour conditions and the health of employees, families, and communities The research evidence shows that labour conditions play a critical role in determining the health of employees, families, and communities. Labour conditions influence health in these three spheres, but in different ways – by how work is structured, by the physical environment at the work site, and by the social and policy environment at work, among others. As a comprehensive review of research on the association between working conditions and health is beyond the scope of this chapter, we will cover only some of the many examples available. Many textbooks have been devoted to exploring the evidence on the many ways that working conditions influence the health of employees.1 There is a long history of documenting the impact of environmental exposures on personal health covering a wide range of outcomes, beginning with Hippocrates’ writings about the illnesses suffered by metallurgists and clothmakers in ancient Greece more than two millennia ago.2 Research continues to document the significant impact of physical and chemical exposure on workers’ health.3 From noise exposure to agricultural pesticides, physical and chemical hazards have been shown to have serious health consequences.4 Beyond physical, chemical, and biologic exposures, the more recently researched are the physical- and mental-health impacts of the psychosocial work environment. Decision-making authority and intellectual discretion have been shown repeatedly to be aspects of the psychosocial work environment that are linked to good health status.5 Other critical factors are workplace stress and job strain. In a range of studies, job strain has been associated with coronary heart disease outcomes6 and a number of mental and physical health outcomes from cancer to problematic pregnancy outcomes, and periodontal disease.7 Similarly, high levels of workplace stress have been associated with an increased risk of cardiovascular disease, depression, and other mental health conditions, physical injuries at work, high blood pressure, and risky health practices such as smoking and drinking.8 Moreover, it is rare that the links between work and health operate solely on the level of the individual employee. There are many ways that working conditions can affect the health and welfare of employees’ families, though this second level of effects does not often receive sufficient attention. Working conditions affect family income, socioeconomic status, and the physical and mental health of household heads,

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among many other features, each of which affect family health. Here we provide examples of the studies demonstrating these effects. At each phase of the life course, human development is affected by the working conditions of families. Infant health is one area in which there is a vast amount of research on the impact of parental labour conditions. One of the key factors influencing child mortality and morbidity is maternal breast-feeding. Breast-feeding has been shown to lower infant mortality between one-and-a-half- and five-fold in industrialized and developing countries.9 Infants who are breast-fed have substantially lower rates of gastrointestinal infections,10 respiratory infections,11 meningitis,12 and other infections.13 Research on developed and developing nations around the globe has demonstrated the importance of the length of guaranteed parental leave, the availability of breastfeeding breaks, and the proximity of child care to workplaces for increasing the likelihood that working mothers are able to breastfeed.14 Working conditions are also important determinants of infants’ emotional development. Paid parental leave facilitates parents’ ability to support this development. Newborns require intensive care at a level that few child care centres are equipped to provide. Moreover, there is extensive evidence showing that the newborn period is a critical time for the development of attachment and emotional bonds between parents and their infant children, which critically affect children’s later development.15 But working conditions also affect children beyond infancy. Paid leave and flexibility can influence employees’ availability to care for sick children. Studies have shown that sick children have shorter recovery periods, better vital signs, and fewer symptoms when their parents participate in their care. The presence of parents has been shown to reduce hospital stays by 31 percent.16 When parents are involved in children’s care, children recover more rapidly from outpatient procedures as well. Research has shown that parents play important roles in the care of children with chronic as well as acute conditions. Parents who receive paid leave are more than five times as likely to be able to care for sick children, even after taking into account demographic differences. Paid leave has also been shown to affect parents’ ability to ensure their children’s safety and reduce the risk of accidents and injuries,17 as well as to ensure that preventive health needs are met; for example, to ensure that children receive a full complement of vaccinations.18

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Having paid leave from work for family illness needs can also enable workers to be available to provide support to their older family members, which has been shown to have important positive impacts on family members’ health. Research has shown that adults have better health outcomes when they receive support from family members. An extensive body of research demonstrates that elderly individuals live longer when they have higher levels of social supports from friends and family.19 Social supports have also been linked with lower mortality rates and reduced severity of coronary disease,20 higher survival rates from myocardial infarction,21 and progressive improvements in the functional status of stroke victims.22 Studies also indicate that family supports can improve mental health outcomes.23 That the impact of working conditions is multi-faceted is demonstrated not only by their impact on families but also by their impact on social structures and conditions. Not only do working conditions have a direct impact on communities and populations; they also have an indirect impact, most commonly on gender and income inequalities, which themselves influence health outcomes. Here we review examples of the vast evidence on these two indirect impacts to give a sense of the importance of this third level of impact. Research on the experiences of Latin America and the Caribbean over the last two decades provides a good example of the link between labour conditions, gender inequality, and health. Women have joined the paid labour force in Latin America and the Caribbean in increasing numbers over the last few decades. The health effects have been both positive (higher income, increased self-esteem, more access to social networks) and negative (relative to men, women face more limited job opportunities, have lower wages, and face generally poorer labour conditions). As a result, they now face increased risk of physical injuries on the job, exposure to harmful chemicals, respiratory disease, reproductive problems, and the emotional stress of sexual harassment.24 Research shows that working conditions have had an equally significant effect on income inequalities. For example, researchers used crossnational data to examine how employment and the structure of wages affect poverty and income inequality at the societal level, which in turn significantly undermine social health.25 The increasing inequalities across and within countries have had notable consequences for health. In sum, the evidence – and only some of the many examples have been presented here – is overwhelming. The link between working conditions and health is strong. Working conditions can affect individuals, families,

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and whole communities. Since labour conditions are strongly connected to health outcomes, policies that influence labour conditions – such as trade policies that affect where goods are produced and the conditions in which goods are produced – have the potential to improve or worsen health outcomes. The potential ramifications of trade liberalization have led many researchers to examine how conditions have changed during the period of globalizing economies and the extent of a link with trade.

does trade policy affect global labour conditions? In this section, we review trends in a number of labour conditions, asking whether they have improved or gotten worse during the era of globalization, and we review research on whether trade helped improve labour conditions or made them worse. Wage Differentials A core indicator of working conditions is the financial reimbursement one receives whether as a salary or wage or in-kind payments. Much research both at the individual and the international level demonstrates the strong relationship between higher income and better health.26 Trends in income are often calculated using wage differentials because trends in real wages measured as changes in average wage growth mask the circumstances of wage earners at different parts of the spectrum.27 The wage differential, also referred to as wage inequality or wage dispersion, is typically defined as the ratio of wage earners in the ninetieth and tenth percentiles of a log wage distribution. While there are no global trends in wage differentials, the evidence base suggests there are common patterns in wage differentials by region and by income. Over the period of the 1980s and 1990s, wage differentials increased in countries in four regions: in the Americas in the United States and Latin American countries such as Argentina, Brazil, Colombia, and Mexico; in Central and Eastern Europe in the Czech Republic, Slovakia, Romania, and Russia; in Oceania in Australia and New Zealand; and in Europe in the United Kingdom.28 In France and Germany and in Japan, Korea, and Taiwan wage differentials remained stable or decreased.29 The overall trend is for rising inequalities, with some exceptions. In a small number of cases, the magnitude of the increases and decreases over time was small. For example, while wage differentials in Hungary

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increased from roughly 2.6 in the mid-1980s to upwards of 5.0 by 2000, the increases in Australia and Sweden and decreases in France and Finland were between 0.1 and 0.3 (i.e., the ratio of the wage at the ninetieth percentile to the wage at the tenth percentile changed by only a factor of 0.3).30 While cross-national studies that examine wage changes in response to trade policy are not available, single-country studies of nations that have recently changed trade policy can provide insight into the extent and nature of the impact of trade on wages inequalities, and the impact of increased trade appears to be an increase in wage inequalities of a substantial degree. Because trade policies and agreements typically apply to the traded sectors of the economy, these sectors in theory should be impacted to a greater degree than other sectors. Inequalities could increase if either wages at the bottom of the spectrum in export sectors fell and/or if wages at the top rose higher. Lowering of wages at the low end of the wage scale could result from one of the fundamental aspects of globalization: increased competition among lower-wage countries. This competition can lead to lower wages for poor workers not only in high- and middle-income nations but also in moderately low-income nations in order to compete with wages in the lowest-income nations. In addition to the lowering of wages at the bottom level, an increase in wages at the top levels could arise. When production moves from foreign, developed nations to developing countries such as Mexico, an increased demand for skilled labour will result. Changes in relative prices resulting from tariff reductions could raise the relative wages for whitecollar workers in predominantly low-skilled, labour-intensive industries.31 Finally, with foreign ownership, there may be a tendency to make work conditions more parallel to conditions in the home country, where wages and skill premiums are higher, resulting in increased wage differentials. In research that is consistent with this theory, Aitken, Harrison, and Lipsey found that, accounting for plant, industry, and regional characteristics, skilled workers in foreign-owned manufacturing plants are paid 21.5 percent more than comparable workers in domestically owned plants and that unskilled workers are paid 3.3 percent more.32 Because tariff reductions are often focused on industries employing a high proportion of less skilled workers who on average earn lower wages and may be in less stable jobs than skilled workers, accurately identifying the specific impact of trade liberalization on wages or hours or job security is complex. Nonetheless, it is worth noting the mounting

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evidence to support the existence of such an impact. The following examples from Colombia, Brazil, Argentina, and Mexico show that, in sum, trade liberalization is associated with increasing wage differentials, fuelled by increasing returns to education and modest or stagnant wage growth among low-skilled workers. Researchers found increases in the wage differential in Colombia between 1990 and 1998, a period when tariff reductions were introduced.33 Similar findings came out of Brazil, where researchers found that between 1981 and 1999 real hourly wages remained unchanged, while wages in traded sectors declined relative to wages in non-traded sectors, and that increased wage differentials occurred after 1990 when trade liberalization policies were introduced.34 Research on Argentina’s manufacturing sector showed that approximately 30 percent of net employment was lost between 1992 and 1996, owing to strong competition from foreign markets.35 Researchers who examined wage differential trends in Mexico found that wage inequalities grew significantly following the adoption of trade liberalization policies in the mid-1980s and that the largest increases in wage inequality were concentrated in sectors that experienced the most significant tariff reductions. Both studies also found evidence of an increased skill premium in the postliberalization period, when white-collar workers and those with higher education experienced increases in salary, while the salary of blue-collar workers with low levels of education decreased. While fewer studies have examined trade liberalization and its impact in Asia, there is some evidence consistent with the findings from Central and South America. For example, one study conducted in India found that wage inequality between permanent and casual labourers in India increased between 1983 and 2000, coinciding with a period of significant tariff reductions.36 Hours of Work As noted above, parental availability is critical to maintaining children’s and adult family members’ health. Reasonable work hours allow parents to be available. Reasonable work hours also allow workers to care for themselves, obtain adequate sleep and rest, and maintain their own health. The two most common indicators of work hours are average paid hours worked per week by employees and average paid hours worked per year by employees. Average paid hours worked per year are gener-

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ally used in cross-national comparisons, since they include vacation and sick leave. Among oecd nations, the total hours of paid work (including overtime) have decreased overall since the 1980s.37 In the 1990s the decline slowed overall, with many countries still experiencing declines in average paid hours, countries such as France, Germany, Italy, the Netherlands, Norway, Japan, and Korea, but with a less steep trend line. For other countries, paid hours remained relatively stable, as in Australia, Canada, Finland, New Zealand, Spain, and the United Kingdom. In only three countries have average paid work hours increased: Hungary, Sweden and the United States.38 Hours of paid work in developing countries have not fallen similarly and are on average longer than hours in industrialized countries. Average annual paid working time still exceeds two thousand hours. With overtime included, average paid hours approach or exceed three thousand per year.39 However, it is a complex problem to determine if the overall decline in average paid hours reflects a decline in total hours worked because data on unpaid work hours by household are not available. If there has been an increase in the number of family members who are working for pay and if unpaid work has been constant, there may be many more countries with increases in total work hours (paid and unpaid) than have been observed. If employment rose significantly, but paid work hours declined because the number of part-workers increased,40 total household hours of work would rise and hours of caregiving and care of employees’ own health, as well as leisure time, would decline. Non-standard and Contingent Work Steady employment and income can enable families to purchase needed medications and health insurance and to maintain a healthy environment that reduces risk of illness and injury. The converse – that the increase in the number of less stable jobs and the rise of more fluid relationships between employers and the employees has negative population health impacts – is also true and impacts are even stronger when economic changes lead to bouts of unemployment. “Contingent work” often refers to positions that are not permanent and full-time and that lack consistent hours and pay. Contingent work, according to the us Bureau of Labor Statistics, is “any job in which an individual does not have an explicit or implicit contract for long-term employment or one in which the minimum hours worked can vary in a non-systematic manner.”41 Seasonal workers, part-time workers, and workers in the informal sector would

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all be classified as contingent, as would temporary workers who are hired through a third-party agency for a job of fixed duration, “in-house” temporary workers who are hired directly by the employer, and independent contractors or consultants who are self- employed and who provide services to a company on a project basis or for a set period. There is evidence of a rise in contingent work in industrialized countries overall, though not necessarily for all subgroups of workers. Maurin et al. (2005) examined the proportion of workers in “secure employment,” defined as a permanent position, and in “insecure employment,” defined as employment with a fixed-term or short-term contract, in fifteen European countries between 1994 to 2001. During this period, the fraction of all workers in secure and insecure positions remained stable. However, the proportion of skilled workers in insecure jobs fell but unskilled workers did not experience such a shift. In other words, job security levels between unskilled and skilled workers became more divergent. This same pattern occurred in the United Kingdom, Germany, and Portugal. There were two exceptions, Greece and Denmark, where the distributions of job security actually became more equal between the skilled and unskilled. A number of studies show that the developing world may be starting to experience a similar trend of rising rates of contingent employment. Two examples follow. During the 1990s most newly created jobs in the formal sector in Egypt did not include a regular contract.42 In Brazil, more than two-thirds, or 68 percent, of companies used some form of “flexible” labour as defined by the researchers.43 Outsourcing was the mostly commonly used form of flexible labour, at 56 percent, followed by temporary work (21 percent), fixed term contracts (10 percent) and part-time work (8 percent). There are signs that in China a form of contingent labour has been growing in size. In the mid-1990s reforms to Chinese labour policy created a category of workers called “lay-offs,” workers who were no longer permanent employees but maintained a “nominal employment relationship” with their prior employer and in some cases still received benefits and living stipends similar to “inhouse temporary workers.”44 In sum, the findings on trends in working conditions for which there are adequate data suggest that they are worsening. We see evidence of increasing incidences of non-standard employment and growing inequalities in wages. In terms of the relationship between changes in trade policies and changes in working conditions, there is some evidence of an association between wage inequality and trade liberalization.

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Varying implementation of trade policies and the fact that “trade policies” can encompass a wide range of things from tariff reductions to lowering quotas, creating tax-free zones, and encouraging foreign direct investment indicate the critical need for further research examining the full range of trade policies and labour conditions using crossnational, longitudinal data. In addition to the range of empirical studies, discussions from a theoretical perspective have also been put forward. While some economists, international organizations, national governments, and heads of businesses in developing countries have pointed to the economic benefits of increased trade (that it promotes economic growth and job development in less developed countries, although it is often acknowledged that this growth and development occurs primarily in the export sector rather than in local businesses), nothing is said about the quality of the jobs that develop. Others (some non-governmental organizations, human rights organizations, and many trade unions) argue that more open trade creates incentives to have the lowest production costs by eliminating basic worker protections or by engaging in a “race to the bottom” in terms of working conditions. Because the globalization of the economy means that employers can freely relocate plants and jobs to other countries – or threaten to – they are able to impose lower wages and worse working conditions.45 The situation in call centres in Great Britain provides just one of many examples illustrating this problem. In order to compete with lower-wage nations, call centres have reduced flexibility and time off and raised expectations about the level of intensity of work and productivity substantially, for example, by requiring workers to cut average call times to two minutes and by making cuts that included not providing time for lunch or going to the bathroom.46 While more research on the impact of trade, such as studies on a truly global scale examining multiple forms of trade liberalization and their effects on a wide array of working conditions, is still needed, it is clear from the evidence to date that there is a great deal to be concerned about. The data presented above suggest that current trade policies have contributed to a widening of inequalities in terms of wages and an increase in non-standard employment rates. These data point to the critical need for simultaneous action on monitoring how labour conditions are changing and identifying the specific trade policies doing greatest harm. The concern about a possible downward spiral in working conditions has led individuals, consumers, and organizations to

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take action to improve our monitoring systems and to implement strategies to improve trade’s impact on labour conditions and, consequently, on health.

implications for policy and monitoring Assessing and reporting on the status of labour conditions across nations, firms, and widely varying work settings is challenging. Historically, there have been a number of efforts to create international organizations to both set and oversee global labour standards. The International Labour Organization (ilo), founded in 1919, represents the world community’s most comprehensive effort to establish international, recognized labour rights and standards. The ilo operates like a parliament with tripartite representation of labour, management, and government. Over one hundred conventions have been adopted.47 The ilo to some extent monitors labour conditions by requiring signatories to report on laws and practices but has limited power to enforce adherence to established labour standards. While continuous monitoring is needed to ensure that policy-makers are aware of important declines in labour conditions, other action steps can be taken. A range of options for improving labour conditions is available and some have already been tried. They include, among others, development and enforcement of labour standards by international organizations, trade agreements as part of regional and bilateral trade agreements, trade sanctions or incentives, and voluntary initiatives. We discuss the merits and disadvantages of each and their potential for improving labour conditions associated with trade policy, as well as their consequent benefits to health. Regional and Bilateral Trade Agreements Another approach that has been taken to regulate and guarantee labour standards is to work through regional and bilateral agreements that commit signatories to enforce either agreed-upon standards or existing domestic labour laws. The weakness of existing treaties, for example, the North American Free Trade Agreement (nafta), the world’s first trade agreement to link trade and labour, and the North American Agreement on Labour Cooperation (naalc), has limited their potential impact, however. naalc represents a multilateral body dedicated to the advancement of regional economic integration by developing a shared

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framework of labour standards and rights. It is meant to uphold the three signatories’ respective domestic labour laws and permits ministerial consultations on eleven specific labour principles. It provides for monetary fines and sanctions as a dispute resolution mechanism – but only for child labour, minimum wages, and technical standards48 – and it is still possible under naalc for governments to put legislation in place that undermines labour standards.49 There is evidence that naalc has not contributed to slowing down the race to the bottom in labour standards. Of the nineteen complaints brought forward under naalc before late 2001 (twelve against Mexico, six against the United States, one against Canada), not one fine or sanction resulted.50 As of August 2003, no complaint submitted under naalc had made it past the stage of ministerial consultations.51 In addition, in some instances the implementation of nafta has created worse working conditions. For example, the abuse of labour rights is well documented in exactly the sectors that grew rapidly as a result of the agreement (such as the maquiladoras at the us-Mexico border). Furthermore, chapter 11, which allows investors to claim damages from a sovereign party, demonstrates a key flaw in naalc, namely, the priority that investors’ rights have over social considerations. This “investorto-state” dispute mechanism awarded over us$13 billion for damages to companies when one of the governments banned dangerous products for public health or environmental reasons.52 At least two agreements have been based on the naalc model. The Canada-Chile Agreement on Labour Cooperation (1997), for instance, has identical objectives and obligations and the same eleven labour principles.53 The main difference between the two agreements is that under no circumstances does the Canada-Chile agreement provide for trade sanctions. Human Rights Watch reports that as of 2001, no complaints had yet been submitted under this agreement.54 The Canada– Costa Rica Agreement on Labour Cooperation (2002) authorizes ministerial consultations on all labour standards, and thus avoids the creation of a hierarchy of rights (as in the case of naalc and the Canada-Chile agreement). However, it provides no mechanism for enforcement.55 The us–Jordan Free Trade Agreement (2001) was the first trade agreement to include labour matters in the main part of the text, thus making labour standards subject to the same dispute resolution mechanism as non-labour matters. A study by the American Center for International Labour Solidarity finds that Jordan has better labour

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standards than elsewhere in the Middle East and guarantees some conditions that us workers do not have, such as on-the-job child care and paid maternity leave. Despite the free trade agreement’s potential to improve labour standards, there are signs that it has not fully met expectations. The Public Assemblies Law (passed in August 2001, nearly a year after the trade agreement was signed) makes it illegal to organize or hold rallies and public gatherings without the prior written permission of the government. Furthermore, before the us Congress voted on the fta with Jordan, the United States Trade Representative and Jordanian governments exchanged a series of letters in which both parties stated they did not expect or intend to employ trade sanctions to enforce any of the agreement’s provisions.56 Other agreements provide few mechanisms for enforcement. Under the us-Chile fta (2004) and the us-Singapore fta (2004) countries must abide by their own domestic labour standards, but all other obligations are not covered by the dispute settlement system and are thus completely unenforceable.57 It is, however, significant that the labour standards section is in the main text.58 In some cases, however, even without enforcement the trade agreements have spurred nations to reform domestic laws. For example, the us-Morocco fta (2004) states that countries must effectively enforce their domestic labour laws. According to the ustr, the prospect of this agreement catalyzed a reform of Morocco’s labour law, which is a “significant improvement over existing laws and regulations.”59 The effectiveness of other more recent trade agreements cannot yet be evaluated (e.g., the us–Bahrain fta [2006] and the us–Central America–Dominican Republic Free Trade Agreement, or cafta (2005), which has been signed but is not yet in effect). In sum, in several respects regional and bilateral agreements have been weak to date on labour standards, even when standards are included. First, agreements linking trade and labour, except for naalc, are with relatively small trading partners who lack negotiating leverage and who already have relatively good standards. For example, Jordan has unusually comprehensive, strong domestic labour laws, whereas the us–Jordan fta does not include many of the same basic standards, from the right to strike to compensation for on-the-job injuries and illnesses, equal pay for women and men, and inclusion of migrant workers in legal protections. It thus requires Jordan to try to simultaneously enforce and improve two different, only partially overlapping sets of labour standards – its own and those in the treaty.60 Second, few of the

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agreements allow trade sanctions for breaches of agreement, and the agreements generally have weak enforcement mechanisms and processes that to date have not resulted in real financial consequences. The agreements often do not impose labour standards or regulations but only require that signatories adhere to their own domestic labour laws, which are often related to the four core labour standards of the ilo and which ban only the most egregious forms of labour abuses. The International Labour Organization The International Labour Organization (ilo) has been engaged in a longterm sustained effort to develop and implement global labour standards. It provides equal representation to labour, management, and governments in its tripartite structure. In 1998, the ilo adopted the Declaration on Fundamental Principles and Rights at Work, which compels member states to uphold four core labour standards (regardless of whether they have ratified the relevant eight conventions): freedom of association and the right to collective bargaining, the elimination of forced and compulsory labour, the abolition of child labour, and the elimination of discrimination at work.61 The ilo provides mechanisms for investigating complaints or cases of non-compliance with core labour standards through representations (filed by employers or labour groups) or through complaints (filed by another country that has ratified the convention in question). Twentytwo complaints were submitted between 1961 (no complaints had been made before then) and 1994, and the governments complied with the recommendations in twenty of those cases.62 For a number of reasons, the ilo is limited in its ability to impose real and meaningful consequences for non-compliance. It cannot impose sanctions even if a member breaches its core conventions, and member states cannot be officially expelled, though they can be cut off from ilo funding and forbidden to attend meetings. A number of countries have voluntarily withdrawn (e.g., Germany in 1935, South Africa from 1966 to 1994, Albania in 1967, Vietnam from 1985 to 1992, the United States from 1919 to 1934, 1938 to 1944, and 1977 to 1980).63 An example of the limited power of the ilo is the case of Burma/Myanmar, where human rights groups such as Amnesty International have found clear evidence of the systematic and widespread use of forced labour. The ilo’s Governing Body, when discussing possible measures that the organization could take against Burma, con-

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firmed that the body is incapable of proposing a decision regarding a member state’s suspension or expulsion.64 The ilo’s credibility and ability to fulfill its mission is influenced in part by the number of countries providing buy-in and support, especially those with economic power and those who provide substantial funding. There are a number of nations with power that have the potential to constrain the ilo’s impact if they fail to comply with established standards. The United States is one example: it has signed only two of the eight core ilo conventions (on the abolition of forced labour and on the worst forms of child labour). Only St Kitts and Nevis (population 41,000) has ratified fewer conventions overall than the United States, but even it has ratified seven of the eight core conventions.65 Moreover, there are reports by the International Confederation of Free Trade Unions (icftu) that there are routine violations of core labour standards in the United States. For example, the icftu claims that the right to strike and bargain collectively is extremely restricted.66 Despite the ilo’s limited power to meaningfully penalize violations and the potential of powerful nations to reduce its credibility, many see it as the best institution to uphold labour standards internationally, since it has done a tremendous amount of research on how to deal with the economic and cultural complexities of developing global labour standards while simultaneously maintaining legal integrity and efficacy. Moreover, it has a positive relationship with labour groups across the world. Finally, it has a relatively democratic structure, since organized labour has the same number of votes as business and government.67 Global Trade Organizations A second international body involved in the creation of global labour standards is the General Agreement on Tariffs and Trade (gatt). The gatt was a temporary by-agreement on tariff reductions signed on 1 January 1948 and was meant to be in effect only until the official creation of the International Trade Organization (ito), which never came into being.68 The ito was proposed on 24 March 1948, in Cuba, when fifty-three countries signed the Havana Charter – the Final Act of the United Nations Conference on Trade and Employment – and was meant to be the third institution, alongside the International Monetary Fund and the World Bank, that would forge the link between international security and economic and social welfare. Both the gatt and the ito exemplified the notion of freer and non-discriminatory trade: the

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lowering of tariffs on the “most favoured nation” basis, the suppression of quotas, the removal of tariff preferences, and so on. The United States was initially the main proponent of this organization, but President Truman withdrew the Charter from consideration by the us Senate in 1950, prompting all other countries to give up on the ratification process and effectively dismantling the institution. Researchers who have studied the ito advance various reasons for its collapse: the increasing importance of the Cold War in international relations, political realignment after the implementation of the Marshall Plan, the Charter’s inner contradictions, specifically the attempt to reconcile free-trade interests with those of strong state intervention in the economy, and the us fear of intervention in domestic affairs. In the absence of ito ratification, the gatt remained in force for nearly fifty years. In 1995, the World Trade Organization (wto) replaced the gatt. The wto develops, negotiates, administers, and monitors trade agreements between nations. It is a well-funded organization with administrative branches across the world. Decisions are reached by consensus, and votes of members are not weighted.69 However, because consensus needs to be reached only among the members whose representatives are present at a meeting, wealthy countries will have disproportionate representation of their interests relative to poorer countries, to the extent that it is financially costly to have a continuous presence at the meetings. And the unequal balance of power between developing and developed nations likely limits the ability of developing nations to renege on trade commitments, even with proof of labour abuse.70 Adherence to labour standards is not currently a requirement in trade agreements administered by the wto or a condition for membership. Article XX outlines when members do not have to fulfill trade commitments; often referred to as the escape clause, it currently covers public health and environmental standards. The notion of inserting labour standards into article XX was first proposed at the ministerial meeting in Singapore in 1996; the proposal was supported by some industrialized nations, e.g., United States and most eu countries, and criticized by the Association of South East Asian Nations (asean) and those who saw labour standards as protectionism in disguise or an effort to undermine the competitive advantage of less-developed countries.71 The debate over the addition of a “social clause” continues, and to date such a clause has not been ratified. With the failure of the ito and the creation of the wto, the first way to reduce the likelihood of a “race to the bottom” in labour standards

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was lost. Unlike the wto, whose central mission is to facilitate trade and lower trade barriers, the ito had a broader mission. As noted above, along with the International Monetary Fund and the World Bank, the ito was intended to create a link between international security and economic and social welfare. Underlying this institutional set-up was the premise that international economic actions could have social ramifications and that these needed to be linked together, as opposed to being addressed in side agreements or extra clauses. In addition, the ito’s structure would have created a more equal balance of power between developing and developed nations, which would, for example, have increased developing nations’ ability to renege on trade commitments when they had proof of labour abuses. While each of the wto’s member nations have an equally weighted vote in negotiations and while decisions are made by consensus of all members, there are also informal negotiations between small groups of countries that, owing to the cost of attending meetings, often exclude developingcountry members – those most likely to have adopted poor labour conditions in order to gain competitive advantage and therefore most in need of global labour standards to even the playing field. Lastly, the wto’s private deliberations, which prevent public scrutiny, inhibit the ability to raise issues that impede maximum profit-making, such as social or environmental issues. Trade Sanctions and Incentives Another approach for improving labour standards has been to put pressure on specific sectors or manufacturers through consumer boycotts and through legislative action to ban trade with certain nations or trade of certain types of goods produced by workers under poor labour conditions (e.g., trade sanctions). Individual nations and regional bodies, like the European Union, can use trade sanctions or provide incentives. An example of this approach is the us Trade Act of 1974, a key piece of legislation affecting us trade broadly. This legislation directed the president to seek adoption of fair labour standards in the Tokyo Round of gatt negotiations and instituted the us General System of Preferences and the General System of Preferences Renewal Act (1984), in which the criteria for eligibility as a beneficiary country (eligibility for trade preferences with the United States) were extended to include the criterion whether or not a country had taken, or was taking, steps to give its workers internationally

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recognized rights (defined as including freedom of association, the right to organize and bargain collectively, freedom from forced labour, a minimum age for child labour, and acceptable conditions of work with respect to wages, hours of work, and occupational safety and health). General System of Preferences (gsp) legislation and legislation providing either preferences or quotas for meeting certain standards are generally described by the ustr as “designed to promote economic growth in the developing world”72 but are criticized by, among others, Human Rights Watch as protecting American interests and the United States’ unique position in world trade.73 The legislation has been less than fully effective for a number of reasons. For example, the gsp declares that trading partners must strive to ensure that internationally recognized work protections and rights are safeguarded but does not specify the steps or the rights, and since the United States has yet to ratify most of the relevant ilo conventions, it is unclear which rights must be guaranteed. In addition, the gsp legislation leaves application and enforcement in hands of the us Trade Representative and ultimately the president,74 which leaves the process open to the vagaries of politics and the potential for favoring those countries with which the United States does business. For example, a number of countries with repressive labour regimes were approved for gsp benefits: El Salvador, Guatemala, Haiti, Malaysia, Singapore, Suriname, Guinea in the 1980s and early 1990s, and China and Indonesia in 1990s.75 It is significant that many nations whose gsp benefits were suspended (for instance Nicaragua, Liberia, and Syria) had adversarial relations with the United States.76 Lastly, because the actors are not equally powerful and developing countries are often desperate to attract us investors or gain access to us markets, the vague and open-ended unilateral labour standards permit the United States to act in an ad hoc manner, whereby it can reward some and exclude others who are out of favor. At times labour-trade links have been made for specific goods in various agreements: tin (1975, 1981), rubber (1979, 1987), sugar (1978, 1987), and cocoa (1986).77 More recently, the us–Cambodia Textile Agreement (1999–2005) allowed Cambodian textile exports to the United States to increase, depending on the improvement of labour conditions in the textile industry. It appears that this agreement was relatively successful at improving working conditions. Presently, Cambodian working standards are viewed as the country’s principal comparative advantage, and even though the agreement has expired, independent ilo monitoring will continue until at least 2008.

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Voluntary Efforts In addition to their own efforts to monitor labour conditions, global and international organizations have made efforts to coordinate voluntary codes of conduct among private firms. In 1977, the ilo launched its Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, with a focus on labour policy. As above, no concrete plans were made for real implementation and incentives for firms to change were not incorporated.78 At the World Economic Forum in 1999, un Secretary General Kofi Annan first proposed the Global Compact, which would unite businesses, un agencies, labour, and civil society to uphold environmental and social principles. The compact is a voluntary initiative and does not police, enforce, or quantify the actions of companies. It seeks to support ten universal principles: business should 1 support and respect the protection of internationally proclaimed human rights, 2 make sure that they are not complicit in human rights abuses, 3 uphold the freedom of association and the effective recognition of the right to collective bargaining, 4 uphold the elimination of all forms of forced and compulsory labour, 5 uphold the effective abolition of child labour, 6 uphold the elimination of discrimination in respect of employment and occupation, 7 support a precautionary approach to environmental challenges, 8 undertake initiatives to promote greater environmental responsibility, 9 encourage the development and diffusion of environmentally friendly technologies, and 10 work against all forms of corruption, including extortion and bribery.79 It is important to note that while these standards and principles are broad in scope, they are much less comprehensive than those outlined in the ilo’s Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy. An increasing number of individual firms have taken the initiative and established their own codes of conduct regarding labour practices,

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in part to improve public relations. One of the earliest attempts to monitor labour standards was the Sullivan Principles initiative in South Africa, named after the Reverend Leon Sullivan. It emerged out of three related movements in the 1960s and 1970s: the idea of using economic sanctions to bring an end to apartheid, the move towards socially responsible investment, and the movement to make us firms accountable to their consumers. As a result of a group of lawyer-activists’ pressure on General Motors to appoint black directors, the Reverend Sullivan joined the board of directors in 1970. The first set of principles, put out in 1977, was quite limited, staying within South African laws (inviting companies to desegregate eating and work stations, provide equal pay for equal work, provide training opportunities for black employees, and invest in improving employees’ lives outside the workplace). By 1985, the “amplified” Sullivan Principles demanded that firms take a public anti-apartheid stance and work actively towards the dismantling of apartheid. Even then, however, companies were allowed have the South African military among their clients.80 In 1987, Arthur D. Little, a large consulting firm, reported that the 179 companies that had adopted the Sullivan Principles were spending more than $33 million annually on education, housing, community development, legal aid, and other programs for blacks, and $9 million annually on goods and services from non-white businesses. These investments apparently paid off; during the apartheid period international investors were attracted to companies that displayed corporate citizenship, and after apartheid, the shares of the businesses that had adopted the principles and remained in South Africa did better than the shares of those who had stayed but had not adopted them.81 It is possible to interpret the impact of these principles in two different ways. One could conclude that they demonstrate the ability of independent monitoring and public reporting to effect change in labour standards. Alternatively, one could conclude that the initiatives illustrate the problems associated with corporate codes, particularly the enormous level of external pressure and the length of time required to improve standards beyond the absolute minimum and their inability to replace national systems of regulation. Although the principles’ effects on South Africa are uncertain, their legacy for corporate culture is likely quite important.82 Worldwide, the number of corporate codes of conduct has been estimated at 182.83 O’Rourke divides these into three broad categories.84 The first is comprised of internal monitoring mechanisms that are cor-

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porations’ own procedures for monitoring supplier compliance with their codes of conduct. They are conducted by brands and retailers, including the Gap, Levi’s, Disney, and Nike. The second is comprised of external monitoring systems, which are codes of conduct and systems of monitoring that accredited third-party monitors undertake, based mainly on ilo core standards. In the United States, there are several: the Fair Labour Association (formed 1996); Social Accountability International (formed 1997), which is patterned on the International Organization of Standards and has certified 150 factories out of the 100,000 that are producing for the us market; and Worldwide Responsible Apparel Production (formed 1998), which is the industry’s version of external monitoring. In Europe, there is the Ethical Trading Initiative (formed 1998), which is an alliance of firms, ngos, and unions, and the Fair Weather Foundation (established in 1999 by the Dutch Clean Clothes Campaign). Critical to making these external monitoring systems effective are a non-partisan relationship (and unlinked funding) between these monitoring organizations and the industry leaders, strong standards, and clear, non-opaque certification programs. Not all those systems named above meet all three criteria. Finally, there are independent monitoring systems that are not funded by the firms being evaluated. The Worker Rights Consortium (formed 1999) was established by the United Students against Sweatshops, the Union of Needlework, Industrial and Textile Employees, the American Federation of Labour and Congress of Industrial Organizations, and ngos. This initiative does not certify companies but instead encourages universities to put in place codes of conduct that are similar to its own. Very little publicly accessible data and information have been made available on the actual effects of any of these initiatives on workplace standards, making evaluations extremely difficult. The Worker Rights Consortium is rare in making its reports public; the first, of a Kukdong clothing factory, has been praised as an important step forward.85 Despite the lack of empirical evidence, researchers have identified some benefits and problems inherent in the structure of these monitoring systems. The strengthening of monitoring systems and the engaging of new partners could help promote worker rights in global supply chains. And perhaps these new systems of monitoring are better suited to the complex new supply-chain- and brand-name-based global economy than the older, factory-focused, governmental regulation centring on individual locations of production. However, these initiatives could inadvertently produce negative results for workers in developing coun-

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tries. For instance, ngos could replace unions, or firms could avoid censure by moving the most dangerous jobs into the informal economy. These systems could also represent a co-opting of ngos and contribute to the privatization of public regulation and the weakening of democratic forms of monitoring.86 Consumer-Driven Efforts The anti-sweatshop campaigns of the 1990s provide a second example of an attempt to achieve corporate codes of conduct. The international trade economists Elliott and Freeman see these campaigns as evidence that economic integration and labour standards can be complementary. They argue that these initiatives have created a market for international labour standards, helped increase support for the ilo, encouraged the United States to place labour in some trade agreements, and convinced private firms and the general public that global labour standards are a good idea. Elliott and Freeman do acknowledge, however, that these campaigns have not resulted in the inclusion of a social clause in the wto, that the focus on consumers restricts the impact to the traded sectors, and that the nature of the supply chain in the textile industry means that generic brands cannot be targeted by these types of campaigns.87 Other challenges include the fact that the informal economy, business-to-business products, and production for domestic use would be immune to consumer-based initiatives. Lastly, consumers are difficult to organize and union members have claimed that boycotts are organized without the workers being consulted beforehand.88

conclusion Examples of how trade policies have influenced labour conditions exist in nations throughout the world. Is there more to learn? Yes. Monitoring the full range of trade policies and their variable effects on a wide array of working conditions, including conditions in the informal sector, would further sharpen the global picture. Nonetheless, the fundamental notion that trade liberalization plays a role in the world’s labour conditions has been established and paid heed to. Similarly well documented is the impact of labour conditions on health. A number of initiatives to improve the impact of trade on those labour conditions that most affect health and human welfare have been put into place. We have reviewed a range of these in this chapter. Each

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approach has its own inherent strengths and limitations and has had varying degrees of success. Global trade agreements have been designed primarily to protect the interest of producers of goods and services. While few have included mandates for minimum labour standards, there is reason to believe that they could be equally effective at protecting the basic right to decent work and improving global labour conditions if they included real consequences for violations and if labour standards in trade agreements were translated coherently into national policy. Trade sanctions and incentives have in some cases been successful. Voluntary codes of conduct, while on the increase, have failed in part because of the lack of independent monitoring and standardization. International organizations such as the ilo, while specifically aimed to improve labour conditions, have had fewer accomplishments than they should have had, in large part because of insufficient enforcement mechanisms. How can we modify these efforts to achieve maximum effectiveness? Increased monitoring of policies, to identify whether they impact labour conditions in a positive way, and of the economic position of nations involved as they implement labour standards are critical next steps. These kinds of studies will facilitate the development of policies that best achieve trade and health policy goals concurrently. Key first steps have been taken, but far more comprehensive efforts are needed to ensure that trade liberalization, a cornerstone of the current globalization of the world’s economies, leads to decent labour conditions on a global level and consequently to improved health.

notes Acknowledgement: We would like to thank Ian Cummins and Magdalena Barrera for their excellent research assistance. 1 B.S. Levy and D.H. Wegman, eds., Occupational Health: Recognizing and Preventing Work-Related Disease and Injury (Philadelphia, pa: Lippincott, Williams & Wilkins 2000); C. Levenstein and J. Wooding, eds., Work, Health, and Environment: Old Problems, New Solutions (New York: Guildford Press, 1997); D.J. Hansen, The Work Environment: Occupational Health Fundamentals, volume 1 (London: Lewis, crc 1991). 2 See review in Global Inequalities at Work: Work’s Impact on the Health of Individuals, Families and Societies, J. Heymann, ed. (New York: Oxford University Press 2003).

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3 S. Yin, “A Cohort Study of Cancer among Benzene-Exposed Workers in China: Overall Results,” American Journal of Industrial Medicine 29 (1996): 227–35; M.S. Chen and A. Chan, “China’s ‘Market Economy in Command’: Footwear Workers’ Health in Jeopardy,” International Journal of Health Services 29 (1999): 793–811; S. Greenhouse, “Nike Shoe Plant in Vietnam is Called Unsafe for Workers,” New York Times, 8 November 1997, 1. 4 D.E. Dunn, “Noise,” in Occupational Health: Recognizing and Preventing Work-Related Disease and Injury, 4th ed., B.S. Levy and D. H. Wegam, eds. (Philadelphia: Lippincott Williams & Wilkins 2000); F. He, “Occupational Medicine in China,” International Archives of Occupational and Environmental Health 71 (1998): 79–84; M. Maroni, C. Colosio, A. Ferioli, and A. Fait, introduction to “Biological Monitoring of Pesticide Exposure (Review),” Toxicology 143 (2000): 5–8; J. Jeyaratnam, “Survey of Pesticide Poisoning in Sri Lanka,” Bulletin of the World Health Organization 60 (1982), 615–19; L. London, “Agrichemical Safety Practices on Farms in the Western Cape,” South African Medical Journal 84 (1994): 273–8; J. Boon-Long, T. Glinsukon, P. Pothisiri, S. Srianujata, V. Suphakarn, and M. Wongphanich, “Toxicological Problems in Thailand,” in M. Ruchirawat and R.C. Shank, eds., Environmental Toxicity and Carcinogenesis,” Proceedings of a Regional Workshop (Bangkok, Thailand: Text and Journal Corporation 1986); World Health Organization (who), Public Health Impact of Pesticides Used in Agriculture (Geneva: who 1990). 5 K. Belkic, Pl. Schnall, P. Landsbergis, and D. Baker. “The Workplace and Cardiovascular Health: Conclusions and Thoughts for a Future Agenda,” Occupational Medicine 15, 1 (2000): 307–21; R. Karasek and T. Theorell, Healthy Work: Stress, Productivity and the Reconstruction of Working Life (New York: Basic Books 1990). 6 Ibid. 7 F. Jones, J.E.H. Bright, B. Searle, and L. Cooper, “Modelling Occupational Stress and Health: The Impact of the Demand-Control Model on Academic Research and on Workplace Practice,” Stress Medicine 14 (1998): 231–6; T. Kristensen, “The Demand-Control-Support Model: Methodological Challenges for Future Research.” Stress Medicine 11 (1995): 17–26. 8 A. Jackson, “The Unhealthy Canadian Workplace,” paper given at the Social Determinants of Health across the Life-Span Conference, Toronto, November 2002. 9 R.G. Feachem and M.A. Koblinsky, “Interventions for the Control of Diarrhoeal Diseases among Young Children: Promotion of Breast-Feeding,” Bulletin of the World Health Organization 62, 2 (1984): 271–91; J.P. Habicht, J. DaVanzo, and W.P. Butz, “Does Breastfeeding Really Save Lives, or are

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15 A. Avery, “50-Year Overview of Perinatal Medicine,” Early Human Development 29, nos. 1–3 (1992): 43–50; M. Crouch and L. Manderson, “The Social Life of Bonding Theory,” Social Science & Medicine 41, no. 6 (1995): 837–44; C.K. Johnson, M.D. Gilbert, and G.H. Herdt, “Implications for Adult Roles from Differential Styles of Mother-Infant Bonding: An Ethological Study,” Journal of Nervous & Mental Disease 167, no. 1 (1979) 29–37; E. Anisfeld and E. Lipper, “Early Contact, Social Support, and Mother-Infant Bonding,” Pediatrics 72, no. 1 (1983): 79–83; M.E. Lamb, “Early Contact and Maternal-Infant Bonding: One Decade Later,” Pediatrics 70, no. 5 (1982): 763–8; P.G. Mertin, “Maternal-Infant Attachment: A Developmental Perspective,” Australian & New Zealand Journal of Obstetrics & Gynaecology 26, no. 4 (1986): 280–3; A.M. Taubenheim, “Paternal-Infant Bonding in the First-Time Father,” JOGN Nursing 10, no. 4 (1981): 261–4; P. Nettelbladt, “Father/Son Relationship during the Preschool Years: An Integrative Review with Special Reference to Recent Swedish Findings,” Acta Psychiatrica Scandinavica 68, no. 6 (1983): 399–407. 16 M.R.H. Taylor and P. O’Connor, “Resident Parents and Shorter Hospital Stay,” Archives of Disease in Childhood 64 (1989): 274–6. 17 S.J. Heymann, The Widening Gap: Why Working Families Are in Jeopardy and What We Can Do about It (New York: Basic Books 2000). 18 J. Coreil, A. Augustin, N.A. Halsey, and E. Holt, “Social and Psychological Costs of Preventive Child Health-Services in Haiti,” Social Science and Medicine 38, no. 2 (1994): 231–8; L.K. McCormick, L.K. Bartholomew, M.J. Lewis, M.W. Brown, and I.C. Hanson, “Parental Perceptions of Barriers to Childhood Immunization: Results of Focus Groups Conducted in an Urban Population,” Health Education Research no. 12, 3 (1997): 355–62; K. Streatfield and M. Singarimbun, “Social Factors Affecting the Use of Immunization in Indonesia,” Social Science and Medicine 27, no. 11 (1988): 1237–45; C. Lannon, V. Brack, J. Stuart, M. Caplow, A. McNeill, W.C. Bordley, and P. Margolis, “What Mothers Say about Why Poor Children Fall Behind on Immunizations – A Summary of Focus Groups in North Carolina,” Archives of Pediatrics and Adolescent Medicine 149, no. 10 (1995): 1070–5. 19 L.F. Berkman, “The Role of Social Relations in Health Promotion,” Psychosomatic Medicine 57 (1995): 245–54; T.E. Seeman, “Health Promoting Effects of Friends and Family on Health Outcomes in Older Adults,” American Journal of Health Promotion 14 (2000): 362–70. 20 S. Woloshin, L.M. Schwartz, A.N. Tosteson, C.H. Chang, B. Wright, J. Plohman, and E.S. Fisher, “Perceived Adequacy of Tangible Social Support and Health Outcomes in Patients with Coronary Artery Disease,” Journal of General Internal Medicine 12 (1997): 613–18; K. Orth-Gomer, M. Horsten,

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S.P. Wamala, M.A. Mittleman, R. Kirkeeide, B. Svane, L. Ryden, and K. Schenck-Gustafsson, “Social Relations and Extent and Severity of Coronary Artery Disease: The Stockholm Female Coronary Risk Study,” European Heart Journal 19 (1998): 1648–56; A.M. Karner, M.A. Dahlgren, and B. Bergdahl, “Rehabilitation after Coronary Heart Disease: Spouses’ Views of Support,” Journal of Advanced Nursing 46 (2004): 204–11; A. Rantanen, M. Kaunonen, P. Astedt-Kurki, and M.T. Tarkka, “Coronary Artery Bypass Grafting: Social Support for Patients and Their Significant Others.” Journal of Clinical Nursing 13 (2004): 158–66. S.J. Bennett, “Relationships among Selected Antecedent Variables and Coping Effectiveness in Postmyocardial Infarction Patients,” Research in Nursing and Health 16 (1993): 131–9; L. Gorkin, E.B. Schron, M.M. Brooks, I. Wiklund, J. Kellen, J. Verter, J.A. Schoenberger, Y. Pawitan, M. Morris, and S. Shumaker, “Psychosocial Predictors of Mortality in the Cardiac Arrhythmia Suppression Trial–1 (cast–1),” American Journal of Cardiology 71 (1993): 263–7. E. Tsouna-Hadjis, K.N. Vemmos, N. Zakopoulos, and S. Stamatelopoulos, “First-Stroke Recovery Process: The Role of Family Social Support,” Archives of Physical Medicine and Rehabilitation 81 (2000): 881–7. R.K. Salokangas, “Living Situation, Social Network and Outcome in Schizophrenia: A Five-Year Prospective Follow-up Study,” Acta Psychiatrica Scandinavica 96 (1997): 459–68; M. Jubb and E. Shanley, “Family Involvement: The Key to Opening Locked Wards and Closed Minds,” International Journal of Mental Health Nursing 11 (2002): 47–53; V. Stanhope, “Culture, Control, and Family Involvement: A Comparison of Psychosocial Rehabilitation in India and the United States,” Psychiatric Rehabilitation Journal 25 (2002): 273–80. M. Buvinic, A. Giuffrida, and A. Glassman, “Gender Inequality in Work, Health and Income,” in J. Heymann, ed., Global Inequalities at Work: Work’s Impact on the Health of Individuals, Families and Societies (New York: Oxford University Press 2003). S.V. Subramanian and I. Kawachi, “Wage Poverty, Earned Income Inequality and Health,” in J. Heymann, ed., Global Inequalities at Work: Work’s Impact on the Health of Individuals, Families and Societies (New York: Oxford University Press 2003). For example, S.V. Subramanian, P. Belli, et al., “The Macroeconomic Determinants of Health,” Annual Review of Public Health 23 (2002): 287–302; S.H. Preston, “The Changing Relation Between Mortality and Level of Development,” Population Studies 29, 2 (1975): 239–48; L. Pritchett and L. Summers, “Wealthier Is Healthier,” Journal of Human Resources 31, 4 (1996):

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841–68; E.M. Kitigawa and P.M. Hauser, Differential Mortality in the United States: A Study in Socioeconomic Epidemiology (Cambridge, ma: Harvard University Press 1973); E. Rogot, et al., eds., A Mortality Study of 1.3 Million Persons by Demographic, Economic and Social Factors, 1979 1985 Follow-Up (Bethesda, md: National Institutes of Health 1992). 27 For example, in both the United States and the United Kingdom wage differentials increased in the 1980s, but the trends in real wages for those at the bottom of the wage spectrum, in the bottom tenth percentile, differed in these two countries. The real wages of British workers in the bottom tenth percentile increased, while real wages declined for American workers in the same percentile during the 1980s. L. Katz, et al., A Comparison of Changes in the Structure of Wages in Four OECD Countries, working paper no. 4297 (National Bureau of Economic Research, March 1993, http://www.nber.org/), 6). 28 For the United States and the United Kingdom: R. Freeman and R. Oostendorp, 2000. Wages around the World: Pay across Occupations and Countries, Working Paper 8058 (National Bureau of Economic Research, December 2000); oecd, Employment Outlook 2003: Towards More and Better Jobs? (2003); L. Katz, et al., A Comparison of Changes in the Structure of Wages in Four OECD Countries, Working paper no. 4297 (National Bureau of Economic Research, March 1993) (http://www.nber.org/). For Australia: oecd, Employment Outlook 2003: Towards More and Better Jobs? (oecd 2003). For New Zealand: oecd, Employment Outlook 2003: Towards More and Better Jobs? (oecd 2003); K. Lang, “The Effect of Trade Liberalization on Wages and Employment: The Case of New Zealand,” Journal of Labour Economics 16, no. 4 (1998). For the Czech Republic, Slovakia, Romania and Russia: R. Freeman and R. Oostendorp, Wages around the World: Pay across Occupations and Countries, Working Paper 8058 (National Bureau of Economic Research, December 2000); oecd, Employment Outlook 2003: Towards More and Better Jobs? (oecd 2003). For Argentina: S. Galiani and P. Sanguinetti, “The Impact of Trade Liberalization on Wage Inequality: Evidence from Argentina,” Journal of Development Economics 72 (2003): 497–513. For Brazil: J.S. Arbache, A. Dickerson, and F. Green, “Trade Liberalisation and Wages in Developing Countries,” The Economic Journal 114 (2004): f73–f96. For Colombia: O. Attanasio, P. Goldberg, and N. Pavcnik, “Trade Reforms and Wage Inequality in Colombia,” Journal of Development Economics 74 (2004): 331–66. And for Mexico: G. Hanson, What Has Happened to Wages in Mexico since NAFTA? Working Paper 9563 (National Bureau of Economic Research 2003); G.

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Hanson and A. Harrison, “Trade Liberalization and Wage Inequality in Mexico,” Industrial & Labour Relations Review 52, no. 2 (January 1999). France and Germany: L. Katz, et al., A Comparison of Changes in the Structure of Wages in Four OECD Countries. Working Paper no. 4297 (National Bureau of Economic Research, March 1993) (http://www.nber.org/), East Asian countries, such as Japan: Katz, Lawrence, et al., A Comparison of Changes in the Structure of Wages in Four OECD Countries, Working Paper no. 4297 (National Bureau of Economic Research, March 1993). (http://www.nber.org/). Korea: G. Fields and G. Yoo, “Falling Labour Income Inequality in Korea’s Economic Growth: Patterns and Underlying Causes,” Review of Income and Wealth 46, no. 2 (June 2000). Vietnam: J.L. Gallup, The Wage Labour Market and Inequality in Vietnam in the 1990s. Policy Research Working Paper 2896, Development Research Group (The World Bank, September 2002). And certain low- and lower-middle-income countries such as Sudan and Myanmar: R. Freeman, and R. Oostendorp, Wages Around on World: Pay across Occupations and Countries, Working Paper 8058 (National Bureau of Economic Research, December 2000). Ibid. 44. R.C. Feenstra and G.H. Hanson, “Foreign Direct Investment and Relative Wages: Evidence from Mexico’s Maquiladoras,” Journal of International Economics 42(3–4):371–93. B. Aitken, A. Harrison, and R.E. Lipsey, “Wages and Foreign Ownership: A Comparative Study of Mexico, Venezuela, and the United States,” Journal of International Economics 40(304):345–71. In his review of the effects of globalization on the labour market, Rama notes that empirical studies of trade liberalization and wages have produced seemingly contradictory results, with openness to trade (i.e., tariff reductions) linked to lower wages, while increases in foreign direct investment as a share of gdp are associated with wage increases. He argues that this dynamic changes over time, with the effect of tariff reductions on wages becoming positive in the medium to long term, while the impact of fdi becomes statistically insignificant. M. Rama, “Globalization and the Labor Market,” The World Bank Research Observer 18, no. 2 (2003): 159. O. Attanasio, P. Goldberg, and N. Pavcnik, “Trade Reforms and Wage Inequality in Colombia,” Journal of Development Economics 74 (2004): 331–66. J.S. Arbache, A. Dickerson, and F. Green “Trade Liberalisation and Wages in Developing Countries,” The Economic Journal 114 (February 2004): f73–f96.

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35 S. Galiani and P. Sanguinetti, “The Impact of Trade Liberalization on Wage Inequality: Evidence from Argentina,” Journal of Development Economics 72 (2003): 497–513 36 P.V. Dutta,. The Structure of Wages in India, 1983–1999, Working Paper no. 25 (Poverty Research Unit at Sussex, July 2004). 37 A. Clark, “Your Money or Your Life: Changing Job Quality in oecd Countries,” British Journal of Industrial Relations 43, 3 (September 2005, 0007– 1080): 377–400; D. Gallie, “Work Pressure in Europe, 1996–2001,” British Journal of Industrial Relations 43, 3 (September 2005 0007–1080): 351–75. 38 J. Evans, et al., Trends in Working Hours in OECD Countries, oecd Labour Market and Social Policy Occasional Papers, no. 45, 8. 39 P. Spector, et al., “A Cross-National Comparative Study of Work-Family Stressors, Working Hours and Well-Being: China and Latin America versus the Anglo World,” Personnel Psychology. 57 (2004): 119–42. 40 In nine oecd countries over half of total employment growth resulted from increases in part-time employment. 41 A.E. Plovika and J. Stewart, “Contingent and Alternative Work Arrangements Defined,” Monthly Labour Review 119: 1996. 42 M. DeGobbi and A. Nesporova. “Towards a New Balance between Labour Market Flexibility and Employment Security for Egypt,” Employment Policies Unit, Employment Strategy Department, International Labour Organization, 2005. 43 J.P.Z. Chahad, Non-standard Forms of Labour Contract in the Consolidacao das leis do trabalho (CLT) and the Flexibility of the Brazilian Labour Market (International Labour Office 2004). 44 E. Gu, Labour Market Insecurities in China (International Labour Office 2003). 45 A. Tonelson, Race to the Bottom (New York: Westview Press 2000). 46 K. Bronfenbrenner, “We’ll close! Plant Closings, Plant-Closing Threats, Union Organizing, and nafta,” Multinational Monitor 18, no. 3 (1997b): 8–13; K. Bronfenbrenner, “Trade in Traditional Manufacturing” (testimony before the us Trade Deficit Review Commission, 29 October 1999). 47 See http://www.ilo.org/ilolex/english/convdisp1.htm; accessed 17 February 2006. 48 L. Compa, Crafting a Social Dimension in a Hemispheric Trade Agreement (2005 [cited 25 May 2006]); available from http://www.press.uillinois.edu/ journals/irra/proceedings2005 /compa.html. 49 D.P. Gitterman, “European Integration and Labour Market Cooperation: A Comparative Regional Perspective,” Journal of European Social Policy 13, no. 2 (2003).

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50 W.E. Scheuerman, “False Humanitarianism? us Advocacy of Transnational Labour Protections,” Review of International Political Economy 8, no. 3 (autumn 2001). 51 K. Elliott, Labour Standards and the Free Trade Area of the Americas, Working Paper 03–7: (Washington, dc: Institute for International Economics August 2003). 52 International Confederation of Free Trade Unions, Labour:The Spread of Bilateral Trade Agreements (cited). 53 Elliott, Labour Standards and the Free Trade Area of the Americas. 54 Human Rights Watch, Trading Away Rights: The Unfulfilled Promise of Nafta’s Labour Side Agreement (April 2001 [cited May 25 2006]); available from http://www.hrw.org/reports /2001/nafta/index.htm#TopOfPage. 55 Elliott, Labour Standards and the Free Trade Area of the Americas. 56 American Center for International Labour Solidarity, The Struggle for Worker Rights in Jordan (Washington, dc: American Center for International Labour Solidarity 2005). 57 Labour Advisory Committee for Trade Negotiations and Trade Policy, “Report to the President, the Congress and the United States Trade Representative on the u.s.-Chile and u.s.-Singapore Free Trade Agreements,” http://www.ustr.gov/assets/Trade_Agreements/Bilateral/Chile_fta/Reports /asset_upload_file280_4926.pdf., 28 February 2003. 58 K.A. Elliott and R.B. Freeman, Can Labour Standards Improve under Globalization? (Washington, dc: Institute for International Economics 2003). 59 United States Trade Representative, “Morocco fta Leads to Progress of Labour Reform” (23 June 2004), http://www.ustr.gov/Document_Library/ Fact_Sheets/2004/Morocco_fta_Leads_to_ Progress_on_Labour_ Reform.html; accessed 25 January 2006. 60 R.N. Block, K. Roberts, C. Ozeki, and M.J. Roomkin. “Models of International Labour Standards,” Industrial Relations 40, 2 (April 2001): 258–92. 61 International Labour Organization, About the Declaration (2003 [cited May 29 2006]); available from http://www.ilo.org/dyn/declaris/ declarationwebaboutdeclarationhome? var_language=en. 62 Block et al., “Models of International Labour Standards.” 63 D.K. Brown, “International Labour Standards in the World Trade Organization and the International Labour Organization,” Discussion Paper 2000–03 (10 December 1999), Encyclopedia of the Nations, The International Labour Organization (ilo) (2006 [cited 24 May 2006]); available from http://www.nationsencyclopedia.com/United-Nations-Related-Agencies/ The-International-Labour-Organization-ilo-membership.html.

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64 International Labour Organization, Measures, Including Action under Article 33 of the Constitution of the International Labour Organization, to Secure Compliance by the Government of Myanmar with the Recommendations of the Commission of Inquiry Established to Examine the Observance of the Forced Labour Convention, 1930 (No. 29) (International Labour Organization, November 1999 [cited 25 May 2006]); available from http://www.ilo.org/public/english/standards /relm/gb/docs/gb276/gb–6.htm. 65 Elliott, Labour Standards and the Free Trade Area of the Americas. 66 International Confederation of Free Trade Unions, Internationally Recognised Core Labour Standards in the United States (International Confederation of Free Trade Unions 2004 [cited May 25 2006]); available from www.icftu.org/www/pdf/usclsreport2004.pdf. 67 W.E. Scheuerman, “False Humanitarianism? us Advocacy of Transnational Labour Protections,” Review of International Political Economy 8, no. 3 (autumn 2001). 68 J. Graz, Aux Sources de l’OMC: La Charte de la Havane, 1941–1950 (Genève: Librairie Droz 1999). 69 W.E. Scheuerman, “False Humanitarianism? us Advocacy of Transnational Labour Protections,” Review of International Political Economy 8, no. 3 (autumn 2001). 70 Ibid. 71 A. Chan and R.J.S. Ross, “Racing to the Bottom: International Trade without a Social Clause,” Third World Quarterly 24, no. 6 (2003). 72 Office of the United States Trade Representative, General System of Preferences, (2006); available at: http://www.ustr.gov/Trade_Development/ Preference_Programs/gsp /Section_ Index.html; accessed: 16 February 2006. 73 Human Rights Watch, “Labour Rights and Trade: Guidance for the United States in Trade Accord Negotiations,” http://hrw.org/press/2002/10/ labourrights-bck.htm (10 October 2002). 74 W.E. Scheuerman, “False Humanitarianism? us Advocacy of Transnational Labour Protections,” Review of International Political Economy 8, no. 3 (autumn 2001). 75 Ibid. 76 K. Maskus, Should Core Labour Standards Be Imposed through International Trade Policy? Working Paper no. 1817 (Washington, dc: World Bank 1997). 77 Block et. al., “Models of International Labour Standards.” 78 J. Heintz, Global Labour Standards: Their Impact and Implementation, Working Paper 46 (Amherst, ma: Political Economic Research Institute).

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79 United Nations Global Compact, “About the Global Compact: The Ten Principles,” http://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/ index.html (2006), accessed 24 January 2006. 80 Ibid. 81 Block et. al., “Models of International Labour Standards.” 82 G. Seidman, “Monitoring Multinationals: Lessons from the Anti-Apartheid Era,” Politics & Society 31, no. 3 (2003): 381–406. 83 Scheuerman, “False Humanitarianism?” 84 R. O’Rourke. “Outsourcing Regulation: Analyzing Nongovernmental Systems of Labour Standards and Monitoring,” The Policy Studies Journal 31, no. 1 (2003). 85 Ibid. 87 K.A. Elliott and R.B. Freeman, Can Labour Standards Improve under Globalization? (Washington, dc: Institute for International Economics 2003). 88 G. Seidman, “Monitoring Multinationals: Lessons from the Anti-Apartheid Era,” Politics & Society 31, no. 3 (2003): 381–406.

nants ties, and Health

8 Trade, Inequalities, and Health: Making the Important Measurable ANNA SHEA, NANCY ROSS, AND JODY HEYMANN

We have, in recent years, become fixated on economic growth. This is partly just one component of a broader fixation on the macroeconomy. It is partly a result of the tyranny of numbers – a growing obsession with quantifiable indicators on policy performance and a failure to make what is important measurable rather than making what is measurable important. New Economics Foundation

introduction Virtually all governments and intergovernmental organizations agree that the primary goal of trade is growth (for just one example, see World Trade Organization 1996). Economic growth is of immense importance to policymakers and government leaders globally. Yet the relationship between the well-being of populations and that of the macroeconomy is complex. In this paper, we begin by showing that population health and well-being are affected less by national wealth than by poverty rates and societal inequality. We review the cross-national and national evidence on the impact of trade liberalization on these economic outcomes. In a number of settings where trade regimes have been liberalized, levels of poverty and inequality have increased, and thus health has deteriorated. We conclude with suggestions on how decision makers can measure growth that is related to changing trade policy in a way that can better gauge its effects on population health.

growth and health How does growth, as it is traditionally measured, affect people’s wellbeing? The most common current measurement of growth is gross

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domestic product (gdp), the value of all goods and services produced within a country in a given year. In theory, increased gdp could result in positive health outcomes for the population concerned. Enhancing a society’s capacity to produce goods and services evidently could potentially have widespread positive effects on its population’s health; increased production capacity allows a government to adjust to change, protect its interests, and invest in its people’s well-being. In practice, some countries with high gdps have healthy populations, and some with low gdps have poor health statistics. Norway, for instance, which ranked first on the 2005 United Nations’ Human Development Report, has a gdp per capita of us$37,670. Its medical and health indicators are very positive: it has 356 physicians for every 100,000 people, skilled personnel were present at every birth in the country, and only 5 percent of all Norwegian infants had a low birth weight. Haiti, the poorest country in the Western hemisphere, has an exceptionally low gdp per capita of us$1,742, ranking 153 out of 177 countries on the Human Development Index. Its physician-to-person ratio is 25 per 100,000, less than a quarter of all births are attended by skilled personnel, and 21 percent of its infants are born underweight (United Nations Development Programme 2005). However, there are other vast differences in the political economies of these nations besides gdp. Moreover, the interaction between health and growth as measured by gdp is not a simple linear relation. Research spearheaded by Preston (1975), Rodgers (1979), and Wilkinson (1992), among others, demonstrates that beyond a certain level of wealth, a population’s health does not necessarily improve. Likewise, the World Bank showed in its World Development Report: Investing in Health (1993b) that in rich countries, population health, as measured by life expectancy, was not solely attributable to absolute income (see figure 8.1). Amartya Sen, Nobel Laureate in Economics, notes two important contrasts in worldwide indices of growth and health. The first concerns high economic-growth countries that experienced improved health statistics (such as Korea and Taiwan) and fast-growth countries whose well-being outcomes did not improve (such as Brazil). The second contrast is the difference between countries that improved their citizens’ quality and length of life while undergoing fast economic growth (again, Korea and Taiwan) and those that improved their citizens’ lives irrespective of performing strongly economically (such as Sri Lanka, prereform China, Costa Rica, and the Indian state of Kerala) (Sen 1999). As he showed in a previous work with Drèze (1993), Sen argues that there are two principal ways in which societies can reduce mortal-

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Income per capita (1991 international dollars)

Fig. 8.1 Life expectancy and income per capita for selected countries and periods (World Bank 1993b)

ity: through growth-mediated processes and through support-led processes. Whereas the first occurs through initial economic growth and the state’s subsequent ability to investment in social services, the second works primarily through public investment in services such as health care and education (Sen 1999). A comparison of Canada and the United States further illustrates the tenuous relationship between health and traditional measures of economic growth. In a forthcoming study, Hertzman and Siddiqi undertake a longitudinal comparison of gdp and well-being in these two countries. The authors demonstrate that the health status of Canadians and Americans began at similar levels in 1950, but since that time, Canada’s life expectancy has been gradually and steadily surpassing that of its southern neighbour (see figures 8.2 and 8.3). This trend continued despite the fact that throughout this period, American gdp-measured growth and employment levels were consistently superior to those in Canada, and the United States was also spending more per capita on

Trade, Inequalities, and Health

Fig. 8.2 2006)

Female life expectancy in Canada and the United States (Hertzman and Siddiq

Fig. 8.3 2006)

Male life expectancy in Canada and the United States (Hertzman and Siddiqi

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health care (Hertzman and Siddiqi forthcoming). In sum, there is no simple relationship between population health and gdp.

impacts of poverty and inequality on health As shown above, being a rich nation is generally good for population health, but it is not the entire story. Within most countries around the world, presently as well as historically, being poor comes with an increased chance of illness, disease, and premature death. There is a vast literature in both epidemiology and social science documenting the relationship between poverty and poor health that dates back hundreds of years. Physicians like the German doctor Rudolph Virchow in the mid-1800s were declaring medicine to be a social science, linking the deplorable housing, sanitation, and work conditions of the poor at that time to their high rates of disease and death. Link and Phelan make the point that many thought that improved living and working conditions and the widespread adoption of immunization would break the link between poverty and health (Link and Phelan 1995; Kadushin 1964). As it turns out, however, the poor continue to bear a disproportionate disease burden into the twenty-first century. Poverty is thought to influence health by means of a number of overlapping mechanisms, including material deprivation, feelings of shame and worthlessness, and social exclusion. The most recent data for Canada show a five-year difference in life expectancy between men living in the most affluent neighbourhoods and those living in the poorest (Wilkins, Berthelot, and Ng 2002). The situation for marginalized people in the United States is even more desperate. One study shows that the differences in life expectancies between the best- and worst-off subgroups in the United States are 16.1 years for males and 13.1 years for females (Murray, Kulkarni, and Ezzati 2005). Across the sexes, the difference in life expectancies between the 7.5 million black males in high-risk urban areas and the country’s 10 million Asian American females is 21 years. These data demonstrate that life expectancy is “graded” by income; being poor is worse than being middle class, and being rich is better still when it comes to health. The graded relationship suggests that there is more to the income-health relationship than just poverty – it seems that hierarchies created by social inequality within countries might also be harmful for health. This idea about the relationship between inequality and poor health outcomes in populations is also supported by international

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data suggesting that the richest countries are not necessarily the healthiest countries. As noted earlier, Canada, a country with a lower gdp per capita than the United States, has had a higher life expectancy than the United States for both men and women for over thirty years now, and the gap is widening between the two nations (Duchesne et al. 1999). The best evidence suggests that this is a result of Canada’s social programs and policies, lower poverty rates, and greater equity (Heymann et al. 2006). The Canada-us life expectancy gap suggests that richer is not necessarily better when it comes to a nation’s health, even though poverty is clearly not good for population health either. For nations that are not poor, it is how income is distributed rather than absolute prosperity (if measured by gdp per capita) that is important for health (Wilkinson 1992). In other words, income inequality accounts for the pattern of summary indicators of population health like life expectancy or mortality among those nations. A recent study involving hundreds of cities in Australia, Canada, Great Britain, Sweden, and the United States shows that metropolitan-scale mortality is strongly patterned by income inequality (Ross et al. 2005). Theoretically, income inequality – a property of a place with no individual analogue – is thought to influence health through two possible mechanisms. The first mechanism suggests that income distribution is a proxy for a variety of societal characteristics that are indirectly related to health. The second suggests that income distribution is directly related to health through individual perceptions of social position. These two mechanisms cannot be completely disentangled, as Lynch and Kaplan (1997) point out. Income inequality between or within countries has a number of what Wilkinson calls “social symptoms” that allow for the existence of unhealthy microenvironments in the home, at work, and in the community. These unhealthy microenvironments are deprived both materially and socially, but the psychosocial effects of exposure to them take on increased importance for those at the bottom who are acutely aware that others manage to escape or avoid those microenvironments altogether (Ross, Wolfson, and Dunn 2004).

impacts of trade on poverty and inequality Since poverty and inequality demonstrably exert negative effects on people’s health, to understand how trade policies affect well-being, we must analyze trade policies’ impacts on poverty and inequality. We

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review the empirical evidence at the cross-national and national levels to determine what effects trade liberalization has had on poverty and on inequality between and within countries. The studies were chosen based on their methodological rigor, geographical diversity, and emphasis on empirical evidence. Some cross-country studies suggest that trade liberalization has led to declining levels of poverty and inequality. The International Monetary Fund (imf), for instance, asserts that “[o]verall, inequality among countries has been on the decline since 1990, reflecting more rapid economic growth in developing countries, in part the result of trade liberalization (2001).” Likewise, the World Bank (2001) argues that economic globalization reduces both poverty and intercountry inequality and has negligible effects on intranational inequality. The bank often cites the East Asian Miracle, which was the dramatic increase in gnp per capita of Hong Kong, Indonesia, Japan, Korea, Malaysia, Singapore, Thailand, and Taiwan after the 1960s, as an example of how trade liberalization simultaneously decreases poverty levels and income dispersion (1993a). Since the financial crisis that took place in this region in the late 1990s, as well as the collapse of the highly liberalized Argentinean economy in 2001, some researchers have been less apt to make these types of arguments. However, many studies continue to advocate trade liberalization as the best way to decrease poverty levels and income dispersion. For instance, a World Bank economist uses bank data to study trends in economic integration, poverty, and inequality across the world since 1980. According to his article, the number of destitute people in the world has decreased by 375 million since the 1980s, and although wage inequality is rising, intranational inequality is generally not increasing (though it has risen in China, India, and the United States). The author then argues that since increased growth and decreased poverty occurred most dramatically in integrated economies, economic globalization is good for the poor (Dollar 2005). Making similar links between trade liberalization, increased growth, and decreased poverty, Jagdish Bhagwati (2004) claims that “freer trade is associated with higher growth and that higher growth is associated with reduced poverty. Hence, growth reduces poverty.” Likewise, a study of global inequality trends between 1981 and 1997 argues that widespread trade liberalization resulted in a decline in international inequality, defined as the dispersion in the distribution of per capita incomes within the global population (Ghose 2004).

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The studies just mentioned, which sound an overwhelmingly positive note regarding economic globalization, are subject to a number of criticisms. First, although the world’s aggregate poverty level may have decreased, this figure depends largely on the recent increased consumption in the populous nations of China and India and could mask the marked rise in poverty elsewhere and inequality levels there and elsewhere (World Commission on the Social Dimension of Globalization 2004). Furthermore, it is highly debatable when a country should be termed a “globalizer,” and studies produced by the World Bank, such as Globalization, Growth and Poverty, have been critiqued for their methods of classification (Kiely 2004). Finally, multilateral economic institutions, such as the World Bank and the imf, figure prominently in the literature outlining the benefits of economic globalization. Given that these are banks whose interest in maintaining liberalized trade regimes in developing nations is evident, the impartiality of these studies is questionable. In contrast, other researchers have studied the effects of economic globalization on poverty and inequality levels across numerous countries and reached different conclusions. Researchers at the Inter-American Development Bank assess the impact of economic reforms on inequality in eighteen Latin American countries between 1980 and 1998. Based on seventy-nine national household surveys, they find that within a sample of employed urban males aged thirty to fifty-five, these reforms led to increased wage differentials in the short term but that this effect became less pronounced over time. In understanding how six features of national policy reforms affected wage inequality, the authors identified domestic financial-market reforms, the liberalization of capital accounts, and tax reform as the most important, and labour market reforms as significant, but to a lesser extent. In their analysis privatization had an equalizing effect and openness to trade did not affect inequality. The authors conclude that although the overall impact of trade reforms increased wage differentials, these types of policies should not necessarily be abandoned (Behrman, Birdsall, and Székely 2000). The authors’ final word on the advisability of these types of policies might have been more negative had they examined a more vulnerable portion of the population, since employed, urban, mature males represent a highly advantaged sector of Latin American society. Moving beyond Latin America to compare developing and developed nations worldwide, Savvides uses Lee and Swagel’s (1997) gauges of protection, which they had based on desegregated unctad data on

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measurements of tariff and non-tariff barriers to trade, to study how globalization affects income inequality. Savvides obtained the income distribution data from the Deininger and Squire data (1996) set. The author demonstrates that between the 1980s and early 1990s, trade liberalization did not affect income dispersion in developed nations, but among less developed countries, more open economies experienced a rise in income inequality (Savvides 1998). A more comprehensive and global study based on multistakeholder consultations and worldwide dialogues at the national, regional, and sub-regional levels and conducted by the ilo’s World Commission on the Social Dimension of Globalization finds that economic globalization’s effects have been highly variable across the world. Nations that managed to increase exports and attract foreign direct investment (fdi) (such as newly industrializing economies in East Asia, recent members of the eu, and some Latin American nations, including Mexico and Chile) have benefited from this process. However, as the commission points out, these countries began globalizing with the advantage of prior industrialization, infrastructure, and institutions, and they did not all adhere to orthodox liberalization schemes. Similarly to these nations, the individuals who benefited most from globalization were those connected to profitable multinational enterprises and globally successful national businesses; those who lost out were people associated with unsuccessful firms, the poor, the illiterate, “unskilled” labourers, and typically vulnerable groups like indigenous peoples and women (World Commission on the Social Dimension of Globalization 2004). Regarding inequality, the commission notes its increase in a number of high-income countries. In the United States, the United Kingdom, and Canada, for instance, the top 1 percent of workers in these countries have seen a dramatic rise in their share of national wealth. In the United States, this group now possesses 17 percent of the country’s gross income, which is the highest that this figure has been since the 1920s. And although most countries worldwide have more wage inequality now than they did in the 1960s (see figures 8.4 and 8.5), the commission asserts that it is difficult to assess to what degree economic integration has caused this change. As for poverty, although the number of people living in extreme poverty decreased from 1.237 billion in 1990 to 1.1 billion a decade later, the authors affirm that this change was largely due to the improved lot of citizens in China and India, in which 38 percent of the world’s population live (Cornia and Kiiski 2001).

Trade, Inequalities, and Health 50 45 40 35 30 25 20 15 10 5

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21

15

1 12

12 3

0 Countries with rising inequality

Countries with stable inequality

7 2 Countries with declining inequality

Of the 73 countries surveyed, Of the 73 countries surveyed, Of the 73 countries surveyed, 5% of the population was 36% of the population was 59% of the population was living in these countries living in these countries living in these countries Transitional countries

Developing countries

Developed countries

Fig. 8.4 Income inequality changes in 73 countries, 1960s to 1990s (Cornia and Kiiski 2001). Copyright © International Labour Organization 2004.

Fig. 8.5 gdp per capita in the poorest and the richest countries, 1960–62 and 2000–2 (in constant 1995 us$, simple averages) (Cornia and Kiiski 2001). Copyright © International Labour Organization 2004.

A number of smaller-scale studies have supported the commission’s argument that not enough people benefit from globalization in its present form. For instance, Weller and Hersh study how trade deregulation affected the incomes of the poor in developing countries in the short and long terms. After performing a regression analysis on a data set covering fifty-two less-industrialized economies (with an average of

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three observations per country), they find that the poor benefited most in countries where trade and capital flows were more regulated (Weller and Hersh 2004). Milanovic comes to a similar conclusion in his study of globalization’s effects on inequality. Using the World Income Distribution database, which is comprised nearly completely of householdlevel surveys and covers more than 95 percent of global gdp income and 90 percent of the world’s population, he analyzes how openness (defined as trade as a share of gdp) and fdi (defined as a percentage of gdp) affected income distribution. He finds no evidence to support the idea that openness reduces inequality (Milanovic 2005). Regarding trade liberalization’s effects on inequality, a parallel conclusion is reached in a United Nations University World Institute for Development Economics Research (wider) study. After examining inequality levels in seventy-three countries since the Second World War, the authors find that inequality declined between the 1950s and the 1970s, except in sub-Saharan Africa and in Latin America, where this decline began only in the 1970s. Forty-eight countries displayed rising trends in inequality levels, and this trend generally (in thirty-three nations out of forty-eight) began in the 1980s and 1990s. This surge was evident in all the transition economies of Eastern Europe, virtually universal in Latin America and the oecd nations, present in a less pronounced form in South, Southeast, and East Asia, and present but inconsistent in sub-Saharan Africa (the data from the Middle East and North Africa was not longitudinal, and thus no definite conclusions were reached). In seeking the cause behind this consistent worldwide trend towards more inequality, the authors argue that commonly advanced theories (such as technological advancements) can elucidate the variation among countries, but cannot explain its global increase across all types of economies. The reason for this, the authors argue, was the adoption of trade liberalization policies. Although stating that this does not mean that liberalization and globalization irrevocably lead to more inequality, “it certainly signals that their premature, poorly sequenced and unselective implementation under weak institutional and incomplete market conditions ... may lead to substantially worse results than expected on the basis of the restrictive conditions posited by standard theory (Cornia and Kiiski 2001).” To sum up the cross-national evidence, the best evidence demonstrates that economic globalization’s effects have been highly variable across populations and outcomes. In the aggregate, global poverty levels have likely declined since trade liberalization began in earnest in

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the 1980s, owing to slight improvements in China and India, but not reflecting consistent improvements in other nations. Moreover, inequality within and among countries is almost certainly on the rise. This means that the populations who suffer the most from the results of trade liberalization are precisely those whose economic and health situations are most precarious: the destitute, both in wealthy and in poor countries. Since clearly there are a number of limitations inherent in any study that spans national borders, such as the dependence on aggregate national data, the questionable comparability of poverty levels in rich and poor nations, and the lack of attention to smaller-scale impacts of trade liberalization, we turn now to the level of individual countries. As at the cross-national level, some studies have shown trade liberalization to have had beneficial effects on poverty and inequality. A study of China by the World Bank, based on official household survey data and the Thiel Index of inequality, argues that the country’s trade reforms resulted in improved poverty indicators. The bank examines the reforms that took place after 1979 and their effects on the growth of the economy, as well as on the welfare of the people. Since the late 1970s, the number of people living on $1 a day has reportedly decreased by 400 million. Using the official Chinese poverty line, this means that the poor population has declined from 200 million in 1981 to 34 million in 1999. Despite these indications of positive change, the authors observe that since the late 1990s, macroeconomic growth’s ameliorating influence on poverty has decreased and income dispersion has risen (Brixi 2003). Moreover, data obtained from the Chinese state is not necessarily reliable, and the World Bank’s methods of measuring poverty have been heavily criticized by a number of researchers (Kiely 2004). A similar pattern of decreased poverty levels emerges from a study of Uganda. Researchers from the World Bank and the Economic Policy Research Centre in Kampala examine microlevel survey and panel data for about 1,200 households in 1992 and 2000. During the early 1990s, the country began liberalizing its agricultural sector. The authors note that poverty within the panel decreased markedly over this period, from 54 percent to 36 percent. This decrease occurred most dramatically in urban regions; 42 percent of households were lifted out of poverty in these areas, but only 25 percent of households in rural areas. There was also a disparity in the changes in poverty levels among the different regions, with the North suffering in particular. In seeking to understand the determinants of poverty reduction, the authors observe that the

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marked decrease in cotton prices on the world market played a large role in the stagnant poverty rates of the rural North. The overall picture of Ugandan poverty, however, is positive (Deininger and Okidi 2003). On the other hand, other studies at the national level have shown trade liberalization’s effects on poverty and inequality to be indeterminate or negligible. In Colombia, researchers have examined detailed nationallevel household data from 1984 to 1998 to determine how wage inequality was affected by trade reforms. Although the country had undergone some degree of trade liberalization during the 1970s, the government increased protection in the early 1980s, with tariffs averaging 27 percent in 1984. Between 1985 and 1994, and particularly in the 1990–1 period, Colombia liberalized its trade regime through a reduction in tariffs and through a change in the structure of protection across industries. Because this period coincided not only with an increase in efficiency and growth but also with a rise in wage dispersion, the authors have sought to determine if the reforms triggered the increased inequality (Attanasio, Goldberg, and Pavcnik 2004). The researchers posit three ways in which wage distribution could have been affected by the trade reforms. Regarding the skill premium, because the percentage of skilled workers increased across all industries, the authors conclude that this factor was not affected by tariff changes. The wage premium decreased by more in sectors that witnessed larger tariff reductions, and since these were the sectors with the lowest premiums, this change increased inequality. The informal economy of Colombia increased in size, and sectors with more trade reform experienced a greater surge in informality, thus contributing to inequality. The authors conclude that the increased wage dispersion was too large to be explained by any of the three mechanisms they propose and that the role played by trade reform, therefore, may have been minor (Attanasio, Goldberg, and Pavcnik 2004). Clearly, however, it is possible that there were other mechanisms not measured by these authors through which liberalization affected inequality. Jamaica’s economic policy experiences were similar to Colombia’s, with the adoption of structural adjustment programs (saps) in the 1970s and 1980s. Handa and King (1997) examine trade liberalization’s effect on Jamaican poverty and inequality levels, using data from the Jamaica Survey of Living Conditions and the Planning Institute of Jamaica. The country’s first agreement with the imf was signed in 1977. Over the next twenty years, and especially after 1989, Jamaica concluded over ten agreements with the imf and undertook three saps

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with the World Bank. These accords and programs led to policies that removed price controls, deregulated import controls, eliminated subsidies, and privatized publicly owned businesses. The authors found that the initial round of market-friendly reforms in the early 1980s led to an increase in inequality and a deterioration in living standards. The next set of reforms in the early 1990s, which were more dramatic, led to a rise in inequality, followed by a rapid recovery. The authors contrast this eventual overall improvement in Jamaican equality levels with the more negative outcome of saps across the rest of the Western hemisphere, a difference that they say may be related to the timing of the trade reform implementation. Clearly, in evaluating these conclusions, it is possible to assume that the period of four years is insufficient to accurately gauge the impacts of reforms. A longer-term study examining the effects of external-trade liberalization reforms that China undertook in anticipation of its accession to the World Trade Organization in 2001 presents a similarly indeterminate picture of these reforms’ effects. Two World Bank economists argue that the reforms, including tariff reduction and export subsidies, had negligible effects on aggregate household income, income dispersion and poverty levels (Chen and Ravallion 2004). They qualify these conclusions with the observation that the effects of trade liberalization were not consistent China-wide; urban households tended to gain at the expense of their rural counterparts, and some provinces (notably in the northeast) were affected more than others. Despite the authors’ convincing and innovative pairing of household level data with a general equilibrium model, their conclusions need to be viewed with some caution because of their heavy dependence on official Chinese data, which has been shown to be incomplete or unreliable in other contexts. Demonstrating a similar variation in the impacts of reforms on urban and rural areas, a wider study of India analyzes the trade liberalization that began in 1991. Jha (2000) notes the important differences between the “Delhi consensus,” which advocates controlled trade liberalization and slow privatization, and the less cautious standard “Washington consensus.” Jha uses the National Sample Survey’s consumption data to calculate the Gini coefficient (a widely used measure of inequality) and three measures of poverty. After the liberalization that took place in the 1990s, according to the author, poverty levels were higher, as were indicators of inequality in rural areas and, to a lesser extent, urban zones. But these outcomes, Jha remarks, were not as negative in India as in other areas of the world, notably in transition economies. It is surprising, given the

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increased levels of poverty and inequality that resulted from these types of reforms, that the author still advocates their adoption. In contrast to these assessments of trade liberalization’s effects at the level of nations, other studies paint a bleaker picture. In a brief but compelling study of Korea, Mah (2002) observes the effects of globalization, as measured by trade volumes and foreign direct investment, between 1975 and 1995, on the country’s Gini coefficient. He argues that these trade liberalization measures undoubtedly increased inequality. Likewise in Mexico, Harrison and Hanson study the dispersion in wages after trade reforms that took place in the mid-1980s. The authors obtained their inequality information from yearly data on over two thousand manufacturing plants from Mexico’s Secretariat of Trade and Industrial Promotion between 1984 and 1990. The reforms that took place during this period were considerable, with the maximum tariff falling from 100 percent in 1985 to 20 percent in 1990. During the 1980s, the authors observe, white-collar workers’ wages rose more than those of blue-collar workers; in other words, inequality increased. Harrison and Hanson (1999) argue that this rise in inequality was caused by a combination of foreign direct investment, export orientation, and technological change. It is worth pointing out that this study may underestimate rising inequalities, since the authors cover only the private-sector businesses in manufacturing that succeeded in staying afloat during the entire period. Turning to Brazil, which like Mexico underwent dramatic reforms during the 1980s, a group of economists attempt to move beyond the theoretical models of Heckscher (1919), Ohlin (1993), and Stolper and Samuelson (1941), which predicted that trade liberalization would narrow income inequality in developing countries. Arbache, Dickerson, and Green look at the effects of the major trade reforms that took place in the early 1990s. Until that point, the Brazilian economy had been highly protected and regulated, and publicly owned businesses had been prominent in many industries. In 1987 the average weighted tariff was relatively high at 55 percent. By 1992 this figure was only 14 percent, and trade volumes grew dramatically over a short period; between 1990 and 1996, imports increased by 257 percent and exports by 151 percent. The authors use nationally representative cross-section household survey data gathered in the Pesquisa Nacional por Amostra de Domicílios. Examining employed wage earners aged eighteen to sixty-five (amounting to approximately 125,000 people per year), they find that workers in the traded sectors witnessed a dramatic decrease in

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their wages, while those in the non-traded industries saw their wages decrease, though by less. They also argue that although openness had consequences across all education levels, the best-educated Brazilians were largely protected from the more pronounced effects felt at lower levels of education (Saba Arbache, Dickerson, and Green 2004). Another analysis of saps’ effects, in the context of Zimbabwe, argues that they had negative consequences for the country’s poor. Marquette examines the saps undertaken in the early 1990s and the simultaneous severe drought that took place in 1991–2. Both of these developments, she finds, exerted markedly negative effects on the poor through a variety of mechanisms, including a surge in unemployment levels and a decrease in wages. The author obtained the poverty data from the Zimbabwe Central Statistical Office, two ongoing national household surveys, and initial data from the 1995 National Poverty Assessment Survey (Marquette 1997). The study shows clear and important immediate effects but does not provide data on long-term effects. In sum, the cross-country and national evidence on trade’s effects on poverty and inequality demonstrates the high variability of these outcomes across the world. There is no simple answer to the question of how liberalization affects levels of wealth. Nevertheless, it is possible to draw some important conclusions. To begin with, there is no convincing data to support the idea that trade reduces inequality, either globally or within countries. There is, on the other hand, substantial evidence pointing to globalization’s exacerbation of income dispersion in developing countries (particularly in Latin America since the 1980s, in Eastern Europe after the 1990s, and more recently in East Asia), as well as in developed nations. Regarding poverty, it is possible that economic liberalization has reduced the proportion of people living in absolute destitution worldwide. However, this aggregate dip in poverty levels may be entirely due to the slightly improved financial situation of two countries – China and India – home to over a third of humanity. Moreover, there is extensive evidence suggesting that trade liberalization has exacerbated poverty levels within individual nations. Finally, even most positive assessments of trade liberalization policies conclude that the most vulnerable populations are the least likely to benefit.

measuring growth As demonstrated by the research summarized earlier, poverty and inequality have negative consequences for health. However, as shown in

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the previous section, the relationship between trade, poverty, and inequality is complex. Without a doubt, trade will continue to be developed in order to encourage growth. The question is what form trade will take. The best way for trade policy-makers to make decisions that promote population health is to measure its impacts accurately. As described earlier, gdp, the most popular indicator of growth, represents the total value of new goods and services produced in a given year within the borders of a certain territory. It is most commonly measured by expenditure, taking into account four types of spending: private consumption, investment, government expenditure, and net exports (Danopolous 2004). Many criticisms have been made of this measurement. For instance, some studies have pointed out that it does not take into account the idea of “uneconomic growth” – the idea that above a certain point, increased gdp actually has harmful effects. Moreover, the consumption-based nature of this measure also distorts the picture of economic well-being. For example, a natural disaster would raise a region’s gdp, since the government and citizens would be spending large amounts of money on reconstruction. Simplistic indicators such as gdp are thus unequipped to give us an accurate picture of what happens to people’s health and well-being. Therefore, we should not be surprised when the relationship between gdp and health, as discussed initially, is ambiguous. What we need to make trade good for health is a measure that can give us a clear indication of changes in levels of poverty and inequality – aspects of growth essential to population health and well-being. Fortunately, researchers have already developed and applied several alternative ways to measure growth. One of the earliest indicators proposed was the Index of Sustainable Economic Welfare (isew), developed in 1989 by Daly and Cobb. This measurement has varied in its composition, depending on when and where it has been applied, but it generally includes (in addition to personal consumption), the costs of environmental deterioration, defensive private spending, and nondefensive public spending. A number of studies have calculated the isew in a variety of contexts. Researchers who have examined data between the 1950s and 1980s from six oecd nations show that the levels for European countries (Austria, Holland, Germany, and Sweden) were rising or stable, while the same indicator for the United States and the United Kingdom was declining (Jackson and Symne 1996). A study of Chile’s growth demonstrates that while the gdp grew quickly between the 1960s and 1990s (at a rate of 2.9 percent annually), the

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isew declined over the same period (–0.16 percent annually) (Castañeda 1999). And Thailand, according to a comparison of its gdp and isew between 1975 and 1999, is reaching the point at which its welfare returns from economic growth are diminishing and becoming negative (Clarke and Islam 2005). Closely related to the isew is the currently more commonly used Genuine Progress Indicator (gpi), formulated in 1995 by the San Francisco–based think tank Redefining Progress (2006). Employing the consumption data used in the gdp, it adjusts for a number of other factors, including income distribution, natural resource depletion, pollution, and unpaid work. Hamilton’s (1999) study of Australia compares the country’s levels of gdp and gpi between 1950 and 1996 (see figure 8.6). The author identifies a number of factors that account for the two indicators’ divergence in the late 1970s (gpi dropped but gdp rose): foreign debt, unemployment and overwork, environmental problems, and resource exhaustion. A study of the United States by Redefining Progress (Venetoulis and Cobb 2004) illustrates an even more dramatic divergence between gdp and gpi (see figure 8.7). A third measure, the Index of Economic Well-Being (iewb), is designed to present a better way to measure how economies affect health and well-being (Osberg and Sharpe 2002). It is composed of current effective per capita consumption flow, net society accumulation of stocks of productive resources, income distribution, and economic security. Osberg and Sharpe studied the iewb in Australia, Canada, Norway, Sweden, the United Kingdom and the United States between 1980 and 1999, demonstrating that the growth in economic well-being was consistently lower than the growth in gdp per capita. To sum up, in contrast to gdp, the three alternative indicators all provide a more accurate picture of a society’s economic well-being, because they do not depend entirely on simplistic consumption data. Furthermore, these three measures are all better indicators of population health, because they all look at what we know affects individual wellbeing, as opposed to gdp’s focus on aggregate national wealth.

conclusion In this study, we began by establishing the ambiguity of the effects of macroeconomic growth on population health outcomes. What matters more than prosperity for health is how wealth is distributed: in other words, levels of poverty and inequality. These outcomes, as we showed,

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Fig. 8.6

Australian per capita gdp and gpi, 1950–96, constant 1990 prices (Hamilton 1999)

Fig. 8.7

us gdp and gpi, 1950–2002 (Venetoulis and Cobb 2004)

are not necessarily improved when a nation’s trade regime is liberalized. In fact, there is suggestive cross-national and national evidence showing that increased trade can lead to worsened levels of poverty, inequality, and by extension, well-being.

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This discussion of trade and health, which argues for a shift in the way we understand successful growth, contributes to a long-standing tradition in economic thought. For example, the New Economics Foundation think tank argues that “[i]f we are serious about increasing wellbeing and eradicating poverty, then it is our progress towards doing so, not growth of aggregate income, for which we should design our economic policies and institutions, and by which we should judge our progress (2006).” Furthermore, Mahbub ul Haq, one of the principal forces behind the Human Development Reports begun by the United Nations Development Programme in the early 1990s, urges policymakers to put humans at the centre of their understanding of economic development. As he sees it, “[t]he objective of development is to create an enabling environment for people to enjoy long, healthy and creative lives (1995).” Moreover, the very founders of economics, including Adam Smith, Robert Malthus, Karl Marx, and John Stuart Mill, always remained cognizant of the idea that the purpose of economic development was to benefit human beings and that the creation of wealth was merely a means to that end. If the success of trade was measured in ways that included poverty and inequality indicators, the possibilities for real and lasting human development would be tremendous. Clearly, abandoning measures of gdp in favour of a more accurate measure of growth would not necessarily guarantee population health. But the alternative – a worldwide race to achieve an outcome completely divorced from the lived experience of human beings – is an option that, for people and their health, is no option at all.

bibliography Attanasio, O., P.K. Goldberg, and N. Pavcnik. 2004. “Trade Reforms and Wage Inequality in Colombia.” Journal of Development Economics 74:331–66. Behrman, J.R., N. Birdsall, and M. Székely. 2000. “Economic Reform and Wage Differentials in Latin America. Working paper no. 435. InterAmerican Development Bank. Bhagwati, J. 2004. In Defense of Globalization. New York: Oxford University Press. Brixi, H.P. 2003. China: Promoting Growth with Equity. Report no. 24169-cha. Washington, dc: World Bank.

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Castañeda, B.E. 1999. “An Index of Sustainable Economic Welfare (isew) for Chile.” Ecological Economics 28:231–44. Chen, S., and M. Ravallion. 2004. “Welfare Impacts of China’s Accession to the World Trade Organization.” World Bank Economic Review, 18(1):29–57. Clarke, M., and S.M.N. Islam. 2005. “Diminishing and Negative Welfare Returns of Economic Growth: An Index of Sustainable Economic Welfare (isew) for Thailand.” Ecological Economics 54:81–93. Cornia, G.A., and S. Kiiski. 2001. “Trends in Income Distribution in the Post–World War II Period: Evidence and Interpretation.” Discussion paper no. 2001/89. United Nations University World Institute for Development Economics Research. Danopolous, C. 2004. “Economic Measurements and Quality of Life in Mexico.” Journal of Political and Military Sociology 32(2):193–206. Deininger, K., and J. Okidi. 2003. “Growth and Poverty Reduction in Uganda, 1999–2000: Panel Data Evidence.” Development Policy Review 21(4):481–509. Deininger, K., and L. Squire. 1996. “A New Data Set Measuring Income Inequality.” World Bank Economic Review 10:565–91. Dollar, D. 2005. “Globalization, Poverty, and Inequality since 1980.” World Bank Research Observer 20(3):145–75. Duchesne, D., F. Nault, H. Gilmour, and R. Wilkins. 1999. “Vital Statistics Compendium.” In Statistics Canada, ed., catalogue no. 84–214-xpe Ottawa: Statistics Canada. Ghose, A.K. 2004. “Global Inequality and International Trade.” Cambridge Journal of Economics 28:229–52. Hamilton, C. 1999. “The Genuine Progress Indicator: Methodological Developments and Results from Australia.” Ecological Economics 30:13–28. Handa, S., and D. King. 1997. “Structural Adjustment Policies, Income Distribution and Poverty: A Review of the Jamaican Experience.” World Development 25(6):915–30. Haq, M.U. 1995. Reflections on Human Development. New York: Oxford University Press. Harrison, A., and G. Hanson. 1999. “Who Gains from Trade Reform? Some Remaining Puzzles.” Journal of Development Economics 59:125–54. Heckscher, E. 1919. “The Effect of Foreign Trade on the Distribution of Income”. Ekonomisk Tidskrift: 497–512. Hertzman, C., and A. Siddiqi. 2006. “Towards an Epidemiological Understanding of the Effects of Long-Term Institutional Changes on

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Population Health: A Case Study of Canada versus the United States.” Social Sciences and Medicine 64:589–603. Heymann, J., C. Hertzman, M.L. Barer, and R.G. Evans, eds. 2006. Healthier Societies: From Analysis to Action. Oxford: Oxford University Press. International Monetary Fund. 2001. Global Trade Liberalization and the Developing Countries. New York: International Monetary Fund. Jackson, T., and S. Stymne. 1996. Sustainable Economic Welfare in Sweden: A Pilot Index, 1950–1992. Stockholm: Stockholm Environment Institute, New Economics Foundation. Jha, R. 2000. “Reducing Poverty and Inequality in India: Has Liberalization Helped?” Working papers no. 204. United Nations University World Institute for Development Economics Research. Kadushin, C. 1964. “Social Class and the Experience of Ill Health.” Sociological Inquiry 35:67–80. Kiely, R. 2004. “The World Bank and ‘Global Poverty Reduction’: Good Policies or Bad Data?” Journal of Contemporary Asia 34(1):3–20. Lee, J.-W., and P. Swagel. 1997. “Trade Barriers and Trade Flows Across Countries and Industries.” Review of Economics and Statistics 79(3):372–82. Link, B.G., and J. Phelan. 1995. “Social Conditions as Fundamental Causes of Disease.” Journal of Health and Social Behavior. Special issue, 80–94. Lynch, J., and G.A. Kaplan. 1997. “Understanding How Inequality in the Distribution of Income Affects Health.” Journal of Health Psychology 2:297–314. Mah, J.S. 2002. “The Impact of Globalization on Income Distribution: The Korean Experience.” Applied Economics Letters 9:1007–09. Marquette, C.M. 1997. “Current Poverty, Structural Adjustment, and Drought in Zimbabwe.” World Development 25(7):1141–49. Milanovic, B. 2005. “Can We Discern the Effect of Globalization on Income Distribution? Evidence from Household Surveys.” World Bank Economic Review 19(1):21–44. Murray, C.J.L., S. Kulkarni, and M. Ezzati. 2005. “Eight Americas: New Perspectives on us Health Disparities.” American Journal of Preventive Medicine 29(5):4–10. New Economics Foundation. 2006. Growth Isn’t Working: The Unbalanced Distribution of Benefits and Costs from Economic Growth. London: New Economics Foundation. Ohlin, B. 1933. Interregional and International Trade. Cambridge: Harvard University Press.

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Osberg, L., and A. Sharpe. 2002. “An Index of Economic Well-Being for Selected oecd Countries.” Review of Income and Wealth 48(3):291–316. Preston, S.H. 1975. “The Changing Relation between Mortality and Level of Economic Development.” Population Studies 29:231–48. Redefining Progress. “Sustainability Indicators.” Retrieved 23 February 2006 from http://www. rprogress.org/newprograms/sustIndi/gpi/ gpi_contents.shtml Rodgers, G.B. 1979. “Income and Inequality as Determinants of Mortality: An International Cross-Section Analysis.” Population Studies 33:343–51. Ross, N., D. Dorling, J.R. Dunn, G. Hendricksson, J. Glover, J. Lynch, et al. 2005. “Metropolitan-Income Inequality and Working-Age Mortality: A Cross-Sectional Analysis Using Comparable Data from Five Countries.” Journal of Urban Health 82:101–10. Ross, N., M.C. Wolfson, and J.R. Dunn. 2004. “Why Is Mortality Higher in Unequal Societies? Interpreting Income Inequality and Mortality in Canada and the United States.” In P. Boyle, S. Curtis, E. Graham and E. Moore eds., The Geography of Health Inequalities in the Developed World. Aldershot, England: Ashgate Publishing. Saba Arbache, J., A. Dickerson, and F. Green. 2004. “Trade Liberalisation and Wages in Developing Countries.” Economic Journal 114 (February): f730–96. Savvides, A. 1998. “Trade Policy and Income Inequality: New Evidence.” Economics Letters 61:365–72. Sen, A. 1999. Development as Freedom. New York: Knopf. Sen, A., and J. Drèze. 1993. Hunger and Public Action. Delhi: Oxford University Press. Stolper, W., and P.A. Samuelson. 1941. “Protection and Real Wages.” Review of Economic Studies 9:58–73. United Nations Development Programme. 2005. Human Development Report 2005: International Cooperation at a Crossroads: Aid, Trade and Security in an Unequal World. New York. Venetoulis, J., and C. Cobb. 2004. The Genuine Progress Indicator, 1950–2002 (2004 Update). San Francisco: Redefining Progress. Weller, C.E., and A. Hersh. 2004. “The Long and Short of It: Global Liberalization and the Incomes of the Poor.” Journal of Post Keynesian Economics 26(3):471–504. Wilkins, R., J.-M. Berthelot, and E. Ng. 2002. “Trends in Mortality by Neighbourhood Income in Urban Canada from 1971 to 1996.” Supplement to Health Reports 13:1–28. Ottawa: Statistics Canada.

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Wilkinson, R.G. 1992. “Income Distribution and Life Expectancy.” British Medical Journal 304(6820):165–68. World Bank. 1993a. The East Asian Miracle: Economic Growth and Public Policy. Oxford: Oxford University Press. – 1993b. World Development Report 1993: Investing in Health. New York. – 2001. Globalization, Growth and Poverty: Building an Inclusive World Economy. Washington, dc: World Bank Research Group. World Commission on the Social Dimension of Globalization. 2004. A Fair Globalization: Making It Happen. Geneva: International Labour Organization. World Trade Organization. 1996. “Singapore Ministerial Declaration.” 13 December.

nd nants Health Equity

9 Trade Policy and Health Equity: Can They Avoid a Collision? RONALD LABONTE, TED SCHRECKER, AND DAVID SANDERS

introduction This chapter addresses conflicts between trade liberalization and health equity, with specific reference to social determinants of health. By health equity we mean “the absence of disparities in health (and in its key social determinants) that are systematically associated with social advantage/disadvantage” (Braveman and Gruskin 2003, 256). By social determinants of health, we mean the social conditions in which people live and work – crucially including lack of income, economic insecurity, inappropriate housing, unsafe workplaces, and lack of access to health care. (More detail is provided in the third section of this chapter.) In most low- and middle-income countries, lack of access to health care is an important determinant of health; however, we do not focus on health care in this chapter, since it is the topic of several other chapters in this book. Rather, our concern is with what should be done when trade liberalization may undermine policy objectives related to health equity and to reducing disparities in access to the social determinants of health. With respect to human well-being defined more generally, this tension has existed within the World Trade Organization (wto) since its inception. In the preamble to the Marrakech Agreement, the wto’s founding document, trade liberalization is described as a means of “raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services ... in accordance with the objective of sustainable development” (Agreement

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1994). In practice, as the wto Secretariat itself proclaims, “The system’s overriding purpose is to help trade flow as freely as possible – so long as there are no undesirable side-effects” (World Trade Organization 2005, 10), thus elevating free trade to an end in itself rather than a means to human development, sustainable or otherwise. Further, unlike the substantive provisions of trade agreements, preambles lack legal force for purposes of domestic litigation or dispute resolution among wto members. The wto is not the whole of the current world trade policy regime, but the same tension characterizes the content and implementation of bilateral and regional trade agreements between nations. Context for this chapter is supplied by the Millennium Development Goals (mdgs), which we describe in the next section. Accepting the mdgs as a “floor” in terms of current multinational commitments to health and development, we proceed to review briefly the evidence on the relations between trade liberalization and some key social determinants of health. This is contested territory, and we are not concerned to provide a “balanced” account of the health equity gains and losses from trade liberalization, still less to offer a generic conclusion about whether, on the preponderance of the evidence, trade liberalization is good or bad in terms of its effects on such broader health-related outcomes as poverty reduction. The only responsible answer to this question is, “it depends”; further detail can be supplied only with reference to specific national or sub-national contexts and to a specified time frame.1 Our normative perspective assigns primacy to the objective of health equity, and for our purposes the urgency of the issues discussed in this chapter is adequately established by the substantial number of instances in which trade liberalization demonstrably does not further that objective. The underpinnings of this conflict among priorities lie in the global reorganization of production that arises from the current regime of liberalized trade and that provided an incentive for the industrialized nations (and, it must be said, the governments of some developing nations as well) to promote that regime. Since the effects of trade policy on health equity and social determinants of health cannot be understood in isolation from the global reorganization of production, for which trade liberalization has been a prerequisite, we provide a necessarily brief discussion of that reorganization from a health equity perspective. We then describe what trade liberalization policies might look like if health and development were positioned unequivocally as the objectives of such policies, as implied by the preamble to the Marrakech

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Agreement. We conclude with some sceptical reflections, based on the distribution of power and influence within the global economic order, on the possibilities for reducing tensions and conflicts between trade policy objectives and health equity.

the millennium development goals The Millennium Development Goals (mdgs), to which most of the world’s governments committed themselves at the United Nations General Assembly in 2000, are unprecedented because they incorporate specific, time-limited objectives and targets for reducing the savage consequences of global economic inequality. Three of the goals, which involve reducing child and maternal mortality and reversing the spread of hiv/aids, malaria, and other communicable diseases, are explicitly health-related. Four others directly address crucial social determinants of (ill) health, such as extreme poverty, undernourishment, living in slums, the subordination of women, and lack of access to education, safe water, and basic sanitation.2 They are therefore directly relevant to health equity. The mdgs have at least three weaknesses. First, although ambitious when viewed against a history of slow progress towards meeting basic human needs, they are modest with reference to the full extent of those needs.3 Second, given the questionable quality of existing data sets, measurement of progress toward several of the goals and associated targets is likely to be fraught with uncertainties (Attaran 2005). Third, even when data are available, unless progress toward the goals can be assessed in a way that allows for intranational disaggregation of indicators of progress, targets derived from the mdgs might be met on a national scale, even though the situation of the poorest and least healthy households in the society remained unchanged or even deteriorated (Gwatkin 2002). On the other hand, the mdgs and their associated targets have three strengths that, for many observers, more than compensate for these weaknesses. First, at least implicitly they recognize “that many of the most devastating problems that plague the daily lives of billions of people are problems that emerge from a single, fundamental source: the consequences of poverty and inequality” (Paluzzi and Farmer 2005, 12). Second, progress (or lack of progress) toward the mdgs has emerged as an unprecedented focus for research and monitoring efforts undertaken by many existing international agencies (e.g., United

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Nations Development Programme 2003; Wagstaff et al. 2003; Abumoghli et al. 2006), as well as by specially created entities such as the un Millennium Project (un Millennium Project 2005; Sachs and McArthur 2005). Third, the mdgs thereby provide an indispensable opportunity for critical examination of the gap between such rhetorical flourishes as the g8’s 2001 commitment to “ make globalisation work for all our citizens and especially the world’s poor”4 and the actual consequences of development policies broadly defined. The goals and associated targets also provide valuable benchmarks for research designed to measure the impacts of trade policy and other elements of transnational economic integration (“globalization”) on social determinants of health. The best available data indicate that while substantial progress has been made toward achieving the mdg targets in some regions, in others the situation is grim. An assessment prepared for the first World Health Organization High-Level Forum on the Health Millennium Development Goals in January 2004 concluded that “Even if economic growth accelerates ... and even if progress toward the gender and water goals were to be substantially accelerated, the developing world will wake up on the morning of January 1, 2016 some way from the health targets – Sub-Saharan Africa a long way” (Wagstaff et al. 2003, 2:12). More recent syntheses of available evidence have reached similar conclusions and suggest the outlines of an emerging consensus: substantial commitments of new resources in the form of development assistance are a necessary, although not a sufficient, condition for achieving the mdgs (e.g., un Millennium Project 2005; Commission for Africa 2005). For purposes of this chapter, the mdgs are especially important because, as an increasingly dense network of trade and investment flows links rich and poor across national borders, achieving the mdgs will also require revamping development policy to ensure, at the very least, that its stated objectives are not undermined by other policies (for example, in the area of trade) pursued by industrialized countries. Hence, the appeal for policy coherence in the form – at the very least – of a “whole of government approach” (Picciotto 2005a) that minimizes the extent to which the policies of national governments operate at cross purposes. In a more ambitious proposal, international development specialist Fantu Cheru and economist Colin Bradford advocate a coordinated set of actions by the industrial countries organized around the mdgs, incorporating “a holistic view of all their actions toward developing countries that goes beyond aid to trade, investment, capital

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flows debt, environment, health standards, agriculture and macropolicy management” (Cheru and Bradford 2005, 16). They emphasize that “some action on trade issues of consequence to developing countries ... must be forthcoming or the policy coherence criteria for the international cooperation agenda will fail” (17). The logic of this appeal to a holistic view is compelling, but, as we shall see, the track record of the industrialized world to date is mixed and the political impediments are formidable.

trade liberalization and social determinants of health The most easily visible effects of trade on health are probably those involving access to essential medicines, an area of ongoing dispute since the adoption of the Agreement on Trade-Related Aspects of International Property (trips), and changes in access to health services that may result from commitments made under the General Agreement on Trade in Services (gats); these are dealt with in other chapters of the book. Trade can also affect social determinants of health outside health care systems in a number of ways that may ultimately be of equal or greater significance for improving health outcomes. To understand this point, it is useful to consider an analytic framework for studying disparities in health developed by Diderichsen et al. (2001), who identify four mechanisms that link social context with health outcomes: 1 social stratification, which includes the effects of “those central engines in society that generate and distribute power, wealth and risk”; 2 differential exposure to health risks; 3 differential vulnerability; and 4 differential consequences – for instance of illness for the rich and poor, for those with contractually secured employment, and for those reliant on casual jobs or the informal economy. Poverty, however defined, and economic insecurity are central to the operation of all four mechanisms. According to recent World Bank estimates, roughly 1.1 billion people worldwide were living on incomes of less than us$1 a day in 2001, and roughly 2.7 billion on less than $2 a day (Chen and Ravallion 2004). These estimates are contentious, because data from China and India, where much of the claimed poverty reduction has taken place, are of questionable reliability (Wade 2002). Further, it has been argued that the way in which market income figures are adjusted for purchasing power parity bears little relation to realworld prices of a market basket of basic necessities (Reddy and Pogge

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2005; Pogge and Reddy, 2006). Satterthwaite (2003) notes that this disconnect may be especially acute in the case of major urban areas; rapid urbanization in the developing world may therefore mean that the gap between World Bank estimates and the true global extent of an inability to meet basic needs is actually increasing over time. Fundamentally, preoccupation with the accuracy of such estimates diverts attention from “what should be our central preoccupation, the sheer magnitude of poverty and inequality” (Wade 2002, 50) and its health consequences. Worldwide, 850 million people are chronically undernourished, a figure that has remained almost unchanged in recent years, and much larger numbers suffer from serious, potentially debilitating micronutrient deficiencies (United Nations Administrative Committee on Coordination Sub-Committee on Nutrition 2000, 23–32) – despite the fact that undernutrition is the single most important contributor to the global burden of disease (Ezzati et al. 2002) and despite much rhetoric on the part of international agencies about reducing food insecurity. More than 1 billion people lack access to water that is safe for drinking, and 2.6 billion lack access to basic sanitation (United Nations Development Programme 2005, 24) – important given the substantial contribution of diseases related to water and sanitation to the global burden of disease (Pruss et al. 2002). Of special concern, given the speed of urbanization in the developing world, is the estimate that more than 850 million people now live in slums, defined as areas combining poor quality housing, overcrowding, inadequate services and insecurity of tenure, with the number projected to rise to 1.4 billion in 2020 (un Millennium Project Task Force on Improving the Lives of Slum Dwellers 2005). Recent synthetic reviews of research on determinants of vulnerability to hiv/aids, tuberculosis, and malaria (Bates et al. 2004a, b) concluded that poverty, gender inequality, development policy, and health sector “reforms” involving user fees and reduced access to care are important determinants of vulnerability and that “[c]omplicated interactions between these factors, many of which lie outside the health sector, make unravelling of their individual roles and therefore appropriate targeting of interventions difficult” (Bates et al. 2004a, 268). These exposures and vulnerabilities are unequivocally economic in origin: individuals and households who have enough money to avoid them can readily do so almost everywhere in the world. Unequivocally economic, as well, are some of the consequences of ill health: “medical poverty traps” resulting from loss of livelihood or prohibitive health

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care costs (Whitehead et al. 2001; International Labour Organization Socio-Economic Security Programme, 2004, 87–91). Thus, it can be argued that a “first-cut” health equity impact test of trade policy measures, alone or in the broader context of globalization in which they are embedded, demands that they be measured against contributions to poverty reduction and impacts on access to the resources that support the ability to lead a healthy life. In other words, the impact of trade policy measures needs to be assessed not only in terms of their effect on the ability of countries, sub-national jurisdictions, and regions to achieve the mdgs but also in terms of their effect on the most vulnerable individuals and households within those countries. Despite much rhetoric about level playing fields, today’s trade policy regime often fails this test, for reasons related both to protectionist policies that continue to be pursued by industrialized countries and to pressures on developing countries to liberalize imports. These pressures can have two distinct kinds of negative economic impacts that are relevant to social determinants of health. They may result in losses in economic output or productivity across an entire economy; alternatively, they may have disproportionate negative impacts on particular populations: for instance, on agricultural producers or industrial workers in previously protected sectors whose livelihoods are lost to competition from low-cost imports.5 The most widely recognized policy failure involves agricultural trade. Market access for agricultural commodities is economically critical for many developing countries, yet that access is systematically impeded by high levels of producer support, notably including direct subsidies. No one-to-one correspondence exists between the value of these subsidies and the value of potential markets lost to developing country producers, and estimating the latter is fraught with difficulty (Wise 2004), but a strong consensus exists within the research literature that the income losses for the developing world as a whole are substantial (World Bank 2001; Watkins and Fowler 2002; Anderson and Martin 2005). Although agricultural subsidies are often justified in populist terms, the main beneficiaries within the industrialized world are the richest agricultural producers and agribusiness firms (Commission for Africa 2005, 279–84; United Nations Development Programme 2005, 130). Intransigence on the part of the industrialized world on the issue of agricultural subsidies led to the collapse of World Trade Organization ministerial negotiations at Cancún in 2003; the best the 2005 Hong Kong ministerial negotiations could agree upon was an end date of

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2013 for agricultural export subsidies; there was also agreement on the classification of domestic subsidies that will eventually have to be reduced, although issues of depth and timing were still to be resolved. Subsequent negotiations ended without apparent hope of agreement in July 2006 (Woodall 2006). Meanwhile low-cost agricultural imports, required either by trade agreements such as the North American Free Trade Agreement (NAFTA) or by conditions attached to loans from the World Bank and the International Monetary Fund (IMF), have wiped out the livelihoods of many agricultural producers in developing countries: chicken farmers in Ghana and many small-scale corn producers in Mexico are just two examples (Atarah 2005; Henriques and Patel 2004; Fanjul 2003). A further perverse impact of the industrialized countries’ trade policies affects all goods, not just agricultural products. At least in the absence of compelling distributional/health equity considerations within the exporting countries or regions, one would expect a prodevelopment trade policy to incorporate minimal or zero tariffs on exports from poor countries to rich ones. However, the United States “collected almost as much in import duties in 2004 from Bangladesh ($314 million) as from France ($350 million), despite importing 14 times as much from France” (Radelet 2005); similarly, “VietNam pays $470 million in taxes on exports to the United States worth $4.7 billion, while the United Kingdom pays roughly the same amount on exports worth $50 billion” (United Nations Development Programme 2005, 127). Among the reasons for this pattern is the tendency of industrialized countries to apply much higher tariffs (tariff peaks), sometimes amounting to more than 100 percent, to the labour-intensive exports that are of special importance to developing countries (International Monetary Fund Staff 2002). Such “tariff escalation” on products to which value has been added outside the industrialized world is especially important because of the distinctive characteristics of contemporary trade that are explored in the next section of the chapter. The health impacts of these trade practices occur by way of a pathway involving access to income or livelihood. Two additional examples show that potential effects on specific determinants of health that operate in other ways require investigation as well, and they underscore the need for health ministries and civil society constituencies that are concerned with health to become more involved in trade policy debates. First, recent research identifies trade liberalization, specifically its role in facilitating foreign direct investment in food processing and retailing

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and rapid increases in the availability of processed foods, as contributing to nutritional transitions in developing countries and rapid increases in obesity. These changes in turn have important consequences for the future incidence of non-communicable diseases such as cardiovascular disease and diabetes (Hawkes 2002, 2005; Rayner et al. 2007), which even in developing-country contexts often affect primarily the poor rather than the rich (Monteiro et al. 2004; Ezzati et al. 2005). This is not an argument against trade liberalization per se, but it suggests that national governments should carefully assess the health impacts of trade commitments, even as it raises the question of how many governments outside the industrialized world have the expertise and institutional capacity to do so. Second, commitments made either under the gats or in bilateral and regional trade agreements may open up services such as water and sewage treatment and social programs such as public pensions to private investment. Whatever the theoretical benefits in terms of improved economic efficiency – a concept that is intrinsically indifferent to issues of distribution and equity – privatization of water and sanitation in many countries over the past decade has often generated intense political resistance because of negative effects on access to services by the poor and economically insecure (Loftus and McDonald 2001; McDonald 2002; Budds and McGranahan 2003; International Consortium of Investigative Journalists 2003). A recent ilo report describes the privatization of state pension plans as undermining economic security and identifies as a key driver of this process the World Bank’s strong preference for converting state pension plans to private insurance on the Chilean model (International Labour Organization Socio-Economic Security Programme 2004, 35–7, 70–5). Once a particular service has been opened to foreign investment under gats, privatization may be locked in because the gats commits all wto members to a “progressively higher level of liberalization” in all service sectors (article XIX). If a foreign firm (say, a private insurer or a water utility) lost markets as a result of a subsequent effort to limit commercial activity, wto dispute settlement procedures might expose a country wishing to curtail commercial health care provision or financing to demands for compensation in other areas of trade.6 Opening up particular services to foreign investment may also create powerful incentives for prospective investors and their actual or prospective host country joint-venture partners to promote privatization, because of the security the gats provides for investments in newly privatized services. This discussion does not imply

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an out-of-hand rejection of private provision of services, but it implies a strong warning to national governments against making the gats commitments to allow private investment in services that are relevant to social determinants of health without diligent exploration of long-term consequences for health equity.7

trade policy and the global reorganization of production Beyond these specific issues, assessments of how contemporary trade policy affects social determinants of health must be sensitive to how the context diverges from the presumptions of conventional economic theory. That body of theory at least implicitly regards trade as an exchange of goods between independent parties, in a context that just happens to involve crossing national borders rather than the village market square. Today, however, the majority of trade occurs within complicated production networks that cross multiple national borders (Dicken 2003). Historically, these networks were mainly structured by direct investment in subsidiaries and affiliates by transnational corporations (tncs), characterized by ownership of financial assets and, at least indirectly, of physical plant and equipment. Increasingly, however, short-term contractual arrangements between a core firm and multiple, often competing suppliers are replacing foreign direct investment (Milberg 2004). This is the Nike model (Donaghu and Barff 1990; Rothenberg-Aalami 2004), which has now been extended throughout the garment industry, to the manufacture of many other consumer products, and to outsourcing an expanding range of business services such as call centre operations, data entry, and routine computer programming. Several years ago, “[t]rade within tncs and arm’s-length trade associated with tncs [were] estimated to account, together, for about two-thirds of world trade, and intra-firm trade, alone, for one-third” (United Nations Conference on Trade and Development 1999, xix). The concept of a commodity chain or value chain (the two terms are largely interchangeable) is useful in describing how production tasks are allocated among national jurisdictions and in understanding the distribution of gains and losses from the global reorganization of production. “Globalization entails uneven development for firms and workers both within and across regions and nations, and viewing the process through the lens of the commodity chains framework contributes to our understanding of who wins and who loses, and why” (Bair and Gereffi

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2003, 165). Recent case studies applying commodity chain analysis to industries such as horticulture, textile manufacturing, and garment production in Kenya, South Africa, Bangladesh, and Vietnam (Nadvi 2004; Jenkins 2005) found that substantial opportunities for employment and income gains (for some workers) were associated with integration into global value chains and the resulting access to export markets. Conversely, “[g]lobal value chain pressures are ... associated with increasing casualization of labour and excessive hours of work” (Nadvi 2004, 25). These pressures are familiar from studies of the footwear and clothing industries in many jurisdictions (e.g., (Ross 1997; Gereffi, Spener, and Bair 2002), especially from the experience of Mexico’s maquiladora sector, where cost containment by way of falling wages and deteriorating working conditions for many manufacturing workers (AlarcónGonzález and McKinley 1999; Fussell 2000; Cypher 2001, 2004; Frey 2003; Martínez 2004) has failed to avoid the recent loss of an estimated two hundred thousand export production jobs to China. In its annual forecast, “The World in 2006,” the Economist noted that “the entry of China’s massive labour force into the world economy is helping to hold down wages” and reduce the risks of inflation (Woodall 2006). Meanwhile, “many investors are touting Vietnam as the next China – a country with lower wages and more energetic entrepreneurs than its giant northern neighbour” (York 2005). The imperative to compete by way of lower labour costs and more flexible employment conditions (the “race to the bottom”) is real and important and was recognized more than twenty years ago in early studies of the new international division of labour (Fröbel et al. 1980), but it is only part of the story. Some observers of the effects on women of integration into the global economy note that “for many women, working in exports is better than the alternatives of working (or being unemployed) in the domestic economy” (Barrientos et al. 2004, 2; see also Kabeer 2004a, b). Workers and national economies can gain substantially from economic integration if firms can “move up the value chain” by engaging in intermediate or final (often more knowledgeintensive) stages of the production process, where value added is higher. To do so firms and workers must have access to the necessary financial resources, skills (human capital), and technology. This may or may or may not be the case, and even when it is, the economic dislocations from trade liberalization may be substantial, because formerly valuable skills and equipment cannot always quickly, frictionlessly, or affordably be replaced by those most relevant to the new global marketplace, and

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some workers, firms, and regions will almost inevitably be left behind (Aky´u´z 2005). This process and its destructive impacts are familiar even in industrialized economies with vastly greater resources (e.g., Uchitelle et al. 1996). Further, the current trade and development policy regime works against strategies of moving up the value chain in at least two ways. The first is that the tariff escalation referred to earlier works against such strategies. Second, many of the newly industrialized countries (the Asian “tigers”) that were most successful in moving up the value chain did so by way of a high degree of state intervention. Countries like South Korea and Taiwan protected industries at an early stage of development through import controls, management of foreign investment, extensive subsidies to manufacturing industries, selective allocation of credit and subsidies, capital controls, and intellectual-property regimes that favoured domestic producers, just as European and North American countries had done a century earlier (Amsden 1994; Chang 2002; Birdsall et al. 2005a) and as China did until its accession to the wto.8 Only as economically important industries matured were imports selectively liberalized. These interventionist strategies, often demonstrably successful even though antithetical to neoclassical economic wisdom, may be precluded by contemporary trade agreements (South Centre 2005; Chang 2005a). For example, the Agreement on Trade-Related Investment Measures (trims) prevents countries from imposing performance conditions such as minimum local content or domestic-sourcing requirements and import restrictions – but not, apparently, technology transfer requirements – on foreign investors (Trebilcock and Howse 2000, 352). Economist Ha-Joon Chang (2002) argues that the trade policy stance of the industrialized countries amounts to “kicking away the ladder” that enables their economies to achieve current levels of affluence. Amsden (2000) has argued that most of the requisite legal flexibilities still exist9 and has suggested that the problem lies, rather, in the lack of “an explicit alternative vision” of development policy. However, we suggest later in this chapter that this view may be too sanguine in view of other elements of globalization, such as the ease of capital flight and the fact that such dirigisme is antithetical to the development policy wisdom promoted by such agencies as the World Bank and the imf, backed up by conditionalities attached to lending and debt relief. Looking toward the future, Chang warns that many existing flexibilities could be eliminated by the outcome of current wto negotia-

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tions on non-agricultural market access (nama), thus “re-introducing precisely the trade rules employed by the imperial powers to stifle the development of poor countries” (2005b, 62). A further concern is that wto-plus provisions in the proliferation of bilateral and regional trade agreements (World Bank 2004, chap. 2), may require that “developing countries relinquish virtually all instruments of industrial policy” (Shadlen 2005: 768), including those that would have been available within the wto. The attempt by the United States to write trips-plus provisions into such agreements in order to vitiate the flexibilities gained over the 2001–3 period in intellectual property regimes (Fink and Reichenmiller 2005) arguably serves as an early warning. Bilateral and regional trade agreements are not inherently more restrictive, but they are likely to be so in practice because inequalities and asymmetries in bargaining power and resources between industrialized and developing countries are likely to be even more influential in determining the outcome than they are in the wto process.10 Two further points should be made about how the economic strategy of moving up the value chain relates to social determinants of health, even though these points are not institutionally related to trade policy. First, the rapid growth performance and subsequent democratization of some Asian tigers has led to amnesia about the repression of labour in the not-so-distant past. Amsden (1990, 18) has observed that “the discipline of labour by the state lies at the heart of all late industrialization” – an observation that is borne out by the experience of contemporary China, although outside that context and a few others the hypermobility of capital may limit the need for coercive state intervention. Economic insecurity in itself functions as a form of labour discipline, as Marx understood; thus, the destructive effects on livelihoods that have been associated with the rapid liberalization of imports may be comprehensible as an outcome of this strategy. Second, the preceding discussion of the incidence of gains and losses from export orientation suggests that even industries and countries that are relatively successful in the game of global integration may experience increased polarization of incomes and opportunities between workers with more and workers with less marketable capabilities (human capital) – as indeed has been the case in many industrialized countries (Mytelka 1987; Nickell and Bell 1995; Freeman 1997; Yalnizyan 1998; Duménil and Lévy 2004; Cornia et al. 2004; Mishel et al. 2005). Thus, even in the improbable event that a near-future trade policy regime were to eliminate all obstacles to moving up the value chain, health inequity and disparities in

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access to social determinants of health would not automatically be reduced. Domestic policy interventions would be needed.

social determinants of health and directions for trade policy What would a trade policy regime that gave priority to health equity and access to social determinants of health look like? The question confronts several evidentiary complications. Trade policy effects on health and social determinants of health are rarely describable with the certainty that is available from studies in clinical settings and from some epidemiological study designs. In the real world of public policy, confounding factors are too numerous and the available number of cases too few. “The further upstream we go in our search for causes,” to explore variables such as trade policy’s effects on social determinants of health, the greater is the need to rely on “observational evidence and judgment in formulating policies to reduce inequalities in health” (Marmot 2000, 308). Since insufficient research attention has been directed to trade policy impacts on social determinants of health, the lack of answers also results from the fact that the correct questions have only infrequently been asked – for example, by way of systematic studies of trade policy impacts on the human right to health,11 the importance of which has recently been underscored by the un Special Rapporteur on the topic (Hunt 2004). De Vogli and Birbeck (2005) provide a useful guide for such research by describing several pathways leading from globalization to increased vulnerability to hiv infection and its consequences among women and children in sub-Saharan Africa. Of special importance in the trade policy context, they show that women’s access to basic needs may be reduced by reduced labour income resulting from import liberalization and increased reliance on the informal sector. Economic insecurity may also increase pressures for migration to urban areas, which may simultaneously reduce women’s access to basic needs and increase their exposure to risky consensual sex (if “survival sex” can be called consensual). Although the issue is not explicitly addressed by De Vogli and Birbeck, trade liberalization may also affect health outcomes by reducing fiscal capacity. Despite recent trade liberalization initiatives, tariffs continue to account for a significant proportion of government revenues in many developing countries; low-income countries, in particular, have recovered only a small portion of lost tariff revenues from other sources

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(Baunsgaard and Keen 2005). In the absence of compensating increases in development assistance or in the capacity and willingness of governments to collect tax revenues from other sources, cutbacks in already minimal public expenditures on health care and education that follow the loss of tariff revenues or the introduction of user fees to make up for the lost revenues are likely to reduce access to education and to hiv treatment and prevention services. As in other situations involving assessment of the impacts of trade liberalization, case-by-case attention to distributional questions is important here: beneficiaries of publicly financed health and education services that were supported by foregone tariff revenues may (or may not) be quite different from the primary beneficiaries of the lower prices that result from tariff reductions. The issue of fiscal capacity and our earlier mention of lender conditionalities underscore the importance of the fact that trade policy changes are seldom implemented in isolation from other elements of market-oriented economic policy “reform,” such as reduced food subsidies, the introduction of user fees, and the privatization of social security – all of which historically were actively promoted by agencies like the World Bank and the imf (Akin et al. 1987; World Bank 1993; International Labour Organization Socio-Economic Security Programme 2004; Lister 2005).12 This complexity makes it difficult, but perhaps also unnecessary, to separate out the effects of trade policy per se. Keeping in mind what we know about the etiology of economic insecurity on various scales, it is less important to be able to determine how much of the change in social determinants of health can be attributed to trade policy per se, as distinct from other elements of integration into the global marketplace, than it is to be able to identify negative impacts and either change the trade regime or design effective compensatory policy measures. To restate the point made earlier about complexity: no oneto-one correspondence can be identified between trade liberalization and declines (or improvements) in such determinants of health as access to health care and education; the real world is too complicated for that. However, from our normative perspective trade policy must avoid increasing social or economic inequalities that affect access to the social determinants of health and, further, must avoid restricting the opportunities to provide compensatory policy measures. The United Nations Development Programme’s Human Development Report (2005) provides a useful set of directions and prerequisites for a trade policy regime that prioritizes human development (chap. 4). First, it argues that the round of multilateral trade negotiations (the

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Doha Round) begun in 2001 must deliver improvements in market access for poor countries, with a special focus on agricultural trade, and must “revisit agreements and negotiations that limit the policy space available to developing countries ... or skew the benefits of integration towards rich countries” (126). An illustrative example of the potential is provided by Special and Differential Treatment (sdt), which has been a feature of the trade policy regime since the founding of the gatt. Intense lobbying by African and Asian countries led wto members to agree in 2001 to review “all Special and Differential provisions ... with a view to strengthening them and making them more precise, effective and operational” (World Trade Organization 2001, par. 44, emphasis added). But what should count as strengthening? According to one observer, the fundamental question is whether sdt provisions should be considered temporary measures to facilitate the integration of developing economies into global exchange relationships characterized by dramatic disparities in resources and bargaining power or whether “the bottom-line question for the wto should be what it can do to facilitate development, not what it is willing to allow to ease adjustment” (Garcia 2004, 300). The Commission for Africa, established by the British government in the lead-up to the 2005 g8 Summit, similarly mooted the idea of applying to selected wto commitments a “development test” that “would focus on the likely net effects of not implementing wto rules in favour of more development orientated trade policy, and on negative spillovers, and would allow greater discussion of development concerns, rather than merely the implementation of the rule of law” (Commission for Africa 2005, 280–1). This discussion revisits the fundamental tension about the ultimate objectives of trade policy with which we introduced the chapter. At least over the short term, the July 2006 collapse of wto negotiations renders much of this discussion academic and a human-development-friendly trade regime increasingly improbable. Second, the United Nations Development Programme (undp) argues that national governments must be able to capture and share the benefits of global economic integration by way of such measures as (1) pursuing an active industrial and technology policy, including selective governmental support for development and transfer of important technologies; (2) managing trade liberalization in order to achieve development objectives, e.g., by controlling the pace and sequencing of opening domestic markets to imports; and (3) implementing redistributive policies that ameliorate the effects of growing disparities in market income,

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even if they cannot directly reduce these,13 and that compensate the losers from economic integration (United Nations Development Programme 2005, 119–28). Many developing countries may lack the institutional capcity to implement such policies effectively within their own borders, quite apart from political constraints generated by the interaction of globalization and domestic political allegiances; internationally, the flexibility needed to implement some of these measures may be constrained both by the current wto regime and by bilateral and regional trade agreements: the extent of both sets of constraints is an important topic for future research. At the very least, the approach recommended by the undp implies the need for an international mechanism to compensate developing countries for the substantial losses in tariff revenue associated with trade liberalization, for example under the Economic Partnership Agreements (epas) now being negotiated by the eu with countries in Africa,14 in order to protect the fiscal capacity required for tackling inequality. These combined tasks represent a tall order indeed.

conclusion: historical context and political economy How likely is the policy shift that we have just described? If the choices and changes advocated by the undp were implemented, they would constitute a basic shift in the nature of the wto and trade policy negotiations away from a “mercantilist” orientation involving parties with highly unequal resources and asymmetrical bargaining power15 and a shift “towards a collectively agreed global social-welfare function. However, there has been almost no discussion, let alone agreement, on what that function should be” (Stiglitz and Charlton 2004, 496). Further complicating the equation is the explicit introduction of issues of fairness and distribution, which fit uneasily with the self-interested nature of the negotiating process as it now exists. Industrialized-country electorates and especially economic elites in those countries may have little to lose from development policies that simply pay no attention to substantial portions of the world’s population. More than a decade ago the editor of the New Perspectives Quarterly wrote that “[p]eople merely surviving in places like Bangladesh and across vast stretches of Africa are superfluous from the standpoint of the market. By and large, we don’t need what they have; they can’t buy what we sell” (Gardels 1993). Since the mdgs imply a commitment to such

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objectives as poverty reduction and health equity for reasons that may not be reducible to self-interest,16 a clear tension exists between policies aimed at achieving the mdgs and the motivations that industrializedcountry governments (perhaps all governments) bring to trade negotiations and to the pursuit of dispute resolution under the agreements that result. Thus, situations in which trade agreements or dispute resolution outcomes are inimical or less favourable than they might be to health equity are perhaps best described not in terms of policy incoherence but in terms of conflicts of fundamental values and underlying economic and political interests. This critique gains force from the fact that trade liberalization over the past two decades has been driven primarily by the agendas of the United States and major European nations: protecting key sectors of their economies, prying open new markets for their products, and facilitating the global reorganization of production in accordance with the priorities of transnational corporations and their shareholders. The “debt crisis” that began in the early 1980s provided an important source of leverage, as “[a]n alliance of the international financial institutions, the private banks, and the Thatcher-Reagan-Kohl governments was willing to use its political and economic power to back its ideological predilections” (Przeworski et al. 1995, 5). Import liberalization, along with privatization, deregulation, and reduced government expenditure, became a key element of structural adjustment packages that were attached to loans from the World Bank and the International Monetary Fund. Although the macroeconomic policy rationales were superficially plausible, the effect was to promote rapid integration into the global marketplace while often increasing domestic economic inequality and contributing to large-scale deterioration in health outcomes and determinants of health.17 That source of leverage is still being used in the form of Poverty Reduction Strategy Papers (prsps) that are now a prerequisite for debt relief under the Multilateral Debt Relief Initiative (mdri). Picciotto (2005b, 138) observes that “the overwhelming focus of the prsp initiative has been on the assessment and the monitoring of developing country performance with virtually no attention to the impact of developed country policies on the likelihood of achieving results.” Direct parallels exist between the prsp process of qualifying for debt relief and earlier forms of conditionality (Cheru 2001; Gottschalk 2004); notably, policy elements of prsps may include “trade-related conditions that are more stringent, in terms of requiring more, or faster, or deeper liberalization,

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than wto provisions to which the respective country has agreed”(Brock and McGee 2004, 20). The value shift that would be involved in making development policy consistent with attaining the mdgs, and with reducing disparities in access to the social determinants of health more generally is therefore even more fundamental than one would think from examining trade policy in isolation. In the industrialized world, some governments have much farther to go than others. Development assistance expenditures are a highly imperfect proxy for commitment to global improvements in well being, but it is nevertheless worth noting, first, that a sixfold variation exists among industrialized countries in development assistance expenditure as a percentage of national income and, second, that a strong correlation exists between national governments’ commitment to social protection within their own borders and development assistance expenditure. Many low spenders on development assistance18 are those Anglo-American states characterized by Esping-Andersen (1990) as “liberal” welfare states, which are defined by their limited commitments to domestic redistribution. Conversely, Denmark and Norway, classic “social-democratic” welfare states in Esping- Andersen’s typology, are consistently at or near the top of the league table in terms of development assistance (figure 9.1). Interestingly, in a recent unicef comparison of national performance in reducing domestic child poverty using a measure designed for international comparisons, Denmark and Norway ranked highest and the United States ranked lowest among the group of countries shown in figure 1: the percentage of children living in poverty was estimated at 2.4 percent in Denmark, 3.4 percent in Norway, and 21.9 percent in the United States (unicef 2005). The Norwegian government elected in 2005 is committed to the position “that the wto rules must not deprive poor countries of the management right and means that have been important in developing our own society into a welfare society” (Norwegian Labour Party 2005). Thus, it can be argued that a high degree of coherence already exists within individual industrialized countries between the values that guide domestic policy and those that guide the country’s orientation toward the global economy. The key question is not one of policy coherence but, rather, one of what values are appropriate and of how to induce the value shifts that would appear to be a prerequisite for reorienting trade policy in ways that prioritize, or at least recognize as legitimate, such concerns as health equity and access to social determinants for health.

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A further challenge arises from the fact that developing-country governments may or may not use the policy opportunities available to them in ways that contribute to achieving the mdgs or comparable objectives. To oversimplify a complex problématique, they may accept and even welcome integration into the international economy in ways that undermine health equity: in order to secure the domestic and international alliances that increase their chances of retaining power and achieving their own personal objectives, rulers may be willing to see globalization leave a substantial number of their marginalized and relatively powerless subjects behind in order to satisfy the winners from integration into the global marketplace, such as the growing “middle class” beloved of the business press. Consider, as an example, the dispossession of shanty dwellers in urban India in order to create literal and metaphorical space for commercial development (Fernandes 2004; Lakshmi 2005). The undp comments on the priorities reflected by such phenomena that “[w]ere India to show the same level of dynamism and innovation in tackling basic health inequalities as it has displayed in global technology markets, it could rapidly get on track for achieving the mdg targets” (United Nations Development Programme 2005, 30–1). The Indian example is not an exceptional one but, rather, one of many examples that could be cited of bidding wars for urban space that instantiate globalization’s deepening of divisions between the upwardly mobile included and the socially and economically excluded.19 Domestic politics arguably explain what looks like a policy failure from the undp’s normative perspective, which we share: globalization increases the bargaining leverage of domestic elites in a variety of ways. As just one illustration, the ease with which financial assets can be moved around the world, when coupled with the rise of short-term contractual arrangements for the organization of production, enables the propertied worldwide to join what Sassen (1996, 40) calls “a sort of global, cross-border economic electorate, where the right to vote is predicated on the possibility of registering capital.” The preceding discussion must not be taken as a counsel of despair; despair can lead to paralysis, and the stakes in terms of human wellbeing are too high for that. Neither, however, should researchers underestimate the depth and manifold dimensions of the tensions between the current direction of trade policy and the imperative of improving health equity. The issue is more than administrative or organizational. More detailed national and sub-national case study research on trade policy impacts and trade policy interaction with other elements of globaliza-

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Fig. 9.1 Development assistance as a percentage of gross national income (gni), 2005 (Organization for Economic Cooperation and Development 2006). The symbol * denotes “Anglo-American welfare states according to the typology developed by Esping-Andersen (1990). Note that the United Kingdom is an outlier in terms of the Anglo-American welfare states only because of the us$3.3 billion value of “one-shot” commitments to debt cancellation for Iraq and Nigeria, both of which were probably driven primarily by political alliance with the United States and the associated oil-related strategic imperatives. Oxfam International has pointed out that if one subtracts these commitments from the United Kingdom’s 2005 aid expenditures, its commitment to aid as a percentage of gni falls to 0.33 (Oxfam International 2006) – in other words, lower than Canada’s and Ireland’s and firmly within the cluster of Anglo-American welfare states at the low end of the aid spending distribution.

tion is urgently needed (who Task Force on Research Priorities for Equity in Health and who Equity Team, 2005). Meanwhile, as indicated by our discussion of evidentiary issues, the demand for more research should not divert attention from the imperative of action based on what is already known about influences on the social determinants of health and about fundamental incompatibilities between contemporary trade policy and a conception of “public policy based on a vision of the world where people matter and social justice is paramount” (Marmot 2005).

notes 1 On this point as it applies to the more general question of the relations among trade liberalization, economic growth, and poverty reduction – a debate that is highly relevant to health equity – see, e.g., Rodrik (2001); Nissanke and Thorbecke (2006); Sen (2006). 2 For a list of the goals and derivative targets, see http://www.un.org/ millenniumgoals /goals.html.

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3 Pogge (2004) eloquently demonstrates the modesty of the poverty reduction target (reducing by half, in the year 2015, the proportion of the world’s people living on less than us$1 per day) when viewed against the background of expanding global affluence. 4 Communiqué, Genova, 2001 July 22: par. 3; http://www.g8.utoronto.ca/ summit/2001genoa/finalcommunique.html. 5 We are indebted to Chantal Blouin for this statement of an important analytical distinction. 6 Chapter 11 of nafta provides an indication of how such processes might operate in practice. 7 This same point has been made about gats commitments respecting health services by Smith, Blouin, and Drager (2006). 8 And may well continue to do because of its unique bargaining power as simultaneously an important consumer market and a location for low-cost, labour-intensive manufacturing production. 9 For a less dogmatic discussion that distinguishes between middle-income, late industrializers and “potential industrializers,” see Di Caprio and Amsden, (2004). 10 These inequalities and asymmetries have several dimensions. Many developing countries are unable to maintain missions at the wto in Geneva at all, much less to afford the professional expertise that is needed not only to participate effectively in multiple trade negotiations but also to pursue dispute resolution (Jawara and Kwa 2003) – creating a strong case based on fairness for expanded assistance in “capacity building.” It is more difficult to get around the asymmetry created by differences in market size as it affects not only initial bargaining positions but also the ability to make use of dispute resolution even when the outcome is favourable. “The sanction for violating a wto agreement is the imposition of duties. If Ecuador, say, were to impose a duty on goods that it imports from the United States, it would have a negligible effect on the American producer; while if the United States were to impose a duty on goods produced by Ecuador, the economic impact is more likely to be devastating” (Stiglitz and Charlton 2004, 504). 11 Key texts include the 1948 Universal Declaration of Human Rights (udhr), which refers to the right to “a standard of living adequate for the health and well-being of [one]self and his [sic] family” (article 25); the 1966 International Covenant on Economic, Social and Cultural Rights (icescr), not ratified by the United States, which specifies the “right of everyone to the enjoyment of the highest attainable standard of physical and mental health” (article 12); and General Comment 14 of the un Committee on Economic, Social and Cultural Rights (2000), which sets out states’ specific legal obliga-

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15 16

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tions “to respect, protect and fulfil ” the article 12 right. For explication see Chapman (2002); Nygren-Krug (2002). For reviews of national experiences with cost recovery and user fees for health care, see Creese (1991); Gilson (1997); Creese and Kutzin (1997); Lister (2005); Homedes and Ugalde (2005). Important case studies include Laurell (1991); McPake et al. (1993); Bloom (1998); Barrientos and Lloyd-Sherlock (2000); Kim et al. (2000); Gilson et al. (2001); Liu et al. 2001; Hung et al. (2001); Laurell (2001); Bloom et al. (2002); Wadee et al. (2003); Liu et al. (2003). This analytical distinction is important. For instance, even if it possesses the necessary administrative capacity, a developing country may not be able to raise minimum wages or restrict the flexibility of employment relations, on pain of reducing its competitiveness in terms of labour costs in an emerging global labour market (Caporaso 1987; World Bank, 1995). In theory, it might better be able to implement such measures as progressive income taxes or taxes on luxury consumption. In practice, the hypermobility both of capital and of “skilled” (i.e., marketable) labour creates serious constraints on the viability of this policy option (Tanzi 2001; Williamson 2004). Thus globalization, of which trade liberalization is a key ingredient, may lead to economic disparities that must simply be lived with and worked around for purposes of policies to reduce health inequities. Stevens and Kennan (2005) estimate that “three-quarters of the acp,” i.e., the African, Caribbean and Pacific countries with which these agreements are being negotiated, “could lose 40% or more of their tariff revenue from the eu, and for over one-third it could be 60% or more.” The paper does indicate that the impact of this loss will depend on the speed and sequencing of trade liberalization, but does not provide a regional breakdown of impacts. See note 10, above. It is tempting to appeal to self-interest by claiming, as do Cheru and Bradford (2005, 12), that “even those who are well-off feel insecure in a polarized world.” The empirical foundations of this “securitization” of human wellbeing (O’Manique 2005) remain in question except with reference to a few specific risks, such as highly communicable diseases with asymptomatic incubation periods (like sars and influenza) for which no adequate test exists. Otherwise, the appeal to security can be interpreted as an argument for more effective cordons sanitaires, and it further invites the demonization of people who are marginalized by disease or poverty as threatening “others” rather than people to whom any obligation is owed by the affluent. For an early review of the effects of such adjustment policies in ten countries, see Cornia, Jolley, and Steward, eds. (1987). For a methodologically exem-

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plary study of structural adjustment impacts, difficult to repeat because of the resource and data requirements, see Bijlmakers, Bassett, and Sanders (1998); Bassett, Bijlmakers, and Sanders (2000). Important country- or regionspecific syntheses include Schoepf, and Millen (2000); Kim (2000); Sparr (2000); Bhattacharya et al. (2002). For a summary of evidence that finds a preponderance of negative health impacts, which probably understates the case because of its omission of many important qualitative studies, see Breman and Shelton (2001). A more recent synthesis of available evidence on structural adjustment impacts is provided by Babb (2005). 18 Although not all, as shown by the example of Japan. 19 A detailed review of literature on this topic is provided by United Nations Centre for Human Settlements (2001). For case studies see, e.g., Leaf (1996); Makdisi (1997); Vasconcellos (1997); Bunnell and Nah (2004).

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10 Achieving Coherence between Trade and Health Policies: Selected Examples from Pakistan, the Philippines, Uganda, and Peru ELISABETH TUERK AND MINA MASHAYEKHI

introduction Human health is a fundamental human right and a key requisite for development, including human development.1 Today many diseases are quietly draining the vitality and hope of people in the developing world, diseases including aids, malaria, and tuberculosis, which are concentrated in the poorest countries. At the end of 2004, 39.4 million people in the world were living with hiv, nearly two-thirds of them in subSaharan Africa. Each year, almost 11 million children die before the age of five. Most of them live in developing countries and die from a disease or combination of diseases that could be prevented or treated if the means were there. Maternal health is another preoccupation of developing countries. More than half a million of women die each year from complications during pregnancy and childbirth, in part because health systems – especially systems in rural areas – are inadequate. In 1948, United Nations member states affirmed the right of everyone to “a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services” (article 25 of the Universal Declaration of Human Rights). Furthermore, the states that were parties to the International Covenant on Economic, Social and Cultural Rights of 1966 recognized “the right of everyone to the enjoyment of the highest attainable standard of physical and mental health” (article 12). More recently, improving human health was reflected in the

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Millenium Development Goals (mdgs) 4 (reduction of child mortality), 5 (improvement of maternal health), and 6 (combating hiv/aids, malaria, and other diseases). Human health is also a key requisite for development, and universal access to health services is crucial in that context. Against the backdrop of expanding epidemics (hiv/aids, tuberculosis, malaria), it has become increasingly clear that economic progress depends on healthy citizens and healthy environments. Poverty, ill-health, and inadequate access to health care are closely related. Governments pursue health-related goals through a complex set of domestic health policies, including policies to ensure universal access to essential medicines and health services. Universal-access policies are diverse, with no universally accepted categorization. In the health services area, the spectrum ranges from public to private provision, with many variations in between (public services provision, publicly funded services provision, universal-service obligations, subsidies, microfinancing of services, community-based systems, and other systems). While there is a broad consensus that regulatory intervention is needed to ensure universal access, none of the solutions is a panacea, and each government needs to identify the “best-fit solution” for it to implement, in accordance with its particular needs.2 Thus, health policies are shaped by a series of factors, including a country’s specific economic and social situation, which influences both the means available for achieving health goals as well as the priority granted to health-related policy objectives. Health care policy-making involves complex trade-offs between promoting equitable and affordable access to a basic set of health products and services, ensuring efficiencies in the health care system, and meeting the constraints in government budgets.3 National health policies are also put in place within the broader framework of international rules. On the one hand, international rules on human rights create legal obligations for governments to take action to achieve the full realization of the right to the health. On the other hand, international trade rules direct a country’s policies to the extent that they affect international trade-related issues. The trade rules include rules aimed at the liberalization of trade in goods and services, as well as rules aimed at the protection of international property rights. While international trade as such can help improve a country’s health situation, there are concerns that international trade rules may constrain governments in the implementation of domestic health policies. Moreover, the available evidence on the impact of commercialization

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on access to services is mixed. These concerns are compounded by delicate nature of issues surrounding health and health policies, including important questions of equity and equality. This chapter looks at the coherence between trade and health policies, with a particular focus on the processes that achieve or fail to achieve coherent outcomes. It presents selected examples of trade policymaking in the areas of trade in health services and trade-related intellectual property rights across a series of developing countries and describes how these countries have addressed particular trade and health challenges. In so doing, it aims to identify key elements that can help to ensure that trade policy-making results in outcomes that promote – or at least do not impede – the achievement of health objectives. Based on these examples, the chapter aims to identify vehicles and best practices for governments to follow in their attempt to achieve coherent outcomes. The examples cover different geographical regions, including Asia (Pakistan and the Philippines), Africa (Uganda), and Latin America (Peru); different types of trade negotiations (multilateral and bilateral/regional negotiations); and touch on different stages of trade negotiations (e.g., the formulation of negotiating positions, the outcomes of negotiations, and the implementation of internationally agreed trade rules).

four case studies of trade policy-making Pakistan and Public Services in the GATS Negotiations: Inter-agency Consultation at the National Level During the last decade the curative health care system in Pakistan has expanded substantially, and an increasing proportion of health care is now being provided by the private sector. Nevertheless, the incidence of disease in Pakistan is high, because of inadequate coverage and poorquality care.4 Forty percent of women are anemic, and almost 80 percent of women deliver their babies at home without trained assistance. It is, therefore, not surprising that both infant mortality and maternal morbidity associated with pregnancy are amongst the highest in Asia.5 This problematic state of the population’s health results from both inadequate access to health care and general poverty, which are strongly interconnected.6 For those who are slightly above the poverty line, diseases are a major factor in pushing them into poverty. When the poor fall ill, they tend to suffer for a protracted period, which erodes

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the few assets they have and pushes them into indebtedness and deeper poverty. Thus, for Pakistan a trade policy position that promotes prohealth outcomes would appear vital in achieving its broader development objectives. As a member of the World Trade Organization, Pakistan is currently engaged in wto negotiations to liberalize trade in services. In May 2005, Pakistan submitted its initial offer, suggesting additional market openings in sectors such as veterinary services, midwifery, and paramedical and sanitation services.7 At the same time, however, Pakistan included – in the sectoral column for these new commitments – language similar to a public services “carve-out.” More specifically, the Pakistani offer states that it “does not include services provided by public institutions, whether owned and operated by federal, provincial, district, Tehsil or municipal Authorities.”8 By including such a carve-out in its schedule, Pakistan can ensure that certain regulatory policies relating to or emanating from the above-mentioned institutions do not have to comply with the gats market access and national-treatment commitments. This would be particularly important for subsidies or other financial-support mechanisms, for universal service obligations, or for other regulatory measures intended to ensure universal access (e.g., those regulating the interface and relationship between public and private providers). In essence, such careful scheduling can help achieve the benefits from increasing market access (including private-sector participation) in the relevant services sector, while at the same time ensuring that regulatory policies aimed at guaranteeing that services are adequately provided – including to the poor and the marginalized – can be put in place with the utmost leeway. As such, a negotiating position along these lines is an example of coherence between trade and health policies. For the purpose of this paper, the key question relates to the process: how did such a trade policy position come about? With the trade ministry taking the lead in wto-related issues, where did the suggestion to include a public services carve-out in the country’s gats offer come from? In Pakistan, trade policy is the prerogative of the Ministry of Commerce, which has a special wto wing, headed by a joint secretary. Other ministries such as the Ministry of Industry or the recently founded Ministry of Textiles, handle trade-related issues arising in their context. Pakistan’s Geneva mission to the wto, however, reports directly to the Ministry of Commerce. During the process leading to the submission of the initial offer, between December 2004 and April 2005 the Pakistani Ministry of

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Commerce conducted a wide stakeholder consultation process,9 holding meetings with more than twenty-seven different federal ministries and organizations. This process included the Ministry of Health, which called on the relevant attached accreditation and licensing bodies, such as the Pakistan Medical and Dental Council, the Pakistan Nursing Council, and the Pakistan Pharmacists Association, to participate.10 Thus, these governmental and non-governmental regulatory and licensing bodies were actively involved in the design of the initial offer and effectively allowed to voice their concerns and reservations with the draft language. One of the concerns related to the government’s ability to provide essential services to the poor and marginalized, and to the question whether a full market access and national-treatment commitment would compromise this ability. Similar concerns about the extent to which specific commitments could affect regulatory prerogatives, particularly at the municipal level, were also raised by municipal authorities. It was in response to these concerns that the final version of the initial offer – in those sectors that relate to health – was designed to effectively exclude, as already mentioned, “services provided by public institutions, whether owned and operated by federal, provincial, district, Tehsil or municipal Authorities” from the scope of the commitment. While ultimately, the design and drafting of the offer appears to have been an expeditious process (lasting from December 2004 to April/May 2005), one must not overlook the long-term effort that preceded it. Over the years, the government had conducted a series of events aimed at raising awareness about wto negotiations, offered teaching and training about the multilateral trading system, and provided detailed explanations about the services negotiations, as well as about the drafting of offers and the replies to requests.11 Questions were raised about the experience with the gats in other countries and about their responses, pointing to the need for information and analysis that can facilitate informed policy choices. Initiatives such as unctad’s work on services assessment, as well as multilateral discussions on assessment, have helped in this context.12 It is important, however, for such research, outreach, and training activities not to be part of a one-time effort but, rather, to take place over time, as a continuing series of activities. The importance of capacity building and training on trade-related issues, with the objective of building the capacity of affected stakeholders and the local negotiating team, is widely recognized. Over the years, several international organizations, including the wto, unctad, and the who, have carried out –

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and still are – carrying out such capacity building activities, which are frequently sponsored by contributions from specific donor countries. Depending on the nature and purpose of the training, the beneficiaries are either government officials or other affected stakeholders. Only a longer-term effort allows the stakeholders to become properly informed, to identify the policy option that best suits their development needs, and to effectively feed this option into the broader policy formation process. Similarly, the need for consultation is not exhausted with the submission of an initial offer. There must instead be a continuous engagement, so that the consultation process also involves feedback about developments in the response to the offer in Geneva. In sum, despite the many constraints (time constraints, institutional constraints, and resource constraints, both human and financial) a developing country like Pakistan faces when striving to achieve coherence between its health and trade policy-making, so far the consultation process appears to have been successful, particularly because concerns raised by potentially affected stakeholders were included in the country’s official documents submitted in Geneva. Identifying concerns and including them in the negotiation position, however, is only one part of the process. Important questions remain about the extent to which Pakistan will be able to sustain its position in Geneva. With the Hong Kong Ministerial Declaration adding new dimensions in terms of modal objectives and plurilateral approaches for negotiating services commitments,13 there are concerns that negotiations may result in higher levels of commitments and sectoral initiatives. More broadly, developing countries fear that these approaches and initiatives would effectively reduce the flexibilities granted by the gats,14 particularly regarding the scheduling of conditions and limitations. The Pakistani public services carve-out is one of these conditions and limitations. It remains to be seen to what extent this conditionality can be retained, particularly as negotiations intensify, ultimately heading towards the conclusion of the negotiating round. So far, however, no plurilateral request has been made regarding health services, and accordingly, no plurilateral negotiating session has been held for this sector.15 While these developments appear to be promising, some observers have expressed doubts about the usefulness of the public services carveout. While such an approach could be useful for ensuring that governments retain their full right to regulate (including, among other things, their right to provide subsidies) the services in question, the public services carve-out might not help to address other health concerns arising

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from increasing trade in services. Internal and external brain drain (i.e., health personnel being drawn from public sector jobs towards what are perceived as better jobs in the private sector) serves as an example. Additional complementary policies might, therefore, be needed to avoid any negative effects arising in that context. The Philippines and Access to Essential Medicines under the TRIPS Agreement: A Geneva-Driven Process with Support and Autonomy from the Capital The Philippines is a developing country whose gdp in 2005 was us$98.3 billion. The statistics reveal that 15.2 percent of Filipinos live in extreme poverty and survive on less than $1 a day.16 The Philippines was less severely affected by the Asian financial crisis of 1998 than other countries in the region, aided in part by annual remittances of $7–8 billion from overseas workers and the absence of a sustained run-up in asset prices or foreign borrowing before the crisis. The country has taken bold measures to reduce the cost of medicines for the poorest and most vulnerable groups, including children,17 most notably with the passing of the Generics Act (1988) and the importation of lower-cost medicines. In 2001, President Gloria Macapagal-Arroyo (gma) launched the program gma 50, with the over-all objective of ensuring that affordable, high-quality, safe, and effective drugs and medicines are always available, especially to the poor.18 Thus, in its endeavor to promote public health, the government would need to ensure that its domestic policies do not conflict with eventual international obligations, particularly those related to the protection of intellectual property rights. The Philippines are a founding member of the wto, with the attendant obligations arising from the wto’s trips Agreement. During the process of negotiating and adopting the Doha Declaration on trips and Public Health, the August 2003 Decision, as well as in the discussions surrounding its implementation, the Philippines was one of the most active and vocal countries,19 combining its legal arguments with reaffirmations of the humanitarian components of wto members’ work. The very intensive engagement of the Philippines is particularly noteworthy since many observers regarded the debate on trips and Public Health as a largely African issue. This section looks at the process involved in adopting the August 2003 Decision, in order to shed some light on why the Philippines was so active concerning paragraph

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6, which waived some obligations of countries with insufficient manufacturing capabilities.20 In the Philippines, trade policy-making is mainly handled by the Department of Trade and Industry, supported by an interagency committee, the Technical Committee on wto Matters (tcwm). The tcwm looks at the broad array of trade issues and meets at regular intervals; the higher, ministerial or deputy ministerial level meets before important events, such as the wto’s ministerial conferences. Inter-agency committees exist for specific areas of wto negotiations (in the area of services, for example, they involve agencies ranging from finance, the central bank, and telecommunications to transport and health), and sometimes ngos or other affected stakeholders also participate. Some of these committees – or their core groups – are very active and possess considerable expertise, providing input and producing papers for the Geneva process. Looking at the process resulting in the trips and Public Health Declaration, as well as the August 2003 Decision, however, reveals that it was a mainly Geneva-led process. What were needed were quick, but well-thought-through responses. Frequently, there was no time for lengthy consultations, and, consequently, the specific legal capabilities of the individuals involved provided a significant contribution to the process. In essence, much of the negotiating work was done in Geneva, and technical input from the country’s capital was rather limited. What was needed in Geneva required a combination of skills. Diplomatic parlance was not enough; rather, the negotiations for the trips and Public Health waiver exemplify the degree of legal complexity that can arise in today’s trade negotiations. Multifaceted questions about approach and language involving issues of legal interpretation, the meaning of key terms, and relationships between various legal arrangements can pose a series of challenges to developing countries, particularly to those with scarce technical and legal resources and poor negotiating capabilities. The Philippines, though, with its Geneva-based delegation, was wellplaced in this context. However, if a message is to succeed in Geneva, it has to be combined with political and substantive support and close collaboration from the nation’s capital. In the case of the Philippines, the additional support arose from the close link between the trips and Public Health debate and the country’s program for providing affordable medicines.21 Providing affordable medicines was part of a larger program for fair pricing, an initiative that also extended to other products. In 2001,

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the Ministries of Trade and Health jointly launched President Gloria Macapagal–Arroyo’s gma 50 initiative, which, as mentioned, originally focused on providing cheaper medicines, through parallel importation. For example, the government used parallel importation of branded drugs from India to provide lower- priced medicines for public hospitals and pharmacies.22 Nevertheless, because the program was subject to legal controversies about its consistency with the Philippine’s international ip obligations,23 additional “fall-back options” were needed. Complementing parallel importing from India with an effective mechanism for compulsory licensing in the Philippines appeared as an interesting option. However, for this solution to remain free from legal challenges, the flexibilities of the trips, as reaffirmed in the Public Health Declaration, were of fundamental importance. Along these lines, the Philippines actively participated in the Geneva process, aiming to shape the text of the 2003 Decision in a manner supportive of the fair-pricing program at home. Key aspects of the Philippine position were to broaden the scope of users of the program (e.g., to extend production and imports, ultimately allowing for a broader range of beneficiaries); to expand the coverage of diseases (e.g., to include not only hiv, malaria, and tuberculosis but also more common illnesses such as colds and heart disease); to avoid far-reaching provisions on trade diversion (e.g., to allow for maximum flexibility, thereby making the system easy to use); and to ensure that the coverage of countries was as broad as possible, for example, to also include countries that were not yet members of the wto. This linkage between the country’s national fair-pricing program and the wto trips and Public Health solution, turned the Geneva negotiating process into a key aspect of domestic health policy-making in the Philippines. A strong Philippine position in the Geneva context provided, indeed, a fundamental support for the domestic process – and vice versa. This connection created mutually supportive policy interlinkages clearly directed towards improving the country’s health situation. The importance of the Geneva process for domestic policies was further strengthened by political developments in the Philippines: the trade minister at the time had political aspirations, and a strong trips and Public Health position in Geneva was perceived as supporting his goals – in part because it would translate into votes at home. Thus there was indeed active coordination between Geneva and Manila, with the key domestic counterpart being the trade ministry, to which the Geneva mission was subordinated.

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Nevertheless, despite the continuing involvement of Manila, much of the ultimate design and formulation of the language was left to Geneva – with the relevant delegates enjoying considerable leeway and freedom to pursue the path they considered would best serve domestic health objectives. Moreover, the public-health advocates among the trade negotiators obtained additional support from national and international ngos. In fact, civil society played a major role in the Geneva process, for example, by providing developing-country negotiators, with technical and practical assistance, as well as supporting them through political statements (e.g., in press releases, letters, and so on). Some of these efforts were also targeted towards the national level in the Philippines, both calling on northern governments to show flexibility and calling on southern governments to continue their efforts. Oxfam’s letter to the Philippine trade minister concerning paragraph 6 of the Doha Declaration is a case in point.24 Similarly, several civilsociety organizations in the Philippines have a history of working on trips and public-health- related issues.25 Thus, several constituencies were – vocally – in favor of a strong approach supporting public health. Uganda: The Need for Coherence between National and International Processes Uganda is one of the world’s poorest countries. As a less-developed country (ldc), its gdp was us$6.8 billion in 2004; 35 percent of its population lives on less than $1 a day.26 The health situation is similarly problematic. hiv has claimed over 800,000 lives in two decades and continues to be the country’s main cause of death among adults.27 In 2001, approximately 510,000 adults and 110,000 children were living with hiv/aids. The country has an orphan population of more than 2 million, nearly half as a result of hiv/aids. As another consequence of aids, life expectancy in Uganda is only around forty-two years. It was estimated in a undp report that 51 percent of the population did not have access to health care facilities in 2001. In recent years, the government of Uganda has taken measures to limit the spread of hiv/aids and increase access to arv treatment. The Drug Access Initiative of 1998 and the Accelerating Access Initiative of 2000 are cases in point.28 There are concerns, however, that these measures would be threatened by an overwhelmingly strict implementation of international rules for the protection of intellectual property. Thus, effective flexibilities at the international level, combined with maximal

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use of such flexibilities at the national level, would be key ingredients for sustaining and strengthening Uganda’s domestic health policies. Uganda has embarked on a far-reaching program of law reform, giving rise to fears that these national-level efforts may effectively undermine the flexibilities granted at the international level. A quick glance at Uganda’s laws and regulations relating to iprs reveals that they are neither state of the art nor suited to the country’s level of development. The origins of this lack of consistency can be traced back to 1962, the time of independence, when Uganda inherited whole pieces of ip legislation from the British ipr system. Subsequently, some changes in the ipr system were made as a consequence of international obligations undertaken by Uganda during the period since 1990. In addition to a patchy framework of national laws and regulations, much of Uganda’s ipr system is operated through the African Regional Industrial Property Organization (aripo), the World Intellectual Property Organization’s regional office.29 A report by the uk Commission on International Property Rights concluded that Uganda’s ipr policy suffered from a lack of finances and an institutional infrastructure and that it needed to be completely overhauled.30 As a response, in the early years of this century, several bills were put in the pipeline, including the Patents Amendment Bill (2000) and the Industrial Property Bill (2002). However, a closer look at the Industrial Property Bill proposed in 2002 reveals that it would have undermined, rather than supported, coherent outcomes at the trade and health policy interface. For, example the proposed draft had not taken advantage of key trips flexibilities for ldcs,31 and it contained ambiguous language on second uses,32 even though no wto member – under articles 27 and 28 of the trips Agreement – is obliged to grant patents on second use.33 On the positive side, the draft law did allow for compulsory licensing and government use.34 It is important to remember, however, that – given the extended transition period – Uganda is still under no obligation to implement the trips Agreement. In sum, if the legislation had proceeded along the lines of the draft bill, the law reform process would have resulted in laws that risked raising the price of drugs, thereby effectively threatening the country’s public-health policies and objectives. Thus, not only did these national efforts expose the obvious lack of coherence between domestic trade and domestic health policies but the national efforts directed towards full application of ip rules appear to have been in contradiction with international efforts to achieve greater flexibility (trips and Public

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Health Declaration, ldc transition period). While at the international level Uganda, as part of the ldc group, was arguing for increased flexibility and longer transition periods, at the national level it almost forfeited the use of this flexibility. This raises questions about the reasons for such apparent lack of coherence and the role Uganda’s trade policy formation process played in this context. In Uganda, the main responsibility for trade policy-making is with the Ministry of Tourism Trade and Industry, while the Ministry of Foreign Affairs is involved through its missions abroad. Uganda participates in the Joint Integrated Technical Assistance Programme (jitap), a joint initiative by unctad, the wto, and the itc. Among other things, jitap aims to assist African countries to improve their trade policy formation, through the strengthening of their institutional frameworks. Accordingly, in Uganda the work of public/government institutions addressing wto issues is organized jointly with private-sector institutions and civil-society representatives under the auspices of the Inter– Institutional Committee (iitc). While the iitc is formally established under the chairmanship of the Ministry of Tourism, Trade and Industry, other actors involved include the Ministry of Foreign Affairs; the technical ministries (the Ministry of Finance, Planning and Economic Development; the Ministry of Health, the Ministry of Agriculture, Animal Industry and Fisheries; the Ministry of Justice; and other government agencies), which are responsible for undertaking technical studies and making proposals for negotiations concerning their sectors of competence; and the private sector and civil society (business associations, academic centres and ngos), which should provide the necessary data regarding their concerns, in order to contribute to the definition of the negotiating position. The iitc’s main role is to act as a policy advisor to the government, and its competence is extended to all trade policy issues. The iitc acts through seven subcommittees chaired by both by government and private-sector members. For example, the subcommittee for trips and Legal Aspects is chaired by the Ministry of Justice with the Uganda Law Society as alternate chair.35 How did this set-up play out for Uganda’s law reform process? Why is it that the above-mentioned incoherence both between economic and health policies as well as between national and international efforts in Uganda’s ip law could emerge? A closer look at the institutions involved in the process through which the country’s ip law reform process was conducted gives some initial indications. In essence, it was Uganda’s

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Law Reform Commission, a body created by the Ministry of Justice and Constitutional Affairs and supported through donor funds that prepared the draft laws. In 2000, the trips Task Force was created and subsequently turned into the main forum for developing public policy on ip.36 While representatives from the Uganda Law Reform Commission, the Ministry of Justice, the Uganda Law Society Judiciary (Commercial Court), the Uganda Investment Authority, the Ministry of Tourism Trade and Industry, and the National Council for Science and Technology participated in its work, originally, neither the Health Ministry nor any of the other affected stakeholders were involved. This lack of involvement and, consequently, awareness was a central precondition for such incoherence to develop. Problems arising from technical assistance may also have contributed to the apparent lack of coherence. Although training and technical assistance are important preconditions allowing domestic stakeholders to engage effectively in consultation processes, in recent years, a number of different sources have raised questions regarding the proper role of donors in assisting developing countries in the reform of their ip legislation. According to Médecins Sans Frontières (msf), “Uganda [was] advised by a usaid-funded consultant to adopt provisions that are not required by trips, but that will hinder generic competition. For example, the draft legislation would place extra limits on the uses of compulsory licensing, grant patent protection for new uses of previously patented products, and criminalize patent infringement.”37 Eventually, however, a civil-society group learned about Uganda’s process of ip law reform and began raising concerns about the exclusive nature of the task force, the technical assistance involved, and the proposed bills emanating from it. In August 2001 some ngos wrote a letter expressing their concerns to the chairman of the Law Reform Commission.38 As a result, heps,39 together with other affected stakeholders, was invited to sit on the commission’s ip task force. However, subsequently the task force refrained from holding official meetings over a significant amount of time. Despite this further source of misgivings, the invitation to sit on the task force could be considered a success for ngo and civil-society engagement and a significant step for furthering coherence in trade and health policy-making. In addition, civil society was also successful insofar as the initial, ambitious timetable for the completion of the domestic reform process was not met. Rather, repeated calls for proceeding carefully – including calls based on an assessment of the health impacts of the proposed changes – bore fruit.

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What were the reasons for these (albeit small) successes, and what can we learn from them that will help to promote coherence between trade and health policies? One is the fact that the ngos involved had already been in existence for some time and had therefore gained experience in lobbying, campaigning, and networking on related issues. Thus, trips and domestic ip reform was taken up by a civil-society network that was already effectively operating on other, closely related topics. Another important factor is the role that public workshops played in this context. In 2001 two workshops on trips were held in Uganda: the first, in May 2001, was held in partnership with hai Africa and focusing on access to drugs. At this workshop, health activists first heard about the task force, and the recommendations of the workshop emphasized the importance of ensuring that civil society was involved in drafting the new law. The second workshop, held by the Uganda Consumer Protection Association, brought together a broader set of stakeholders. Consequently, in addition to health, other issues that might be affected by the domestic law reform process, such as the right to food and indigenous knowledge, were discussed, which allowed a broader coalition to form. A third factor contributing to success is related to the activities undertaken by civil-society groups, activities that included research and analysis and a sensitization program for the media and the parliament. The main message spread was the suggestion for the Law Reform Commission to proceed slowly, to duly incorporate the flexibilities that the Doha Declaration and the trips Agreement grant (particularly to ldcs), and to follow through at the international level with a duly motivated request for extension of the trips transition period.40 In addition to efforts of national ngos in Uganda, international ngos also participated. For example, “3d”, a Geneva-based human rights ngo presented a country briefing on Uganda, addressing trade-related ip rules and access to medicines and human rights as they related to the country’s implementation of the Covenant on Civil and Political Rights;41 the msf reported about the type of technical assistance received by Uganda. This highlights the role of workshops and seminars, as well as broader campaigning and awareness-raising strategies. In sum, they point to the importance of having a public debate on a particular issue. In order to work towards policy coherence, it is also fundamentally important to have a sound understanding of the internal positions and driving forces within governments, with a view towards identifying allies and fostering partnerships between governmental and nongovern-

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mental entities. According to a report by Oxfam, it was difficult to assess the Ugandan government’s stance with regard to the intellectual property bill and the Doha Declaration,42 mainly because the governmental departments had different concerns. While the Ministry of Health strove for universal access and the Ministry of Tourism, Trade and Industry appeared to be in favour of flexible implementation of the trips and Public Health Decision, the Ministry of Justice (under which the Law Reform Commission was established) appeared keen to have comprehensive patent laws with clear references to trips and allowing for the recovery of research and development costs. Thus, fostering domestic interagency processes can be a useful tool for avoiding lack of awareness within relevant government agencies. Also, careful attention should be given to donor funding. In sum, the example of Uganda highlights the lesson that coherence needs to be achieved at different levels of governance, i.e., at both the national and the international level. While Uganda, as part of the ldc group in the wto, argued for flexibilities in the implementation of ip rules, its actions at the national level were forfeiting these same flexibilities. This incoherence might have important cross-linkages, since undermining the flexibilities of the trips and Public Health Declaration through processes of national law could effectively weaken the position of those aiming to strengthen, or even merely to retain, the flexibilities granted at the international level. This is even more likely in light of the decision of 29 November, through which wto members granted ldcs an additional seven and a half years for the transition period. However, because of certain elements that are attached to this decision, it might be difficult for Uganda – once it has enshrined ip law without using trips flexibilities – to revert back to more flexible solutions at a later stage.43 Peru and Data Protection in FTAS: The Challenges to Achieving Coherence Controversies surrounding iprs and public health have not been confined to the trips Agreement or to its implementation at the national level. Over the past few years, concern has arisen regarding the increasing number of bilateral and regional trade agreements with strong protection for iprs. In fact, in many cases the main elements of recent us and ec free trade agreements (ftas) with third parties go beyond multilateral standards for ip, a phenomenon characterized as trips-plus. trips-plus stan-

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dards or commitments take numerous forms: implementation of a more extensive standard than the one provided in the trips Agreement, for example, providing a longer term of protection for trademarks, or copyright, and so on; forfeiting flexibilities or safeguards available in the trips Agreement, for example, with regard to compulsory licensing or exhaustion; or enlargement of the scope of iprs, for example, by including a new area such as the granting of data exclusivity. There are also concerns that in addition to harmonising ip regimes with those of economically and technologically more advanced countries, the trips-Plus requirements will inhibit countries from using fully the flexibilities embodied in the trips Agreement, including flexibilities related to public health. For example, a report prepared by the who Secretariat warned that the use of trips flexibilities may be affected by bilateral/regional free trade agreements that contain trips- Plus provisions.44 Issues surrounding ip and public health proved controversial in the negotiations for the fta between the United States and the Andean countries (Colombia, Ecuador, and Peru, with Bolivia as an observer), which had started in May 2004. In fact, among the many controversial issues (e.g., protection for investments, price band mechanisms in agriculture, and so on)45 the nature and level of ip protection granted by the future fta was one of the key issues – if not the key issue – in the arduous negotiations. The United States made a series of trips-plus demands, including requests to extend the patent term beyond twenty years, to restrict the use of compulsory licenses, and to strengthen the powers of regulatory authorities to enforce patents or to protect second use.46 The United States has also promoted exclusive rights over pharmaceutical test data (e.g., five years of exclusivity for test data originating from clinical drug trials). This relates to data that pharmaceutical companies submit to governments’ sanitary authorities when seeking permission to put a new drug on the market. Since it is very costly to produce such data, prohibiting the use of pre-existing data may, among other things, result in marketing exclusivity. According to some studies, the public health impact could be tremendous: Jose Carlos Vera estimates an increase in cost of medicines in Peru by us$43 million in the first year, and that figure could grow to us$168 million in 2017.47 Finally, in June 2006 Peru ratified the fta with the United States; the negotiations of the ip chapter of the us–Andean fta serve as a key example of the need for coherence between trade and health policies. This section examines the case of Peru to see how coherence can be fostered by raising awareness, generating information, enhancing transparency,

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involving the media, conducting consultations, and involving non- trade actors, including the who, human rights bodies, and other groups. At the same time, however, the us – Andean example also points to the fundamental challenges negotiators meet when striving to achieving coherence, one of them being the relationship of trade and health questions with broader political and economic processes and trade-offs. In Peru, the Ministry of Economy and Finances defines the general framework of national economic policy. It works with other government agencies on related policy areas: for example, with the Ministry of Foreign Trade and Tourism (mftt) in the services context, as well as, more broadly, with the Ministry of Foreign Relations. Within the Ministry of Economy and Finances, there is the Department of Foreign Trade and Competition that is empowered, among other things to formulate advisory opinions on foreign trade negotiations, to adopt measures concerning intellectual-property protection, and to participate in and to propose measures in services talks. The National Institute for Defense of Competition and Intellectual Property (indecopi) is responsible for intellectual property rights. Through its missions the Ministry of Foreign Relations represents the state in the international arena and takes an active part in services and ip rights negotiations. Regarding the private sector, it is not very involved in multilateral negotiations. Public-private interaction in trade talks is usually limited to regional cooperation entities (for example, the Pacific Economic Cooperation Council) or local activities of the Lima Chamber of Commerce. Besides these formal processes and frameworks for achieving policy coherence, a series of supporting activities take place. One stream of activities, for example, is related to the individuals negotiating the fta. As mentioned, present-day trade negotiations – particularly, but not only, in the area of iprs – involve a highly complex set of issues, the mastering of which requires a particular set of diplomatic, legal, and economic skills, but also health-related skills. Frequently such skills are not prevalent in developing country ministries. The Andean countries (through the undp) were advised by a wellknown academic, with the goal of improving and strengthening their participation in the negotiations. A number of studies were undertaken, in order to gain more specific information and data about the implications of the various proposals related to iprs. The first study was conducted in Colombia on behalf of a congresswoman, followed by other studies sponsored by paho (the Pan American Health Organization), who, and ifarm (a local founda-

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tion). Both pieces of research showed that the proposed ip rules would have a significant impact on prices. Studies were also conducted in Peru, where the Ministry of Health and the national ip office (indecopi), as well as the National Council of Science and Technology (cyncotec) initiated the research.48 While the studies showed different results, they all projected higher costs for the domestic health system. Another set of activities aimed at improving transparency in the negotiating process. Already before the actual launching of the negotiations in March 2004, the msf urged the ustr to make the text of the agreement available to the public throughout the negotiations, in order to enhance efforts to promote an informed public debate about crucial issues in the agreement. In part, the us-Andean fta could serve as an example for transparency, with efforts to increase transparency taking different forms. For example, in several countries the respective negotiating text was available in the ministries of commerce, granting the interested public an opportunity study it (without, however, making copies of the text publicly available);49 some governments also set up designated web pages to provide information, as well as electronic fora for discussion. Finally, the negotiating rounds themselves turned into a major exercise in transparency: the Cartagena Round involved twelve hundred participants, and the Puerto Rico Round (September 2005) as many as two thousand. The participants ranged from congressmen to press, consultants and private-sector people. Obviously, such efforts to increase transparency not only presented huge logistical challenges but also made it more difficult to get the negotiating process effectively under way. From the point of view of transparency, however, they allowed for close interaction between negotiators and influenced stakeholders during the actual negotiating rounds. A so-called parallel room was organized for private-sector participants where they could receive information from heads of delegations about the current state of play of negotiations. These meetings were held in an interactive manner in the form of questions and answers from critics of the negotiation process. In addition, a press room was set up for the media.50 In order to improve the coordination between the Andean countries’ health ministries, paho organized a video conference for the health ministries of Ecuador, Peru, and Colombia in March/February 2005. This conference allowed the respective ministries to agree on a common strategy for the remaining rounds of fta negotiations. Subsequently, towards the beginning of March 2005, the ministers of health of the

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Andean countries issued a statement demanding that “any agreement reached with the us must be in the spirit of the wto Doha Declaration, and must be able to protect public health, providing access to medicines when necessary.”51 In addition to the involvement of public health actors and entities, the us Andean fta negotiations also benefited from the involvement of human rights groups and policy-makers, including those closely linked with un human rights bodies. From 6 to 15 June 2004, for example, Paul Hunt, the special rapporteur on the right to health, conducted a mission to Peru, visiting several health care facilities. Among the issues about which he voiced particular concern were the us–Peru fta negotiations. Subsequently, as part of his report,52 this issue was to be discussed in the sixty-first session of the Commission on Human Rights (under item 10, for economic, social, and cultural rights). With the negotiations intensifying, on 14 July 2005, Hunt issued a second press release, in which he urged the United States not to pressure Peru to enter into the trade pact, stating that the United States “must not apply any pressure on Peru to enter into commitments that are inconsistent with Peru’s constitutional and international human right obligations.”53 Before Hunt’s intervention, various human rights ngos had already engaged with the Andean countries,54 strengthening the side of those striving to achieve pro-health outcomes. Other civil-society groups also got involved. For some, the goal was to exert pressure on the United States, while others focused on supporting and strengthening the Andean countries. A number of international ngos addressed letters to the us administration.55 Similarly engaged were national ngos or coalitions.56 However, those in favor of stronger ip rules and protections themselves engaged in intensive lobbying activities. Besides the many pharmaceutical companies, a bipartisan congressional delegation of the us House of Representatives Ways and Means Committee also visited Colombia, Peru, and Ecuador. The delegation’s report highlighted its efforts to convince Andean policy-makers of the benefits of signing an fta with high ipr protection standards. For example, the officials argued that the relationship between the Andean countries and the United States had matured and that this change would need to be enshrined in a reciprocal, mutually beneficial arrangement in the form of an fta. They also informed Andean decision makers that an fta was the only way to adequately deal with the expiration of trade preferences, that is, the only way to prolong much-needed market access. 57

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With the date of the last negotiating round coming closer, civilsociety engagement became more and more active. By then it was not limited any more to conducting studies and writing letters: rather, ngos aimed to bring more visibility to the opposition to ftas, for example, through public demonstrations. Some commentators claim that these initiatives originated from misinformation and misguided political interests, but policy-makers, notably parliamentarians, also voiced their concern with the us fta negotiating process. On 22 September 2005, for example, a group of parliamentarians, congressmen, and legislators from Colombia, Ecuador, Peru, and Bolivia issued a declaration in Cartagena emphasizing their need to define their own policies – without any restrictions originating from an fta.58 Despite all this, the Andean countries’ governments still seemed determined (albeit to a different degree) to go ahead; they felt that the controversies surrounding the ip chapter should not create further impediments to an expeditious conclusion of the fta. This interest in a timely conclusion originated in a series of factors, including schedules for presidential elections at the national level (e.g. in 2006 in Peru). A potential change in presidential leadership created uncertainties for those embracing the fta. Along similar lines, the then Peruvian leadership still equated the fta with jobs and hoped to gain electoral benefits from a rapid conclusion to the negotiations, even though many Andean affected stakeholders saw the fta as a capitulation to us interests, with some calling for a referendum on the agreement in their countries. Most importantly, however, the decision on whether or not to agree on increasing ip protection in the future fta should not be considered in isolation from broader political and economic processes. Despite the numerous studies and analyses showing the potential for detrimental effects on domestic health policies, there appears to be one overriding reason for agreeing to such a deal: the need to ensure that unilateral us tariff preferences in the area of agriculture would not expire, but rather would be extended, expanded, and enshrined in a legally binding agreement. More specifically, during the last few years, Peruvian agricultural exports have benefited from preferential access to the us market. Following the 1991 Andean Trade Preferences Act (atpa), the 2001 Andean Trade Promotion and Drug Eradication Act (atpdea) renewed the preferences of the atpa and added new products, but these preferences were to expire by the end of December 2006.59 By the time expiration of the preferences had gotten closer, however, access to the us market for

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selected products had become vital for Peruvian agriculture, even more so since in recent years agricultural development focusing on exports had been growing in the area south of Lima and employing an increasing number of people. In addition to preserving existing access, the fta holds promises of additional market access. In the light of the ever closer date for the expiration of the trade preferences, the arguments put forth by a congressional delegation became more and more convincing: in essence, a comprehensive fta with far-reaching ip standards was considered the only method for prolonging much-needed market access for agricultural exports. Ultimately, the United States and Peru concluded negotiations on a bilateral free trade agreement on 7 December 2005.60 This case shows that the specific trade and health challenge will in many cases have to be viewed within a broader picture: even sophisticated research and analysis, as well as broader stakeholder involvement across countries, together with involvement of the human rights and other agencies, cannot ensure pro-health outcomes. If there are important trade-offs to be made and if there are significant power imbalances between the countries negotiating an fta, the outcome might be tilted the other way. In sum, despite all possible attempts and mechanisms to promote coherence, the controversial ip provisions went ahead, resulting in five years of data protection for pharmaceutical products and ten years for agrochemicals.61

conclusions – best practices emerging What can these four examples tell us about identifying processes that achieve (or fail to achieve) coherent trade and health outcomes? While the examples are different in their political nature, content, and trade significance, some valuable lessons might still be learned. The following appear to be some of the key elements, vehicles, and best practices arising from these examples. The first lessons relate to the legal framework and the institutional arrangement for policy coordination. Clearly, inter-institutional coordination processes as they exist in most countries (including those put in place through the jitap (Joint Integrated Technical Assistance Programme) or set up in the context of negotiations to accede to the wto) are an important component. They allow for formal, predictable, and traceable coordination between actors who represent different interests. At the same time, the Ugandan example showed that formal coordination between trade and health ministries at the level of trade policy-

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making does not ensure coherent policy making at the national level. In fact, Uganda highlights the possibility that national policy-makers may not always be fully aware of the implications of policies and nationallevel processes, creating challenges for efforts towards coherence between trade and health. On the other hand, the Philippine example shows how individual engagement, outreach, and action can play a key role in promoting coherence, by effectively strengthening and complementing official and institutionalized mechanisms. It also shows the benefits that can arise from giving sufficient leeway and flexibility to some of the key actors. The Peruvian example, in turn, has highlighted the benefits of cooperation between health policy-makers across countries and the assistance international organizations can offer in that context. Similarly, it is valuable to ensure cooperation, coordination, and regular information flows between governmental and non-governmental actors, which was a central aspect in all four case studies. Second, information needs to be a key input in the processes working toward policy coherence. Information starts with overall awareness, which can be absent – as in the case of Uganda – or which can be promoted, including by the relevant ministry, as in the case of Pakistan. Systematic awareness-raising among stakeholders in developing countries and elsewhere has proven to be important. Building a comprehensive and useable knowledge base, however, requires detailed and wellresearched information, derived from targeted studies, impact assessments, and analyses. Sound data and information can help to underpin the pro-health arguments that are put forth by policy-makers and affected stakeholders. The studies undertaken in the Andean countries predicting the costs of tightening ip standards serve as an example. Studies not only provide information, they also build capacity for those who are conducting them, and they offer vehicles for convening meetings, workshops, and broader engagement, including by the media. While some examples highlighted the assistance that international agencies and donors can give in this context and the need to ensure coherence between donor funding and national policy objectives, other examples emphasized that some developing countries were proud of their capacity to bring about a purely homegrown process. Moreover, some case studies also showed the challenges that can arise from international assistance. These lessons link to the need for a broader public debate, creating the political context at the national level. Studies and analyses need to be presented to the affected stakeholders, thereby generating a broader

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public debate that is supported by the media within and across countries. Again, ngos and civil-society groups play a major role in this context, mobilizing activists and expressing opinions, both at the national and at the international level. For ngos and affected stakeholders to be effective, however, an analytical and an advocacy capacity is necessary, in order to screen proposals and identify implications and to have them heard. The example of the Andean countries shows how national and international groups can work together, mutually reinforcing their messages and actions. The Andean countries also serve as an example for broader political engagement, since they show congress, parliamentary bodies, and other decision makers getting involved in the process, strengthening the public-health side at the national level. The Philippine example shows how national political processes can effectively strengthen and support the Geneva process. Finally, however, wider political and economic dimensions come into play, creating the context within which a particular set of trade negotiations is taking place and determining a country’s ultimate negotiating strength and clout.62 A country’s overall dependency on exports, on fdi inflows, and on the contribution of international trade to its economy (including the degree of diversification of its exports), rather than concerns about the implementation of international trade agreements, might affect its leverage when it tries to consistently and forcefully pursue a goal. Dependency on one (or a few) importing countries, as well as on a limited number of export items, can have a major impact. Moreover, trade negotiations will always create winners and losers, with the respective trade-offs between these groups playing a major role. Peru’s reliance on agricultural exports to the United States might have been one of the key elements in this context. Despite the numerous analytical studies, the domestic upheaval against stronger ip protection, and the international involvement, the country ultimately agreed to five and ten years of data protection. In that context, the type of forum in which the negotiations take place clearly matters. Multilateral negotiations make it easier for developing countries to form coalitions and alliances, thus restraining the pressure exerted by some of their negotiating counterparts.

notes 1 The views expressed here are the authors’ and do not represent those of the unctad secretariat or its member states. Research assistance was provided by

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Volodya Matenchuk and Anna Emilia Autio. We are grateful to the two anonymous commentators for their views and thoughts. All errors remaining are those of the authors. See also “Universal Access to Services”, note by the unctad secretariat, td/b/com.1/em.30/2, 18 September 2006. C. Fink and J. Arunanondchair, “Trade in Health Services in the asean Regions,” Health Promotion International 21, supplement 1 (December 2006): 59–66; 6th Global Conference on Health Promotion, Bangkok, August 2005, Kwok Cho Tang, Robert Beaglehole, Evelyne de Leeuw (eds.); http://heapro.oxfordjournalsorg/cgi/reprint/21/suppl-1/59. The indicators for health are far worse than for other low-income countries, and particularly compared to some of the other South Asian countries. Akmal Hussain, “Pakistan nhdr,” 2003; http://www.un.org.pk/nhdr/. Malnutrition is a major problem in and an important factor underlying ill health and morbidity. For Pakistan’s initial offer, See Council for Trade in Services, “Conditional Initial Offer on Services,” tn/s/o/pak, 30 May 2005. Thesil is an Urdu word referring to a subdivision of districts or a geographical area. Many countries operate inter-ministerial coordination mechanisms, to ensure some degree of coherence across the various issues affected by trade policy (e.g., health, environmental, financial, or monetary policies). Similar consultations were also held with other bodies, including the Pakistan Engineering Council and the Institute of Chartered/Cost Management Accountants. The importance of teaching and training on trade-related issues, with the objective of building the capacity of affected stakeholders and the local negotiating team is widely recognized. Several international organizations, including the wto, unctad, itc and the who, conduct this kind of training, which is frequently sponsored by contributions from specific donor countries. Depending on the nature and purpose of the training, the beneficiaries are either government officials or also other affected stakeholders, including civil- society organizations. “Trade in Services and Development Implications,” note by the unctad secretariat, December 2005, td/b/com.1/77. Doha Work Programme, Ministerial Declaration, wt/min(05)/dec. Umberto Celli Junior, “Intrinsic Elements of the gats: Some Notes for Reflection,” Bridges, no. 8, August 2005, 15–16. See also, the review of developments and issues in the Post-Doha Work Programme with particular concern for developing countries: “Note by the unctad secretariat,” td/b/52/8, 26 August 2005.

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15 Elisabeth Tuerk, “Services Post Hong-Kong, Initial Experiences with Plurilaterals, paper presented at the Tenth World Trade Forum,” September 2006, Bern, Switzerland. 16 http://www.hain.org/publication/factsandfigures.html#table1, citing Asian Development Bank, from Philippine Daily Inquirer, 10 September 2004, 10. 17 “International Trade, Health, and Children’s Rights: The Philippines, 3dà Trade – Human Rights – Equitable Economy,” December 2004, http:// www.3dthree.org/pdf_3d/3dcrc Philippines_Dec04.pdf. This is a submission from the ngo 3d to the Committee on the Rights of the Child pre-session Working Group in December 2004. 18 gma 50 is President Gloria Macapagal-Arroyo’s commitment to lower the prices of drugs and medicines frequently bought by the poor by 50 percent. 19 For example, as regards the August 2003 Decision, the strong Philippine position on this issue is also manifested by its statement in the 28 July 2003 trips Council meeting, when members agreed to transmit the draft texts to the General Council. For example, the Philippines pointed out that they were agreeing to the chair’s text and the decision only on the understanding that the undertakings of members made with respect to diversion in the decision had been on a purely “best-endeavor basis,” that they understood the statement as “not precluding the use of the system for purposes of protecting public health, even if industrial or commercial policy objectives are involved,” and that they interpreted the understanding such that the system would “not be used primarily as an instrument to pursue industrial or commercial policy objectives” (emphasis added). 20 Paragraph 6 of the declaration recognizes that countries with insufficient manufacturing capacities may face difficulties in using the flexibilities of the trips and, accordingly, ministers instructed wto members to continue negotiations to find a solution to these difficulties. After several months of intense negotiations, as well as a series of missed deadlines, members finally agreed to the so-called August 2003 Decision/Waiver (Decision on Implementation of paragraph 6 of the Doha Declaration on the trips Agreement and public health). This decision temporarily waives the obligations under article 31(f and h) to assist countries with insufficient or no manufacturing capacities to make use of the system. 21 Interestingly, this link was identified by the Geneva-based delegate. 22 The plan was to subsequently also import lower-cost patented drugs from China. “International Trade, Health, and Children’s Rights – The Philippines, 3dà Trade – Human Rights – Equitable Economy,” December 2004. 23 In 2000, a coalition of pharmaceutical companies filed a case against the government.

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24 See the letter from cptech, Oxfam, msf, and hai to wto delegates regarding the chairman’s text of 16 December 2002 “solution” to paragraph 6 of the Doha Declaration on trips and Public Health, 19 December 2002, http://www.cptech.org/ip/wto/p6/ngos 12192002 .html; See also, the joint letter from cptech, Essential Action, msf, Oxfam International, the Health gap Coalition, and the Third World Network to the World Trade Organization’s trips Council, 28 January 2002, http://www.cptech.org/ip/health/art 30 exports.html. 25 While local civil-society groups generally focused more on trips issues as they related to biodiversity or the environmental issues (e.g., disclosure or the patenting of life forms), several also engaged in issues related to trips and Public Health. Examples are the groups signing a joint ngo statement in the context of negotiations towards the Doha Declaration, such as bayan, the Congress of Teachers/Educators for Nationalism and Democracy, the ibon Foundation, and the Indigenous Peoples’ International Centre for Policy Research and Education. 26 www.unmillenniumproject.org/documents/tf5-medicines-Appendixes.pdf. 27 “Uganda: Trade-Related Intellectual Property Rights, Access to hiv/aids medicines and the Fulfilment of Civil and Political Rights, March 2004,” http://www.3dthree.org/en/. 28 For more details on both initiatives see http://www.aegis.com/pubs/gmhc/ 1998/gm120603.html and Jeffrey L. Sturchio, “Partnership for Action: The Experience of the Accelerating Access Initiative, 2000–4, and Lessons Learned” available at http://www.who.int/3by5/amds/aai_chapter6.pdf. 29 Overall, Uganda does not have any specific national policy on iprs but, rather, only various pieces of legislation operating together with particular policy statement (e.g., from National Science and Technology Policy). 30 The uk Commission on iprs study “Institutional Issues for Developing Countries in ip Policy-Making, Administration and Enforcement (Uganda)” looks at the responsible institutions and their challenges http:// www.iprcommission.org 31 See, for example, article 66 of trips or the exclusion for pharmaceutical patents until 2016 as set out in the Doha Declaration. 32 See section 10 of the draft bill, which considers an invention to be “patentable if it is new, involves an inventive step or is a new use.” 33 For further information on this aspect as it is addressed in different us ftas, see Carsten Fink and Patrick Reichenmiller, “Tightening trips: The Intellectual Property Provisions of Recent us Free Trade Agreements, February 7, 2005, Trade Note,” The World Bank Group, http://siteresources.

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worldbank.org/intranettrade/Resources/Pubs/TradeNote20.pdf, see also Pedro Roffe, “Bilateral Agreements and a trips-plus world: The Chile-usa Free Trade Agreement,” October, 2004, Quaker International Affairs Programme, Ottawa. Arthur Mpeirwe, “In Defense of National Interest: A Report on Uganda’s Reform Process for the Industrial Property Legislation,” published by heps Uganda, in partnership with Panos Eastern Africa . “Toolkit for Module 1: Institutional Capacity Building: Trade Negotiations, Implementation and Policies,” (New York and Geneva: jitap 2005), 32–33; www.jitap.org. The Task Force was created under the auspices of the commission, with the objectives of: documenting Uganda’s trips obligations, studying existing legislation, and identifying a need for reform. Doha Derailed: Technical “Assistance” – A Case of Malpractice? msf report, 10 September 2003, http://www.msf.org/msfinternational/invoke.cfm? objectid=2ecd1bdd–94b2–49eb–8 ec939e2c87e54c7&component=toolkit. report&method=full_html. heps, an informal network of ngos, international development agencies, health practitioners, academics, social action groups, and agriculturists, wrote a letter to the chairman of the commission emphasizing its concern with the fact that the commission did not truly represent, comprehensively, the concerns of the affected stakeholders. In addition, heps argued that there was no need to rush, but that it was better to monitor. heps also emphasized, that trips itself was subject to time limitations. heps is motivated by the belief that the human right to health of Ugandans might be compromised by the drafting and possible enactment of an insensitive ip bill: [email protected]. Rosette Mutambi, “Uganda: Civil society Organizations concerned as Uganda Rushes to Implement trips, 5 Years Ahead of the Deadline,” HAI News, July– September 2001 (www.haiweb.org). “Uganda: Trade-Related Intellectual Property Rights, Access to hiv/aids Medicines and the Fulfillment of Civil and Political Rights,” March 2004, http://www.3dthree.org/pdf_3d /3dhrcUgandaBrief04en.pdf. “Access to Antiretroviral Therapy in Uganda,” Kampala, June 2002, prepared for Oxfam, gb, by Astrid Martinez-Jones and Norbert Anyama. Available at www.oxfam.org.uk/what _we_do/issues/hivaids/downloads. Note that some point out that the limits on flexibility to adopt higher ip standards would not arise with respect to trips-plus standards in the first place. Anti-retrovirals and Developing Countries (Geneva: who 2005).

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45 The Andean countries, for example, would like the United States to open its market to sugar (where United States has quotas), while at the same time, retaining their own protection of rice, beans, and corn – all of which are crucial to livelihoods and nutrition in the region. The United States, in turn, does not want to discuss subsidies outside the multilateral, wto context. 46 For a more detailed discussion of trips-plus elements in us ftas, see Carsten Fink and Patrick Reichenmiller, “Tightening trips: The Intellectual Property Provisions of Recent us ftas,” Trade Note 20, World Bank, February, 2005. 47 http://www.globalexchange.org/campaigns/afta/3541.html. 48 See “Perú. Los intereses nacionales en propiedad intelectual y los tratados de libre comercio: Marco referencial,” indecopi, Documentos Institucionales (Lima 2005). 49 At some point, however, the text was leaked and it found its way into one of the newspapers, generating substantial public debate. 50 Francisco Rossi, “Balance entre participación ciudadana y confidencialidad en la negociación del tlc entre los Estados Unidos y Los Países Andinos,” (2005, on file with the author). 51 “u.s., Andean Negotiators Dodge Toughest ip Issues for Now,” Intellectual Property Watch (21 March 2005), www.ip-watch.org. 52 Report submitted by the special rapporteur Paul Hunt on the right of everyone to the highest attainable standard of physical and mental health; e/cn.4/2005/51/Add.3, 4 February 2005. 53 http://www.un.org/apps/news/story.asp?Newsid= 15007&Cr=trade&Cr1= development. 54 For example, just before the official launching of the negotiations in April 2004, 3d called on Ecuador to ensure that its ip laws governing the manufacture, import, and distribution of pharmaceuticals were negotiated and implemented in a way that allowed Ecuador to satisfy its obligations under the Convention on the Rights of the Child. In this context, 3d also called on Ecuador to seek all available technical assistance for the Office of the High Commissioner for Human rights. http://www.3dthree.org/pdf_3d/ 3dcrcEcuadorBrief _Sept04.pdf 55 For example, the msf wrote a letter to Ambassador Zoelick, calling “upon ustr to abandon immediately its trips plus negotiating objective” and to negotiate the us-Andean fta in line with the letter and spirit of the Doha Declaration on Public Health, emphasizing that the United States had signed this declaration along with the other wto members in November 2001. Along these lines, the msf suggested that ipr provisions be excluded from the final us-Andean fta altogether. “msf Comments on us-Andean Free Trade Agree-

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ment,” March 2004, http://www.doctorswithoutborders.org/publications/ openletters/tozoellick _10–15–2003.cfm In September 2004, for example, a coalition of fifty-one labor, religious, and environmental groups wrote to the ustr calling for the suspension of the negotiations. Similar efforts were also undertaken with the goal of strengthening the Andean countries. Also in September 2004, ngos presented a letter to the Andean negotiators asking them to stand firm in the negotiation process, to ensure that the Doha Declaration and other public health goals were respected. See Alliance for Responsible Trade: www.art-us.org, also www.develomentgap.org. Committee on Ways and Means, Report on Trade Mission to Colombia, Ecuador, and Peru, 109th Congress, September 2005. “Declaracion de parlamentarios, congresistas y legisladores de Colombia, Ecuador, Peru y Bolivia frente al tlc,” posted 22 September 2005, http://www.bilaterals.org/article.php3? id_article=2759. Set to expire on 31 December 2006, the atpa preferences were extended again for six months. Subsequently, the agreement was signed on 12 April 2006, and the Peruvian Congress ratified it on 28 June 2006. See chapter 16 of the text signed on 12 April 2006, available at http://www.tlcperu-eeuu. gob.pe/ index.php?ncategoria1= 209&ncategoria2=215. Frederic M. Abbott, “The wto Medicines Decision: World Pharmaceutical Trade and the Protection of Public Health,” ajil 99 (April 2005), 356.

cess erence in Anarchy

11 Achieving Coherence in Anarchy: Foreign Policy, Trade, and Health DAVID P. FIDLER

the emerging significance of policy coherence between trade and health The tenth anniversary of the World Trade Organization (wto) in 2005 prompted reflections on its past, present, and future.1 The wto’s broad impact on international relations in an era characterized by economic globalization meant that these reflections ranged across many issues and areas. Many of these analyses did not expressly consider the relationship between trade and the protection of human health. This relationship has, however, become significant in terms of the wto’s role in the governance of world politics. The relationship between trade and health within the wto is multifaceted and has been the topic of acrimonious controversies. A few examples provide a sense of the diversity and intensity of the trade and health debate. Global civil-society groups have criticized various wto agreements, especially the Agreement on Trade-Related Aspects of Intellectual Property Rights (trips) and the General Agreement on Trade in Services (gats), for the adverse impact they are alleged to have, or could have, on the ability of wto members to protect and promote human health. Aware of the fierce debates over the wto’s impact on public health, the wto Secretariat and the World Health Organization (who) engaged in an unprecedented joint study of the wto agreements and public health. wto members have also utilized the wto Dispute Settlement Body to resolve controversial cases involving trade-restricting measures justified on health protective grounds, with us—Gasoline (1996), ec—Hormones (1998), ec—Asbestos (2001),

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and ec—Biotech Products (2006 (panel report)) being (as of this writing) the best-known cases involving the trade and health relationship. The range of health-related issues and controversies that have arisen concerning trade in the last decade demonstrates that health cuts comprehensively across the wto agreements. This reality has forced increasing attention on what many believe is the central challenge of managing the relationship between trade and health – achieving policy coherence between the two policy areas. Generally speaking, policy coherence means that two or more areas of policy can be simultaneously pursued without inconsistency or conflict among them. Coherence can occur, for example, if two policy tracks seek different objectives but do not materially interfere with each other’s efforts to achieve those separate goals. Coherence can also produce synergies between policy pursuits in the sense that the two different policy tracks seek the same goal in mutually supportive ways. A resolution passed by the World Health Assembly (wha) in May 2006 demonstrates the centrality of the policy coherence challenge in the trade and health relationship.2 The wha stressed “the need for all relevant ministries, including those of health, trade, commerce, finance and foreign affairs, to work together constructively in order to ensure that the interests of trade and health are appropriately balanced and coordinated” (preamble). The wha urged who members “to create constructive and interactive relationships across the public and private sectors for the purpose of generating coherence in their trade and health policies” (par. 1(5)). In addition, the wha instructed the who directorgeneral to provide support to who members in connection with “their efforts to frame coherent policies to address the relationship between trade and health” (par. 2(1)) and to continue collaborations with other international organizations “in order to support policy coherence between trade and health sectors at regional and global levels, including generating and sharing evidence on the relationship between trade and health” (par. 2(2)). The wha’s interest in trade and health policy coherence reflects the deep policy importance this goal has taken on over the first ten years of the wto’s existence. The who-wto joint study concluded its analysis by stressing the need for policy coherence and noted that There is common ground between trade and health ... Yet concerns have been expressed by some observers that wto rules constitute a threat to sound public health policies ... A constructive way to

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address such concerns is to view them as opportunities for finding common ground. Minimizing possible conflicts between trade and health, and maximizing their mutual benefits, is an example of policy coherency. The term refers to efforts to seek synergies between policies in different areas in support of their common goals – in this case, poverty reduction, human development and economic growth ... [T]his report stresses the importance of the goal of coherence between health and trade policies at the national and international levels.3 The growing political interest in policy coherence between trade and health raises questions and problems at different levels of policy formulation and implementation. As the who-wto joint study observed, “[p]olicy coherence is easy to support in principle but hard to achieve in practice.” The complexity inherent in creating coherence for trade and health policies requires looking at specific problems, such as access to pharmaceuticals and trade in health services, the politics of which have been controversial, especially from the health perspective. Specific issues arise, however, within larger political contexts that are important to understand in contemplating the crafting of policy coherence. This chapter focuses on policy coherence issues concerning trade and health from the broader perspective of trade and health as converging and competing foreign policy issues. Coordinating trade and health policy, which is a foreign policy task, is only one example of coherence challenges facing foreign policy generally in many countries. Changes in international relations, especially since the end of the Cold War, have forced all countries, even the most powerful, to confront problems for which their traditional foreign- and domestic-policy assumptions, practices, and institutions have proved ill-equipped. The policy coherence agenda is, thus, larger than the specific trade and health relationship and the more general set of contentious “trade and ...” debates, which involve arguments about linkages between international trade law and other policy objectives such as foreign investment, competition law, environmental protection, labor standards, and human rights. This chapter explains why understanding this larger foreign policy context is important in analyzing policy coherence between trade and health. The structure and dynamics of the post–Cold War world have forced policy-makers everywhere to rethink foreign policy. This process recog-

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nizes that traditional foreign policy assumptions, practices, and institutions no longer reflect the challenges countries face domestically and internationally. The effective pursuit of the national interest depends increasingly on foreign policy’s ability to reflect a coherent understanding of the complex problems countries confront. The foreign policy pursuit of coherence in an increasingly globalized world faces many obstacles that make coherence efforts more complex and difficult. This chapter explores the trends that have forced policy-makers to rethink foreign policy, the implications of these trends for policy coherence, and the challenges of seeking such coherence in the globalized world of the early twenty-first century. Part of the post-Cold War adjustments foreign policy-makers have made involves the rise of health as a foreign policy concern. Health has long been a foreign policy issue, but it was historically a marginal and neglected aspect of countries’ foreign policies. Health’s rise on the foreign policy agenda has created the need for countries to think of health as foreign policy in its fullest sense. Conceiving of health as foreign policy puts the trade and health relationship in a different light, which colors coherence efforts in important ways. Trade and health as subjects of policy coherence efforts cannot be isolated, therefore, from the manner in which health has emerged as an important challenge across the range of objectives countries pursue with their foreign policies. Health’s importance to the key areas of foreign policy makes achieving policy coherence between trade and health more complicated, especially if the professed objectives of the coherence exercise are poverty reduction and human development. Approaching the policy coherence challenge between trade and health from the general perspective of foreign policy and the specific perspective of health as foreign policy produces the need to analyze coherence in two contexts – that external policy coherence, which involves the balancing of the health and trade interests of different states, and that of internal policy coherence, which involves getting trade and health policy-makers to work together more effectively in formulating the national interest. This chapter explores each of these aspects of policy coherence, identifies internal policy coherence as the more difficult and pressing challenge, and sketches a framework for promoting internal policy coherence. The final substantive section briefly reviews obstacles that may complicate and frustrate the achievement of policy coherence between trade and health.

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coherence and foreign policy: the challenge of networked anarchy The effort to focus on coherence with respect to trade and health is but one example of a much larger project under way in government ministries around the world. This project arises from the perceived need, noted inside and outside the halls of power, to rethink foreign policy in order to enable countries to respond more effectively to the challenges they face in twenty-first-century world politics. In general terms, the impetus to reinvent foreign policy flows from the awareness that post– Cold War geopolitical changes, technological developments, and the acceleration of globalization render ineffective foreign policy assumptions, practices, and institutions that were developed in a different time for a different set of priorities. A particularly high-profile example, the 9/11 attacks on the United States, illustrates the changing contexts in which foreign policy must now be made. As the 9/11 Commission argued, the United States’ foreign-policy and national-security communities failed conceptually and institutionally to “connect the dots” populating the policy landscape that indicated a major terrorist attack was in the works.4 The nationalsecurity community and the domestic law enforcement community shared the same goal of countering terrorism, but the respective policy areas were organized in ways that produced incoherence (e.g., actors failed to share critical data because of policy barriers to information sharing) rather than synergy. For many reasons, ranging from conceptual myopia to institutional inertia, the us government had not achieved coherence on antiterrorism policy and capabilities before 9/11. Since that horrible day, the us policy-making communities have been struggling to achieve policy coherence, particularly between law enforcement and national-security assets and capabilities. Three Trends Fostering the Rethinking of Foreign Policy Reinventing foreign policy confronts three trends that simultaneously call for and complicate coherence approaches. The first trend is the breakdown of the traditional distinctions between “domestic policy” and “foreign policy.” This trend is familiar to those who work on public health because it has been a theme in the literature on the globalization of public health with respect to both communicable and noncommunicable diseases.5 But the trend is not confined to public

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health, as confusion in the United States and other countries between “homeland security” and “national security” makes clear. Increasingly, policy problems are “global,” and only with difficulty can they be categorized as either “domestic” or “foreign.”6 The second trend is for problems to cut across conventionally defined issue areas, creating the need for interagency cooperation and coordination within governments.7 Such problems do not respect traditional jurisdictional boundaries that establish the turf for particular government ministries. As explored below, the emergence of health as a foreign policy issue constitutes just such a cross-cutting challenge. More specifically, concerns about how trade and health policies align also express the need to adapt vertically “stove-piped” ministries to horizontally dynamic problems. The third trend arises from the convergence of the other two trends. As stove-piped government ministries and agencies increasingly have to manage globalized issues, often without the benefit of interagency processes, they begin to interact more directly with their counterparts in ministries overseas. Such transgovernmentalism produces what scholars call the disaggregation of state sovereignty.8 The formation of transgovernmental networks at the ministry level and below undermines the notion that a unitary state makes and implements policy. Rather, transgovernmental networks influence how policy is made. Horizontal plumbing connecting the policy nodes of disaggregated states is replacing the vertical stove-piping of policy in the unitary state. Implications of the Three Trends for Policy Coherence Each trend has important consequences for thinking about policy coherence. The blurring or obliteration of the traditional distinction between domestic and foreign policy actually increases the importance of foreign policy for all issue areas. The interconnectedness between the local and the global fostered by globalization produces the need to shift governance of issues from the local to the national and from the national to the global. The essence of foreign policy – organizing a country’s relations with other states and foreign bodies – has increasingly become central to most policy areas. As a result, coherence in foreign policy has wide ramifications as a matter of governance. The tendency of globalized problems to affect policy across traditionally defined issue areas creates not only the need for interagency efforts but also competition among agencies for how the interagency agenda

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will unfold. The question becomes not policy coherence per se but policy coherence on whose terms. Bureaucratic turf battles are, of course, not new to the world of foreign policy, as long-standing rivalries between foreign and defense ministries in many governments illustrate. The three trends affecting foreign policy not only exacerbate traditional bureaucratic incentives to protect and fight for influence but also bring more agencies and players into the mix because of the erosion of the conventional distinction between foreign and domestic policy. In this context, interagency cooperation and coordination can trigger Darwinistic, survival-of-the-fittest behavior, with “alpha agencies” protecting their bureaucratic turf and attempting to expand that turf at the expense of the less powerful agencies that are relative newcomers to the world of foreign policy. The rise of transgovernmentalism as a policy phenomenon complicates the production of coherent policy for the state. Horizontal policy plumbing among finance ministers of various countries might achieve coherence among themselves but to the exclusion of connecting their pipes with the plumbing running to development or environmental ministries. To overcome the potential policy incoherence resulting from the formation of transgovernmental networks, these networks have to themselves be networked so that a “network of networks” strives for policy coherence. The complexity of the task of policy coherence in such an approach perhaps makes interagency cooperation within a single government look simple by comparison. Policy Coherence in Networked Anarchy This discussion of the three trends and their implications assumes that policy coherence is, or should be, a central characteristic of foreign policy in a globalized world. The interdependent complexities of most policy areas affected by globalization force governments to “connect the dots” across many different policy pursuits in order to address effectively the problems at hand. Even so, we should pause briefly to consider the policy coherence assumption, because it connects to divergent perspectives about the ultimate purpose of a country’s foreign policy. We might agree that policy coherence is important to a state’s foreign policy for the reasons explored above, but this consensus would tell us little about why a state might think coherence is an important national interest. The demand for policy coherence may have nothing to do with promoting poverty reduction or human development nationally or

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globally but everything to do with a government’s interests in security, power, or placating an influential special-interest group. Exploring the diverse explanations about the nature of foreign policy is beyond this chapter’s scope, but a few words are in order because some elements of the debates about foreign policy are important for thinking about policy coherence generally and specifically with respect to trade and health. At its most basic, foreign policy represents a state’s attempt to secure its interests in a political environment characterized by anarchy. Anarchy does not mean a condition of chaos. Rather, anarchy simply describes the fact that international relations operate in a political context in which the actors recognize no common, superior authority.9 The condition of anarchy affects, however, state behavior, especially in foreign policy. Different theories of international relations offer competing explanations for the underlying motives of foreign policy behavior. All leading theories of foreign-policy behavior would explain any drive for policy coherence with larger objectives connected to a country’s concept of its national interests. Policy coherence in the abstract does not motivate states unless it serves some political purpose important to their respective national interests. States interacting in a condition of anarchy often have conflicting conceptions of what is important for their national interests. Consequently, country a and country b may be pursuing coherence in their respective foreign policies on the same issues but for reasons that conflict. Each may achieve policy coherence domestically, but the two countries may not develop a foundation for successful collective action on a particular problem internationally. In other words, coherence in one state’s foreign policy does not necessarily produce collective policy coherence among countries. States compete to maximize the likelihood that their own conceptions of coherence prevail. Depending on the configuration of power among states, one could see that what policy coherence means is determined by the hegemon or a small circle of great powers. Anarchical politics are rarely representative or democratic. This dynamic of competition often brings intergovernmental institutions and mechanisms, including international law, into play. States use these instruments to coordinate divergent national interests and to mediate power inequalities in the international system. In these settings, policy coherence among countries often becomes the search for the lowest common denominator or for rhetoric sufficiently broad to allow every state to claim it obtained what it wanted out of the multilateral

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process. The picture is more sobering when the effects of globalization are combined with the impact of anarchy. Anarchy pushes countries to decide on negotiating positions and strategies that represent their national interests. The mechanics of globalization disaggregate issues and policy responses, fostering more and more complex webs of transgovernmental networks that make the national interest appear kaleidoscopic. From the foreign-policy perspective, coherence has to be pursued in the context of networked anarchy, a political context that requires unity of purpose implemented through a diversity of means. Policy coherence in networked anarchy requires the ability, nationally and globally, to synthesize cross-cutting problems and to rewire internal and external networks to produce actions that adequately address them. The ability to pursue policy coherence in networked anarchy suggests that states must have sufficient governance capacity to undertake these tasks. The struggles that highly developed countries with significant governance capacities have had with globalized problems indicate that the pursuit of policy coherence in networked anarchy is difficult. Many developing and least-developed countries do not, however, have the governance capacity to address adequately globalized problems. This lack of governance capacity is a frequent theme in analysis of global health problems, particularly infectious diseases, which require robust surveillance and intervention capabilities that many developing and least-developed countries do not possess. Similarly, concerns about the liberalization of trade in health-related services often emphasize the need for countries undertaking liberalization to have sufficiently strong regulatory systems to manage such services, which again raises the issue about the weaknesses of regulatory capabilities in many countries around the world.

the coherence challenge of health as foreign policy The broader enterprise of integrating health into all the major functions of foreign policy emerged in the last decade,10 as health issues increasingly became more important to many aspects of countries’ foreign policies.11 The rise of health as a foreign policy issue enhances the objective of producing coherence in trade and health policies by giving health goals more political importance in the realm of trade, but health’s new foreign-policy importance also complicates trade and health policy

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coherence by forcing countries, internationally and domestically, to sort out how to organize and balance their interests in trade and health. Foreign Policy’s Governance Functions In simple terms, states undertake four governance functions through foreign policy. First, they attempt to ensure their security from external threats. Historically, this function has focused on military threats posed by rival states. Second, states engage in foreign policy to contribute to their economic power and well-being. Thus, trade and foreign-investment policies have always played a significant role in foreign policies. Third, states support the political and economic development of other countries. Often the foreign-policy interest in development connects to the state’s security or economic interests, but sometimes development initiatives are undertaken for humanitarian reasons. Fourth, states use foreign policy to promote and protect human dignity, as evidenced by support for human rights and the provision of humanitarian assistance to countries and populations. Historically, these foreign-policy functions existed in a hierarchy, with security and economic power ranking as more important than development and human dignity (see figure 1). From the mid-nineteenth century until World War II, foreign policy’s interest in health predominantly concerned reducing the burden national health measures created for international trade and commerce, measures such as maritime quarantines, and that interest was thus linked to states’ interests in their economic well-being. Since World War II, the place of health in foreign policy has largely been linked to development and human-dignity agendas, the traditional “low politics” of international relations. Even in these development and human-dignity agendas, health was not a top foreign-policy priority. The approach of development policies to health during the Cold War stressed that “wealth produced health.” The argument that investments in health actually contribute to economic development did not gain serious influence until the World Bank published Investing in Health in 1993.12 In terms of human dignity, the bifurcation of human rights into civil and political rights and economic, social, and cultural rights put health into the latter category, which tended not to receive as much attention as civil and political rights during the Cold War. who’s approach to international health after its establishment in 1948 moved away from the pre-World War II foreign-policy linkage of

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High politics

Security Economic well-being Development

Public health Low politics Fig. 11.1

Human dignity

Hierarchy of foreign policy functions

the health and trade interests of states towards achieving universal access to primary health care in the developing world.13 This “health for all” strategy was not directly connected with the specific trade interests of states but was linked to trade more generally through its support for the New International Economic Order, which sought to radically restructure all manner of international economic relations.14 Health as Foreign Policy The rise of health as a foreign-policy issue during the last decade reveals health escaping from its traditional place in the low politics of international relations to a situation in which health has become an important consideration for each of the functions foreign policy serves. Publichealth threats posed by biological weapons and pandemic diseases have become national and international security concerns. The emphasis by both the wto and the who on the importance of trade and health coherence signals the emergence of health as a more important consideration in international economics, a message reinforced by other efforts, most prominently those of the Commission on Macroeconomics and Health.15 who has pointed out that health is at the heart of the United Nations’ Millennium Development Goals (mdgs),16 which constitute the leading development initiative in the world today. Rightsbased arguments involving health have proliferated in the last decade, ranging from concerns about hiv/aids-related discrimination,17 ensur-

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ing civil and political rights are protected as much as possible when governments respond to outbreaks of dangerous communicable diseases (e.g., with the quarantines used during the sars outbreak in 2003),18 and increasing access of the poor and vulnerable to essential medicines and health services.19 These developments across all governance functions of foreign policy have forced governments to think about health as foreign policy. Whether and how health is integrated effectively across the functions of foreign policy have now become important national and international governance questions. The rise of health as a foreign-policy concern exhibits all the characteristics of networked anarchy analyzed above – the blurring of traditional distinctions between domestic and foreign policy, the tendency of health problems to cut across traditionally defined issue areas, and the development of transgovernmental and nongovernmental networks trying to address health problems. The idea of health as a foreign policy attempts to capture the challenge of crafting a unity of purpose for health challenges through the diversity of functions served by foreign policy. Health as foreign policy requires coherence not only within individual foreign-policy functions but also across these functions. The idea of health as foreign policy does not mean that foreign policies of different countries are or will be uniform as to whether or how they integrate health into the function foreign policy serves. The health component of security is more important to the United States because of bioterrorist fears than it is for many developing countries, which place more value on health’s role in their economic and social development. Developed states may stress their sovereign right to establish “zero tolerance” levels for health risks potentially moving with goods in international trade, but this high level of protection may adversely affect developing-country exports that cannot achieve the level of health protection established. In addition, the extent to which a state can pursue health as foreign policy depends on its governance capacities in foreign policy, health, and other affected policy areas, which raises questions about the capabilities of many developing and least-developed countries to engage effectively in health as foreign policy. Thus, health as foreign policy does not escape the effects anarchy has on states’ calculations of their respective national interests. Divergence of national interests among states routinely occurs in international relations. To address such divergence, a state will often argue that what is in its interests coincides with what is in the interest of

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other states and the international community. This “harmony of interests” doctrine has been criticized in connection with foreign policy behavior generally,20 and the doctrine is equally suspect in the context of health and foreign policy. For example, developed states (and pharmaceutical companies) have argued that high international standards for protecting pharmaceutical patents and other forms of intellectual property are good for the world’s health because such protection will stimulate more healthrelated research and development. Many developing states and nongovernmental organizations have responded to claims that a harmony of interests exists among states on the need for high levels of patent protection with criticism and opposition. This example illustrates that even within health as foreign policy, the national interest, rather than abstract notions of human development, shapes the political context in which states pursue policy coherence.

trade and health as a coherence challenge in foreign policy Coherence can exist at two interconnected but different levels – the external and the internal. “External coherence” refers to policy coherence in the international realm, in the space of anarchy in which states interact. “Internal coherence” means policy coherence in the domestic realm, in the hierarchical space in which countries respectively organize their political affairs. External and internal coherence are interdependent. How a country organizes its policies domestically affects its participation in diplomatic efforts to coordinate and balance the national interests of states. The balance set internationally among states can directly affect how countries manage policies domestically. Recognition of this interdependence does not preclude seeing that external and internal policy coherence are sufficiently different analytically to be discussed as separate aspects of the larger task of policy coherence. External Policy Coherence: Balancing State Interests in Trade and Health As argued above, the dynamics of anarchical politics among states often produces divergent national interests. Some controversy and concern that have arisen in the trade-health relationship flow from a perceived divergence of national interests on trade and health issues. Country a

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wants to increase its exports of tobacco products, but country b wants to restrict importation of tobacco products in order to protect public health. Country c wants to increase access to effective medical technologies by producing them locally, but country d wants country c to respect the patent rights on such medical technologies held by country d’s nationals. Country e wants to increase its exports of private health insurance services, but country f wants to prevent private insurance from undermining the universal coverage provided by its national health insurance system. As with all issues in international relations, the main question when national interests diverge is how states manage this divergence in their anarchical relations. In this external policy realm, continued divergence of national interests will prevent construction of collective approaches that accommodate differing national interests in sustainable patterns of behavior. Achieving such accommodations produces external policy coherence when divergent interests are balanced, meaning that the outcome allows states to hold and pursue both interests simultaneously. Balancing trade and health interests has been a long-standing objective of both international law on public health and international trade law. Both sets of international legal rules have long recognized a state’s right to restrict trade to protect human health as long as the trade-restrictive health measure has a rational relationship to protecting health and does not restrict trade more than is necessary to achieve the health objective in question. The old international sanitary conventions of the late nineteenth and early twenieth centuries and who’s International Health Regulations (originally adopted in 1951) prohibited the use of trade-restricting measures designed to prevent the importation of specific communicable diseases unless the conventions or regulations specifically authorized the use of such measures. These agreements contained the maximum healthprotecting measures that states parties could apply to international trade and travel. The General Agreement on Tariffs and Trade (gatt) (originally adopted in 1947) likewise permitted contracting parties to violate gatt obligations if the violating measures were necessary to protect human health, with “necessary” meaning that the measure in question had to be the least trade-restrictive measure possible to achieve the level of health protection sought. This approach, common to pre-wto international law both on public health and on trade, attempted to establish a balance between one state’s interest in engaging in trade and another state’s interest in protecting the health of its population.

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External Policy Coherence and Contemporary International Law Contemporary international law on public health and international trade continues to attempt to balance trade and health interests and thus achieve external policy coherence. First, in terms of trade in goods and health the key international trade agreements under the wto – the gatt, the Agreement on the Application of Sanitary and Phytosanitary Measures (the sps Agreement), and the Agreement on Technical Barriers to Trade (the tbt Agreement)) – recognize the wto members’ right to restrict trade to protect human health but apply disciplines to this right to ensure that trade is not unnecessarily restricted and that health is not used to disguise an unjustified or arbitrary restriction on international trade. With regard to international law on public health, the same approach of balancing the right of health protection with preserving as much trade flow as possible has routinely appeared, from the international sanitary conventions of the late nineteenth century to the new International Health Regulations adopted in 2005 (ihr 2005).21 For example, the purpose and scope of the ihr, 2005, “are to prevent, protect against, control and provide a public health response to the international spread of disease in ways that are commensurate with and restricted to public health risks, and which avoid unnecessary interference with international traffic and trade” (article 2). The stability and continuity of this approach over long periods in both international trade and international health law suggest that states have settled on a strategy they believe produces sustainable external policy coherence between trade in goods and health. Second, in terms of trade in health-related services, the main multilateral agreement, the gats, imposes fewer disciplines on wto members seeking to protect health from potentially adverse effects created by imports of health-related services.22 The gats’ general obligations, such as the most-favored-nation principle (article II), are not a serious constraint on the exercise of sovereignty to protect human health. In terms of specific commitments under the gats, each wto member decides whether it wants to accord market access or national treatment to the health-related services and service providers of other wto members, subject to whatever exceptions to such access and treatment it desires to retain (gats, articles XVI and XVII). Unlike the sps Agreement (article 5.6) and the tbt Agreement (article 2.2), the gats contains no general obligation to ensure that any trade-

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restricting health measure is not more restrictive than necessary to achieve the health objective in question. This obligation appears in the gats’ general exceptions, which allow wto members to violate the gats in implementing a measure that is necessary to protect human health and that is not applied in a manner that constitutes arbitrary or unjustified discrimination against trade (article XIV). The balance struck for external policy coherence with respect to the gats allows wto members to favor health over trade, compared to the agreements on trade in goods. Third, with respect to intellectual property rights, trips requires wto members to accord baseline patent rights (articles 27–8), subject to safeguards and flexibilities that wto members can use for public health purposes (article 31). This approach echoes the one taken in trade in goods – the rules allow an exception to general obligations that can be used for health protection purposes. The Doha Declaration on the trips Agreement and Public Health issued at the wto ministerial meeting at Doha in 2001 made clear that nothing in trips should be interpreted to prevent a wto member from taking action to protect health.23 Criticism of the Prevailing External Policy Coherence in International Trade Law To be sure, many health experts and advocates would argue that international trade law under the wto favors trade over health and thus does not achieve the kind of balance required for external policy coherence. The requirement that trade-restricting health measures be necessary – the so-called necessity test – has been a particular target of health-related criticism of international trade law. The necessity test allows scientifically justified and non-discriminatory measures to be struck down to facilitate larger trade flows. According to its critics, a more coherent approach would be to permit all trade-restricting health measures that had a scientific basis and were applied in a non-discriminatory manner. The gats’ seemingly more flexible approach to trade in services has also not been well received in many health policy circles because of fears that the gats will lead to the privatization of public services, harming efforts to achieve, for example, universal access to health care. Similarly, concerns have been raised about the trips requirement that all countries provide baseline patent rights for all pharmaceutical products, subject only to safeguards and flexibilities that major economic

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players have challenged and tried to undermine. Many critics of trips would prefer to leave the decision about what kind of patent rights to recognize to the sovereign deliberations of each country, an approach that would allow each country to accommodate its health concerns more robustly if it so desired. The Doha Declaration arose from intense controversy on the meaning and scope of the safeguards and flexibilities trips contains and does not reflect solidarity in terms of external policy coherence in the relationship between patent rights and public health. The common thread in these criticisms is that the rules create imbalance rather than balance because they allow trade interests to override health protection and thus do not achieve external policy coherence. Behind this position is the sense that developed countries utilize their power to privilege their trade interests over the health interests of weaker developing countries in the implementation of wto rules. The criticisms help demonstrate, however, that external policy coherence involves balancing competing national interests involving trade and health. This balancing task does not, and cannot, strive for calibrating competing interests such that both get equal weight in all situations. Anarchical politics rarely produce results in which everything is accorded equal weight. Further, rules that gave equal weight to all competing interests would produce deadlock because such rules would provide no guidance for deciding when one interest should legitimately prevail over another in case of conflict. External Policy Coherence Scorecard A case can be made that the existing rules, with the exception of the patent provisions in trips, adequately balance trade and health interests and thus achieve external policy coherence. As noted above, the prevailing international legal rules concerning trade in goods and services construct approaches that permit trade flows and health protection to occur in a sustainable pattern over time. However, health critics of wto rules on trade in goods and services still dislike the potential for trade interests to trump health concerns, and they would prefer rules that accorded greater deference to sovereign decisions on protecting health. This alternative vision of external policy coherence is not, however, realistic or feasible. This argument relies less on a reading of the existing rules than on an emphasis of the importance of trade to international relations, especially in the post–Cold War era.

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Health as foreign policy is a relatively new phenomenon. Trade as foreign policy is as old as international relations itself. The interests of states in being able to trade robustly are pervasive, and globalization is grooving these interests more deeply with each passing year. Contemporary economic growth and development strategies depend on the engine of trade, and this reality explains why many countries and international organizations are deeply worried about the gloomy prospects (as of this writing) for a successful conclusion to the Doha round of multilateral trade negotiations. Trade could even be considered a geopolitical determinant of health that requires the support and backing of public health as a matter of foreign policy. A weak or failing international trading system would produce political and economic consequences under which national and global health, especially of the most vulnerable populations, would suffer. Public health needs a stable, orderly, and dynamic international trading system, because this system delivers economic opportunities and resources that are critical for improving standards of living, funding public services, and supporting good governance. This reality applies to developed and developing countries and thus is not confined to contexts of development. Given the enormous geopolitical importance of trade and its foreignpolicy significance to every country, the international trade law on goods and services actually accommodates health well, especially considering that health experts were not significantly involved in the negotiations of the wto agreements and that health historically has been neglected in foreign-policy formulation. The appearance time and again of the same template for balancing trade and health with respect to trade in goods also suggests that the competing interests of states have found an equilibrium that works. The template’s appearance again in the ihr of 2005 reinforces its systemic stability. For services, the template is currently whatever the wto member in question wants the balance between trade in services and the protection of health to be. Proposals made in advance of and during the wto ministerial meeting in Hong Kong in December 2005 would, if adopted, have significantly changed the status quo. Under proposals made before the Hong Kong ministerial meeting, wto members would have to make mandatory, numerically based liberalization commitments across service sectors. Many wto members opposed these numerical targets for the services negotiations. In November 2005, the chairman of the Council for Trade in Services reported:

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A number of Members stated that numerical targets would help to translate a high level of ambition into meaningful commitments for services in the round. Several Members indicated that inclusion of numerical targets in the text of the Ministerial Declaration would be necessary. Many Members expressed strong reservations about numerical targets, particularly in terms of their compatibility with the gats and the Negotiating Guidelines, and considered that these proposals were no longer a basis for discussion. Given that the gap between positions remains too wide to be bridged, I have not included a reference to numerical targets in the draft text [for the Hong Kong ministerial meeting].24 Disputes about moving negotiations on trade in services from the bilateral request-offer format into a plurilateral request-offer mechanism also caused problems in pre–Hong Kong discussions in the Council for Trade in Services. Plurilateral requests would involve wto members making offers or requests to a number of other wto members simultaneously, with a view to collective negotiations, the results of which would be made available to all wto members on a mostfavored-nation basis. The chairman of the Council for Trade in Services reported in November 2005 that “regarding negotiations on a plurilateral basis, a number of delegations felt that the text could have been phrased in a more binding manner. Other Members took the opposite view that certain of its elements were overly prescriptive” (par. 13). Despite the disagreement about plurilateral negotiations, the draft text for the Hong Kong ministerial meeting included language that required wto members to engage in the plurilateral process. At Hong Kong, wto members did not include numerical targets in the services annex of the ministerial declaration but did include the nonbinding option for wto members to engage in plurilateral negotiations on liberalization of trade in services.25 How the plurilateral negotiations will unfold and evolve remains, as of this writing, to be seen. The addition of a nonbinding plurilateral negotiating process does not, technically, change the discretion the gats accords to wto members to decide how they wish to liberalize their service sectors. The external policy coherence achieved by the gats remains in place, but the attempt by some wto members to change the process through which liberalization of trade in services occurs by adding mandatory numerical targets and an obligation to engage in plurilateral negotiations demonstrates

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that this coherence is vulnerable and must be carefully watched, particularly by those in the health policy community. In the context of external policy coherence, intellectual property rights remain a serious problem. State interests in protecting patents and in protecting health have not settled into equilibrium and often continue to conflict. Evidence of continued divergence in state interests in patent rights in pharmaceuticals and the trips flexibilities and safeguards can be in found in the controversies leading to the Doha Declaration and in the disagreements after the Doha Declaration, including the contentious negotiations on the Decision on the Implementation of Paragraph 6 of the Doha Declaration.26 More evidence of the lack of external policy coherence on patent rights and health can be located in the controversies generated by the United States’ pursuit of trips-plus provisions in bilateral and regional trade agreements.27 These provisions grant holders of intellectual property rights, especially patents, more protection than trips, and critics see the us push for trips-plus provisions as its strategy to circumvent the health–patents situation achieved in the multilateral wto process through and after the Doha Declaration. The regional and bilateral agreements that contain trips-plus provisions have a potential multilateral impact because of the most-favorednation (mfn) principle in trips. Any wto member that grants the United States trips-plus protections in a bilateral or regional trade agreement must grant that advantage, favor, and privilege immediately and unconditionally to the nationals of all wto members (trips, article 4). As the web of agreements containing trips-plus provisions grows, the mfn principle in trips potentially establishes a new de facto multilateral level of patent protection not reflected in trips itself. trips-plus politics are, thus, rightly a serious issue to those who are concerned about balancing trade and health interests with respect to intellectual property rights. Internal Policy Coherence: Synergy in Service of the National Interest The second level of policy coherence to consider in the context of trade and health is internal. Analysis of external policy coherence proceeded on the basis that states had national interests in trade and health that they managed in their relations with each other largely through multi-

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lateral international legal instruments. External policy coherence develops in a symmetrical context: country g’s trade interest bumps up against country h’s health interest, producing a need for equilibrium between the two interests. Internal policy coherence focuses, instead, on how a country constructs its national interest with respect to trade and health. The construction of the national interest on trade and health reflects external policy coherence but involves different elements that require analysis. The objective of internal policy coherence goes beyond balancing interests in trade and health. The balancing task identified with external policy coherence flows from the interaction of states in a condition of anarchy. Internal policy coherence has the advantage of operating in a hierarchical political context, which offers more prospects for policy coherence to aim for synergy. Domestic actions should be synergistic in the sense that trade and health make different contributions to the same end. Synergistic actions converge in ways that advance the identified end farther than action alone in one area could achieve. One way to illustrate the synergy at the heart of internal policy coherence is to consider an alternative approach to trade and health issues. Think, for example, of the traditional “wealth produces health” trope. Under this framework, health is not an engaged participant in the construction of the national interest but a by-product of the foreign-policy process. Economic considerations alone determine the national interest the state uses in its dealing with other countries. The health benefits created by the economics-only focus are positive externalities that the state and its people enjoy when trade produces them. This example describes internal policy monopoly rather than coherence between trade and health. The balancing of trade and health interests externally through international legal rules creates the need for those involved in foreign, trade, and health policy within the state to contribute to the formulation of the national interest. In its May 2006 resolution on international trade and health, the wha urged who members, for example, “to apply or establish, where necessary, coordination mechanisms involving ministries of finance, health, and trade, and other relevant institutions, to address public health related aspects of international trade” (par. 1(3)). This perspective echoes the relationship of partnership described by Lee and McInnes as “one in which the tools and skills of various policy communities – development, security, public health and foreign policy – are brought together for the greater good.”28 How states integrate trade

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and health in constructing their respective national interests is the subject matter of internal policy coherence. In many ways, internal coherence is a more difficult challenge than external coherence. Even when health ministers and experts have not participated significantly in trade negotiations, international trade agreements produced, by and large, a balance for trade in goods and services that leaves room for states to craft policies and approaches in which the health and trade sectors jointly participate in formulating the national interest. Such joint participation has not, however, occurred, and still often does not occur, within many countries. The tendency within states historically has been to marginalize health ministries and experts through a double dose of “stove-piping.” First, governments often organized their thinking according to the “domestic-policy” stove-pipe and the “foreignpolicy” stove-pipe. Health generally fell under the domestic-policy category. Second, even within the domestic-policy stove-pipe, health often operated in ways disconnected from other policy areas that affected health inputs and outcomes. The double stove-piping meant that health ministries and experts often had more contact with their counterparts in other countries through transgovernmental networks than with their own trade and foreign ministries. Largely through these transgovernmental networks, health ministries and experts began to deliberate on the extent to which health’s policy space within countries was affected by the acceleration of globalization, aided by the evolution of the multilateral trading system. Health problems respected no policy stove-pipes, but these stove pipes still structured responses within countries. Integrated threats were met with disaggregated governance. Internal policy coherence on trade and health suffered. These dynamics demonstrate that internal policy coherence between trade and health is not organic but has to be deliberately constructed, nurtured, and maintained. Left to their own devices and natural inclinations, trade and health communities tend to drift back into patterns with which they are more comfortable. In addition, trade ministries typically have more power within governments than health ministries, giving trade interests an upper hand when trade and health intersect. These tendencies and historical patterns underscore why internal policy coherence has to be achieved through government and governance architecture and capabilities that maximize the ability of health and trade ministries to contribute to the formulation of a national interest that simultaneously advances health and trade objectives.

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Towards Trade Epidemiology Identifying the need for internal policy coherence and describing its general nature are easier, of course, than producing such coherence. The organizational diversity of governments makes concrete descriptions of needed mechanisms and institutions less helpful than providing a general framework for achieving internal policy coherence. I call this approach trade epidemiology. The basic idea is to mainstream the use of public-health principles and techniques, where relevant, in the formulation and implementation of trade policy. The goal is to have health and trade policy converging synergistically in the construction of a more enlightened national interest. Internal policy coherence will not work well if the relationship between trade and health mainly constitutes health officials complaining about trade and not offering constructive solutions to make trade and health work more productively together for the good of the country. The trade epidemiology approach might include (but not be limited to) the following activities: G

G

Building the evidence base for policy. Having more accurate and comprehensive empirical evidence of the ways trade affects public health would enhance efforts to achieve internal policy coherence. The need for better empirical data has been particularly acute with respect to the international trade in health-related services.29 Part of this effort could involve developing a system that organizes and analyzes notifications issued under international agreements related to public health (e.g., under the sps Agreement, the tbt Agreement) and other forms of information (e.g., ProMed-mail, who’s Global Outbreak Alert and Response Network) to increase the transparency and quality of data concerning trade and health.30 Monitoring the implementation of existing agreements related to trade and health. Trade and health ministries should develop harmonized approaches to monitoring how existing agreements that affect trade and health are being implemented by governments and what weaknesses and problems need to be addressed. The wha’s resolution on international trade and health urged who members “to continue to develop capacity at the national level to track and analyse the potential opportunities and challenges of trade and trade agreements for health-sector performance and health outcomes” (par. 1(5)). This

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G

G

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task becomes more important and complex as the number of trade agreements a country adopts increases. Integrating public health expertise into negotiations of new agreements and arrangements. States periodically negotiate new agreements and arrangements that affect trade and health, and health input and/or expertise should be integrated into all diplomatic teams that negotiate these regimes. Accountable and transparent processes should be developed for resolving conflicts between trade and health interests with respect to proposed new agreements or arrangements to ensure that health concerns are not automatically subordinated to trade objectives. Networking trade epidemiology. Efforts to improve synergies between trade and health domestically can be aided by linking such internal activities with intergovernmental regimes (wto, who) and existing transgovernmental networks. The creation of a working group or committee on trade and health at the wto might provide a catalyst for broadening and deepening domestic attempts to integrate trade and health policies. Trade-for-health initiatives. Trade epidemiology should integrate systematic efforts to stimulate and undertake trade initiatives that could positively benefit health. As I argued in 2004, “[e]fforts to reduce tariffs and other trade barriers that adversely affect access to life-saving and health-promoting products ... indicate that systematically identifying and reducing such barriers could produce global health benefits.”31 In February 2006, the United States and Switzerland jointly introduced a proposal at the wto that would eliminate tariffs on the trade in medicines and medical devices.32 Such “trade-for-health” initiatives could also include promoting exports of old or new healthrelated products or technologies (as is being done in the wto with environmental goods and services); supporting international standardization efforts that make products safer and healthier; providing technical and financial assistance to help developing countries implement health-protecting international standards; awarding prizes to companies that increase access to health-related products and technologies for developing countries; encouraging licensing arrangements to allow foreign manufacture of health-related technologies to better serve poor populations; fostering public-private partnerships that utilize trade to improve health; and creating preferential trading privileges for countries that achieve material progress toward achieving the health-related mdgs.

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Trade epidemiology as an approach to internal policy coherence would require institutional change within trade, health, and foreign policy bureaucracies and the development of novel kinds of personnel and information capabilities. Trade epidemiology would depart from what has prevailed in the past, but internal policy coherence’s objective of synergy for trade and health cannot be achieved by half-hearted halfmeasures.

obstacles to policy coherence between trade and health Achieving policy coherence in the relationship between trade and health confronts many problems that threaten to drain this project of energy and potential. At the most general level, trade and health coherence may not get high-level political attention and commitment compared to other areas of foreign policy that also demand more coherent policymaking and implementation. The challenge of creating unity of purpose through a diversity of means in the context of networked anarchy forces governments to prioritize their coherence needs in their overall foreign policies. The Policy Triage Problem Leaving aside the larger foreign-policy context, trade and health policy coherence may not even rank highly on the agenda of health as foreign policy. Countries face many serious national and global health problems with an urgency that is not present in the trade and health context. For example, the perceived growing threat of pandemic influenza, which is linked to the global spread of avian influenza (h5n1), is increasingly driving the health-as-foreign-policy agenda. This threat highlights the world’s lack of public health preparedness and the inadequacies of national and international surveillance and response capabilities for both animal and human health and their intersections. Although trade plays a role in the avian influenza problem (e.g., poultry exports are big business in Southeast Asia), this crisis does not point to either external or internal policy coherence between trade and health as something requiring urgent foreign policy attention. Similarly, other major global health problems, including the still worsening hiv/aids pandemic, the lack of progress on achieving the health-related mdgs, and the need to help developing countries build the core surveillance

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and response capacities mandated by the ihr 2005, all require actions, such as significantly increased international development assistance, that do not hinge on health’s relationship with trade. Given that health ministries in most countries face an increasing parade of public health problems that require, on epidemiological grounds, immediate action, the need for policy triage might marginalize the trade-health coherence agenda or outsource it to nongovernmental actors. Under-resourced and under-staffed public health authorities may not be able to focus sustained energy on the trade and health coherence objective. This problem may be most acute in developing and least-developed countries where such coherence is, in fact, most needed. The pressures of policy triage may also exist in the realm of trade. Although the Hong Kong ministerial meeting did not collapse in failure, the wto’s Doha Development Agenda is presently in trouble. wto watchers worry about the lack of progress made to date in the Doha Round of multilateral trade negotiations. Incoherence between trade and health is not a cause of the Doha Round’s travails, nor is it perceived as a major problem presently confronting the wto’s efforts on the Doha Round. Experts are more worried about the lack of progress in the negotiations on the liberalization of trade in agriculture, the trend of wto members adopting regional and bilateral trade agreements, and the lack of progress on special and preferential treatment for developing and least-developed countries. Challenges for External-Policy Coherence The lack of urgency concerning trade and health policy coherence in the worlds of foreign policy, health, and trade also connects with issues arising under both external and internal policy coherence. As argued earlier, the balance struck between trade and health interests in wto rules on goods is such that wto members have expressed no serious interest in changing them. In terms of services, the addition of plurilateral negotiations for the liberalization of trade in services has the potential to stress the external policy coherence achieved by gats. The divergence of trade and health interests is most apparent with respect to patent rights, but after the Doha Declaration, the patent rights controversy shifted to the context of regional and bilateral trade agreements and trips-plus provisions in such agreements. Given the nature of the divergent state interests on intellectual property rights in the wto system, the prospects for better external policy

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coherence on this aspect of the trade-health relationship are not currently promising. The increasing adoption of regional and bilateral trade agreements complicates both external and internal policy coherence in ways beyond the issue of intellectual property rights. The proliferation of these agreements increases the transactions costs for achieving and sustaining external and internal policy coherence. Operating under a single, universally accepted set of rules creates efficiencies for policy efforts geared to monitoring the relationship between trade and health. If trade epidemiology has to manage an increasingly complex set of agreements that does not embody the same rules on goods, services, and intellectual property, then the effort is more time-consuming, expensive, and less transparent. Such increased transaction costs would burden developing and least-developed countries more than developed countries. The trend toward regional and bilateral trade agreements may also create different substantive balances between trade and health from those struck in wto agreements. Some regional and bilateral agreements have provisions that are more aggressive on trade in services than the gats and contain trips-plus provisions. In such circumstances, external policy coherence, defined as a balance between trade and health interests of states, becomes a series of fragmented and unconnected balances that prevail between different countries. This situation does not undermine the utility of thinking about external policy coherence, but it complicates assessment of the balance required for external policy coherence to exist. In addition, the more the rules on goods, services, and intellectual property rights differ from the wto rules, the more likely it is that state interests are diverging in terms of trade interests vis-à-vis health interests in their respective foreign policies. Divergence in state interests on a broader basis may erode the balance represented in wto agreements that currently produces the external policy coherence that does exist. Challenges for Internal Policy Coherence In terms of internal policy coherence, many obstacles arise from the historical absence of close interagency cooperation on trade and health and from the lack of resources that health ministries and authorities suffer from, particularly in developing and least-developed countries. Given their pressing priorities, trade ministries may not respond with

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enthusiasm to an agenda that potentially alters how trade policy is made. With health over-stretched and trade wary, producing synergy between trade and health internally may prove difficult practically and bureaucratically. These dynamics suggest a need for higher-level political intervention before prospects for synergy in the service of the national interest may seem credible. The likelihood of such intervention probably varies from state to state, but this type of intervention may occur only with respect to the most urgent issues or crises and not for the operation of trade epidemiology. Challenges of internal as well as external coherence may also arise from the growing global health problems presented by noncommunicable diseases. who and other public health experts have warned that morbidity and mortality from noncommunicable diseases are increasing globally. This increase is epidemiologically related to the consumption of products traded internationally (e.g., tobacco products, processed foods, alcoholic beverages). Achieving internal and external policy coherence with respsect to products associated with noncommunicable diseases may be increasingly difficult. The main wto cases concerning human health adjudicated by the Dispute Settlement Body to date have involved alleged threats of noncommunicable diseases. This reality suggests that the relationship between trade and noncommunicable diseases raises policy dissonance not created by trade-related issues generated by communicable diseases. Controversies about the potential impact of who’s Framework Convention on Tobacco Control on the obligations of wto members serve as further evidence that increasing national and international public-health efforts on noncommunicable diseases may create friction with internal and external incentives to export products associated with the burden of noncommunicable disease. Such friction spells trouble for policy coherence on trade and health at all levels.

conclusion Whether policy coherence for trade and health can be achieved has become a significant question, particularly for those working on health problems around the world. As this chapter has argued, this question is connected to much larger coherence projects that address reinventing foreign-policy for the new age of globalized problems. The larger foreign-policy perspective allows us to see how health itself has risen as a foreign-policy consideration in the last decade, but the rise of health

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to greater foreign-policy prominence does not ensure that achieving policy coherence between trade and health becomes a much easier task. When viewed as a coherence challenge in foreign policy, trade and health policy coherence actually involves two challenges in the form of external and internal policy coherence. This chapter has argued that, of these two, internal policy coherence is the most difficult to achieve, and trade epidemiology was offered as a framework for organizing trade and health in such a way that the state’s national interest reflects synergy rather than competition between these two areas of political endeavor. The obstacles to external and internal policy coherence for trade and health are, however, formidable, not least because foreign policy, trade, and health all must engage in policy triage, which may show that trade and health coherence is not the most pressing concern for states even within the realm of health as foreign policy. Achieving coherence in anarchy for trade and health has become increasingly desirable, but responding to this necessity is more complicated and difficult than might at first be imagined. This task requires the state to establish unity of purpose on trade and health and to use diverse means to steer the national interest through the complex reality of globalization. Replicated across the international system, this approach could produce results that foster human betterment. Sustained achievement of such policy coherence would demonstrate that the anarchical society of states is capable of improving its prospects for being healthy, wealthy, and wise.

notes 1 Peter Sutherland et al., The Future of the WTO: Addressing Institutional Challenges in the New Millennium (Geneva: wto 2005). 2 World Health Assembly, International Trade and Health, wha59.26 (27 May 2006). 3 World Health Organization and World Trade Organization, WTO Agreements & Public Health: A Joint Study by the WHO and the WTO Secretariat (Geneva: who 2002), 137–38. 4 National Commission on Terrorist Attacks upon the United States, The 9/11 Commission Report (New York: W.W. Norton 2004). 5 Kelley Lee, Suzanne Fustukian, and Kent Buse, “An Introduction to Global Health Policy,” in K. Lee, K. Buse, and S. Fustukian, eds., Health Policy in a Globalising World (Cambridge: Cambridge University Press 2002), 3–17.

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6 David Held and Anthony McGrew, “Political Globalization: Trends and Choices,” in I. Kaul, P. Conceição, K. Le Goulven, and R.U. Mendoza, eds., Providing Global Public Goods: Managing Globalization (Oxford: Oxford University Press 2003), 185–99. 7 Jospeh S. Nye and Anne Marie Slaughter, Report of the Working Group on Foreign Policy Infrastructure and Global Institutions (Princeton, nj: Princeton Project on National Security 2005), at http://www.wws.princeton.edu/ ppns/conferences/reports/fall/fpigi.pdf. 8 Anne-Marie Slaughter, A New World Order (Princeton: Princeton University Press 2004). 9 Tim Dunne and Brian C. Schmidt, “Realism,” in J. Baylis and S. Smith, eds., The Globalization of World Politics: An Introduction to International Relations, 2d ed. (Oxford: Oxford University Press 2001), 141–61. 10 A. Ingram, ed., Health, Foreign Policy & Security: Towards a Conceptual Framework for Research and Policy (London: The Nuffield Trust 2004). 11 David P. Fidler, “Health as Foreign Policy: Between Principle and Power,” Whitehead Journal of Diplomacy and International Relations 6 (summer/fall 2005): 179–94. 12 World Bank, World Development Report 1993: Investing in Health (Washington, dc: World Bank 1993). 13 Declaration of Alma Ata, International Conference on Primary Health Care, 6–12 September 1978. 14 United Nations General Assembly, “Declaration and Programme of Action on the Establishment of a New International Economic Order,” Resolution 3201–3202 (1 May 1974); United Nations General Assembly, “Charter of Economic Rights and Duties of States,” Resolution 3281 (12 December 1974). 15 Commission on Macroeconomics and Health, Investing in Health for Economic Development (Geneva: who 2001). 16 World Health Organization, WHO and the Millennium Development Goals, at http://www.who.int/mdg/en/. 17 Lawrence O. Gostin, The AIDS Pandemic: Complacency, Injustice, and Unfulfilled Expectations (Chapel Hill, nc: University of North Carolina Press 2004). 18 Mark A. Rothstein et al., Quarantine and Isolation: Lessons Learned from SARS, Report to the Centers for Disease Control and Prevention, 2003. 19 Medecins sans Frontieres, Campaign for Access to Essential Medicines, available at http://www.accessmed-msf.org/. 20 Edward H. Carr, The Twenty Years’ Crisis, 1919–1939: An Introduction to the Study of International Relations, 2d ed. (New York: St Martin’s Press 1946).

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21 World Health Assembly, Revision of the International Health Regulations, wha58.3, 23 May 2005. 22 David P. Fidler, Carlos Correa, and Obijiofor Aginam, Legal Review of the General Agreement on Trade in Services (GATS) from a Health Policy Perspective, available at http://www.who.int/trade/resource/gatslegalreview/en/ index.html. 23 World Trade Organization, Declaration on the trips Agreement and Public Health, wt/min(01)/dec/2, 20 November 2001 at http://www.wto.org/english/thewto_e/minist_e/min01_e/ mindecl_trips_e.htm. 24 Council for Trade in Services, Special Session of the Council for Trade in Services: Report by the Chairman to the Trade Negotiations Committee, par. 9, tn/s/23 (28 November 2005). 25 World Trade Organization, Ministerial Declaration of 18 December 2005, annex c, par. 7, wt/min(05)/dec (22 December 2005). 26 World Trade Organization, “Decision on Implementation of Paragraph 6 of the Declaration on the trips Agreement and Public Health,” wt/l/540, 1 September 2003 at http://www.wto.org/ english/tratop_e/trips_e/ implem_para6_e.htm. 27 Oxfam, TRIPS-Plus Provisions, at http://www.oxfamamerica.org/whatwedo/ issues_we_work_on/ trade/news_publications/trips/art5391.html. 28 Kelley Lee and Colin McInnes, “A Conceptual Framework for Research and Policy,” in A Ingram, ed., Health, Foreign Policy & Security: Towards a Conceptual Framework for Research and Policy (London: The Nuffield Trust 2004), 10–18. 29 Richard Smith, Chantal Blouin, and Nick Drager, “Trade in Health Services and the gats: Introduction and Summary,” in C. Blouin, N. Drager, and R. Smith, eds., International Trade in Services and the GATS: Current Issues and Debates (Washington, dc: World Bank 2006), 13. 30 Ann Marie Kimball, “The Health of Nations: Happy Birthday wto,” The Lancet Online, 15 December 2005. 31 David P. Fidler, Draft of an L20 Communique on Global Health, 31 October 2004, available at http://www.l20.org/publications/Phase%20II/Health/ health_fiddler_communiqué.pdf. 32 United States Trade Representative, United States Seeks to Eliminate Global Tariffs on Medicines and Medical Devices, 27 February 2006; available at http://www.ustr.gov/Document_Library /Press_Releases/2006/February/ United_States_Seeks_to_Eliminate_Global_Tariffs_on_Medicines_ and_ Medical_Devices.html.

ross cess Boundaries

12 Negotiating across Boundaries: Promoting Health in a Globalized World DIANA CHIGAS, DAVID FAIRMAN, ELIZABETH MCCLINTOCK, AND ADIL NAJAM

Improving health conditions is a top priority and fundamental necessity for many developing countries. It is also critical to the fulfillment of many international development goals. Sustainable development depends on the ability of countries, individually and collectively, to maintain and increase the stock of capital – human and social, as well as physical and financial – that has been the traditional focus of development efforts. Increasingly, human capital (people’s skills, knowledge, and productivity), rather than natural resources, is the basis of comparative and competitive advantage in the developed world. In many developing countries, health hazards and poor sanitary conditions threaten human capital and lead to loss of life and human misery, continued poverty, and underdevelopment. Yet as health issues become more urgent, they have become more difficult to address. As globalization progresses, the areas of overlap between traditionally separate sectors are increasing. Globalization has introduced or intensified the cross-border transmission of infectious diseases (hiv/aids, tb, malaria, and others) and the cross-border transmission of risk factors for health (pollution, potentially unsafe foods, and environmental phenomena such as climate change). International trade, marketing practices, and travel have also intensified cross-border influences on health behavior, especially the production and consumption of unhealthy goods and services, such as tobacco. The increase in cross-border health risks has been accompanied by a decrease in national governments’ capacity to respond to them effectively, for several reasons. First, as risk factors increasingly cross

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national boundaries, state-centric approaches to protecting health are no longer adequate (Dodgson, Lee, and Drager 2002). States’ capacity to influence health determinants and outcomes cannot be assured through domestic action alone. Health problems and the keys to their resolution now cut across national boundaries and often need international and global solutions. Second, the traditional biomedical approach to health, emphasizing disease-focused research and policy, is no longer sufficient. Policies outside the health sector, in areas such as trade, the environment, and education, are becoming drivers of health and health risks. Health problems are no longer “only” health problems and are no longer the domain of “only” health officials. The emerging health challenges tend to be cross-sectoral crises that spill from and into the areas of international commerce, finance, environment, and social development. Just as trade, the environment, and economic and social policies can undermine attempts to deal with health needs, efforts to address health needs can have negative impacts in other sectors. Tourism, for example, declined significantly after China, the World Health Organization (who), and national governments issued alerts about sars (bbc, 15 May 2003; Asia Times Online, 11 July 2003). Third, the growth in the number and influence of supranational and nonstate actors (multilateral and non-governmental organizations, transnational corporations, and so on) has reduced the relative authority and capacity of national governments to protect and promote the health of national populations (Dodgson, Lee, and Drager 2002). In order to develop and implement effective policy responses, health professionals must deal with an increasingly complex web of state and non-state actors with whom they have limited influence. At the same time, the growing number of actors and institutions influencing health outcomes provide opportunities for increased resources and action to address problems. In short, health policy is becoming a more “global” enterprise and is likely to become ever more so in the coming years. There is now a complex set of goals and institutions for addressing health issues at the global level and an understanding that health crises anywhere can very easily affect, or travel to, other places. It is unclear whether the ongoing development of global health institutions can keep pace with either the spread of threats or the intertwining of policy areas and actors. What is clear is that global health negotiations will be more and more frequent and more and more complex.

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challenges for developing countries: the importance of the negotiation process For developing country health policy-makers, simply gaining information about the new drivers that are affecting public health in their countries and about the current status of international action is difficult. Information is dispersed among many governmental and non-governmental actors. Health agencies have limited staff, expertise, skills, or resources to participate in the “epistemic communities” that generate cutting-edge information and analysis (Haas 1992). These limitations have been partially offset by the efforts of international agencies, including the who and other research institutions, to define and disseminate analytic frameworks for reliable assessment of the effects of globalization on health, and to set and implement research priorities in this area (Woodward et al. 2001). Nonetheless, gaps in infrastructure, information, human resources, and the capacity to fully participate in bilateral, regional, and global processes remain serious hurdles for most developing countries. Even when information and analysis are available, developing-country health officials need substantial cooperation from other actors to develop an effective response strategy. Health policy responses are increasingly cross-sectoral, international, and in some cases global. For example, reducing the threat of avian flu may depend as much on innovations in poultry management and on creating alternative livelihoods for poulty farmers as on the development of vaccines. Solutions and funding may come from global networks of agricultural, veterinary, and public health experts, farmers’ representatives, private foundations, and governmental donors. In situations like these, health policy must be developed in cooperation with other domestic and international actors (government agencies, experts, ngos, businesses) who are likely to have different views on the issue and how it should be handled. Managing health needs that have very real economic impacts requires negotiation on difficult questions: defining the issues, identifying and developing options, assessing those options against a wide range of criteria that matter to different stakeholders, and making appropriate trade-offs between short- and longterm health, economic, and social considerations. Policy-makers responsible for finance, trade, or education are frequently not sensitized to the health impacts of their policies, and health managers are neither invited nor able to participate meaningfully in most macroeconomic planning

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exercises, negotiations with foreign donors, or international-trade fora. Health officials themselves are seldom trained or sensitized to the dynamics of the various other arenas that have an impact on their work. Achieving more health-friendly negotiated outcomes is not simply a question of enhancing technical capacity to develop, monitor, and evaluate health programs, increasing technical knowledge of trade rules and other areas that affect health, or enhancing research on the impacts of globalization on health. While capacity building in these areas is essential, it is insufficient. The challenges of globalization have intensified the importance and complexity of negotiation and consensus-building processes. Developing-country health officials need to be able to participate effectively in these processes not only as experts and representatives but also as negotiators and advocates, to meet three key challenges. 1. Negotiating “up” to shape rules and actions at the global level. Ministries of health, which have traditionally focused on protecting their populations from outside health risks, must now proactively seek to influence international and global rules and actions that have spillover effects in their countries. They must understand and navigate not only global health negotiations within the framework of the who, but also non-health negotiations in global and regional trade (wto), environment, and security forums, on issues as diverse as intellectual-property protection, foreign investment, and trade. 2. Negotiating “across” to achieve national policy coherence. Health professionals must negotiate more effectively to integrate health issues and goals with their own countries’ trade, development, and investment policies. As the health of national populations is increasingly affected by rules and institutions in which non-health ministries and agencies take the lead, ministries of health must engage in national negotiations to shape their countries’ strategies. Health professionals need to identify and influence the behavior of people in other sectors who have different worldviews, different priorities, and different “cultures” and who frequently have more power and access to international rule making forums than do health officials. They cannot, as David Fidler argues in chapter 12 of this book, simply complain about trade. They need to offer constructive solutions to make trade and health, and other sectors, work more productively together for the good of the country. 3. Negotiating “out” to build coalitions with diverse actors. Finally, with the growth in the number and influence of non-state actors,

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health professionals must negotiate and build coalitions with an increasingly diverse set of actors in order to achieve health goals. The array of actors and processes is diverse and messy, ranging from local non-governmental organizations to international ngos, multinational companies, academics and scientists, and professional organizations. Pharmaceutical manufacturers, health and development advocacy and service organizations, and private health management and insurance companies can all be key allies or obstacles to progress on developing-country health goals. These actors are often organized transnationally and have become increasingly important to agenda setting and to the knowledge and monitoring of the health impacts of non-health policies. However, the sheer diversity of non-state actors with an interest in health may actually make it more difficult to take action. Scientists and technical experts may align with advocates for different viewpoints and form rival epistemic communities who do not share beliefs about cause and effect or value systems that would inform them about whether and how to take action. Figure 1 attempts to map the key types of actors involved in the process of taking action to promote health priorities in a globalized world. Even a cursory examination of the actors and range of actions they can take in multilateral negotiations serves to underline the complexity of the task for developing-country health professionals (particularly in government). They must rise to the challenge of “cross-boundary” health issues and the proliferation of governmental, private-sector, and non-governmental organizations working on them. They must do so with very limited human, financial, and informational resources for understanding issues, and they must develop effective national responses. Negotiation and coalition-building skills and strategies will be essential for success.

dealing with the challenges: formulating responses The complexities described above make public health negotiations in the international realm more complex and difficult than other multiparty, technical negotiation processes. Yet achievement of public health goals in developing countries has become increasingly dependent on these negotiation processes and health officials’ ability to shape them. Based on a review of the theoretical and case study literature on multi-

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Governments seeking action issue framing convening jff forum selection negotiation on action implementation reporting

Potential blocker governments issue framing challenging jff forum selection negotiation on action implementation (blocking) reporting Multilateral organizations supporting jff providing forum supporting negotiations supporting implementation supporting reporting

ngos advocating action (may include businesses) issue framing advocacy science/ff influence on forum influence on negotiations

Fig. 13.1

ngos opposing action (often led by businesses) issue framing advocacy science/ff influence on forum influence on negotiations

Negotiating complex multilateral issues – key actors and actions

lateral negotiations, and of five specially commissioned case studies of international negotiations on health and environmental issues in international fora, we are developing a model comprising three phases of the negotiation process that are critical for negotiations in the health field:1 G G G

problem identification and framing, joint fact finding, negotiating agreement.

A fourth phase, implementation and renegotiation, is not addressed in this framework, but it is important and should be addressed at a later stage. These stages are sequential, although they overlap and are not linear. More importantly, we believe that these stages correspond to

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functions that are particularly critical to developing countries’ ability to influence complex, multiparty, cross-boundary negotiation processes and that they thus offer a useful framework for organizing negotiation analysis and strategy in these contexts.

phase one: problem identification and framing The pre-negotiation phase is a diagnostic phase in which groups of experts, advocates, and managers explore, debate, and negotiate on whether a new problem exists. Whether the issue is determining the threat posed by a new virus (aids, sars, avian flu), assessing the impact of wto intellectual-property provisions on the production of critical medicines, or reviewing the effectiveness of public-health strategies for tobacco control, the framing of issues as “global health challenges” is a key first step in the process of developing a global response. It is a critical phase for developing countries. If developing countries can get in early to frame the definition of the problem and the terms of collective debate, they can have enormous influence on the subsequent negotiations and their outcomes. It is also a phase in which more “powerful” countries, such as the United States or the European countries, may not have fully formulated or finalized their views on an issue; there may be an opportunity to influence their perspective on the problem. Once, however, they have agreed on the broad agenda and trade-offs, blocking or changing the agenda becomes very difficult. In the Uruguay Round negotiations, for example, the United States and the European Union obtained Canadian and Japanese support in the pre-negotiation phases to include services and intellectual property; after that point, removing services and intellectual property from the negotiating agenda was impossible (Drahos 2003; 90). Finally, it can be seen as the first interaction between science and policy-making in a process of making science “policy relevant.” In the problem identification stage, two questions need to be answered. First, is this a problem that merits a negotiated international response? In other words, what kind of problem “frame” (a way of defining and talking about the problem) can help motivate parties to negotiate? Internationally, the World Health Assembly, unaids, and emerging ad hoc processes to negotiate framework conventions specifically dedicated to health issues (e.g., the Framework Convention on Tobacco Control) are the typical forums for health authorities to negotiate rules on health issues. But the wto – through rules regulating intel-

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lectual property and trade in services, for example – can undermine or reinforce decisions taken in health forums. For health policy advocates, getting health on the agenda in nonhealth forums and resolving intersectoral conflicts regarding priorities is a particular challenge, as health concerns are not usually seen as having direct economic impacts, while the impacts of trade or fiscal policies are more visible and immediate. Policy-makers in other sectors sometimes see health considerations as a drag on development. Until the significance of health considerations can be framed positively and with more urgency and concreteness, it will be difficult to bring parties to the table to talk about health. Reframing health problems to motivate other sectors to be concerned about them is thus a critical first hurdle for health policy officials. Here, presenting evidence of the impact of trade (or other policies) on health is important but not sufficient. Heightened public concern about an issue may be more important than scientific consensus in determining whether policy-makers take an issue seriously. For health policy officials accustomed to medical or technical responses to public-health problems, this represents an enormous change of thinking and action. The contrast between the success of the island states in negotiating the climate change Kyoto Protocol and the failure of developing countries’ call for a New International Economic Order is instructive. In the negotiations on the Kyoto Protocol, the Association of Small Island States (aosis) became an influential driver of action. Members framed the problem of climate change in a way that connected inaction to very concrete disastrous consequences (i.e., the disappearance of small island states) and created a moral dilemma for the large industrial countries. They also presented the threat of global climate change not merely as a threat to Pacific and Caribbean islands but as a threat to the physical (and economic) integrity of the East Coast of the United States, highlighting a potential loss of immediate concern to the United States. This framed the problem in terms of United States’ interests, not just those of small island states, and helped to bring the United States to the table (Sims Gallagher and Berland 2001). In the Law of the Sea negotiations, by contrast, developing countries’ insistence on a seabed regime modeled on the New International Economic Order (nieo) strengthened the United States’ and other Western countries’ opposition to the developing countries’ interests and agenda. Industry representatives with an interest in seabed mining argued persuasively to the us government that what was at stake in this negotiation was not only their finan-

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cial interests but a precedent with respect to global governance (Sebenius 1995). Second, what kind of problem framing or definition will shape the subsequent negotiation process most favorably for the health priorities of developing countries? From experience in other fields, we know that certain kinds of problem framing are more persuasive than others. We also know that the way the problem is framed will influence the course of the negotiations and the shape of the resulting agreement. And it will determine, to a large extent, which interests arise to oppose action and, consequently, whether developing-country health officials will be able to build winning coalitions for action favorable to health. The climate change problem, for example, was initially viewed, particularly in the West, as a scientific and environmental problem. This framing affected who participated in the debate about climate change (scientists, the environmental agencies, and environmental concerns), as well as the scope of the approaches discussed. Developing countries’ reframing of the negotiation to be about the linked issues of environment and development, rather than just about environment, ensured that developing- countries’ concerns would also be at the center of the negotiation process. In health and intellectual property, private-sector activists waged an aggressive (and successful) campaign to persuade the United States, the most powerful state in this context, to engage in coercive economic diplomacy in the process leading up to the Uruguay Round (Sell 2002, 489). Private-sector representatives presented “inadequate intellectualproperty protection” as a barrier to trade and framed the intellectualproperty issues in terms of violations of “rights” by “pirates” (i.e., wrongdoers). This framing heavily influenced the terms of debate and the negotiating position and strategy of the United States. Still, less powerful developing countries do have significant opportunities to influence the identification and framing of issues for action, and they have experienced success in the health field. Framing by developing countries played an important role in mobilizing action against the consequences of the trips regime on several fronts. Brazil’s concern to make cheap drugs available for aids sufferers and others led it to require local production as a condition for foreign patent holders to receive protection in Brazil. The United States – the Pharmaceutical Manufacturer’s Association and the ustr – claimed this violated the trips Agreement. In the past, pure price negotiations had resulted in only limited victories for the governments of developing countries (as in Senegal, Rwanda, and Uganda, where only a very small number of

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affected persons received drugs without supporting distribution systems). Brazil chose to frame the issue for negotiation as one of “access to essential medicine,” rather than of the reduction of prices of aids drugs and protection of intellectual property. This approach enabled Brazil to expand the issue beyond a purely “price negotiation.” Brazil was able to advocate for funding for the acquisition and distribution of drugs and to raise broader concerns about how a country may cope with national emergencies under current international intellectualproperty law. Brazil also underlined the importance of its negotiations as a precedent and model for Africa. In so doing, Brazil increased its influence in the negotiations; the government was able to attract diverse allies within Brazil (ministries, ngos, industry groups), in the United States (ngos and media), and internationally (within multilateral forums and other countries) and was able to expand the scope of negotiation to address the interests of primary concern to it (Balachandran and Kravkova 2001). Initially, negotiations to identify the problem and possible policy responses and to resolve conflicts of priorities among various affected sectors may need to occur at the national level. To the extent that a national consensus or internal-policy coherence can develop for action on health, a country’s ability to promote health interests internationally is strengthened. South Africa adopted national legislation legalizing domestic manufacture and imports of generic drugs for hiv/aids treatment but never formulated a national policy that responded to the demands of civil society and the many provincial governments requesting universal access to antiretroviral therapy for aids patients. As a result, it was consistently on the defensive trying to justify its position before its own domestic constituencies and weakened its negotiating position with pharmaceutical companies that were able to exploit internal divisions and present any price cuts they provided as gestures of goodwill to the South African population as opposed to an outcome of a negotiated agreement. Brazil, by contrast, took a multisector approach to formulating, passing, and implementing its policy. Health leaders in the negotiation process involved agents from international lending organizations, the ngo sector, the religious community, and the local business community. In response to civil-society pressures, the government started providing free universal access to antiretroviral drugs for people with hiv/aids. After it had made the goal of universal access its own goal, the government proceeded in close consultation with civil society to formulate a

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coherent policy, and it launched a nationally coordinated aids prevention and treatment program relying on the support of ngos, activist groups, and even the Catholic Church. Developing a shared definition of the problem and a coherent policy response domestically strengthened its negotiation position vis-à-vis the United States. Brazil’s actions demonstrated that it could manage hiv/aids, and that it could develop its own capacity to produce treatment drugs. Doing so enhanced its credibility, assisted in formulating creative options, and undercut the United States’ and pharmaceutical industry’s claim that their expertise was essential to hiv/aids treatment. Developing internal policy coherence often requires strong political leadership. In this area health ministries often face challenges, since health ministers are typically not the most politically influential with cabinet members or public opinion. Nevertheless, their ability to influence the national debate about health priorities – and to influence their government’s position on trade, economic, educational, security, and other policies that affect health – will often depend on their ability to “sell” both the importance of health and the urgency of action on health to other political figures and forces with very different concerns, interests, and priorities.

phase two: joint fact finding Epistemic communities have an important role to play in gathering information about the health impacts of globalization and in identifying the problem. Shared scientific understanding of the threats (and possible responses) provides an essential basis for political motivation and cooperation to address global and regional health risks. It is our experience that the development of shared understanding is an essential part of the prenegotiation process and that the process by which this consensual knowledge and understanding is developed significantly affects both the dynamic and the results of the negotiation of a policy response. In the health field, because the issues cross national and sectoral boundaries (e.g., health and trade), there is not one epistemic community but rival epistemic communities or “transnational issue networks,” often linked to advocates and interest groups who do not share beliefs about cause and effect and do not share value systems that would inform whether and how to take action (Keck and Sikkink 1998). In many cases, “joint fact finding” can help bridge the gap both between rival epistemic communities and between science and policy-

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making, helping communities to build a shared understanding of technical and scientific issues and to develop more health-sensitive global policies. Joint fact finding encompasses any process by which a group of stakeholders seeks agreement on a set of questions to be investigated, ways to conduct the investigation, experts and other resource people to be involved, and ways to interpret and use the results for decision making (Ehrmann and Stinson 1999). Joint fact finding is not a substitute for interest-based negotiation, but it can substantially narrow the scope of “data disputes” and allow the parties to focus on ways to bridge conflicting interests and priorities. Joint fact finding offers several advantages, especially for developingcountry health agencies seeking to promote health in non-health arenas. First, it enables the parties to explore difficult topics together. This allows them to develop a common knowledge base and resolve disputes about scientific and technical methods, data, findings, and interpretations. Second, it allows those stakeholders with less knowledge, education, or expertise to learn more about the technical issues involved and the sort of data required at the international level, so they can negotiate on a more equal footing. Third, it facilitates greater creativity and better agreements. When the parties work together to develop the scientific knowledge base, they draw on each other’s experience, knowledge, and ideas and can often discover innovative agreements that no single party could have generated. Joint fact finding also minimizes the formation of “adversary science” coalitions behind differing “schools” of thought. When the parties work together, investing their time, ideas, and resources in jointly discovering good information, they also become more committed to reaching a mutually agreeable outcome. Finally, joint fact finding helps to improve relationships among parties with differing interests and perspectives, by enhancing communication, fostering trust, and building deep understanding of other’s interests, needs, and values (Ehrmann and Sinson 1999). Joint fact finding processes can take several forms. In recent years, there have been some notable successes in developing multilateral joint fact finding institutions that are technically credible and responsive to key policy questions, such as the Intergovernmental Panel on Climate Change (ipcc), the Scientific Advisory Committee on Tobacco Product Regulation, and research supported through the unaids program. Other, more limited processes can also be useful in developing a shared understanding of the technical/scientific issues under negotiation and bridging the gap between science and policy. Non-institutional (more

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ad hoc) joint fact finding processes have been convened by international organizations (such as who) or by countries to explore specific issues. Throughout the negotiation of the Framework Convention on Tobacco Control, for example, who and a number of member states convened “technical conferences” and consultations on topics ranging from Potential Liability and Compensation Provision for the Framework Convention on Tobacco Control to Avoiding the Tobacco Epidemic in Women and Youth. Finally, joint fact finding can be organized on a non-governmental or quasi-governmental basis before official or institutional processes have been initiated, or in parallel to them. There are some interesting lessons to be derived from experiences of integrated assessment in other arenas, especially from the Intergovernmental Panel on Climate Change (ipcc) and, more recently, the Millenium Assessment process, which also relates to the environment. The ipcc experience – which is now over a decade old and is in the process of producing its fourth global assessment – has many lessons to offer. In part because of advocacy and capacity building by developing countries, the composition of the assessment teams has changed over the years to incorporate more developing-country experts and experts from a broader array of issue areas. The result has been an ever widening focus for the ipcc, so that what had started mostly as a very “hardscience” (even chemistry-focused) enterprise is, slowly and hesitantly, turning into a more integrated assessment of the implications of climate change for sustainable development – including health impacts of climate change (Najam et al. 2003).

phase three: negotiating a response In the negotiation stage, the parties develop and discuss alternative packages, develop details, and craft commitments to specific policy options. Negotiation of health goals in cross-boundary contexts presents special challenges and opportunities for leverage for developing countries. Formulating Goals and Priorities The interdependence of health with education, environment, trade, economic development, and other policies makes the definition of goals and priorities for negotiation a particularly complicated undertaking. Health officials usually do not lead negotiating teams; it is the foreign

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ministry or the ministry of trade, finance, or planning that leads negotiations in the United Nations General Assembly, in environmental fora, or in the wto. In this context, it is especially important for health managers to prepare for the process of negotiation, as well as for the substantive issues to be negotiated. A health ministry is faced with a multilevel preparation challenge. It must set its own goals and priorities for health and prepare to negotiate with other domestic actors for resources for health and inclusion of health considerations in the policies developed in other sectors. It must also reflect on the international negotiations the government will engage in; it must reflect on the national interest – balancing health and other policy considerations. Developing a sophisticated understanding of the national and international context is challenging both because the information may be hard to get and because it requires a psychological shift and a good deal of imagination to consider the goals and concerns of others and to find creative ways to meet all the legitimate interests at stake. Finally, health ministry teams must negotiate with other domestic ministries and nongovernmental actors for a process that allows health officials to participate in formulating and evaluating trade-offs among the differing interests that come into play in the negotiations. A stable seat at the table is necessary – though not sufficient – to ensure that health interests are adequately taken into consideration as the context, interests, and dynamics change during the course of any negotiations and to guarantee that options are developed that adequately protect health. This approach also helps protect weaker delegations from “divide and conquer” tactics. Dr Antonio La Viña, a member of the Philippine delegation and spokesman for the g–77 and China negotiating group in the biosafety negotiations of the Convention on Biological Diversity, notes that consultation and coordination with health, science and technology, agriculture, and trade ministries strengthened his delegation’s capacity to negotiate. In dealing with the ustr over pharmaceutical pricing, the Brazilian government adopted a multisectoral approach, consulting and involving leaders from a range of sectors within the country to define its policies and negotiation goals. Dealing with Power Asymmetry Developing countries have limited ability to influence global policy development processes in which powerful developed countries such as

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the United States or the countries of Western Europe have an interest (Krasner 1985). They have fewer traditional sources of power. They do not have large markets that would allow them to make credible threats in trade negotiations. They have fewer organizational and informational resources and thus cannot field large teams with deep expertise. Indeed, they have few “intelligence networks” – commercial or otherwise – to gather, distribute, and analyze information (Drahos 2003). Within this context, health ministries are at a particular disadvantage because they are often less powerful within their own governments. The unequal power relations and disparities in informational, analytic, and organizational resources are likely to be a permanent feature of the negotiating landscape for developing countries, at least for the short to medium term. Yet there is still much that weak states, and weak ministries within those states, can do to enhance their negotiating power. Developing countries can sometimes do surprisingly well by arguing on the basis of fairness and historical responsibility that developed countries should “level the playing field” – by changing institutional rules to create binding multilateral commitments and other restrictions on powerful countries’ ability to disregard the interests of developing countries (Drahos 2003). While these efforts are significant, they are not the only available response to the problem of power asymmetry. Indeed, they may backfire and result in stronger countries simply bypassing multilateral fora and rules in favor of bilateral or regional fora, as the United States has begun to do in negotiating bilateral tripsplus agreements with individual countries. Developing countries can build up additional sources of power that are often under-used. Two sources of negotiating power are worth underlining, as health ministries can organize and be proactive in enhancing them in service of the global agenda for health. The first is the power of good preparation. It can dramatically enhance the credibility and influence of a weak delegation. The second is the power of a strong coalition, which can provide complementary resources and magnify the negotiating leverage of individual members. The Alliance of Small Island States (aosis), for example, prepared rigorously for each negotiation session for the Kyoto Protocol. aosis members helped each other find their strengths and capitalize on their resources. They prepared briefing books for each session and brought in experts (often from ngos) on specific topics about which they were less knowledgeable. As the Marshall Islands representative to the negotiations noted, this preparation gave aosis “a lot of influence politically” because

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members were fully prepared to make their concerns heard and develop options for resolving issues. Part of this preparation is the systematic and rigorous definition of goals, so that negotiators can assess and make political trade-offs. Health policy-makers tend to focus on “evidence-based” arguments as the core of their persuasion strategies. But developing the capacity to assess and make political trade-offs is likely to be equally important in cross-sectoral and international negotiations. aosis’s preparation in this respect also enhanced its negotiating power. aosis advocated an ambitious target for greenhouse gas emissions reduction and an aggressive timetable (20 percent below 1990 levels by 2012). aosis leaders knew that this target would not be politically obtainable, but they had a credible scientific and technical argument to justify their goal, and they challenged other countries to explain how a less ambitious target could significantly reduce the risk to the most vulnerable nations, peoples, and ecosystems. Along with high aspirations, aosis had a clearly thought-out, ambitious, but attainable, “bottom line”: to obtain legally binding, and not voluntary, commitments. They achieved that goal. By having a good understanding of what was realistic in the context of the interests and constraints of the other parties in the negotiations and of what they could be flexible about, they were able to achieve their primary interest. Coalition building is another source of power in negotiations that is essential to enhancing the influence of developing countries in multilateral forums. Coalitions reduce complexity by converting a large negotiation with many parties into a smaller negotiation with relatively few parties and fewer positions to manage. They also enhance access for developing countries, and the health ministries within them, to needed information and expertise by allowing them to pool their resources and expertise. Finally, they compensate, at least partly, for the developing countries’ lack of structural power. Indeed, the breakthrough in negotiations over trips during the Doha summit of the wto would not have been possible without the Africa Group’s leadership and cohesion. In the Uruguay Round, the Cairns group of agricultural exporters similarly enhanced their negotiating power by pooling information and technical capacities, recruiting key agricultural states to their coalition, and instituting a systematic structure for cooperation (Drahos 2003, 92). In the current Doha round of wto negotiations, the coalition of developing-country agricultural exporters led by Brazil (the g20) has dramatically reframed the negotiating agenda to focus on phasing out

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eu and us agricultural subsidies (Veiga 2005). For health policy officials, who are often not at the international table at all, coalitions across borders – with governments, ministries, international agencies, ngos, academic institutions, and others – can also enhance their influence in domestic negotiations to integrate health considerations into positions on trade, finance, development, and the environment, and into other sectoral positions. With the increasing importance of nongovernmental actors, both in the domestic and in the international arenas, coalition-building (and blocking) processes have become more complex but have also opened tremendous opportunities for health actors to enhance their leverage. At one level, nongovernmental actors complicate the process of defining interests and priorities and pursuing goals. If international nongovernmental actors have agendas that overlap with but are not identical to developing-countries’ agendas, they can even undermine developing-countries’ ability to pursue health priorities and economic growth, since “single-issue” ngos or corporate actors often do not have to balance multiple interests. Even the sixty-member coalition of developing countries pushing for limitations to trips for public health priorities risked fracturing because of external pressures from ngos that were focused on a single issue. Yet ngos can still be powerful resources for leveling the playing field. These same nongovernmental actors can be a source of power and influence for developing countries if appropriate coalitions are formed. They can provide analytic resources and expertise for negotiations, as organizations like the Foundation for International Environmental Law did for the Alliance of Small Island States during the Kyoto Protocol negotiations. They can also help frame issues and put them on the public agenda, in order to generate interest in putting them on the negotiation agenda, as the process that produced the Public Health Declaration to the trips Agreement demonstrates. The beginnings of this process did not involve country-to-country negotiations but rather a lobbying effort by ngos like Médecins sans frontières (msf), Health Action International (hai) and the Consumer Project on Technology (cpt), which aimed at ensuring cheaper prices for essential medicines for developing nations in need. Notably, these organizations arranged a conference in Geneva in March 1999 at which representatives of the pharmaceutical industry, various ngos, national governments and intergovernmental organizations came together to discuss the potentialities of compulsory licensing under article 31 of the trips Agreement. At the end of 1999, msf officially began

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its Access to Medicines Campaign, and by the middle of 2001 official policies were beginning to show the effects of the campaign. Finally, ngos can put pressure, both domestically and internationally, on more powerful governments to change their positions. cpt, a us ngo, played a significant role in influencing the United States’ position on access to medicines. In its negotiations with the ustr over the importation of American cigarettes, Thailand allied with the domestic us anti-smoking lobby and succeeded in persuading the us Congress to change the ustr’s mandate. Brazil forged an informal global coalition with aids and human rights ngos, African countries fighting the aids epidemic and international organizations to challenge the patent rights of us pharmaceutical companies, ultimately leading to a change in us policy. Brazil’s strategy created enormous international and media attention for aids, and it created the perception that the ustr was the lackey of the pharmaceutical industry. It succeeded in driving a wedge between the leading us pharmaceutical trade association, phrma, and the us trade representative, who was subjected to intense pressure from the media and other domestic groups to change the us position.

conclusion Global health issues are increasingly intertwined with a wider range of issues and stakeholders in other global arenas: the arenas of trade, investment, education, security, and the environment. Developing-country health ministries are generally not well positioned to advocate for the goals or needs of developing countries in non-health forums. Despite this fact, developing countries have scored some successes in advocating and negotiating for their priorities: Brazil vs the ustr/ phrma, Thailand vs us tobacco, and so on. There are also lessons to be learned from developing-country negotiations on other global issues (e.g., aosis on climate change). To succeed, developing-country health officials need to see themselves not only as experts but also as advocates and negotiators. They need to use negotiation analysis and effective preparation to maximize their impact on their own governments. They also need to use the power of coalitions with non-traditional allies to increase their leverage on their own governments and on others. This chapter has diagnosed some congenital disabilities for health officials in developing countries and prescribed remedies that may require changes in diet (more journals of international politics) and exercise (more time spent in meetings

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and in calls and emails with a far-flung network of like-minded colleagues and unlikely allies with complementary interests). Building up skills in negotiation and advocacy may also be a useful supplement. We cannot promise superhuman results for those willing to follow the regimen, but we see ample evidence that the prognosis for developing countries will be far better with a broader perspective on the challenges and opportunities for global health negotiations.

notes 1 The model is based on a review of theoretical and case literature, as well as the authors’ professional experience in multilateral negotiations generally and specifically in the environment, sustainable development, security, and trade sectors. Several case studies of international negotiation of health and environmental issues in international fora were also commissioned. The cases included Negotiating Access to hiv/aids Medicine in South Africa and in Brazil; Negotiation of the Doha Declaration of the wto; Negotiation of the 1997 World Health Assembly Resolution on Malaria; and two comparative cases from the environmental field: Negotiating the Cartagena Biosafety Protocol to the Convention on Biological Diversity; and Climate Change Negotiations – Lessons from Island Nations.

bibliography Balachandran, A., and M. Kravkova. 2001. “Negotiating Access to hiv/aids Medicines: A Study of Strategies Adopted by Brazil and South Africa.” Commissioned Case Study for Consensus Building Institute and Conflict Management Group. Available on request. Dodgson, R., K. Lee, and N. Drager. 2002. “Global Health Governance: A Conceptual Review.” Discussion paper. Geneva: World Health Organization. Drahos, P. 2003. “When the Weak Bargain with the Strong: Negotiations in the World Trade Organization.” International Organization 8:79–109. Drake, W. & K. Nicolaidis. 1992. “Ideas, Interests, and Institutionalization: ‘Trade in Services’ and the Uruguay Round.” International Organization. 46, no. 1:37–100. Ehrmann, J.R., and B.L. Stinson. 1999. “Joint Fact-Finding and the Use of Technical Experts.” In L. Susskind, S. McKearnan, and J. Thomas-

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Larmer, eds., The Consensus Building Handbook. Thousand Oaks, ca: Sage Publications. Haas, P. 1992a. “Introduction: Epistemic Communities and International Policy Coordination.” International Organization 46, no. 1:1–35. – 1992b. “Barring Chorlofluorocarbons: Epistemic Community Efforts to Protect Stratospheric Ozone.” International Organization 46, no. 1:187–224. Hampson, F., with M. Hart. 1995. Multilateral Negotiations: Lessons from Arms Control, Trade and the Environment. Baltimore: Johns Hopkins University Press. Hopkins, R. 2001. “Reform in the International Food Aid Regime: The Role of Consensual Knowledge.” International Organization 46, no. 1:225–64. Keck, M. and K. Sikkink. 1998. Activists Without Borders: Advocacy Networks in International Politics. Ithaca, ny: Cornell University Press. Krasner, S. 1985. Structural Conflict: The Third World against Global Liberalism. Berkeley: University of California Press. Mintzer, I., and J.A. Leonard, eds. 1994. Negotiating Climate Change: The Inside Story of the Rio Convention. Cambridge and New York: Cambridge University Press. Najam, A. 2005. “Developing Countries and Global Environmental Governance: From Contestation to Participation to Engagement.” International Environmental Agreements 5:303–21. Najam, A., A.A. Rahman, S. Huq, and Y. Sokona. 2003. “Integrating Sustainable Development into the Fourth Assessment Report of the Intergovernmental Panel Climate Change.” Climate Policy 3, supplement 1:9–17. Sebenius, J. 1984. Negotiating the Law of the Sea. Cambridge, ma: Harvard University Press. – 1995. “Dealing with Blocking Coalitions and Related Barriers to Agreement: Lessons from Negotiations on the Oceans, the Ozone, and the Climate.” Kenneth Arrow, Robert H. Mnookin, Lee Ross, Amos Tversky and Robert Wilson, eds., In Barriers to Conflict Resolution, 150–82. New York: W.W. Norton. Sell, S. 2002. “trips and the Access to Medicines Campaign.” Wisconsin International Law Journal 20:482–522. Sims Gallagher, K., and A. Berland. 2001. Keeping Your Head above Water in Climate Change Negotiations: Lessons from Island Nations. Case Study Prepared for Consensus Building Institute. Available on request. Veiga, P. 2005. “Brazil and the g–20 Group of Developing Countries.” In P. Gallagher, P. Low, and A. Stoler, eds., Managing the Challenges of WTO Participation: 45 Case Studies. Geneva: wto.

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Wilkinson, R., and M. Marmot. 2003. Social Determinants of Health: The Solid Facts 2d ed. Cophenhagen: who Regional Office for Europe. Woodward, D., N. Drager, R. Beaglehole, and D. Lipson. 2001. Globalization and Health: A Framework for Analysis and Action. Commission on Macroeconomics and Health Working Paper. wg 4:10.

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Contributors

c h a n ta l b l o u i n is senior researcher in Trade and Development at

the North South Institute. b i j i t b o r a was counsellor at the Economic Research and Statistics Division at the World Trade Organization. ru pa c h a n da is professor at the Indian Institute of Management,

Bangalore. d i a n a c h i g as is professor of practice at the Fletcher School of Law

and Diplomacy, Tufts University. c a r l o s c o r r e a is director of the Centre on Interdisciplinary Studies

on Intellectual Property and Economic Law, Universidad de Buenos Aires. n i c k d r ag e r serves as acting director, Department of Ethics, Trade,

Human Rights and Health Law, The World Health Organisation. a l i s o n e a r l e is a research scientist at the Harvard School of Public

Health. dav i d fa i r m a n is vice-president at the Consensus Building Institute. dav i d p. f i d l e r is professor at the Indiana University School of Law.

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Contributors

jo dy h e y m a n n is founding director of the Institute for Health and Social Policy, McGill University. ro n l a b o n t e is Canada Research Chair in Globalization and Health

Equity at the Institute for Population Health, University of Ottawa. m i n a m as h ay e k h i heads the Trade Negotiations and Commercial

Diplomacy Branch of the United Nations Conference on Trade and Development. e l i z a b e t h m c c l i n to c k is a partner at CMPartners. a d i l n aja m is associate professor at the Fletcher School of Law and

Diplomacy Tufts University. c h a - a i m pac h a n e e is a technical officer at the Ministry of Public

Health, Thailand. p e d ro ro f f e is a senior fellow on Intellectual Property Issues, Inter-

national Centre on Trade and Sustainable Development. n a n cy ro s s is assistant professor, Department of Geography, McGill University. dav i d sa n d e rs is founding director of the School of Public Health,

University of the Western Cape. t e d s c h r e c k e r is associate professor at the Institute for Population

Health, University of Ottawa. a n n a s h e a is a research assistant at the Institute of Social Policy and

Health, McGill University. e l i sa b e t h t u e r k is an economic affairs officer, Trade Negotiations

and Commercial Diplomacy Branch, United Nations Conference on Trade and Development. dav i d v i vas - e u g u i is a program manager for Intellectual Property, Technology and Services, International Centre on Trade and Sustainable Development.

Contributors

349

jo h a n n a vo n b r au n serves as a program officer at the International

Centre on Trade and Sustainable Development. s u w i t w i b u l p o l p r as e rt is senior advisor on health economics,

Ministry of Public Health, Thailand.

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Index

Abbott, Frederick, 56, 85nn53, 62 Abuja Declaration on Roll Back Malaria in Africa, 136, 145, 147 access: to education, 240; government intervention for, 266; to health facilities, 4, 240; to health services, 163, 230, 266, 267, 268, 269, 309; to income, 233; to markets, 241; to social determinants of health, 244; universal, 163, 266, 268, 309; to water, 231 access to medicines: Andean–us fta and, 283; Bolar exception and, 17; cafta and, 59; compulsory licenses and, 27; free trade agreements (ftas) and, 57, 73; hiv/aids, 334; msf campaign for, 341–2; patent protection and, 29; patents and, 44; in Philippines, 271–4; policies for universal, 266; policy coherence and, 296; prices of pharmaceuticals and, 12, 17, 25, 334, 342; trade and, 230; trips-plus and, 41, 42 Africa: eu epas with, 242; mosquito net production in, 133; recruitment of nurses from, 101–2; and sdt provisions, 241; shipping costs within, 141

African Regional Industrial Property Organization (aripo), 275 Agreement on Technical Barriers to Trade (tbt Agreement), 308–9 Agreement on the Application of Sanitary and Phytosanitary Measures (sps Agreement), 308–9 Agreement on Trade-Related Aspects of Intellectual Property Rights, 50 Agreement on Trade-Related Investment Measures (trims), 237 agricultural trade: Andean–us fta, 284–5, 287; and developing countries, 232–3; liberalization of, 319; subsidies, 232, 340–1; undp and, 241; us–Andean, 292n45 aids. See hiv-aids Aitken, B., 174 Alliance of Small Island States (aosis), 339–40, 341 American Center for International Labour Solidarity, 180–1 Amsden, A., 237, 238 anarchy: and balancing of interests, 310; defined, 301; globalization and, 302; health as foreign policy and, 305; policy coherence in, 302, 322

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Index

Andean Community: Court of Justice, 24, 28; patents in, 24 Andean countries: health ministries’ coordination, 282–3; intellectual property rights in, 281–2, 283 Andean Trade Preference and Drug Eradication Act (atpdea), 52, 284 Andean–us fta, 51, 52, 280–5; agricultural trade and, 284–5, 292n45; national/international cooperation in, 287; trade preferences in, 283, 284–5; transparency in, 282 Annan, Kofi, 187 Argentina: economic collapse, 208; in ftaa, 48–9; patents in, 22–3, 24, 25, 27, 28, 38n52; wage differential in, 175 Arthur D. Little, 188 asean (Association of Southeast Asian Nations): Healthcare Services Sectoral Working Group, 153, 158–9, 160; Partnership in Dynamic Development, 151–2; Vision 2020, 151–2 asean countries, 151–2; electronic commerce in, 158; foreign direct investment from, 163; health care sector in, 157–8; health tourism in, 158; investment in health care among, 155–6; on labour standards, 184; migration within, 155–6, 158–62; mutual-recognition arrangements in, 158; trade liberalization in, 5–6; trade liberalization in health services, 154–9; trade liberalization in services, 152–3 asean Economic Community (aec), 162–3 asean Framework Agreement on Services (afas), 152–4, 157–9, 160, 162 asean Free Trade Area (afta), 151

asean-minus-x model, 152, 158, 161 Asian countries: East Asian miracle, 208; financial crisis, 271; inequality in, 212; newly industrialized countries (“Asian tigers”), 237, 238; and sdt provisions, 241; wage differential in, 175 Association of Small Island States (aosis), 332 Association of Southeast Asian Nations. See asean atpdea. See United States: Andean Trade Preference and Drug Eradication Act (atpdea) Australia: economic growth, 219, 220fig.; fta with us, 58–9, 62, 83n23, 84n37, 85nn56, 61; health professionals in, 94; wage differentials in, 173–4 avian influenza, 318, 327 Bahrain, fta with us, 62, 85nn58, 61, 181 Behrman, J.R., 209 Bhagwati, Jagdish, 208 bilateral agreements, 5, 42, 44–5, 339; alliances and, 55; economic rationale for, 47–8, 51–3; and flexibilities, 238; health care migration in, 94, 95, 98, 101, 107–11; and intellectual property rights, 279; and labour standards, 179–82; multilateral vs, 44, 46–7, 49; patent rights and, 319; and policy coherence, 320; political rationale for, 48–51, 53–4; security aspects, 51; and trips, 33; us–peru, 285 Birbeck, G.L., 239 Birdsall, N., 209 Bradford, Colin, 229–30, 248n16

Index brain drain, 4, 5, 118, 162, 271 Brazil: and agricultural trade, 340–1; anvisa, 24; coalition of aids and human rights groups, 342; contingent employment in, 177; and data protection, 38n59; in ftaa, 48–9; Industrial Property Code, 19; patents in, 22, 24, 25–7; and price of drugs, 333–5, 338; trade liberalization, 216–7; us and, 26–7, 36n28, 333, 335, 338; wage differentials in, 175 breast-feeding, 171 cafta (Dominican Republic and Central American Free Trade Agreement), 5, 41; and access to medications, 59; approval of, 53–4; compulsory licensing in, 58–9; criticisms of, 41–2; and data exclusivity, 28; demonstrations opposing formation of, 53; and enforcement of intellectual property rights, 48; exports to us, 47–8; foreign direct investment and, 52–3; foreign marketing approvals under, 63–4; intellectual property and, 49; itac-15 on, 49–50; language of negotiations, 57; markets, 47–8, 52; Mexico and, 53; mostfavoured nation principle in, 67; non-violation complaints under, 68–9; and parallel imports, 59–60; patents and, 58; regulatory exceptions under, 60–1; and trips, 41–2; and us, 49, 51, 57, 58–61, 62, 63, 68–9, 70, 71, 74–80, 181 Cambodia, textile exports to us, 186 Canada: Bolar-type provisions in, 17; gdp vs population health and wellbeing in, 204–6; health professionals in, 94; inequality in, 210; labour

353

complaints against, 180; life expectancy in, 204–6, 207; nurses in, 106–7; pharmaceutical industry, 37n39, 60; r&d spending, 37n39; us and, 37n39 Canada-Chile Agreement on Labour Cooperation, 180 Canada–Costa Rica Agreement on Labour Cooperation, 180 capacity: building, 164; of health agencies, 327. See also governance capacity Caribbean Basin Initiative (cbi), 52, 53 Caribbean Community Agreement (caricom), 104 Caribbean countries: migration within, 104–6; nurses, 104–6; recruitment of health workers from, 99, 100–1; women in paid labour force in, 172 Caribbean Free Trade Agreement (carifta), 104 caricom Single Market and Economy (csme), 105–6 Cartagena Round, 282 Central American countries: us and, 51. See also Latin American countries Central American Free Trade Agreement. See cafta (Dominican Republic and Central American Free Trade Agreement) Chang, Ha-Joon, 237–8 Chen, S., 215 Cheru, Fantu, 229–30, 248n16 children: deaths of, 265; hiv-aids and, 239; ill, 171–2, 175; in poverty, 244; rights of, 292n54. See also infants Chile: agreement with efta, 84n36; economic growth in, 218–9; pension plans in, 234; and us, 40n73, 51, 57,

354

Index

59, 62, 68–9, 71, 72, 74–80, 84nn36, 37, 85n54, 181 China: as competition to cafta, 48; consumption in, 209; contingent employment in, 177; effects of trade liberalization in, 213; mosquito net production, 133–4; poverty in, 213, 230; production employment in, 236; protection of industries in, 237; recruitment from, 108; standard of living in, 210, 213; trade liberalization, 215; trade with us, 48 civil-society organizations: and Andean–us fta, 283; in Brazil, 334–5; and cafta, 41–2; criticism of wto, 294; in Philippines, 274; and policy coherence, 287, 334–5; and trips, 29–30; in Uganda, 277–8. See also international organizations; ngos climate change, 332, 333 clothing industry, 236 coalitions: among developing countries, 339–40; and health negotiations, 327, 328–9, 340–1, 342; with non-traditional allies, 342 Cold War, 303 Colombia: and Andean–United States fta, 52; data protection in, 27, 28; inequality in, 214; intellectual property rights in, 281; and us, 40n73; wage differentials in, 175 Commission for Africa, 241 Commission on Intellectual Property Rights, 81n10 Commission on Macroeconomics and Health, 304 commodity/value chain, 235–9 Commonwealth, migration of health workers within, 97–8

Commonwealth Code of Practice for the International Recruitment of Health Workers, 97–8 Commonwealth Secretariat, 95, 97 competition: among agencies, 299–300; intergovernmental, 301; laws and policies, 43; synergy vs, 322; unfair, 12–13, 21, 61; for wages, 174 consumption, and poverty, 209 Convention on Biological Diversity, 337 Convention on the Rights of the Child, 292n54 copyright protection, 46 Costa Rica, 4, 53 Council for Trade in Services, 312 Covenant on Civil and Political Rights, 278 cpt, 342 Cuba: bilateral agreements regarding health worker migration, 108–9; medical training to South African students, 109; migration of health workers from, 108–9; recruitment of nurses from, 112; state-managed migration from, 111, 112 data protection, 12–13, 21, 27–8, 43; Brazil and, 38n59; in Latin American countries, 27, 28; and public health, 73, 280; trips-plus and, 61–5; us and, 61–3, 72. See also test data De Vogli, R., 239 debt crisis, 243 Declaration on Fundamental Principles and Rights at Work, 182 Deininger, K., 210 Denmark: children living in poverty in, 244; development assistance from, 244

Index developed countries: governance capacity, 302; health professionals’ migration to, 94; pharmaceutical industries, 30, 31; power asymmetry with developing countries, 338–42; reasons for seeking ftas, 46–51; and trips, 32–3 developing countries: access to medication in, 12; agricultural subsidies and, 232–3; alliance formation by, 55; balance of power with developed nations, 184; balancing of trade and health interests, 310; bargaining power of, 55; coalitions among, 339–40; contingent employment in, 177; cooperation for health policy responses, 328; ftas with us, 44–5; in global marketplace, 245; governance capacity in, 302; health as human capital in, 325; health equity of, 245; health negotiations, 327–43; hours of paid work in, 176; ihr and, 319; implications of international obligations and, 56; import liberalization, 232–3; income in, 211–12; inequality in trade agreements, 238; and intellectual property, 46, 47, 55, 56, 72–3; intelligence networks, 339; and labour standards, 184; long-term vs short-term interests, 53; loss of health professionals, 95; market access for, 241; middle class in, 245; nutrition in, 234; patents vs research in, 16; pharmaceuticals in, 11–12; policy coherence in, 335; poverty in, 211–12; and power asymmetry, 338–42; reasons for seeking ftas, 51–4, 72; recruitment from, 99, 101–2, 107–8; regulatory capacity in, 302; and seabed, 332–3; tariffs and,

355

141–3, 233, 239–40, 242; trade liberalization and, 142–3, 145, 211–12; trips and, 11–12, 44–5, 52; urbanization in, 231, 239; wages in, 174, 217 development: assistance, 229, 244; capital and, 325; health issues and, 332; human, 226–7, 240–2, 265; of infants, 171; tariffs and, 143, 145; trade liberalization and, 143, 145, 226–7, 241; trade policies and, 240–2. See also Doha Development Agenda; economic growth; Millennium Development Goals (mdgs) Diderichsen, F., 230 disease(s), 231, 234, 265, 266, 302, 304–5; cross-border transmission, 325; importation of, 307; noncommunicable, 321; in Pakistan, 267 Doha Declaration, 310, 319, 341; and Andean–us fta, 292n55, 293n56; Brazil and, 25; in Chile–us fta, 59; compulsory licensing and, 35n26; developed countries and, 46; divergence of national interests and, 313; and exceptions to exclusive patent rights, 60, 61; and Latin American countries, 31; on parallel imports, 18–19; Philippines and, 271, 274; and price of medicines, 70; and protection of public health, 3, 33, 69, 309; side letters of ftas and, 71; trips flexibilities and, 33, 44; and Uganda, 279; us and, 70 Doha Development Agenda, 131–2, 319; and mosquito nets, 139–42, 144; and tariffs, 142 Doha Round, 131, 240–1, 311, 319, 340–1

356

Index

Dominican Republic: patents in, 25, 27. See also cafta (Dominican Republic and Central American Free Trade Agreement) Eastern Europe, inequality in, 212 economic development. See development economic globalization, 169; and exports, 210; and foreign investment, 210; and income inequality, 210; and labour conditions, 178; and poverty, 208–13; variable effects of, 210–11; and vulnerable populations, 210; and wage differentials, 174. See also globalization economic growth: health and, 203–4, 266, 303; and inequality, 219; and investment in services, 204; measurement of, 218–19; and poverty, 208, 219; and quality and length of life, 203–4; trade and, 202, 218, 311; trade liberalization and, 208. See also development Economic Partnership Agreements (epas), 242 Ecuador: intellectual property laws and children’s rights, 292n54; patents in, 24; and us, 40n73 education, access to, 240 efta. See European Free Trade Area Egypt: contingent employment in, 177; fta with us, 52 Elliott, K.A., 190 employment: contingent, 176–9; flexibility in, 171–2, 236; global value chains and, 236; non-standard, 176–9; polarization of, 238; secure vs insecure, 177 Esping-Andersen, G., 244

Ethical Trading Initiative, 189 European Community. See European Union (eu) European countries: early working exception in, 35n21, secure vs insecure employment in, 177; and trade liberalization, 243. See also Eastern Europe, inequality in European Free Trade Area (efta), 84nn36, 40, 85n54 European Patent Convention, 16 European Union (eu): and compulsory licenses, 20; epas with African countries, 242; and gats mode 4, 113; and Japan, 67; and Microsoft, 49; mosquito net exports, 133; mutualrecognition arrangements in, 161; and parallel imports, 17; recruitment of health professionals within, 108; and trips flexibilities, 31 exports: economic globalization and, 210; health professionals, 156–7; health risks and, 305; health services, 154–5, 156, 156table, 162; tariffs on, 233. See also tariffs Fair Labour Association, 189 Fair Weather Foundation, 189 families: of employees, 170–2; health of, 172, 175 Finland, age differential in, 174 food processing/retailing industries, 233–4 footwear industry, 236 foreign investment, 212; from asean countries, 163; economic globalization and, 210; in health service businesses, 158; in production, 235; in services, 234; and wages, 197n32

Index foreign policy: anarchy and, 301; coherence in, 297, 299, 300; domestic policy vs, 298–9, 300; governance functions, 303–4; harmony of interests doctrine, 306; health and, 297, 302–3; health as, 304–6, 311, 318, 321–2; and national interests, 297; post–Cold War, 296–7, 321; purpose of, 300–1; trade as, 311; uniformity of, 305 Foundation for International Environmental Law, 341 Framework Convention on Tobacco Control, 331, 337 France, wage differentials in, 173–4 free trade agreements (ftas): and agricultural imports, 233; alliances during negotiations, 55; developed countries’ reasons for seeking, 46–51; developing countries’ reasons for seeking, 51–4; domino effect of, 54; exclusive rights under, 61–2; forum shifting and, 54–5; intellectual property and, 46; intellectual property rights and, 283; language of negotiations, 56–7; between large and small countries, 42, 47, 53; market access and, 53–4; and migration, 109–11; and most-favoured nation principle, 66; national coordination and, 55–6; and national treatment principle, 66; nces under, 62; nonviolation complaints under, 68–9; opposition to, 53–4; patent term extensions in, 58; and policy coherence, 73; political economy of, 45–6; power balance in, 55; preferential trade and, 52; and public health, 42; reasons for joining, 46–54, 72; transparency in, 57; and trips flexibilities,

357

32; and trips-plus, 70–1; us and, 31–2, 44–5, 52, 57, 61–5, 74–80. See also bilateral agreements; cafta (Dominican Republic and Central American Free Trade Agreement); North American Free Trade Agreement (nafta); regional agreements; trade agreements Free Trade Area of the Americas (ftaa), 48–9, 50 Freeman, R.B., 190 g20, 55, 340–1 g77, 55 garment industry, 235 General Agreement on Tariffs and Trade (gatt), 140, 183; intellectual property moved from wipo to, 54; most-favoured nation principle in, 66; non-violation complaints under, 67–8, 69; on trade restriction for protection of health, 307 General Agreement on Trade in Services (gats), 308–9, 312: in asean countries, 152; and health worker migration, 96, 112–14, 115–21, 123; most-favoured nation principle in, 66; Pakistan and, 6, 268–71; and privatization of services, 234 General Agreement on Trade in Services (gats)-plus principle, 152, 153 Genuine Progress Indicator (gpi), 219 Germany, Slovakian nurses in, 108 Ghana, nurses from, 100, 101 Gini coefficient, 215, 216 Global Compact, 187 globalization: and anarchy, 302; and cross-border health risks, 325–6; and elites, 245; and foreign policy, 297; and health negotiations, 328; of

358

Index

health policy, 326; and national interests, 322; and policy coherence, 297; of policy problems, 299; and poverty, 229; of production, 235–9; of public health, 298; and sectoral overlap, 325; and social divisions, 245; and trade, 311. See also economic globalization governance capacity, 302, 305; of developed vs developing countries, 302; for health risks, 325–6; for policy coherence, 164, 302, 315; for population health and well-being, 326 Great Britain. See United Kingdom gross domestic product (gdp), 202–3, 212, 218: and population health and well-being, 203, 204–6 Guatemala: bilateral assistance to, 31; data protection in, 27, 28 Guyana, migration agreement with Cuba, 108–9 Haiti, gdp of, 203 Hamilton, C., 219 Handa, S., 214 Hanson, G., 216 Haq, Mahbub ul, 221 Harmonised Commodity Description and Coding System, 137–8 Harrison, A., 174, 216 Havana Charter, 183 health: behaviour, 325; biomedical approach to, 326; data protection and, 73; and development, 266; and economic growth, 266, 303; of employees’ families, 170–2; environmental exposures and, 170; and foreign policy, 302–4; as foreign policy, 297, 304–6, 311, 318, 321–2; ftas

and, 42; globalization of, 298; human capital and, 325; and human development, 265; human resource planning, 122–3; human rights and, 266; of infants, 171; integration into new agreements; intellectual property and, 32, 33; intellectual property rights and, 279–80; job stability and, 176; labour conditions and, 6, 169, 172–3, 190–1; legislation, 31; patent protection and, 29; policy coherence in, 33; psychosocial work environment and, 170; as right, 265, 266; risk factors, 325–6; risks, 305; and security, 305; social determinants of, 6, 226, 227, 228, 230–5, 238–9, 239–42, 244; test data rights and, 280; trade restrictions and, 307, 308–9; trips and, 42, 69–71; tripsplus and, 69–70; wealth and, 303, 314. See also population health and well-being Health Action International (hai), 341; Africa, 278 health agencies, capacity of, 327 health equity, 227; defined, 226; trade liberalization and, 226; trade policy and, 232, 244, 245–6 health facilities: access to, 4; in asean countries, 154–5 health ministries: as advocates and negotiators, 342; coalitions with non-traditional allies, 342; and intellectual property, 29; international negotiations, 328; multisectoral consultations, 337; and power asymmetry between developing and developed countries, 339; stovepiping of, 6–7, 315; and transgovernmental networks, 315

Index health negotiations: appeal to historical responsibility in, 339; bottom line in, 340; coalitions and, 328–9, 340–1; definition of goals, 340; developing countries and, 327–43; fairness in, 339; framing and identification of problems, 331–5; global, 326; globalization and, 328; joint fact finding, 335–7; multisectoral, 7; and national policy coherence, 328; negotiating responses, 337–42; nongovernmental actors in, 341–2; phases of, 330–1; problem identification and, 331–5; quality of preparation for, 339; trade-offs in, 340; transnational issue networks, 335 health policies: coherence with economic policies, 276–7; coherence with trade policies, 42, 146, 267, 268, 275; as global enterprise, 326; information gathering for, 327; intellectual protection and, 72–3; nonviolation complaints and, 69; trade rules and, 266–7. See also policies; policy coherence health services: access to, 163, 230, 240, 266, 267, 268, 269, 309; in asean countries, 157–8; economic growth and, 204; export of, 154–5, 156, 162; foreign investment in businesses, 158; import of, 154–5; intellectual property rights and costs, 282; in Pakistan, 267; private sector and, 267; strengthening of systems, 163–4; tiered, 162; trade agreements and, 5; trade in, 5, 296, 308–9, 311–13; trade liberalization in, 154–9, 162–3, 302, 319; urban–rural inequality in, 162, 163

359

health services personnel: classification of, 120–1; demand for, 93–5; export of, 94, 156–7; migration of, 5, 93–124, 153, 155–6; movement within asean countries, 159–62; mutual-recognition arrangements for, 160–1; mutual recognition of, 160–2; mutuality of benefits for, 97–8; nafta and, 106–7; outflows of, 94; recruitment of, 93, 97–8; in rural areas, 103; shortages of, 112–13, 120, 156, 163–4; training of, 156–7. See also nurses; physicians health tourism, 3, 4, 154–5, 158, 162 Heavily Indebted Poor Countries (hipc) initiative, 243 Hecksher, E., 216 Hersh, A., 211–12 Hertzman, C., 204–6 hiv-aids: determinants of vulnerability to, 231; in developing world, 265; discrimination related to, 304; globalization and, 239; medicines, 333–5; ngos and, 30, 342; policy triage and, 318; in Uganda, 274 Hong Kong, health facilities in, 154, 155table Hong Kong Ministerial Conference, 4, 232–3, 270, 311–13, 319 hours of work, 175–6 Human Development Reports, 221 human rights, health and, 266 Hungary: health worker recruitment from, 108; hours of work in, 176; wage differentials in, 173–4 Hunt, Paul, 283 ifac-3, Industry Trade Advisory Committee on Intellectual Property Rights (itac–15), 49–50

360

Index

imports: communicable diseases, 307; health professionals, 156; liberalization of, 232–3, 243. See also tariffs income(s): access to, 233; in developing countries, 211–12; distribution of, 207, 210, 212, 219, 241–2; economic globalization and, 210; global value chains and, 236; and life expectancy, 206; polarization of, 238; and population health and well-being, 203; and purchasing power, 230–1; of women, 239 Index of Economic Well-Being (iewb), 219 Index of Sustainable Economic Welfare (isew), 218–19 India: consumption in, 209; globalization and, 245; health facilities in, 154, 155table; patents in, 14, 16; poverty in, 230; recruitment of personnel from, 99, 101–2, 107–8, 110–11, 112; standard of living in, 210, 213; state-managed migration from, 111, 112; trade liberalization, 215–16; wage differential in, 175 Indo-Singapore Comprehensive Economic Cooperation Agreement (ceca), 110–11 Indonesia: export of health professionals, 157; mosquito net production, 133–4; nurses, 157 Industry Trade Advisory Committee on Intellectual Property Rights (itac-15), 49–50 inequality: causes of, 212; economic globalization and, 210; economic growth and, 219; economic reforms and, 209; of health care services, 162, 163; in high-income countries, 210; income, 172; intranational, 208;

labour conditions and, 172; and population health and well-being, 202, 206–7; privatization and, 209; Thiel Index of, 213; trade and, 6, 207–17; trade liberalization and, 202, 208–9, 212, 213–17, 220; wage, 208, 209, 214 (see also wages: differentials) infants: emotional development, 171; health of, 171; mortality, 267. See also children Information Technology Agreement (ita), 142 insecticide-treated mosquito nets (itn), 130; classification of, 137–9; Doha Development Agenda and, 139–42; domestic production of, 143, 144; funding for, 130–1; helicopter-drop strategy and, 131; import duties on, 143, 147; product definition, 138–9; production of, 132–4; tariffs on, 132, 136–9, 143, 145–6; trade in, 133–6; utilization rate, 131 intellectual property (ip): bilateral agreements and protection of, 337; and cafta, 49; developing countries and, 55, 72–3; economic aspects of enforcement, 48; enforcement of, 48; ftas and, 46; global law, 47; and health policies, 72–3; innovation policies and, 56; national coordination of policy-making, 55–6; policymaking moved from wipo to gatt, 54; and public health, 32, 33; Uganda and, 274–5, 279; us and, 46 intellectual property rights (iprs), 41: in Andean countries, 281–2, 283; and children’s rights, 292n54; divergent state interests in, 319; exceptions for public health purposes, 309; exhaustion of, 43; in ftas, 283; legis-

Index lation, 11; pharmaceutical industry and, 30–2; policy coherence and, 29–32, 313; and prices, 282; protection of, 6; and public health, 279–80; trade agreements and, 279; trips and, 11; and wto Declaration on the trips Agreement and Public Health, 46. See also trips (Agreement on Trade-Related Aspects of Intellectual Property Rights) Inter-American Development Bank, 209 interagency cooperation and coordination, 299–300 Intergovernmental Panel on Climate Change (ipcc), 336, 337 International Confederation of Free Trade Unions (icftu), 183 International Covenant on Economic, Social and Cultural Rights (icescr), 81n3, 247n11, 265 International Labour Organization (ilo), 179, 182–3, 191; International Standard Classification of Occupations (isco-88), 120–1; World Commission on the Social Dimension of Globalization, 210 international law, 301: balancing of interests in, 307; policy coherence and, 308–10 International Monetary Fund (imf), 183; and agriculture, 233; and changes in trade policy, 240; on international inequality, 208; Jamaica and, 214; loans from, 243 International Nonproprietary Names for Pharmaceutical Substances (inn), 37n43 International Organization of Standards, 189

361

international organizations: and information gathering, 327; internal policy coherence and, 317; and labour conditions, 191; and migration policies, 123; national governments and, 326; and policy coherence, 286; state use of, 301–2; trade-related training by, 288n11; and trips flexibilities, 31. See also civil-society organizations; ngos international relations: post–Cold War, 296–7; wto and, 294 International Standard Classification of Occupations (isco-88), 120–1 International Trade Organization (ito), 183–5 interventionism: in industry, 237; and universal access, 266 Israel, us aid to, 52 Jamaica, saps in, 214–5 Japan: eu and, 67; labour migration from Philippines, 110 Japan-Philippines Economic Partnership Agreement (jpepa), 110 Jha, R., 215 job quality, 178 job stability, 176 job strain, 170 Joint Integrated Technical Assistance Programme (jitap), 276, 285 Jordan: fta with us, 51, 58–9, 85n56, 180–1; labour standards in, 180–1 Kaplan, G.A., 207 Kennan, J., 248n14 Kenya, mosquito net production, 133, 134 King, D., 214

362

Index

Korea: protection of industries in, 237; trade liberalization, 216 Kyoto Protocol, 332, 339 La Viña, Antonio, 338 labour: discipline of, 238; international division of, 236; mobility (see migration); policy, 187; standards, 179–83, 184, 191 labour conditions: consumer-driven efforts, 190; corporate codes of conduct, 187–9, 190; downward spiral in, 178–9; under foreign ownership, 174; globalization and, 178; health and, 6, 169, 172–3, 190–1; and income inequalities, 172; independent monitoring systems, 189–90; international organizations and, 191; standardization of, 191; trade and, 178, 185–6; voluntary codes of conduct, 187–90, 191; of women, 172. See also hours of work; wages Larson, B., 134 Latin American Association of the Pharmaceutical Industry (alifar), 29 Latin American countries: compulsory licensing in, 26–7, 31, 32; data protection in, 27–8; early working exceptions in, 25; economic reforms vs inequality in, 209; inequality in, 212; and intellectual property, 29; parallel imports, 25–6; patent law in, 32; patentability in, 23–4; pharmaceutical industries, 29, 30; public health legislation in, 31; trips flexibilities in, 21–8; trips in, 5, 11–33; in Uruguay Round, 29; women in paid labour force in, 172. See also Andean countries; Carib-

bean countries; Central American countries Lebanon, efta and, 84nn36, 40, 85n54 Lee, J.-W., 209–10 Lee, K., 314 life expectancy, 203, 204–6 Link, B.G., 206 Lipsey, R.E., 174 Lynch, J., 207 Macapagal-Arroyo, Gloria, 271 McInnes, C., 314 Mah, J.S., 216 malaria, 265; control of, 130, 137, 144, 147; determinants of vulnerability to, 231; Doha Development Agenda and, 132; effects of, 130, 144, 147. See also insecticide-treated mosquito nets (itn) Malaysia: export of health services, 154, 155table; nurses, 162 Marchand, R., 131 markets, access to, 53–4, 241 Marquette, C.M., 217 Marrakech Agreement, 226–8 Marx, Karl, 238 Médecins Sans Frontières (msf), 277, 278, 282, 292n55, 341–2 medical practitioners. See physicians medicines: access to (see access to medicines); affordability of, 4; generic, 334; parallel imports of, 273; prices of, 5, 17, 20, 29, 42, 273, 275, 333–5 Meitinger, I., 85n51 mercosur, 33 Mexico: cafta and, 53; data protection in, 27; inequality in, 216; labour complaints against, 180; maquiladora sector, 236; nafta and,

Index 53; patents in, 25; trade liberalization, 216; trips in, 27; wage differential in, 175 Microsoft, 49 migration: adoption of good practices, 98; within asean countries, 158–9; within Caribbean region, 104–6; compensation and, 98; economic needs testing, 122; gats and, 96, 112–14, 115–21, 123; governmentgovernment agreements, 119–20; of health personnel, 93–124, 153, 155–6, 159–62; horizontal commitments, 117–18; liberalization of, 117–18; managed, 95, 96, 114–22; and market access to health services, 118; mutual-recognition arrangements and, 160; mutuality of benefits for workers, 97–8; national treatment commitments, 119–20; of nurses, 93, 162; of patients for health services, 154–5, 156, 163; patterns of, 93, 94; permanent vs temporary, 115, 121; of physicians, 93; policies, 122–3; policy coordination in, 96; preferential trade agreements and, 109–11; push vs pull factors, 95, 96–7, 107; quantitative limits to, 118–19, 120; sectoral commitments, 117–18; of skilled workers, 153; within Southern Africa, 102–4; statemanaged, 111–12; and technology transfer, 113; temporary, 94, 103, 109–11, 112–14, 116; trade agreements and, 96–7, 98, 107–11, 114–22 Milanovic, B., 212 Millennium Development Goals (mdg): on improvement of health, 265–6, 304; lack of progress in, 318; malaria

363

in, 130, 144; mosquito nets and, 144; and trade-health issue, 227, 228–30, 232, 243, 244, 245, 317 Millennium Ecosystem Assessment, 337 ministries: national policy coherence, 55–6; reinvention of foreign policy, 298; trade vs health, 315; transgovernmentalism by, 299. See also health ministries Morocco: fta with us, 51, 52, 57, 59, 62, 68–9, 70, 71, 74–80, 85n58, 181; and intellectual property chapter, 52 most-favoured-nation (mfn): in gats, 120, 308; in trips, 66–7, 313 mutual-recognition arrangements (mras), 153, 158, 159 Myanmar: forced labour in, 182–3; nurses, 162 National Health Service (nhs) (uk), and international recruitment of health workers, 98–102 national interests: balancing of trade and health interests and, 314–15; divergence of, 305–7, 313; foreign policy and, 297; globalization and, 322; and policy coherence, 301, 314; synergy in, 313–15, 321, 322 Netherlands, Polish nurses in, 108 new chemical entities (nces), 62 New Economics Foundation, 221 New International Economic Order (nieo), 304, 332 ngos, 142, 342; and Andean–us fta, 283, 284; and labour conditions, 190; in Philippines, 274; and policy coherence, 287; and sectoral initiatives, 142–3; and trips, 30; in Uganda, 277–8. See also civil-society

364

Index

organizations; international organizations Nike model of production, 235 non-agricultural market access negotiations (nama), 141–2, 238 North American Agreement on Labour Cooperation (naalc), 179–80, 181 North American Free Trade Agreement (nafta), 27: labour in, 179–80; and Mexico, 53; and migration of health professionals, 106–7 Norway: children living in poverty in, 244; development assistance from, 244; Filipino health worker recruitment by, 108; gdp of, 203; on impact of wto rules for poor countries, 244 nurses: in Caribbean region, 104–6; demand for, 94; Filipino, 101–2, 110, 111–12, 161; migration from Canada to us, 106–7; migration of, 93, 99–100, 162; mutual-recognition arrangement for, 160, 161; recruitment of, 99–100 nutrition, 231, 234 oecd nations: economic growth in, 218; hours of work in, 176; inequality in, 212 Ohlin, B., 216 O’Rourke, R., 188–9 Osberg, L., 219 outsourcing, 177 Oxfam, 274, 279 paid leave, 171–2 Pakistan: disease in, 267; and gats, 6, 268–71; health services in, 267; inter-agency consultation in, 267–71; Ministry of Commerce, 268–9; Min-

istry of Health, 269; public services in, 267–71; trade liberalization, 268 Pan American Health Organization (paho), 281, 282 Panama, patent law in, 22 Paraguay, patents in, 22 Paris Convention for the Protection of Industrial Property, 42–3 patent legislation, 4; in Brazil, 25; in developing countries, 12; in Latin American countries, 22, 31, 32; in South Africa, 20; us and, 14; ustr and, 20 patent protection: harmony of interests doctrine and, 306; and health protection, 313; local production and, 333–5; pipeline approach, 22–3; and public health, 29; trips and, 5 patentability, 58; criteria, 43; exclusions, 14–15; harmonization of criteria, 47; in Latin American countries, 23–4; of surgical/therapeutic/diagnostic methods, 23–4 patents/patent rights, 42–4: availability of, 43; baseline, 309–10; Bolar exception, 16–17, 43, 60; compulsory licensing, 19–21, 25, 26–7, 43, 58–9; and divergence of health and trade interests, 319; early working, 16–17, 43, 60; evergreening of, 14, 24, 43, 62; exceptions to exclusivity, 24–5; exclusions, 15–19; exhaustion of, 17–18, 59–60, 60; industrial applicability concept, 58; licensing of, 43; regulatory exceptions, 60–1; regulatory procedures and, 64–5; research vs, 16; Swiss formulation, 24; term extensions, 58; voluntary licensing, 19 pension plans, privatization of, 234

Index Peru: agricultural exports, 287; fta with us, 283–5; government agencies, 281; policy coherence in, 286; private sector in, 281; and us, 40n73; in us–Andean fta, 280–1; pharmaceutical industry, 283, 342; and intellectual property rights, 46; and trips, 30–2, 46 pharmaceuticals: in developing countries, 11–12; generic, 17, 21, 42, 60, 61, 62, 63, 277; patent protection, 46; patent rights to, 42–4; prices of, 12, 337; product patents, 12; r&d, 12; trips and, 11–12. See also medicines; patents/patent rights Phelan, J., 206 Philippines: access to medicines in, 271–4; compulsory licensing in, 273; export of health professionals, 157, 161; Generics Act, 271; gma 50, 271, 273; health worker recruitment by Norway, 108; inter-agency committees, 272; labour migration to Japan, 110; Ministries of Trade and Health, 272–3; parallel imports in, 273; policy coherence in, 286, 287; recruitment of personnel from, 99, 101–2, 108, 110, 111–12, 161; statemanaged migration from, 111; Technical Committee on wto Matters (tcwm), 272; trips and, 271–4 Philippines Overseas Employment Administration (poea), 108, 111–12 phrma, 22–3, 30 physicians: migration of, 93; mutualrecognition arrangements for, 160; in rural areas, 4 Picciotto, R., 243 Plan Colombia, 52 Pogge, T., 247n3

365

Poland, nurses in Netherlands, 108 policies: cross-cutting of, 299; evidence base for, 316; export of health workers, 94; globalization of, 299; health impacts, 326, 327; for health worker migration, 96; horizontal plumbing of, 299, 300; impacts on health, 329; migration of health personnel, 122–3; science and, 336; stove-piping of, 299. See also health policies; trade policies policy coherence, 4, 42, 56, 146, 267, 268, 275, 276–7; in anarchy, 302, 322; in asean trade agreement negotiations, 164; awareness of implications and, 286; and balancing of interests, 310; bilateral/regional trade agreements and, 320; civil-society organizations and, 287, 334–5; definition of, 295; in developing countries, 335; and domestic policy values vs globalization, 244; external, 297, 306–13, 319–20; in foreign policy, 299; ftas and, 73; governance capacity for, 302, 315; health as foreign policy issue and, 302–3; health negotiations and, 328; information and, 286; and integration of health expertise into new agreements, 317; intellectual property and, 29–32, 313; inter-institutional coordination and, 285–6; inter-ministerial coordination, 288n9; intergovernmental aspects, 278–9; intergovernmental competition for, 301; internal, 297, 313–15, 320–1; and international law, 308–10; international organizations and, 286; levels of government and, 279; and mdg, 229–30; monitoring of agreement implementation,

366

Index

316–17; national interests and, 301, 314; ngos and, 287; and 9/11 attacks on us, 298; obstacles to, 318–21; in Peru, 280–1; policy triage problem, 318–19, 322; public debate and, 286–7; in public health, 33; security and, 298, 299; synergy in, 295, 296, 298, 314, 316, 317, 318, 321; technical assistance and, 277; trade epidemiology and, 316–18, 322; trade-for-health initiatives and, 317; in Uganda, 274–9; who and, 304; wto and, 304 population health and well-being: economics and, 203–4, 221; gdp and, 203, 204–6; in high economicgrowth countries, 203–4; income and, 203, 207; inequality and, 202, 206–7; macroeconomy and, 202; measures of, 219; national government capacity and, 326; national wealth and, 202; poverty and, 202; trade and, 207–17; trade liberalization and, 202. See also health poverty: and access to medicines, 12; and access to services, 234; child, 244; as consequence of ill health, 231–2; consumption and, 209; decrease in, 210; in developing countries, 211–12; economic globalization and, 208–13; economic growth and, 208, 219; globalization and, 229; illness and, 267–8; and life expectancy, 206; multilateral economic institutions and, 209; and population health and well-being, 202; and social determinants of health, 230; trade and, 6; trade liberalization and, 202, 208–9, 212–17, 220; trade policies and, 207–17, 232

Poverty Reduction Strategy Papers (prsps), 243–4 Preferential Trading Arrangement (pta), 151 private sector: and health care, 267; in health negotiations, 282; itn and, 131 privatization: of public services, 309; of sanitation, 234; of state pension plans, 234; of water, 234 production: foreign direct investment in, 235; international allocation of tasks, 235; reorganization of, 227, 235–3; value added, 236–7 public health. See health public services: carve-out, 268, 270–1; privatization of, 309 Puerto Rico Round, 282 Rama, M., 197n32 Ravallion, M., 215 r&d, pharmaceutical, 12 recruitment of health personnel: from developing countries, 107–8; good practices, 102; private agencies, 99, 101; watch agencies, 102–3 Redefining Progress, 219 regional agreements, 5, 66, 339; and flexibilities, 238; and intellectual property rights, 279; and labour standards, 179–82; multilateral vs, 44; patent rights and, 319; and policy coherence, 320 Roffe, P., 85n62 Rosen, S., 134 rural areas: effect of trade liberalization in, 213–14, 215; health sector in, 103; inequality of health care services in, 162, 163; physicians in, 4

Index sadc (Southern African Development Community), recruitment of health workers in, 102–4 Samuelson, P.A., 216 sanitation: access to, 231; privatization of, 234 sars, 305, 326 Sassen, S., 245 Satterthwaite, D., 231 Savvides, A., 209–10 sdt. See Special and Differential Treatment (sdt) seabed, 332–3 self-employment, 177 Sen, Amartya, 203–4 Service Provider Visa (spv), 115–17, 121 service sector: foreign investment in, 234; migration of skilled labour in, 153; mutual-recognition arrangements for personnel, 153; privatization of, 234; trade in, 109–11, 112–14; trade liberalization in, 152–4, 268, 311–13. See also health services; social services Sharpe, A., 219 Siddiqi, A., 204–6 Singapore: export of health services, 154, 155; fta with us, 58–9, 62, 63, 84n37, 85n57, 181; professional migration to, 110–11 skilled labour, 175, 177, 214; demand for, 174; migration of, 153 Slovakia, nurses in Germany, 108 slums, 231 Social Accountability International, 189 social services: economic growth and, 204; and life expectancy, 207 South Africa: compulsory licensing in, 20; generic drugs in, 334; and inter-

367

national recruitment of health workers, 102–4; medical students trained in Cuba, 109; Medicines and Related Substances Control Act, 18; parallel imports, 20; recruitment of health workers from, 99–100, 100–1; Sullivan Principles, 188; trade dispute with us, 20 South Korea. See Korea Southern African Customs Union (sacu), 73; tariffs on mosquito nets, 139 Spain, recruitment of health personnel from, 99 Special and Differential Treatment (sdt), 241 Squire, L., 210 St Kitts and Nevis, and ilo conventions, 183 stakeholders: informing of, 269–70; involvement of, 277; and policy coherence, 286 Stevens, C., 248n14 Stewart, S., 131 Stolper, W., 216 stove-piping, 6–7, 299, 315 stress, workplace, 170 structural adjustment programs (saps), 214–15, 217, 243 sub-Saharan countries: hiv-aids in, 239, 265; inequality in, 212; and sectoral initiatives, 142–3; tariffs and, 144–5; tariffs on mosquito nets, 138–9 subsidies, agricultural, 232–3, 341 Substantive Patent Law Treaty (splt), 47 Swagel, P., 209–10 Sweden: hours of work in, 176; wage differentials in, 173–4

368

Index

Székely, M., 209 Taiwan, protection of industries in, 237 tariffs: binding of, 144–5; developing countries and, 142–3, 239–40, 242; and development, 143, 145; escalation, 233, 237; on exports, 233; and less than full reciprocity, 141; on medical goods, 317; on mosquito nets, 136–9, 143, 145–6; reductions and wage differentials, 174–5; sectoral initiatives within, 141–3, 147; and sub-Saharan countries, 144–5; trade liberalization and, 242; and wages, 197n32. See also exports; imports technology-importing countries, 47, 52, 57 technology transfer: migration and, 113; trips and, 20 test data, 44; exclusive rights to, 21, 61–2; foreign approvals, 63; us and, 280. See also data protection textile industry, 186 Thailand: coalition with us anti-smoking lobby, 342; economic growth in, 219; export of health services, 154–5, 156table, 162; health tourism in, 162; medical litigation in, 162; mosquito net production, 133, 134; shortage of doctors in, 163–4; us negotiations with, 57 3d, 278 Tokyo Round, 185 tourism, 326. See also health tourism trade: agricultural, 232–3, 241; aid shipments and, 140–1; and economic growth, 202, 218, 311; epidemiology, 316–18, 322; as exchange of

goods, 235; facilitation of, 140–1; as foreign policy, 311; globalization and, 311; and health human resource planning, 122–3; in health products, 5; in health services, 5, 296, 308–9, 311–13; and inequality, 6, 207–17; in mosquito nets, 133–6; necessity test of restrictions on, 309; and poverty, 6, 207–17; preferences in Andean–us fta, 283, 284–5; preferential, 52, 317; production networks and, 235; and protection of human health, 294; restrictions on, 307, 308–9; rules, and health policies, 266–7; sanctions, 182, 185–6; in services, 109–11, 112–14; and social determinants of health, 6; teaching and training on, 269–70; and wages inequalities, 174 trade agreements: capacity building for, 164; and health worker migration, 107, 114–22; inequalities in, 238; and interventionism, 237; labour in, 169, 180–1; and labour standards, 184, 191; migration and, 107, See also free trade agreements (ftas) trade-for-health initiatives, 317 trade liberalization, 6, 266; in agricultural sector, 213–14, 319; within asean Economic Community, 162–3; assessment of consequences of, 164; debt crisis and, 243; and developing countries, 142–3, 145, 211–12; and development, 143, 145, 241; and distribution, 240; economic globalization and, 169; and economic growth, 208; European nations and, 243; and food processing/retailing, 233–4; and health, 202; and health equity, 226; in health services, 154–9, 162–3,

Index 302, 319; and human development, 226–7; and income dispersal, 210; and inequality, 202, 212, 213–17, 220; and labour conditions, 190–1; and malaria, 137; of Pakistan, 268; and poverty, 202, 208–9, 212–17, 220; and reorganization of production, 227; in service sector, 153–4, 234, 311–13; of services, 152–4, 268; and social determinants of health, 227, 230–5; and tariffs, 242; and urban vs rural areas, 213–14, 215; us and, 243; variability of effects, 217; and wage differentials, 175, 177, 178 trade policies: changes in, 240; coherence with health policy, 42, 146, 267, 268, 275; and communicable diseases, 131; and health equity, 232, 244, 245–6; and human development, 240–2; and labour conditions, 178, 190; poverty and, 232; and public health, 331–2; and reorganization of production, 235–9; sdt in, 241; and social determinants of health, 6, 239–42. See also policies; policy coherence transgovernmental networks, 302, 315, 317 transgovernmentalism, 299, 300 transnational corporations (tncs), 235 transparency: in ftas, 57; in negotiating processes, 282 Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy, 187 trips (Agreement on Trade-Related Aspects of Intellectual Property Rights), 3, 5, 11, 43; and aids drugs, 333–5; cafta and, 41–2; civil-society

369

organizations and, 29–30; compulsory licenses under, 31, 58–9, 341–2; Doha Declaration and (see Doha Declaration); exceptions to exclusive patent rights, 24–5, 31, 60–1; exceptions to patentability, 14–15; exclusive rights under, 62; flexibilities, 11, 13–21, 21–8, 30, 31, 33, 43–5, 69, 73, 280; free trade agreements and, 32; itac-15 on, 50; in Latin American countries, 5; most-favoured nation principle, 66–7, 313; nces under, 62, 63; ngos and, 30; nonviolation complaints under, 67–8, 69; parallel imports and, 25–6, 31, 59–60; patent term extensions in, 58; patentability under, 13–14, 58; pharmaceutical industries and, 30; and pharmaceuticals, 11–12; and Philippines, 271–4; and public health, 42, 69; and technology transfer, 20; and test data protection, 21; transitional periods in, 13, 31, 43–4; trips-plus compared to, 279–80; in Uganda, 275–6, 277, 278; and us ftas, 57, 74–80 trips (Agreement on Trade-Related Aspects of Intellectual Property Rights)-plus, 33, 41–2, 48, 279–80; and data protection, 61–5; developing countries and, 52; and public health, 69–71; us and, 31–2, 72, 313 Truman, Harry S., 184 tuberculosis, 231, 265 Tunisia: efta and, 84n36, 84n40, 85n54 Uganda: civil-society advocacy in, 6; coherence in, 274–9; compulsory licensing in, 275; Consumer Protec-

370

Index

tion Association, 278; Economic Policy Research Centre, Kampala, 213; effects of trade liberalization in, 213–14; gdp in, 274; heps, 277; hiv-aids in, 274; Industrial Property Bill, 275; intellectual property protection and, 274–5, 279; Inter-Institutional Committee (iitc), 276; law reform in, 275, 276–7; ministries in, 276, 279, 285–6; trips and, 275–6, 277, 278 unemployment, 176 unfair competition, 12–13, 21, 61 United Kingdom: bilateral agreements, 107–8; call centres in, 178; Commission on International Property Rights, 275; economic growth in, 218; gats visa for contractual workers, 126n35; health professionals in, 93–4; inequality in, 210; National Health Service (see National Health Service (nhs) (uk)); Philippines nurses in, 157; wage differentials in, 196n27 United Nations: Children and Education Fund (unicef), 131, 244; Committee on Economic, Social and Cultural Rights, 247n11; Conference on Trade and Employment (unctad), 183, 209–10, 269; Development Programme (undp), 221, 240–2, 245, 281; Millennium Project, 229 United Nations University World Institute for Development Economics Research (wider), 212, 215 United States: Agency for International Development (usaid), 277; agricultural trade with Andean countries, 292n45; aid packages, 52; and Andean fta, 51, 52; Andean Trade

Preference and Drug Eradication Act (atpdea), 284; Andean Trade Preferences Act (atpa) (us), 284; and Argentina, 23, 27, 28; and Brazil, 26–7, 36n28, 333, 335, 338; Bureau of Labor Statistics, 176; and cafta, 47–8, 181; and Canada, 37n39; Canadian nurses in, 106–7; children living in poverty in, 244; and Colombia, 28; compulsory licensing and, 20, 35–6n27; and data protection, 61–3, 72; domestic markets for imports, 51; economic growth, 218, 219, 220fig.; and exclusive rights to test data, 44; ftas (see United States ftas); gdp, 220fig.; gdp vs population health and well-being in, 204–6; General System of Preferences (gsp), 185–6; Generalized Preference System, 23; health professionals in, 94; and hiv-aids drugs, 333; hours of work in, 176; House of Representatives Ways and Means Committee, 283; and ilo conventions, 183, 186; inequality in, 210; and intellectual property, 46–7, 50, 56, 72; labour complaints against, 180; life expectancy in, 204–6, 207; 9/11 attacks on, 298; OmnibusTrade and Competitiveness Act, 82n20; pharmaceutical imports from Canada, 60; pharmaceutical industry in, 30; Pharmaceutical Research Manufacturers Association (phrma) (see phrma); Philippines nurses in, 157; pipeline approach, 22; policy coherence in, 298; power of industrial groups in, 49–50; protection of public health, 70–1; security considerations for ftas, 51; and test data rights, 280;

Index textile agreement with Cambodia, 186; and Thailand, 57; Trade Act, 46, 82n20; Trade and Development Act, 83n32; trade dispute with South Africa, 20; and trade liberalization, 243; Trade Promotion Act, 50; and trips flexibilities, 31; and trips-plus, 31–2, 33, 72, 238, 280, 313; wage differentials in, 196n27 United States ftas, 31–2, 40n73, 44–5, 61–5, 72–3; with Andean countries, 280–5; with Australia, 58–9, 62, 83n23, 84n37, 85nn56, 61; with Bahrain, 62, 85nn58, 61, 181; with cafta, 49, 51, 57, 58–61, 62, 68–9, 70, 71, 74–80; with Chile, 51, 57, 59, 62, 68–9, 71, 72, 74–80, 84nn36, 37, 85n54, 181; with Jordan, 58–9, 85n56, 180–1; with Morocco, 52, 57, 59, 62, 70, 71, 74–80, 85n58, 181; with Peru, 283–5; with Singapore, 58–9, 62, 63, 84n37, 85n57, 181; with Vietnam, 58–9 United States Trade Representative (ustr): Brazil’s negotiations with, 337; consistency policy, 48; and free trade agreement with Jordan, 181; and pharmaceutical industry, 342; and pharmaceutical patents, 22–3; policy of consistency, 48; on preferences/quotas legislation, 186; Special Report 301, 20, 27, 47, 82–83n20 Universal Declaration of Human Rights (udhr), 247n11, 265 Uruguay, patents in, 22 Uruguay Round, 11, 44, 50, 62, 331, 333, 340; Latin American participation, 29; pharmaceutical industries and, 30

371

us-cafta-dr Agreement. See cafta (Dominican Republic and Central American Free Trade Agreement) Vargo, Regina, 52 Vera, Jose Carlos, 280 Vienna Convention on the Law of the Treaties, 71 Vietnam: fta with us, 58–9; mosquito net production, 133, 134 Virchow, Rudolph, 206 wages: competition for, 174; in developing countries, 174; differentials, 173–5, 177, 178 water: access to, 231; privatization of, 234 Waxman, Henry, 59–60, 70 Weller, C.E., 211–12 West Indies. See Caribbean countries wider. See United Nations University World Institute for Development Economics Research Wilkinson, R.G., 207 wipo. See World Intellectual Property Organization (wipo) women: in global economy, 236; health of, 267; hiv-aids and, 239; income of, 239; maternal health, 265; in paid labour force, 172 Worker Rights Consortium, 189 World Bank, 183; and agriculture, 233; and changes in trade policy, 240; on economic globalization, 208, 209; loans from, 243; and pension plans, 234; on poverty, 209, 213; and saps, 215 World Customs Organization, 138, 140 World Health Assembly (wha), 295, 314, 316–17

372

Index

World Health Organization (who): Agreements and Public Health, 4; approach to international health, 303–4; Convention on Tobacco Control, 321; High-Level Forum on the Health Millennium Development Goals, 229; International Health Regulations (ihr), 307, 308, 311, 319; joint study on trade–health relationship with wto, 294–6; and malaria, 130–1; and mosquito nets, 133; and policy coherence, 304; World Health Assembly, 3–4 World Income Distribution database, 212 World Intellectual Property Organization (wipo), 47, 54, 275; Group of Friends of Development, 55; and trips flexibilities, 31 World Trade Organization (wto), 184–5, 294; Agreements and Public

Health, 4; and agricultural subsidies, 232; criticisms of, 294; Declaration on the trips Agreement and Public Health, 46; Dispute Settlement Understanding, 17, 26–7, 27, 36n28, 294–5, 321; Doha meeting (see Doha Round); and early working exception, 25; Hong Kong Ministerial Conference (see Hong Kong Ministerial Conference); joint study with who on health–trade relationship, 294–6; most-favoured nation principle in, 66–7; and policy coherence, 304; Services Sectoral Classification List, 120; on trade liberalization, 226–7 Worldwide Responsible Apparel Production, 189 Zimbabwe, saps in, 217