For personal use. Only reproduce with permission from The Lancet. VIEWPOINT 1072 THE LANCET • Vol 362 • September 27, 2003 • www.thelancet.com Trade ministries from the World Trade Organization’s (WTO’s) 144 member states are presently deciding which public services they proposed to open to foreign competition under the complex liberalisation rules of the general agreement on trade in services (GATS). The largely secret negotiations, which started 2 years ago, have fuelled the continuing controversy about the introduction of market forces in health, social services, and public utilities such as water. 1,2 In an attempt to answer critics’ complaints that WTO negotiations erode national control over crucial services and deny citizens a democratic voice in major decisions about their welfare, 3 regional and state governments have published summaries and mounted public consultation exercises. 4–6 One of the most common criticisms of the WTO system is that it reduces the ability of governments to protect the welfare of their citizens because of the ways in which the WTO’s trade treaty regime intrudes into public policy and governance. However, respect for national sovereignty is asserted in the preface to the GATS treaty in the form of a right to regulate. 7,8 Various provisions within the body of the treaty give substance to this right. First, the treaty’s scope is defined so as to exclude from coverage “services supplied in the exercise of governmental authority”. 7 This provision has been interpreted both by the UK Department of Trade and Industry 9 and by WTO staff as exclusion of public services. 10 Second, the treaty avoids provisions requiring privatisation of public services. Third, the treaty, while allowing member states to choose what to liberalise, provides them with various opt-outs and exemptions from GATS so as to protect national policy objectives. This flexibility, according to the WTO secretariat, allows governments “to determine the level of obligations they will assume”. 8 Here, we examine claims made by the WTO and others that GATS neither applies to public services nor requires their privatisation, and then we discuss trade treaty Lancet 2003; 362: 1072–75 Public Health Policy Unit, School of Public Policy, University College London, 29–30 Tavistock Square, London WC1H 9QU, UK (D Price BSc, Prof A M Pollock FFPHM) Correspondence to: Prof Allyson Pollock (e-mail: allyson.pollock@ucl.ac.uk) processes that can subject public services to commercial rules, the treaty’s flexibility with respect to national autonomy, and GATS provisions in situations in which national autonomy is not protected. A background to the WTO is shown in the panel. Are public services excluded from trade agreements? National autonomy is affected by the scope of GATS. Article 1.3 states that “services supplied in the exercise of government authority” are exempt from the treaty, and it further defines government authority services as those that are neither commercial nor supplied in competition with other providers. But the treaty does not define commercial or competition, and it has frequently been pointed out that the exclusion could be ineffective because few public services are entirely free from commercial arrangements or competition. 12 The UK and several other WTO members originally maintained that article 1.3 excluded public services, 13 but they are now seeking legal clarification. 6 The WTO has also changed its position by stating that exemption of public services is based on member choice not the scope of the treaty: “WTO members can choose not to make commitments in any sector where this ambiguity could compromise a country’s reliance on this exclusion”. 6 The European Commission has stated that choice can be exercised to protect national health services, and the UK Government—like Canada and New Zealand—has said it does not intend to take commitments “that could lead to the continued provision of public services via the NHS being called into question”. 6 We return to this claim later in the article. Does GATS require privatisation? Privatisation is one of the most hotly contested issues to emerge in the debate about GATS and national autonomy. Defenders of WTO agreements have repeatedly rejected claims that GATS requires privatisation of public services. 8 However, a condition of membership of the WTO is that market forces operate more widely after accession. For example, eastern bloc countries’ accession to the WTO entails a programme of privatisation under accession agreements, and WTO members must be kept informed about the process of privatisation. The public health implications of world trade negotiations on the general agreement on trade in services and public services Allyson M Pollock, David Price Trade ministries from the World Trade Organization’s (WTO’s) 144 member states are presently deciding which public services to open to foreign competition under the complex liberalisation rules of the general agreement on trade in services (GATS). A frequent criticism of the WTO system is that it reduces national autonomy over public policy. However, respect for national sovereignty is asserted in the GATS treaty. Here, we examine claims made by the WTO and others that GATS exempts public services and does not require their privatisation. We discuss trade treaty processes that can subject public services to commercial rules, the treaty’s flexibility with respect to national autonomy, and the effect of GATS in situations in which national autonomy is not protected. We conclude that national autonomy over health policy is not preserved under GATS, and that accordingly, there is a role for international standards that protect public services from the adverse effect of trade and market forces. Viewpoint