At CMPI's second policy round table lunch in Geneva, we were lucky enough to have Fredrik Erixon, the head of Brussels trade think tank ECIPE, as speaker. He spoke on the need for a new international trade compact focused exclusively on health.
During the lunch, which was attended by a 25 high ranking Geneva diplomats and officials, Fredrik set out the case that such a new trade compact would invigorate trade negotiations, while helping countries drive down costs.
Fredrik argued that the Doha Round is dead and it looks unlikely that the WTO will ever again prove to be a useful forum from which to negotiate global trade liberalisation. As mercantilism is still a dominant philosophy throughout the world, trade is unlikely to be liberalised further unless it is clear there will be clear gains in trade volumes. Trade negotiations need therefore to become less ambitious and focus on specific, clear issues.
Meanwhile, both developed and emerging economies are facing huge fiscal pressures as their populations age. Healthcare already comprises 20 per cent of the service sector of most higher and upper-middle income countries, with costs rising all the time due to factors such as technology, labour costs and so on. In other sectors, these inflationary pressures have been tempered via international trade, as countries are able to trade across borders to exploit their comparative advantage and lower costs. However, almost no trade exists in healthcare outside of pharmaceuticals and other medical goods.
At the same time, emerging economies such as China are developing new healthcare systems. As they are starting from a very low base, it requires enormous amounts of capital. They too would benefit from international trade in healthcare in order to attract investment and capital from overseas.
All these factors underline the need for a new trade compact in healthcare. Richer countries would derive great advantage from utilising communications technologies to have diagnostics and other analysis performed in countries where such things can be done more cheaply. There is also great potential to use such technologies to keep patients at home rather than in capital-intensive hospitals. Emerging markets could tap into this demand to help them mobilise the capitals and skills necessary to help them develop modern healthcare systems.
So what can be done? First, there needs to be a thorough reworking of the rules surrounding trade in services. Only a few (mainly developing) countries have made firm commitments under the WTO's General Agreement on Trade in Services (which governs the rules on trade in healthcare). Rich countries therefore need to put healthcare services at the front of their trade strategies. Second, healthcare needs to be included in the WTO’s Government Procurement Agreement to ensure that state healthcare systems are part of this international process. Third, work needs to be done to reduce non tariff barriers to trade in healthcare, such as technological and regulatory barriers.
Although medical tourism will become increasingly popular amongst richer people it is unlikely to become a mass market phenomena as it is paid for mainly out of pocket. Rather, using technology to allow patients and their physicians to communicate with low cost, foreign service providers -without having to go to a hospital- could be a potential game changer, driving down costs and improving the quality of care. To make this happen, there needs to be a new global compact for trade in healthcare.
During the lunch, which was attended by a 25 high ranking Geneva diplomats and officials, Fredrik set out the case that such a new trade compact would invigorate trade negotiations, while helping countries drive down costs.
Fredrik argued that the Doha Round is dead and it looks unlikely that the WTO will ever again prove to be a useful forum from which to negotiate global trade liberalisation. As mercantilism is still a dominant philosophy throughout the world, trade is unlikely to be liberalised further unless it is clear there will be clear gains in trade volumes. Trade negotiations need therefore to become less ambitious and focus on specific, clear issues.
Meanwhile, both developed and emerging economies are facing huge fiscal pressures as their populations age. Healthcare already comprises 20 per cent of the service sector of most higher and upper-middle income countries, with costs rising all the time due to factors such as technology, labour costs and so on. In other sectors, these inflationary pressures have been tempered via international trade, as countries are able to trade across borders to exploit their comparative advantage and lower costs. However, almost no trade exists in healthcare outside of pharmaceuticals and other medical goods.
At the same time, emerging economies such as China are developing new healthcare systems. As they are starting from a very low base, it requires enormous amounts of capital. They too would benefit from international trade in healthcare in order to attract investment and capital from overseas.
All these factors underline the need for a new trade compact in healthcare. Richer countries would derive great advantage from utilising communications technologies to have diagnostics and other analysis performed in countries where such things can be done more cheaply. There is also great potential to use such technologies to keep patients at home rather than in capital-intensive hospitals. Emerging markets could tap into this demand to help them mobilise the capitals and skills necessary to help them develop modern healthcare systems.
So what can be done? First, there needs to be a thorough reworking of the rules surrounding trade in services. Only a few (mainly developing) countries have made firm commitments under the WTO's General Agreement on Trade in Services (which governs the rules on trade in healthcare). Rich countries therefore need to put healthcare services at the front of their trade strategies. Second, healthcare needs to be included in the WTO’s Government Procurement Agreement to ensure that state healthcare systems are part of this international process. Third, work needs to be done to reduce non tariff barriers to trade in healthcare, such as technological and regulatory barriers.
Although medical tourism will become increasingly popular amongst richer people it is unlikely to become a mass market phenomena as it is paid for mainly out of pocket. Rather, using technology to allow patients and their physicians to communicate with low cost, foreign service providers -without having to go to a hospital- could be a potential game changer, driving down costs and improving the quality of care. To make this happen, there needs to be a new global compact for trade in healthcare.
