news focus: The government's enthusiasm for opening up the NHS to private sector involvement could pose tricky questions about the UK's obligations under GATS. Tash Shifrin reports

Published: 13/06/2002, Volume II2, No.5809 Page 14

The idea of the sort of antiglobalisation protests seen in Seattle during 1999 targeting the Department of Health's Richmond House headquarters seems absurd.Yet this is one of the possibilities raised by the government's decision to give the private sector a 'permanent' place in Britain's health service ('Here to stay', conference focus, 30 May).

The inspiration may prove to be the General Agreement on Trade in Services, a World Trade Organisation treaty which was negotiated by member governments, including the UK's, and came into force in 1995.

GATS contains two elements, details of global trade rules and disciplines and a schedule of 'specific commitments', covering individual governments' undertakings on access to particular domestic markets by foreign suppliers.

Services provided on the exercise of 'government authority' are excluded from GATS. These are defined as services supplied neither on a commercial basis, nor in competition with other suppliers.

But some academics and campaigners now fear that by opening up the NHS to the commercial sector the government has taken it outside this definition.

University College London health policy and health services research unit research fellow David Price says: 'A public sector provider monopoly looks to be excluded.

The NHS was assumed to be excluded.'

But he adds: 'If we introduce markets and competition, health services become covered by the treaty so they are at least subject to the general obligations.'

The 'general obligations' allow the WTO to apply a necessity test to the provision of services, he says. 'The idea is they can police your domestic policy and determine whether It is necessary.'

He also fears that the specific commitments made by the UK government in GATS could begin to apply. Hospital services were included in the UK commitment and, Mr Price explains, 'unlike other European countries who made a similar commitment, we didn't use the provisions available to qualify this'.

If the specific commitments did apply, the government may not be able to restrain the 'commercial presence' of overseas firms wanting to provide healthcare in the UK. The implications are profound, Mr Price says. 'It could prevent all quantitative regulations that control supply or costs. It could require all foreign providers to be treated the same as domestic ones. Any subsidies given to NHS hospitals would also have to be given, for example, to a health maintenance organisation from the US.Any policy devised to control the quality of a services could be limited by WTO powers.'

He concludes: 'Arguably, we now no longer have full control over health policy.'

John Hilary, trade policy adviser at Save the Children and author of The Wrong Model: GATS, trade liberalisation and children's rights to health, claims that action is even now being considered: 'A coalition of service industries in the US has identified GATS as a way to open up health services in Europe. They represent a glittering prize.'

Mr Hilary agrees that 'once You have started using private providers within the health system, it opens you up to challenge under the GATS rules'.

So how might such a challenge occur? He explains: 'You might say providers have to provide a certain level of service or a certain form of service to poorer people.

Under GATS, all those domestic regulations can be challenged if they're seen as restrictive to trade.'

Challenges can be taken to a WTO disputes panel, which rules according to a GATS article stating that regulation should be 'not more burdensome than necessary to ensure the quality of the service'.

Mr Hilary cites as a warning a 1990 case taken up by the US government on behalf of the tobacco industry to the General Agreement on Tariffs and Trades disputes panel, which preceded the WTO.

The US challenged the Thai government's ban on tobacco imports - a public health measure to tackle smoking. 'The US government said the import ban was an unfair restriction on their tobacco.

'The Thai government brought in the World Health Organisation in its defence, 'Mr Hilary explains.

'But the GATT disputes panel agreed with the US because the import ban couldn't be said to be the only way to stop smoking.

There could be another way that was less 'restrictive'. The WTO in 1996 called on that as a precedent.'

The need to show that regulations are 'not unduly burdensome' has serious implications for regulating the private healthcare sector, Mr Hilary says.

A US firm might, via its government, challenge a quality standard it was not used to meeting.

How this would be handled if it concerned a business contracted to serve the NHS is 'a grey area', he says.

Mr Hilary adds that build-operate-transfer partnerships - including some private finance initiative arrangements - 'will not be seen as public services' by the WTO.

'It is a real minefield - an increasingly complicated agreement.'

A Department of Trade and Industry spokesperson says: 'A country doesn't need to make commitments under GATS to allow foreign participation in their market. These are domestic policy decisions. They're not forced on the UK.'

But asked if recent reforms and the new role of the private sector will leave the NHS exposed under the commitments the government has already made, she says: 'We do not believe that is the case.'

WTO material stresses that governments are not forced into making commitments on anything and do not have to show they are employing 'least-trade-restrictive' practices.

But there is a rider...'unless asked to justify a specific regulation in the event of a dispute with another government'.

A challenge brought by a foreign government on behalf of an overseas health provider could find the DoH having to field some potentially very tough questions.