Navigating between the Poles: Unpacking the Debate on the Implications for Development of GATS Obligations relating to Health and Education Services

Abstract

Differences of opinion are stark regarding the implications of the General Agreement on Trade in Services (GATS) for public services like health and education in developing countries. Some believe that GATS poses no threat at all to these essential services and, in some circumstances, may contribute to their more effective delivery and regulation. Others are vehemently opposed to trade liberalization commitments of any kind in these areas and view GATS as a significant threat to the effectiveness and even the viability of national health and education systems. The reality for developing countries is much more complex than either of these polar positions suggests. Before deciding on what GATS commitments to undertake in health and education, developing countries must make prior policy choices regarding how much private sector participation to permit in the delivery of these services. Developing country governments must measure the costs and benefits of privatization and commercialization in health and education services against the achievement of their development objectives. The desirability and impact of privatization and commercialization on development in each country will depend very much on local conditions including the state's capacity for effective domestic regulation of private sector suppliers. One question for developing countries in this regard is whether there would be benefits resulting from permitting foreign firms to provide privatized or commercialized services, such as more money flowing to improving health and education facilities and better access to desperately needed health and education services. For developing countries that have decided to liberalize access to their markets for health and education services, a secondary question is whether GATS commitments in health and education services will assist them to obtain the net benefits of trade liberalization. Many states are successfully liberalizing their regimes relating to health and education services without making GATS commitments to do so. In the current round of GATS negotiations there is little pressure on developing countries to adopt stronger commitments in these areas from WTO Members. At the same time, there is some uncertainty regarding both the scope and nature of GATS obligations and the trade benefits associated with making specific GATS commitments in these sectors. In this context, many developing countries are understandably reluctant to undertake commitments that would limit their future policy options. This paper sketches the outlines of the debate on the liberalization of public services in developing countries focusing on health and education. It then provides a brief overview of the relatively limited existing GATS commitments in these sectors and the low priority attached to improving commitments in the current negotiations. The final sections of the paper look at why there is so little interest in GATS commitments among WTO Members and suggest some possible strategies for making the GATS more relevant to improving the regulation and delivery of health and education services in developing countries.