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Issue # 1417      1 July 2009

Pacific trade and the impact on health services

ANF fact sheet

Everyone has a right to better health and appropriate health care. Around the Pacific, governments should provide services for the immediate and long-term care of citizens (e.g. vaccine programs; public health efforts against malaria or dengue; safe housing; clean water supply, hospitals and health clinics and other services). But access to essential service like health is affected by the trade policies of the government of the day.

Australia, New Zealand and Pacific member states of the Pacific Islands Forum are preparing to negotiate a regional free trade agreement, through the Pacific Agreement on Closer Economic Relations (PACER). Regional free trade agreements like PACER-Plus focus not only on trade in manufactured or agricultural goods, but also trade in services like health or education.

What will this agreement mean for people living in the Pacific, when it comes to their health?

Why? A key issue for the PACER-Plus trade negotiations will be whether Pacific island governments can ensure that all citizens have adequate and equitable access to health care. Governments must not trade away control of key service sectors including health, education, land, tourism and intellectual property.

Who? International trade agreements like the World Trade Organisation (WTO) General Agreement on Trade in Services (GATS) include labour mobility as a service, calling it “the temporary movement of natural persons”. Including labour mobility as a service in free trade agreements will affect the number of skilled health workers who leave their country to work overseas, through temporary labour mobility programs as well as permanent migration.

Where? Developed countries like Australia and New Zealand have shortages of trained health professionals like doctors and nurses. With increased labour mobility, Pacific countries can lose their skilled health workers overseas.

Better health is central to human happiness and well-being. It also makes an important contribution to economic development, as healthy populations live longer, are more productive, and save more. Many factors influence health status and a country’s ability to provide quality health services. One key factor in ensuring that health services meet the needs of the people is whether the government can set the rules for the entire health system.

Gov’t responsibility

The provision and maintenance of health services is the overall responsibility of government. Health care advances are invariably products of government policy, regulation and action.

Governments should supply the health training of nurses and doctors, basic infrastructure like hospitals and clinics. Investments in roads can improve access to health services; inflation targets can constrain health spending, especially in rural areas or outlying islands.

Accordingly all countries should guard against trade agreements that may undermine and restrict a democratically elected government’s capacity to develop policies which are in the best interests of the people it serves.

The PACS-Plus agreement is intended to liberalise trade in goods and services, reduce trade barriers (like tariffs or import duties) and require governments to enter into binding and enforceable trade agreements.

While the future benefits arising from PACER-Plus are uncertain, what is clear is that PACER-Plus will restrict a government’s ability to provide public services, including health care.

Trade and health services

PIC governments fund and provide the largest part of their country’s health services (normally around 80 to 90 percent). Governments generally fund these public services by through taxes and aid programs.

FTAs often reduce the ability of governments to raise revenue.

Recent reports such as a 2007 study by Nathan Associates for the Pacific Islands Forum Secretariat found that some Pacific countries may lose tens of millions of dollars each year from the reduction of tariffs or import duties. For example, Vanuatu stands to lose around 17 percent of its annual government revenue, as does Tonga, while Samoa and Kiribati stand to lose around 14 percent of their revenue. Even bigger countries like Fiji and PNG stand to lose more than $10 million each year.

Trade and public health

Trade policy can clash with public health policies. One example is the way some Pacific governments have mounted public health campaigns against poor nutrition, attempting to combat the increasing rates of diabetes, hypertension and other health impacts from obesity.

In its 2000 budget, the Fiji government led by the then Prime Minister Mahendra Chaudhry imposed a ban on imported mutton flaps through a prohibition order issued under s.102 of the Fair Trading Decree (1992), to address its concerns about the health consequences of poor quality sheep meat imports.

However, New Zealand threatened to take Fiji to the WTO disputes process, arguing that a ban on NZ products could be seen as effective trade discrimination in favour of the US, which also exports junk meat to Fiji.

Some FTAs allow countries to claim a trade restriction necessary to protect human health. But countries must prove that no other measures are possible and that the regulations do not constitute a “disguised restriction on international trade”. Pacific island nations do not have the human or financial resources to use the WTO disputes procedure, and will be under significant pressure under PACER-Plus not to use measures that will hinder Australian and New Zealand based exporters. For this reason, governments cannot easily use trade and taxation policy to protect public health, as noted in a study in the Bulletin of the World Health Organisation:

“Given recent initiatives towards trade liberalisation and the creation of the World Trade Organisation, tariffs or import bans may not serve as alternative measures to control consumption [of poor quality food]. This presents significant challenges to health policy-makers serving economically marginal populations and suggests that some population health concerns cannot be adequately addressed without awareness of the effects of global trade”.

Privatisation

A principle goal of FTAs is to require PICs to open up their service sectors, including health care, to foreign competition. Unless countries can negotiate restrictions for key public services, FTAs provide foreign firms with the same access and treatment as domestic firms and the government. While PACER-Plus promotes free market principles including enhanced market access by the private sector, it is unlikely that private sector interests will provide the full range of public health services that Pacific countries require, especially for rural populations.

Even where the private sector does invest in health care, it will only be those parts that deliver immediate and sustained profits. Such investment may have little concern for the health care needs of all members of the community, especially poor people living in the squatter settlements or villages. Overseas investors will prefer to provide services in the major urban centres, but will be less likely to invest in programs for the vast majority of people who live in outlying rural areas or outer islands.

Labour mobility

Skilled health professionals are very mobile and move from country to country. Whether on a temporary or permanent basis, nurses, doctors and health technicians move in search of career opportunities, training, higher wages or better employment conditions.

There is an international shortage of nurses and other health professionals, with many developed countries scanning the globe for potential employees. For example, in 2006 there were 652 doctors born in the Pacific working in Australia and New Zealand as well as 3,467 nurses and midwives from the Pacific.

While the benefits of remittances from overseas workers cannot be ignored, any increase in the “brain drain” of health professionals from Pacific countries to developed countries like Australia and New Zealand will worsen the shortages of health workers, with the consequent impact on the provision of care.

Find out more:

Joel Negin: “Australia and New Zealand’s contribution to Pacific Island worker brain drain”, Australia and New Zealand Journal of Public Health 32 (6) 2008.

John Connell: “The Migration of Skilled Health Workers; from the Pacific Islands to the World”, Asian and Pacific Migration Journal, 13, 2004.

M Evans et al: “Globalisation, Diet, and Health: An Example from Tonga”, Bulletin of the World Health Organisation 79:9 2001.

Australian Nursing Federation

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