Free trade for better health

Wealth is important to health because it allows people to buy improvements in living conditions. Prosperity brings with it decent sanitation, clean water and clean, efficient domestic fuels. A lack of these necessities is directly responsible for a large proportion of mortality and morbidity in the world’s poorest countries. People in wealthier countries, meanwhile, have the resources to ensure that they are well-nourished and live in hygienic conditions. This is why life expectancies have been on the rise in these regions since modern economic growth began at the time of the Industrial Revolution.

The second reason why trade improves health relates to so-called ‘technology transfer’. Before the late 19th Century, cross-border trade was restricted to a handful of nations. Today, all countries trade internationally, with lower-income countries recently seeing their share of global trade increasing significantly.

As a result of this growing international exchange of goods and services, the health-related knowledge and technologies which originated in rich countries have been disseminated to the rest of the world. In the years following the Second World War, the global spread of drugs such as penicillin – a medicine discovered and developed in Britain – had a massive impact on mortality in many poor countries.

Similarly, the spread of other technologies developed in rich countries, such as DDT, have significantly reduced the incidence of malaria worldwide. Some economists believe that the spread of technology, facilitated by free trade, is the most important reason why life expectancies have been steadily rising in most parts of the world for the last 50 years.

Nevertheless, some have claimed that trade liberalisation and especially agreements such as those administered by the World Trade Organisation (WTO)are harmful to the poor. Such claims are not borne out by the evidence.

One of the WTO agreements, the General Agreement on Trade in Services (GATS) has been accused of undermining sovereignty and requiring the privatisation of health services, but the reality is that the GATS allows signatories a great deal of flexibility. In addition, like all trade agreements, the GATS is voluntary and relies on mutual recognition, not coercion. Moreover, the GATS may act as a significant spur to technology and knowledge transfer, because it encourages the adoption
of beneficial things such as telemedicine, medical tourism and proper standards for health insurance. It may also help overcome the so-called ‘brain drain’ of medical personnel from South to North, by encouraging better career opportunities at home.

Another WTO agreement, the Trade Related aspects of Intellectual Property Rights (TRIPS) agreement, has been accused of – among other things – holding up knowledge transfer from “North” to “South”. In fact, the opposite is true. India has recently made its domestic legislation compliant with TRIPS, and the result has been a massive influx of foreign Research and Development expertise and capital.

The early indications are that this TRIPS-compliant law will provide an environment in which India will develop a range of new drugs for the diseases which affect its population.

Meanwhile, the various Free Trade Agreements (FTAs) signed between the United States and bilateral partners likewise stand accused of delaying technology transfer by strengthening intellectual property protection. The truth is that most of these FTAs retain the flexibilities of TRIPS, and binding ‘side letters’ exist for the others.

But by protecting intellectual property, these FTAs allow local manufacturers to develop their own products with a far lower threat of profit-eroding piracy. Likewise, multinational companies will be reassured that their property will be safe in a signatory country, resulting in greater foreign investment and technology transfer.

Free trade has a positive impact on health, so it is reprehensible that governments continue to impose restrictions on trade. It is particularly horrific that drugs and medical devices continue to be subject to a range of import levies in the majority of lower-income countries, with the result that many sick people are priced out of treatment. Removing these unconscionable restrictions on trade must be a priority for trade negotiators concerned about the health of the poorest.

In addition, there is a strong moral case for prioritising the removal of tariffs on technologies that enable the supply of clean water and clean energy. Dirty water and fuels are two of the biggest causes of disease in lower income countries – resulting in over 4 million deaths per year, mostly of women and children. The removal of these levies can and should be done as soon as possible. If unilateral removal is not politically acceptable then they should be removed within the context of negotiations on access to environmental goods and services in the current multilateral Doha round.

Finally, there is an absolute moral imperative to remove restrictions on trade in food, because malnutrition remains a major problem in many parts of the world. This applies especially to the many nations in Africa which maintain harmful tariffs on the agricultural products of neighbouring states.