. /.RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/W/56
20 October 1998
(98-4049)
Council for Trade in Services Original:  English
COMMUNICATIOM FROM THE UNITED STATES
Health and Social Services
The attached paper has been received from the delegation of the United States with the
request that it be circulated to the Members of th e Council for Trade in Services to assist in the
discussion on Health Services in the context of the information exchange programme.
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GROWTH OUTLOOK AND BENEFITS OF LIBERALIZATION
Liberalization of trade in health and social services  provides a wide array of choices and
lower prices for consumers of those services.  These are vital to all economies, including the emerging
economies, which, given resource constraints,  must find the most efficient ways to guarantee their
citizens access to a wide range of healthcare and related services.   Countries such as Mexico, Indiaand China also are increasingly active in providing such services.
U.S. healthcare companies provide services to foreign patients both cross-border and through
affiliates established in foreign markets.  According to official U.S. trade data, U.S. cross-border
exports of healthcare services totaled $ 872 million in 1996, consisting largely of  the treatment of
foreign nationals in the U.S. by U.S. healthcare providers.   U.S. cross-border imports of health care
services amounted to $ 550 million in 1996.  Revenues from foreign-based affiliates of U.S.healthcare services amounted to $ 469 million in 1995; revenues from foreign affiliates in the U.S.
market reached $ 1.8 billion during the same period.   These figures may not fully reflect growth in
the sector, especially for new services or services provided electronically.
POSSIBLE AREAS FOR FUTURE DISCUSSION AND WORK
o While keeping in mind the need for governments to oversee and regulate this sector,  it would
be useful to take a closer look at issues such as government intervention and regulation for
their impact on the ability of WTO members to provide these services on a commercial basis.
o Our discussions provide WTO members an opportunity to review their commitments in this
sector which by-and-large are not as comprehensive or deep as in other sectors.  For various
reasons, including increased competition in the sector, new types of services, and new
methods of supplying services, this sector is likely to grow in importance as a component of
world trade.
o We also will have to consider whether the cu rrent method of classify ing commitments in this
sector is adequate to capture current and evolving commercial opportunities.  For example,
some WTO members may interpret W/120 as limiting health-related and social services to
services with a component of institutional nursing  (“chiefly in-patient”) and not includingS/C/W/56
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other commercial opportunities, such as out-patient facilities, clinics, and healthcare provided
in  the home.
o The U.S. is of the view that commercial o pportunities exist along the entire spectrum of
health and social care facilities, including hospitals, outpatient facilities, clinics, nursinghomes, assisted living arrangements,  and services provided in the home;  and that existing
and new commitments should reflect this reality.
o WTO members  should review  remaining barriers in mode 3 (commercial presence),
including economic needs tests, equity ceilings and joint venture requirements, to see if they
serve national interests, especially to assist in containing healthcare costs.
o There  is great potential for cross-border provision of health and related services, including
remote diagnosis and treatment.  This was not necessarily obvious during the Uruguay Round
of negotiations (Secretariat paper, pg. 16, para. 52) but it is a commercial reality now.  This is
an area where WTO members could consider additional liberalization if they have not already
recorded commitments for this mode of supply.
U.S. REGIME
In the Uruguay Round, the United States included commitments for "hospital and other health
care facilities - direct ownership and management and operation by contract of such facilities on a 'forfee' basis."  The U.S. provides full market access and national treatment for consumption abroad
although government reimbursement of expenses is limited to U.S. facilities.  The U.S. commitments
provide for the establishment of commercial presence with the possibility of certain needs-based
quantitative restrictions; two U.S. states also apply special requirements for commercial presence.
Mode 1 cross-border is unbound for reasons of techni cal feasibility.  Movement of persons is bound
by the horizontal provisions of the schedule.
In the U.S., health care facilities operated on a for fee basis are licensed by state and/or local
governments.
REMARKS ON SECRETARIAT PAPER/QUESTIONS FOR DISCUSSION
o page 1, para. 3: We agree with Secretariat’s characterization that health care services are
likely to grow as a component of national and international trade.
o page 7, para. 27: We do not believe that it is appropriate to discuss policy interventions for
migration of personnel in this forum, as migration is not addressed by WTO commitments.
o page 15, issues for discussion: We believe that the questions are an excellent starting point
and a further vetting of these issues would be useful for making progress on regulatory
arrangements and recognition problems.
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