The EU market shaping health
4.7 Trade and investment
The EU is a powerful actor in international trade, aiming to represent its Member States with a single voice in trade and investment negotiations and disputes.
The EU has exclusive competence in almost all areas to conduct international negotiations on trade deals, although some practical difficulties remain regarding the sometimes blurred dividing line between international trade and “domestic”
EU policy areas, including health. The EU’s current and future trade and investment commitments remain intimately connected to the ways in which health service providers, medical professionals, patient mobility and products affecting public health – from food, alcohol and tobacco to pharmaceuticals and medical devices – are regulated within the EU. Awareness of the EU’s trade policies is therefore vital for health officials within the EU and at Member State level and dialogue between trade and health officials should be promoted.
The EU is party to many different trade and investment agreements that have implications for health policies. Of the multilateral agreements governed by the World Trade Organization, the most significant for health are the General Agreement on Tariffs and Trade, which governs trade in goods; the General Agreement on Trade in Services, which permits members including the EU to make commitments to liberalize their services markets; the trade-related aspects of the Intellectual Property Rights (TRIPS) agreement, which notably affects patents and access to medicines and has been the subject of much dispute; the Agreement on the Application of Sanitary and Phytosanitary Measures, which addresses the application of food safety and animal and plant health standards with a view to identifying protectionist measures; and the Agreement on Technical
Barriers to Trade, which focuses on the identification of regulatory barriers to trade and has been central to a number of tobacco-related trade disputes.
Outside these multilateral negotiations, the EU has concluded many regional and bilateral trade and investment agreements. These agreements tend to mirror the breadth of the existing multilateral agreements and frequently go beyond them in terms of the level of trade liberalization, intellectual property protections or investor protections that they contain.
Trade agreements and institutions present opportunities to govern the trade of goods and services in ways which can affect health. How this plays out in practice depends not just on the framing of health within these institutions and laws, but also on the intent of the actors operating within them. The extent to which the global trading system impacts health depends upon the ways in which political actors use the system and the goals that they pursue – which may or may not be health goals.
To date, the EU has shown considerable reluctance to make liberalizing commitments directly affecting health services under its trade agreements and has striven to balance access to medicines with protecting its pharmaceutical industry in TRIPS-related discussions and debates. This reflects both the unease of Member States regarding EU policies that could destabilize their healthcare systems, and the concerns of the public and public advocacy groups surrounding health access. Under the TFEU, the EU’s trade policy became part of the ordinary legislative procedure, granting an expanded role for the European Parliament in trade policy decision-making. Nevertheless, any agreement in health services
“where these agreements risk seriously disturbing the national organization of such services and prejudicing the responsibility of Member States to deliver them” requires unanimous approval from Member States.
Public health advocates have strongly criticized what they view as a lack of transparency and attention to public interest issues in recent trade negotiations.
In the case of the Anti-Counterfeiting Trade Agreement (ACTA), an intellectual property agreement negotiated among the EU, United States and nine other industrialized states, these concerns were shared by the European Parliament, which voted against the legislation by 478 votes to 39, with 165 MEPs abstaining.
This vote reflected “unprecedented direct lobbying by thousands of EU citizens who called on it to reject ACTA, in street demonstrations, e-mails to MEPs and calls to their offices”. Similar concerns have been raised by advocacy groups regarding the now defunct Transatlantic Trade and Investment Partnership, particularly in regard to proposals to include an Investor-State Dispute Settlement (ISDS) procedure – a type of redress mechanism that allows firms to initiate
international commercial arbitration directly against governments in response to policies perceived as unfair, unreasonable or disproportionate.109
The EU and its Member States can also be the targets of trade or investment disputes. Firms have used these mechanisms to challenge the regulations in a number of health-related areas, including chemicals, medicines, the environment and tobacco. The willingness of the tobacco industry to utilize these mechanisms against states regulating tobacco product packaging may well have implications for current and future tobacco control legislation within the EU.
109 For ISDS and health in general, see Jarman H (2014). The politics of trade and tobacco control. London:
Palgrave Macmillan. For more detail on the EU dimensions, see Jarman H, Koivusalo M (2017). “Trade and health in the European Union”, in Hervey TK, Young C & Bishop L (eds.). Research Handbook on EU Health Law and Policy. Cheltenham: Edward Elgar Publishing, pp. 429–52. For TTIP in particular, see Jarman H (2014). Public health and the Transatlantic Trade and Investment Partnership. European Journal of Public Health, 24(2):181.
Box 4.3 Trade and Brexit
Separating the economy of the United Kingdom from the EU’s single market is extremely difficult.
For decades the UK has contributed to the direction of EU trade policy and formed part of the market for goods, services and investment from other Member States. The deep political divides in the UK, of which Brexit is a symptom, are likely to last a generation and will continue to make it difficult for EU Member States to define their trading relationship with the UK going forward.
Any economic disruption from Brexit comes with health consequences for Europeans as well as for the British, e.g. in terms of lost revenue, employment or income. In the short to medium term, Brexit (particularly under a “No Deal” scenario) is likely to mean disruptions in trade with effects on health, e.g. interruptions to the supply chains for medicines and medical devices. Brexit planning has already caused some distortions in the market in these areas.
In the long term, the UK’s departure means that the EU is losing one of the strongest voices in the bloc in favour of free trade and market liberalization. The internal politics of EU trade is likely to change as a result. It is possible that this could actually have a positive impact on health policy, with reduced pressure to liberalize health services through trade negotiations, for example.
However, the balance of politics within the EU-27 could still favour populists who oppose both free trade and health, potentially jeopardizing any attempts to balance economic growth with promoting high health standards.a
a Jarman H. European Union Trade Policy in the Wake of the Brexit Vote. 162-176 in Greer SL and Laible J, eds.
The European Union After Brexit. Manchester University Press, 2020.
4.8 Conclusion
The internal market is, over time, the most demonstrably important face of the EU. It undergirds the wide variety of important policies we have discussed here. But to dismiss the EU as a simple market-making machine is a mistake.
Rather, note the wide variety of policies that are made that have important health dimensions and are grounded in internal market law. They include a number of policies with potential value for health systems, such as HTA and workforce, as well as policies which help citizens, such as social security mobility, and ones whose positive contribution is largely unclear, such as the European court rulings on patient mobility or the application of state aids law. If we widen the perspective still further, we note that many broader policies affecting health were for a long time made as part of the single market, since setting regulatory floors often involves raising regulatory standards.
For better or for worse, the regulation of the single internal market is at the core of EU powers. That means that internal market principles – freedom of movement and nondiscrimination – are powerful bases for action that courts will support. It means that much of the EU’s positive effect on health is through regulations grounded in the internal market. The question for health is: how do we ensure that the second face of EU health policy smiles on valuable health policies and objectives?