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Hong Kong: While WTO negotiations currently seem stuck on the issue of agriculture there is still a lot that could be achieved over here in Hong Kong to improve human health.

In fact, one of the areas of the discussion may have some life left in it is the General Agreement in Trades in Services (GATS), which hopes to promote free trade in services.

The forces of protectionism and anti-capitalism have so far been remarkably successful in spinning the fraudulent line that the GATS will harm the poor. The claim is that the GATS allows foreign electricity and water providers to descend en masse upon poor countries in order to charge extortionate fees for their services, leading to social exclusion.

This line is being enthusiastically peddled by the International Trade Union movement, and has been swallowed by a range of developing countries.

The provision of water is a genuine health issue, because water-borne diseases are one of the major killers of children in lower-income countries. Over three million children die every year from cholera and other water-borne diarrhoeal disorders.

But the GATS is part of the answer to this silent health crisis, not part of the problem.

Currently, water resources in most less developed countries are owned and controlled by the state. If the management of water were removed from government's remit and placed with private providers and individuals, it is almost certain that access to high quality water would improve dramatically.

This is what happened in Chile and Guinea when they privatised their water. Access to piped drinking water in Chile rose from 27 per cent of the population in the 1970s to 99 per cent today. In Guinea, the number of urban-dwellers with access to clean water tripled from two in ten, to seven in ten by 2001.

This is no surprise. Private providers of water have strong incentives to deliver high quality water to consumers: they are bound to do so by contract and are incentivised by reputation - failure to provide water as agreed is subject to both legal sanctions and reduced demand from consumers.

Moreover, if suppliers own the water - or are able to purchase it - they have the means to increase supply to meet demand. Meanwhile, if consumers are compelled to pay for the water they use, they have incentives to limit demand.

By contrast, governments lack such incentives and tend to invest very little in extracting and cleaning water, leading to under-supply and poor quality water. And because un-priced water is seen by consumers to be a 'free' resource, they have little incentive to regulate its use and cut down on waste, which compound the inefficiencies of public ownership.

Seen from this angle, the GATS is a highly positive thing. It provides the framework through which private providers can begin to develop the crumbling water infrastructures of poorer countries. The same arguments also apply to electricity, the provision of which could cut disease by removing the need to use smokey fuels such as dried dung for domestic purposes.

But the GATS is good for health in other ways. It helps the spread and take-up of all kinds of health-related technologies. For instance, it promotes things like telemedicine, which uses the power of modern communications to allow surgeons to operate or advise on patients in completely different countries. This can allow the latest treatments and diagnostics to cheaply reach patients in rural areas.

It also permits the entry of foreign hospitals into other countries, which can provide more local job opportunities for doctors and nurses. This could overcome some of the 'brain drain' of doctors from the "South" to the "North". It might also spur local hospitals to improve their management techniques.

The GATS also covers 'medical tourism'. Ten years ago, levels of medical tourism were insignificant. Today, more than 200,000 patients every year visit Singapore - nearly half of them from the Middle East. It is estimated that in 2005 approximately half a million foreign patients will travel to India for medical care, whereas in 2002, the number was only 150,000.

Attracting foreign patients can also be a considerable source of foreign exchange for lower-income countries. Medical tourism could bring India as much as $2.2 billion per year by 2012, according to the Confederation of Indian Industry.

But there is a more important point in all this that has been entirely missed by the anti-GATS campaigners. No country on earth ever got rich through agriculture. Services are where the money is, and this is the direction to which poorer countries should aspire.

Rich OECD countries have seen the importance of agriculture to their economies decline year on year. African economies, on the other hand, are still dominated by agriculture. It is no surprise they remain poor.

The GATS is one way through which more service industries can set up in poorer countries, bringing with them jobs, quality products and prosperity. It should be embraced rather than demonised.

Anti-GATS campaigners seem to want people in poorer countries to remain in a quasi-medieval pastoral existence. Theirs is a reactionary, anti-progress message which trade negotiators here in Hong Kong would be wise to ignore.

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