Remove Medical Tariffs

Roger Bate & James Driscoll | 27 Feb 2006
Wall Street Journal Asia

Anyone in Asia who cares about the health of the world's poor should warmly endorse the proposal to remove import tariffs on essential medicines that is being tabled at the World Trade Organization today by the U.S., Singaporean and Swiss governments.

Provision of health care in Asia and other developing regions is not keeping pace with rapid economic growth -- and one of the main reasons is regressive and obsolete tariffs. Despite growing foreign-exchange surpluses and the highest rates of HIV infections in the region, India, China and Thailand in particular continue to impose inexcusable trade barriers to the importation of life-saving medications, including the drugs needed to treat AIDS sufferers. Average import tariffs on medications and other medical devices range from 16% in India, to 11% in Thailand and 6.5% in China.

These raise relatively little revenue. In China, for example, the income from such tariffs would fund less than 0.1% of the national health-care budget. Yet they inflate the cost of many medical products by more than 10% in China, hurting the poor most by denying them access to medications essential to life, health and productivity. To build hospitals, medical schools, clinics and health services, developing countries need to import medical products and technology.

Tariffs delay improvements to vital healthcare infrastructure and increase their cost. That's why South Africa and Kenya have wisely eliminated import tariffs on AIDS drugs and more than 30 developed nations, including the U.S., Switzerland, Japan, Canada, and the member states of the European Union, have implemented a zero tariff policy on all medical products. China, India and Thailand should follow suit and reap the benefits of doing.

For Chinese President Hu Jintao and Indian Prime Minister Manmohan Singh, abolishing tariffs on medical products would bring especially great rewards. Particularly in China's case, it could help address trade imbalances while simultaneously improving the health care of its citizens and so boosting the popularity of both governments. Decisive action would pressure other rapidly developing countries, like Mexico and Brazil, to follow their sensible lead.

Better still, these countries could go one step further and also abolish the sales taxes that pose a further obstacle to the affordable distribution of medical products. These currently range from 4% in India to 7% in Thailand and 17% in China. For many trade negotiators medical products have the same priority and status as bananas, boom boxes, or whiskey. Everything is reduced to a trading chit regardless of whether it is essential to human health or not.

If we are to improve world health and protect against infectious disease, a paradigm change in trade policy is critical. Just as we recognize that extraordinary steps are necessary to curb the spread of nuclear weapons and bioterrorism, the threat of deadly epidemics deserves special measures. The 1918 flu epidemic killed more people than either world war, while AIDS has killed far people more than terrorists. Widespread international commerce and jet travel increase our vulnerability to infectious diseases, while the threat posed by deadly diseases such as SARS or avian flu make the health of all nations inescapably interdependent. A

s the 2003 SARS outbreak that began in China showed, neglect of health care in one country can have global consequences. U.S. President George W. Bush has already shown commendable leadership in providing AIDS treatment to poorer countries. Now he has a chance to further improve on this impressive record by spearheading trade diplomacy to end medical tariffs world-wide. He could start by raising the issue in India, where President Bush arrives Wednesday. And if Prime Minister Singh and President Hu respond to his efforts, then they can enhance their reputations as world leaders as they work together to help protect humanity from the scourge of disease and make live-saving medications available to the poor.

Mr. Driscoll, a long time AIDS activist, is an adviser to the China Foundation, and has served as a Bush appointee to the Presidential Advisory Council on HIV-AIDS. Mr. Bate is resident fellow at the American Enterprise Institute and coauthor of a new paper published by the AEI-Brookings Joint Center in Washington, D.C. on tariffs and access to medicines (