Trade agreements and health in developing countries.

Politicians champion free trade for bringing an era of high and stable growth, although the evidence supporting such claims is ambiguous. Studies that associate increases in trade with increases in gross domestic product often leave open questions of causality: high growth, the result for instance of strong industrial policies, typically leads to more trade. China and India's growth spurts preceded trade liberalisation. A study by UN Development Programme showed little relation between trade liberalisation and growth. 1 But trade liberalisation is associated with growing inequality in most countries of the world (although there are other contributing factors). Especially in conjunction with liberalisation in capital and fi nancial markets, trade liberalisation has brought unprecedented instability, even in countries with otherwise sound economic policies. Moreover, trade liberalisation has deprived developing countries, which are heavily dependent on tariff s, of needed revenues. The resulting combination of increases in poverty and social stress with decreased public spending is a prescription for decreases in health status. Even a relatively short episode of malnutrition from a severe downturn, of the kind that became all too common during the global fi nancial crisis of 1997–98, can have lifelong consequences. 2 But perhaps the most adverse consequences for health arise from provisions in trade agreements that are designed to restrict access to generic medicines. These include the TRIPS (Agreement on Trade-Related Aspects of Intellectual Property) provisions of the Uruguay Round Agreement of 1994 (as discussed by Richard Smith and colleagues in a paper in this Series 3) and the data exclusivity provisions that have become a standard part of US 4 and European 5 bilateral trade agreements. The fundamental problem with the intellectual property (patent) system is simple: it is based on restricting the use of knowledge. 6 There is no extra cost associated with an additional person gaining the benefi ts of knowledge. Restricting knowledge is thus ineffi cient, but the patent system also grants (temporary) monopoly power, which gives rise to enormous economic ineffi ciencies. In the USA, high prices make drugs particularly costly for people without insurance; in the developing world, people cannot aff ord brand-name drugs, but might be able to aff ord generics. Generic versions of fi rst-line AIDS drugs, for instance, have reduced the cost of treatment by 99% since 2000, from US$10 000 to $130 per year. 7 Advocates of intellectual property argue that such protection is necessary to provide incentives …