[afro-nets] Tariffs on medicine

[Philip Coticelli" <<pcoticelli@gmail.com>>]

Tariffs on medicine
-------------------

A Trade Opportunity for China and America

By Roger Bate
Co-Authored by Jim Driscoll
http://www.tcsdaily.com/article.aspx?id=041406E

Bush administration Commerce Secretary Carlos Gutierrez has
warned that the US is running out of patience waiting for China
to take effective steps to do its part to reduce the ballooning
US$ 200+ billion trade deficit with China. Recently, the US,
Switzerland, and Singapore proposed a small but highly construc-
tive remedy China could implement immediately: eliminate tariffs
on medicines and medical products. Chinese President Hu Jintao's
visit to Washington DC next week affords President Bush a signal
opportunity to call upon China to take this urgently needed ac-
tion.

The US, the EU, Japan, Canada and other developed countries
eliminated these tariff impediments to healthcare years ago.
With their large trade surpluses China and other rapidly devel-
oping Asian states can easily afford elimination; with their
huge unmet healthcare needs maintaining medical tariffs is
folly.

Provision of healthcare in China and Asia has failed to keep
pace with economic growth and environmental strain. SARS, bur-
geoning HIV rates, and the threat of avian flu make the region's
relatively poor healthcare painfully evident and urgent. Despite
growing foreign exchange surpluses, the Asian countries with the
largest HIV epidemics, still erect high tariff barriers to AIDS
drugs, as well as to other medications and medical products --
India (16 percent), China ( 6.5 percent) and Thailand (11 per-
cent). Then they pile VAT and local sales taxes on top their
tariffs, (India 5 percent, China 17 percent, and Thailand 7 per-
cent).

Compounding the damage, collection of tariffs creates bureau-
cratic obstacles to treatment access and provides ample opportu-
nities for corruption at ports and at other borders where tar-
iffs may be collected. Health charities privately claim that
their donated supplies often sit on the docks of China and other
Asian countries spoiling while kickbacks of as little as $20 are
demanded. Removal of tariffs will not stop corruption but should
make it less routine and harder to sustain.

To build hospitals, medical schools, clinics and health ser-
vices, China and the rest of Asia need to import advanced US
medical products and technology. Tariffs delay improvements in
Asia's healthcare infrastructure and increase their cost.
China's medical tariffs can fund less than one tenth of one per-
cent of their national healthcare budget; yet they inflate the
cost of many medical products by more than ten percent.

Medical tariffs are regressive, detrimental, and obsolete. They
hurt the poor most, denying them access to medications essential
to life, health, and productivity. For rapidly developing coun-
tries with balance of payments surpluses, tariff barriers to
healthcare access are protectionism at its inexcusable worst.
Such barriers foster global trade imbalances and damage public
health solely to benefit selfish special interests. China and
other Asian countries should throw their doors wide open to the
best available medical products and technology by joining the
US, EU, and Japan with a zero-tariffs policy.

For President Hu Jintao abolishing tariffs on medical products
would be an act of wise statesmanship with great rewards. It
would help remedy trade imbalances with the US, and simultane-
ously improve healthcare for the Chinese people. Hu's decisive
action would pressure other rapidly developing countries, like
India, Thailand, Mexico, Russia, and Brazil, to follow China's
lead.

Globalization provides great economic benefits but to similarly
improve world health and protection against infectious disease,
we need global trade policies that give priority to healthcare
needs. America and China have a unique opportunity to help cor-
rect their trade imbalances and to lead all nations toward bet-
ter healthcare by championing zero tariffs on medicines and
medical products. If Presidents Bush and Hu Jintao can together
seize this opportunity, all humanity will benefit from their
statesmanship.

*James Driscoll, Ph.D., a long time AIDS activist, is an advisor
to the China Foundation, and has served as a Bush appointee to
the Presidential Advisory Council on HIV-AIDS. Roger Bate PhD,
is a resident fellow of the American Enterprise Institute, a Di-
rector of health advocacy group Africa Fighting Malaria and lead
author of the paper 'Still Taxed To Death'
http://www.aei-brookings.org/publications/abstract.php?pid=930
published by the AEI-Brookings Joint Center.