The News | Tuesday, April 03, 2012
Pak-US investment treaty draft sent to cabinet
ISLAMABAD: The draft of the Pak-US Bilateral Investment Treaty (BIT) has been sent to the Pakistani cabinet for approval, official sources told The News on Monday.
“Pakistan and the United States will soon seal the long awaited BIT, as a number of differences of considerable importance between the two countries have been resolved,” a senior official said requesting anonymity.
Negotiations on Pak-US BIT are there since 2004, but it broke down in 2006 leaving five important issues unresolved that include scope and coverage, transparency and financial services, claims on behalf of enterprise, investment agreement and arbitration rules, he said.
After five-year deadlock, in February 2011 the Board of Investment (BOI) held two important digital video conferences with the US technical team and during June in same year it held discussions on unresolved issues. The board also held meetings with local key stakeholders including Ministry of Commerce, Industries, Finance, foreign affairs, Securities and Exchange Commission and the State Bank of Pakistan and they cleared it, the official said.
Official sources told The News that the draft treaty having concurrence and inputs from stake holding ministries has been vetted by the ministry of law, justice and parliamentary affairs and after getting ‘green signal’ from the Prime Minister Yousaf Raza Gillani in his capacity as the minister for BOI, it has been sent to the cabinet for approval, he said.
A BIT is set to open the door for Free Trade Agreement (FTA) between the two countries. It promises to enhance trade volume, generate more employment and spur business activities, he said.
Despite the fact Pakistan became a US ally in 2001 in its so-called war on terror; it has failed to attract sizeable investment from the US. It could not even gain easy access to the US markets. In contrast, the country suffered billions of dollars in terms of “lost” investment opportunities and social unrest.
Pakistan being the member of Vienna Convention and under its article 28, “retrospectivity” in international law is not applicable. This treaty between Pakistan and the US is “prospective” in nature and does not bind either party in relation to any act or fact that took place or any situation that ceased to exist before the date of entry into force of this treaty. No provision of this treaty shall be construed to impose any obligation on a party regarding its immigration measures. Local policy and law will prevail regarding movement of the senior management and personals, the official elaborated.
Sources said that the bilateral investment treaties essentially give confidence and safety to the investors that their property and investment will not be expropriated/ nationalized. In Pakistan, no foreign enterprise has ever been nationalized.
Under Pakistan’s liberal investment policy, all economic sectors are open to foreign direct investment, 100 per cent foreign equity is allowed, with foreign investment fully protected in the country, they said.
Sources said that in the event of an investment dispute, the claimant and the respondent should initially seek to resolve the dispute through consultation and negotiation, which may include the use of non-binding, third party procedures. The board of investment has proposed that within six-month time, the consultation should be completed before a claim is submitted to arbitration. —Israr Khan