Business Recorder | 14 October 2014
Government to move carefully in approving US-proposed BIT
The government has decided to move carefully in respect to approving the new Bilateral Investment Treaty (BIT) template proposed by the United States as it contains clauses with far-reaching negative implications for the economy of Pakistan, reliable sources in the Board of Investment (BoI) told this correspondent. Pakistan is not in a hurry and will give a formal response to the US only after thoroughly studying the new template that Washington shared last year with Islamabad, an official of BoI stated on condition of anonymity.
The new template is very harsh on certain counts and the BoI is carefully moving forward but has no objection, in principle, to a Pak-US BIT, the official added. While talking to Business Recorder, former finance minister Saleem Mandviwalla said the present government was clueless about how to take the negotiation forward with the US on BIT.
Reacting to recent statement of Finance Minister Ishaq Dar in Washington that Pakistan is forming an inter-agency team to review the new BIT text with the US government and looks forward to its early conclusion, Mandviwalla said. "They have no idea what they are talking about."
Sources said that Defence, Ports and Shipping, Communication ministries, State Bank of Pakistan, Securities and Exchange Commission of Pakistan, National Highway Authority, Pakistan Engineering Council, PEMRA, FBR, PAEC, CAA and Maritime Security Agency are stakeholders that have expressed serious concern over some of the clauses of the US proposed BIT text.
Stakeholders are currently vetting the proposed draft within their ministries/departments and BOI is waiting for their comments/suggestions before finalising the proposals. The official said the US has proposed strict labour and environmental standards in fresh template, which the country will have to adopt once the treaty is signed. Both countries started negotiating the investment treaty about 10 years ago. Frequent collapse of talks in the past is attributed to the US insistence on inclusion of certain clauses that deal with investment in defence programmes as well as the demand for prior notification of changes being introduced to any law that could hurt US investments. There is also a difference of opinion on the mode of arbitration in case of a business dispute.
Sources maintained that Pakistan will hold more in- depth discussions with the US on the joint plan at the Trade and Investment Framework Agreement (TIFA) Council after completion of consultation process with domestic stakeholders. The United States and Pakistan signed a TIFA in 2003, establishing a joint council designed to facilitate discussions on bilateral issues.