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United States, Pakistan Begin Bilateral Investment Treaty negotiations

Office of the US Trade Representative

Press Release

28 September 2004

United States, Pakistan Begin Bilateral Investment Treaty negotiations

WASHINGTON -U.S. Trade Representative Robert B. Zoellick and Pakistan Minister for Commerce Humayun Akhtar Khan announced today that their two countries would begin negotiations on a bilateral investment treaty (BIT). The two officials met at the conclusion of the first meeting of the Joint Council established by the U.S.-Pakistan Trade and Investment Framework Agreement (TIFA).

“I am very pleased to announce that discussions in the Joint Council have produced an agreement to start negotiating a U.S.-Pakistan BIT,” Zoellick said. “These agreements level the playing field and ensure that Americans are treated fairly. Pakistan’s 150 million people also offer a large and potentially valuable market for U.S. exporters and investors.

“At the same time, Pakistan and the United States are partners in combating global terrorism. A BIT based on the high standards contained in our model text can play an important role in strengthening Pakistan’s economy, so as to create new opportunities for exporters and investors in both economies and assist in meeting the economic conditions to counter terrorism.”

Zoellick and Minister Khan discussed a broad range of bilateral trade and investment issues during today’s meeting.

The TIFA, signed in June 2003, is an agreement that provides a forum for Pakistan and the United States to examine ways to expand bilateral trade and investment. Specifically the TIFA creates a Joint Council that considers a wide range of commercial issues and promotes principles that underpin the two nations’ trade and investment relationship.

U.S. goods exported to Pakistan in 2003 totaled $843 million, and included machinery, yarn and fabric, aircraft, electrical machinery, and fertilizers. U.S. goods exports also included $227 million in agricultural products, such as cotton, soybean oil, and planting seeds. U.S. goods imports from Pakistan in 2003 were $2.5 billion, and included knit apparel, miscellaneous textile products, cotton, yarn and fabric, woven apparel, and textile floor covering. U.S. imports of agricultural products from Pakistan were $36 million in 2003 and included rice, sugars, sweeteners, beverage bases and spices.


The United States recently completed a rewrite of the model text it has used in BIT negotiations over the past two decades. The new model text includes provisions developed by the Administration to address the investment negotiating objectives in the Trade Promotion Act of 2002. The new model BIT text is substantively similar to the investment chapters of the free trade agreements the United States has concluded during the past two years.

U.S. BITs level the playing field and ensure that U.S. investors are protected when they establish businesses in other countries. By safeguarding foreign subsidiaries of U.S. firms, BITs help promote new U.S. exports to the markets of BIT partners. BITs also protect the interests of average American investors, whose stock and bond portfolios often include stakes in foreign-invested firms.

Key investor protections in U.S. BITs include an obligation by a host country to treat investors from the other BIT party as favorably as the host treats its own investors or those from any other country. BIT parties must also permit the free and timely transfer of funds relating to an investment into or out of their territory. U.S. BITs also include international law standards requiring host countries to provide prompt, adequate, and effective compensation if they expropriate an investment. Finally, U.S. BITs give investors the right to seek binding international arbitration of claims that a host country government has violated a BIT obligation or certain types of contracts.

The United States currently has BITs in force with 39 countries, providing protection for thousands of U.S.-owned businesses and their U.S. investors. Earlier this month, the United States and Uruguay concluded negotiations on a BIT based on the new U.S. model text. As treaties, BITs require the advice and consent of the Senate before they can enter into force. Responsibility for BIT policy and negotiations is shared by the Office of the U.S. Trade Representative and the Department of State.

 source: US Trade Representative