US pushing Pakistan to accept draft of investment treaty
The News International (Pakistan) | 3 September 2008
US pushing Pakistan to accept draft of investment treaty
By Mehtab Haider
ISLAMABAD: The US administration is pushing Pakistan to accept newly placed draft of Bilateral Investment Treaty (BIT), which has been signed only by few backward African countries, The News has learnt.
If the conditions attached by the USA for inking BIT are the best in the world, why many developed and non-developed countries are reluctant to buy it, official sources questioned who are dealing with negotiation process in this regard.
“Actually, by inking BIT agreement with Islamabad, USA wants to pursue China and India for signing the same document with the argument that without bilateral investment treaty, there will be no investment of US companies on those destinations,” added the official sources.
With new draft of BIT, USA has so far signed this agreement with few countries such as Rwanda, Mozambique, Uruguay, El Salvador etc.
The Bush Administration is pursuing China and India for inking BIT agreement and if Islamabad moves ahead, Washington can easily sell the deal to its other neighbours.
Talks on BIT had been stalled after the Bush visit to Islamabad during 2006. After the PPP led government assumed power the US administration has decided to resume talks on BIT but schedule for holding consultative meetings has not yet been finalised.
As US government exerts pressure on Pakistan to ink BIT under its own rules of game, Pakistan showed reluctance to accommodate demands placed by the USA during the negotiations process.
The Bush Administration, the sources said, asked Islamabad to accept its version on major issues including reinvestment, arbitration mechanism, intellectual property rights, and granting MFN status.
The US authorities gave a 200-page BIT document to Pakistani counterparts in the third round of parleys for finalizing BIT.
The US is putting more pressure on grounds of violation of intellectual property rights and the government is considering to accept it in such a way that only investing companies in Pakistan can raise the issues of IPRs, the sources added.
“The BIT does not mean that Pakistan will start receiving substantial investment and the PPP government should move ahead carefully in this regard,” a senior official said and added otherwise, it could endanger Pakistan’s interest in future.
The sources said different countries want BIT with retrospective effect which means the government will provide protection to all those which were made in the past.
The sources said there is need to bring changes in the definition of investment, retroactive application, MFN treatment, and arbitration mechanism for inking deals on BIT with different countries.
According to a World Bank economist, the US tries to convince other countries for multilateralism but in its own case tries to ink trade and investment deals bilaterally in accordance with its own rules of the game.
For dispute resolution, Pakistan in the past proposed to exhaust local options first available in Pakistan. If any investor is still not satisfied then the government is proposing to approach World Bank’s institution the International Centre for Settlement of Investors Dispute (ICSID), which was established in 1965 to resolve lingering issues.
Another option is UN Commission on International Trade Laws (UNCITRAL) for referring dispute settlement, the sources added. It seems that the government is more inclined towards ICSID because it is an institutional body with clear guidelines of charges of fee in this regard.
Pakistan has so far signed 46 bilateral investment treaties with different countries. The first BIT was signed with Germany in 1959. But most of the agreements in this regard were signed without well-thought out strategy and some times it creates difficulty for the government while confronting issues with other countries.
When official spokesman of US embassy in Islamabad was contacted to get exact number of countries with which the USA signed new draft of BIT agreement so far, he said that they would have to seek this information from Washington so he could not give information just right now. But he promised to give detailed response in this regard very soon.
