US for early signing of BIT with Pakistan
Khaleej Times (Dubai)
US for early signing of BIT with Pakistan
FROM A CORRESPONDENT
12 August 2006
ISLAMABAD - The Bush administration has indicated its willingness to revise America’s investment procedures and to remove some of the harsh conditions to facilitate the signing of the Bilateral Investment Treaty (BIT) with Pakistan by September, 2006.
Informed sources said that a visiting senior level US delegation held talks with senior officials of the ministry of commerce and the Board of Investment (BoI) here yesterday for the early signing of BIT.
However, The US government is not prepared to sign a Free Trade Agreement (FTA) with Pakistan unless the BIT is inked, which would largely protect US investors and their investment in Pakistan. Sources said that the United States now looked considerate to drop some of the "harsh clauses" from the proposed draft, which in case of litigation largely favoured the US investors.
"But from our point of view the signing of FTA will greatly help Pakistan in terms of getting more market access and other benefits," a source said.
During Friday’s meeting, sources said, the US side was expected to offer a revised text of the BIT duly approved by the US Congress which could pave the way for the signing of a treaty between the two countries. Earlier, Pakistan was told that it was a final text and Pakistan should accept it as was accepted by Singapore, Uruguay and many other countries. Sources said the government has made it clear to the United States that Islamabad would not accept a "confidentiality agreement" in the proposed BIT text, which needed to be changed and made open so that the investors do not have apprehensions about it.
There was a clause introduced in the final text by the US government that talked about the "pre-establishment phase of investment" which Pakistan wanted to be excluded.
According to the proposed clause, if any problem arises for the US investor even when he is in the process of establishing his business in Pakistan, he should be compensated through a court of law. Pakistan pleaded that in a case when the business has not been set up a US investor could not be allowed to seek compensation and that it was an unjust provision which should be deleted from the final text.
Over and above Pakistan was being asked to accept an additional 20-page procedure for dispute resolution other than the one to be brought to the notice of the Washington-based International Centre for Settlement of Disputes (ICSID) to deal with arbitration clause in case of a dispute. Pakistan maintained that it would not accept any additional measure being forced by the Americans.
"The Bush government is applying NAFTA standards to sign BIT with Pakistan and this does not favour us," a source said adding that Canada and Mexico were suffering heavily by signing their BITs with the United States because of a number of harsh clauses.
These harsh clauses, he said, were now likely to be removed from the proposed BIT text. "Due to these clauses, the United States won all its cases against Canada and Mexico resulting in huge financial losses for both the countries," the source said adding that the United States generally carves the BIT with any country in such a manner that in case of an arbitration, interest of the US investors are always well protected.
Pakistan also wanted the United States to sign the proposed BIT by dropping its demand that in case of an arbitration only ICSID should be approached for a decision.
Pakistan is reluctant to accept the US demand regarding the dispute resolution mechanism and said some other international forums other than ICSID should also be considered. Islamabad wanted the proposed treaty to be made flexible and unilateral clauses being proposed be avoided for a workable bilateral investment treaty.
Negotiations which were previously held remained inconclusive due to the persistent US demand that in case of any arbitration the US investors should be allowed to approach the Washington-based ICSID.
