AAJ News - 08 March 2022

TIFA talks: US raises taxation issues with Pakistan

The United States on Monday raised issues related to taxation, transparency, good governance and intellectual property rights during discussion in Trade and Investment Framework Agreement (TIFA).

Talking to a select group of media, virtually, Christopher Wilson serving as Assistant US Trade Representative (AUSTR) for South and Central Asia representing the US in talks with Pakistan said that the meeting was meant to re-launch TIFA and reinforce trade relationship between the United States and Pakistan.

He said the US was looking at ways to expand the relationship and solve problems, hoping to sustain these engagements. He hoped there would be engagement at his level or Trade Minister’s levels later this year.

He said, both sides have agreed that trade relationship hasn’t achieved full potential as total bilateral trade is $ 8 billion a year which is not much for the economy of the size of the US and Pakistan. “We should expand bilateral relationship for the benefit of both economies.

The focus of Biden Administration is that trade should be to the benefit of workers,” he said.

To a question he said: “We really focused on trade and economic issues and political dimension of the relationship did not come under discussion and there was no need to discuss such things as there were issues related to solving problems and expanding an investment relationship.”

Answering a query related to Bilateral Investment Treaty (BIT), he replied that the issue of BIT did not come under discussion and there are a number of reasons for that, adding that at the current time the Biden Administration is not pursuing BIT with any of its trade partners so for that reason the status of previous BIT did not come into discussions on Monday.

He said they discussed investment-related issues in Pakistan, adding: “US side was able to reflect on the kind of policies related to taxation, transparency, good governance, intellectual property rights and stronger investment climate and we received very useful information from the Pakistani government with respect to investment and priority areas including renewable energy. We definitely discussed the dimension of investment relationship in a context different from the BIT,” he added.

He further stated that a broad range of issues like intellectual property rights, including issues related to piracy of copyright materials and trademark material came under discussion.

“We received information from the government about its priority like legal framework, i.e., property, enforcement,” he stated and that the US expressed its concerns in specific areas and one in particular which was highlighted is extensive use of pirated software including by government agencies.

The US government urged the authorities to take action on the use of pirated software particularly in the government computer systems which should be fully licensed.

In reply to another question about Pakistan’s relations with Russia, he said Pakistan’s relationship with Russia did not enter into the discussion as both sides strictly restricted their discussion to bilateral trade between the US and Pakistan.

He said, Department of State issued a statement with respect to Russia in which the latter urged the international community to show a strong response including economically to the action Russia has taken in Ukraine over a couple of past weeks.

Answering a question, he said, his office deals with trade and investment not sanctions as this is the domain of US Department of State and Treasury.

“The issue related to sanctions on Pakistan due to Russia did not come under discussion at TIFA meeting,” he continued.

To a question, he said that FATF is a high profile issue and sanction issue did not come under discussion.

Wilson maintained that he did not discuss the IMF program directly but in terms of investment, IMF suggestions and US government proposals are related to longer term investment relations.

Replying to a question, about Pakistan taxation policy, he said, there is general lack of predictability in the application of taxes on corporate sector. There are often problems in terms of delays in rebate and refunds of taxes that are overpaid.

“The concern is frequent changes in tax arrangement in Pakistan which creates confusion in investors,” he concluded.