ISLAMABAD, Oct 22: The United States has agreed to prepare a new "Specific Draft for Pakistan" to help sign an early Bilateral Investment Treaty (BIT). Informed sources told Dawn here on Friday that the Bush government has decided to do a special favour to Pakistan by deviating from a present US model treaty with a view to extensively accommodating Islamabad's point of view in the proposed BIT.

It has been decided that next round of negotiations will be held in England by the end of the year to achieve the objective of signing a separate agreement by the United States with Pakistan.

According to the minutes of the first Trade and Investment Framework Agreement (TIFA) Council meeting at Washington on September 28-30, 2004, the copy of which was also obtained by this correspondent, the delegation of the United States stated that the Draft tabled by them had been cleared by the US Congress and that most of the provisions were not open to negotiations.

During the meeting the secretary Board of Investment (BoI) stated that Pakistan had earlier sent a draft agreement through the Ministry of Foreign Affairs on which the United States has not given any response. The US delegation showed complete ignorance of any draft sent by Pakistan and requested to discuss the draft tabled by the United States.

The Pakistan delegation tabled new formulations in respect of various articles of the draft BIT. These proposals were noted by the delegation of the US and were returned at the end of the meeting. Pakistan pointed out that any agreed changes may also require consequential changes elsewhere in the text.

Pakistan proposed that in the case of Most Favoured Nation (MFN), an umbrella clause or a dispute resolution mechanism provided in another BIT should not be imported into this BIT through the Article 4 route.

Pakistan further proposed that transfers relating to covered investments may be made (for Pakistan) in a usable currency at the inter-bank rate of exchange prevailing at the time of transfer.

Pakistan agreed that it is inappropriate to encourage bilateral investment by weakening or reducing the protections afforded in domestic Labour Laws. However, it proposed an alternative clause in replacement of Article 13, which ensures that each party shall not waive, or otherwise, derogate from such (labour) laws in a manner that weakens or reduces adherence to the ILO Conventions ratified by the concerned party.

For dispute resolution, multiple choices have been given to the investors for arbitration. Pakistan suggested that only one such forum be provided in the Agreement, preferably ICSID.

Besides, detailed procedures to decide cases of arbitrations have been made a part of the agreement, which could complicate its implementation. There was a need to simplify the procedure and apply already existing procedures followed by the organizations like ICSID.

Pakistan also proposed that the state should not be liable for any breach committed by one of the parties to an investment/ contract agreement signed by an investor of either contracting party with any individual, legal entity of the government.

The US side was also told that "Covered Investment" has been defined to include investments made prior to the signing of the agreement, which needs to be excluded.