ISLAMABAD, Dec 16: Pakistan and the United States have decided to hold next round of talks on free trade agreement (FTA) in London on February 7, 2005.

Officials told Dawn here on Thursday that the draft agreement on FTA was currently being finalized by the ministry of commerce and the Board of Investment with the help of the law ministry.

They said that it was agreed in the first Trade and Investment Framework Agreement (TIFA) Council meeting held in September this year that future talks would be held between the two countries in a "neutral territory" (e.g. England) early next year.

Following the meeting between President Bush and President Musharraf early this month in Washington, the US government informed Islamabad that talks on the FTA could be held on February 7 in London. The Pakistan side accepted the date after which the law ministry was asked to early vet the draft agreement to be negotiated between the two sides, the officials said.

"All legal issues are currently being examined to negotiate and finalize the FTA between the two sides," a source said, adding that Pakistan was looking for further export of its fish, fruits, vegetable rice, etc., to the United States under the FTA.

He says Pakistan understands after the Bush/Musharraf meeting that the volume of current Pakistani trade items, including engineering goods, surgical goods and jewellery, could also be increased under the new agreement.

Besides the FTA, Pakistan and the United States have also decided to shortly sign a bilateral investment treaty (BIT) to facilitate each others' investors. The BoI has finalized various details with the help of ministries of finance, commerce, industries and the law division to sign the BIT with the US.

Earlier, the Trade and Investment Framework Treaty (TIFA) was signed between Pakistan and the United States. "The main objective of the proposed treaty is to protect the US investment from any danger or risk of being nationalized," another source said. He added that the treaty would also help the investors of both the countries in terms of having special incentives and concessions.

The BoI, the sources said, was also finalizing details about a general investment treaty to be signed with other countries. "In fact there will be some kind of a model treaty which could be signed with other countries."

According to the World Bank, Pakistan must increase fixed investment rate from 14 per cent of GDP to 17 per cent by 2007, mainly by luring the private sector. The implied high growth in investment over the next few years, the bank believed, would require further efforts to improve investment climate both for domestic and the foreign investors.

"Better public resource management can assist the growth in private investment in several ways, by improving governance especially the law and order and access to justice, by promoting skills development, providing needed infrastructure, and by strengthening bureaucracy and making public institutions more responsive to citizens."

Even though there is a clear need for a sharp expansion of both the private investment and non-interest and non-defence public spending, it is the qualitative aspects of this expansion that will, in the ultimate analysis, assure the productivity improvements vital for growth and poverty reduction.

"Higher growth and more positive social outcomes must come mainly from the expected improvements in the quality of effectiveness of public spending and a private sector that rises to the challenge of diversifying export and industrial structures," the World Bank report about Pakistan said.