January 26, 2006	Thursday	Zilhaj 25, 1426

ISLAMABAD, Jan 25: The United States is non-committal to sign Free Trade Agreement (FTA) with Pakistan in near future but has indicated to finalize the much sought after Bilateral Investment Treaty (BIT) during President Bush’s visit to Pakistan in early March.

However, informed sources told Dawn on Wednesday that the US government was seeking “strong guarantees” to ink BIT that there would be no “expropriation” of the US investment in any circumstances. The signing of the BIT had been proposed to be signed with certain conditions by the US side.

During their recently concluded fourth round of talks in Islamabad, the US officials asked Pakistan to accept the proposed draft for BIT which, sources said, was technically flawed and could not be agreed upon and needed broad changes.

The US side was unwilling to concede and kept demanding that there would be no expropriation (seizer) of the US investment. “While they were ready to concede that let there would be more than one arbitration forums other than the one based in Washington (International Centre for Settlement of Disputes (ICSID), they were saying that no action should be taken against any US investor.

“They want US standards in Pakistan regarding foreign investment”, a source said. Pakistan wanted dispute resolution also in the United Nations Commission on International Trade Law (UNICITRAL), Vienna (Austria).

“There are legal implications involved to accept the US text for BIT and we are not ready for it”, he said, adding that US officials had expressed their concerns over the role of judiciary and non-implementation of Intellectual Property Rights (IPRs).

Sources said that US officials had also been insisting that Pakistan’s existing “taxation measures” and regulatory framework should not be imposed on the US investors. “Also they (Americans) want us to cover the previous US investment in Pakistan in the proposed BIT draft. This means that we allow arbitration for previous US cases and this too was not acceptable to us”, another source said adding that Pakistan was already facing arbitration cases worth well over $800 million and it could not afford to have more such cases.

Sources said that the US side had been arguing that any host state which wanted American investment, would have to accept certain conditions failing which, no US investment could be assured to any country.

Pakistan was told to accept US conditions for signing BIT which would also help Islamabad to have new market access in the United States.

Pakistan is believed to have sought additional $2 billion market access from the United States for further export of its textiles, garments, leather and many other value added products with a view to increasing its exports to the United States from $3.4 billion to $5.4 billion in near future.

Sources warned that Pakistan will have to carefully negotiate and conclude BIT with the United States as Washington was bent upon introducing harsh clauses in the proposed draft so that in case of litigation, US investors should enjoy certain advantageous position. The United States had earlier signed BIT with many countries including special trade agreements with Canada and Mexico. “And in case of litigation, those countries always suffered financially who concluded BIT and FTA with the US government”, a source said, adding that Pakistan would have to carefully negotiate in the next fifth round of talks.

Pakistan was given what the Americans believed the final text of the BIT duly approved by the US Congress and the Bush Administration and did not want any change in it.

The US has proposed a “confidentiality agreement” in the proposed BIT text which Pakistan argued needed to be changed and that it should be made open so that the investors should not have apprehensions about it.

There was a clause introduced in the final text by the US government that talked about “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 when the business has not been set up, how could any US investor be allowed to seek any compensation and that it was an unjust provision which should be deleted from the final text.