ISLAMABAD, May 28: Pakistan has asked the United States to make the Bilateral Investment Treaty (BIT) a part of the proposed Free Trade Agreement (FTA) instead of signing them separately in order to remove persisting differences between the two sides over the issue.
Informed sources told Dawn on Monday that both the governments had failed to remove their differences over the signing of BIT, particularly because of the United States, which kept on seeking unprecedented protection of American investment in Pakistan.
Pakistan has proposed to the US to sign FTA in line with the agreements it earlier signed with a number of countries including Qatar, Oman, Bahrain, Singapore and a couple of South American countries.
"We have proposed that the FTA should have certain portion of investment rather than having a full fledge BIT keeping in view the hardened position taken by both the sides over the issue," a source said.
He said both the governments were expected to shortly hold new round of talks to narrow their differences over the BIT aimed at making it a part of the FTA.
According to informed sources, both sides were not willing to soften their hardened stand over BIT although US had earlier accepted that the "judicial and legislative actions" of Pakistan should not be allowed to be challenged in any international court of law.
The US side, they said, had conceded to differentiate between the "bad faith and the error of judgment" and that the decisions announced by superior courts of Pakistan will not be challenged without any legitimate justification.
In return, Pakistan had accepted that the treaty will be applied with retrospective effect, meaning that any thing pertaining to the existing American investment could also be challenged.
Pakistan, in this regard, had assured the US government that it will be obligatory to Islamabad to give compensation to the US investors in case of their dispute, which has not been settled.
One of the cases in point was the dispute that erupted few years ago over the opening of a US restaurant chain – McDonald - in Lahore.
Sources said that Pakistan had also subdued to American pressure to accept additional forums other than International Centre for Settlement of Disputes (ICSD) to deal with arbitration clauses. The US side maintained that since a number of rules of ICSD were needed to be upgraded, other centres for dispute resolution should also be considered.
The US side was insisting to have more than one international forums to settle investors disputes, while Pakistan wanted only the ICSD. Also, Pakistan wanted the US investors to exhaust the local remedy in Pakistani courts before opting for any international forum in case of any dispute.
Pakistan had also argued that there will be a wastage of time and money to also approach other dispute resolution centres and that let the ICSD alone be approached in case of any dispute.
US Assistant Secretary of State for South Asia and Central Asia Mr Boucher, when visited Pakistan in January this year, had said that there were some "serious technical problems" which were blocking the signing of the treaty.
A source said that Pakistan had been asking the US officials to change their draft law on BIT for signing of the proposed treaty. "In many previous rounds of talks, the US side used to say that since this draft on BIT had been approved by the American Congress, there could be no change in it.
"We have told the Americans that if they are coming with a prepared mind to continue insisting on the acceptance of draft law approved by their Congress, then we are afraid it would not be possible to sign this treaty," he said.
