US investment: Government to tread carefully on bilateral treaty

BoI in no hurry to agree to stringent clauses set out by Washington.

ISLAMABAD:

Unlike its predecessor, the ruling PML-N party has decided to move cautiously on the proposed Bilateral Investment Treaty (BIT) after the United States introduced a new draft that carries stringent clauses with far reaching implications.

Pakistan is not in a hurry and will give a formal response to the US only after thoroughly studying the new template that Washington has recently shared, said Miftah Ismail, Special Assistant to Prime Minister Nawaz Sharif and Board of Investment (BoI) chairman.

“The new template is very stringent on certain accounts and the BoI is carefully moving forward by taking all stakeholders into the fold”, said Ismail while talking to The Express Tribune. He said the BoI has no objection, in principle, on the Pak-US BIT.

Both countries began negotiating the investment treaty about 10 years ago. Talks have collapsed several times in the past due to the insistence of the US on inclusion of certain clauses that deal with investment in defence programmes and prior notification of changes being introduced to any law that could hurt US investments. There was also a difference of opinion on the mode of arbitration in case of a business dispute.

The previous government had taken a sudden U-turn on many principled issues and both countries were about to sign the deal when the military establishment intervened to block the deal, according to officials who were privy to the developments taking place in Salim Mandviwalla-led BoI.

Ismail said there was no major US investment in the pipeline that could get affected because of delay in signing the treaty, giving the country ample time to look into pros and cons of the treaty, which, once signed, carries huge obligations.

According to Ismail, the US was not willing to sign a Free Trade Agreement so the arrangements would be limited only to the BIT. The BoI has started receiving the feedback of the stakeholders and couples of stakeholders have candidly expressed their reservations, he added.

The US has proposed stringent labour and environmental standards, which the country will have to adopt once the treaty is signed, said Ismail.

The BoI chairman stated that the government will first listen to opposing voices to the treaty and if their concerns are found to have merit, these will be addressed.

In the past few years, certain decisions by the judiciary have shattered the confidence of international investors who now feel more secure if there is a bilateral investment treaty, offering them the opportunity for international arbitration.

Pakistan has so far signed about five dozen investment treaties and is ready to sign another one with Kingdom of Bahrain next week. The Emir of Bahrain will lead a business delegation to explore investment and trade opportunities in Pakistan. During the visit, scheduled for March 18-19, Pakistan and Bahrain will sign a BIT, said Ismail.

During the visit a memorandum of understanding will be signed for deepening cooperation in the fields of economy and development. The Privatisation Commission will also give a presentation to the delegation, showing it the windows of opportunities Pakistan is offering.

Bahrain’s Gulf Air could be a prospective bidder for acquiring 26% shares of Pakistan International Airlines that the government wanted to sell to strategic investors, said Ismail.

Published in The Express Tribune, March 16^th, 2015.

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