FO voices concern: BoI sends draft BIT summary to PM

WASIM IQBAL & ALI HUSSAIN

ISLAMABAD: The Board of Investment (BoI) has sent a summary to the Prime Minister, currently holding the additional portfolio of minister in-charge BoI, detailing the draft Bilateral Investment Treaty (BIT) initialled by the BoI Chairman in Washington on March 9, after the Foreign Office voiced serious reservations through a letter to BoI about not being taken on board.

Foreign Office spokesman Abdul Basit while speaking exclusively to Business Recorder stated that “we are still in the process of assessing the treaty and have not yet formulated our final views.”

Sources in BoI disclosed that draft templates of the new BIT, focused on engagement and reciprocal protection of investment, has been vetted by the Ministry of Law and Justice and sent to the Prime Minister for his approval who, unlike the Chairman BoI has the plenipotentiary to approve the treaty on behalf of the government. Subsequent to the PM’s approval, the BIT would be discussed and approved by the Cabinet.

Sources revealed that the US proposed BIT template was driven by three countries which are members of North American Free Trade Agreement namely US, Canada and Mexico. “The BoI will sign the BIT with Canada on the same pattern as the one initialled with the US,” the sources added.

According to the sources, BoI is yet to share the new BIT template with other domestic stakeholders who are therefore unable to compare the new BIT with the old one. The US is expected to begin implementation of the new template of BIT from April 1, 2012.

An official on condition of anonymity declared that prior to his departure to Canada and the US Chairman, BoI held a detailed meeting with Pakistani Ambassador to US, Sherry Rehman. He maintained that the initialling ceremony of the BIT was with the facilitation of the Pakistan Embassy staff in Washington.

BoI Chairman Saleem Mandviwalla currently in South Korea emailed Business Recorder his response to reports that he initialled the BIT without having the necessary approvals. “Every thing was done with Cabinet approval and the US government agreed to all our terms which we had tabled in 2008.”

A BoI official confirmed that there were three stages to be observed before final signing of any international treaty. “We just initialled agreement for which we are empowered, however, a final approval will be sought from the Cabinet and ratification instrument will be signed by President Asif Ali Zardari before it can become effective.”

The BoI Chairman stated that “nothing had been done out of order or in a hurry…once negotiations are closed as a practice in all treaties we initial the draft and then the other legal and Cabinet formalities are completed on both sides for signing. There is no pressure from any one to do this treaty but both countries want this treaty in their own interest.”

Mandviwalla claimed that no laws of Pakistan or rules were violated in any way. “We followed the same procedure what we do for every treaty that we have signed in the last three years and the latest one was with Germany.”

The BOI Ordinance 2001 empowers the Board to negotiate and finalize agreements for protection and promotion of investment with other countries and represent Pakistan in regional and international organizations pertinent to investment promotion.

The present government’s objective is to ensure that BIT is equally beneficial for both the signatory countries as this is crucial for further negotiations to conclude bilateral Free Trade Agreement (FTA) with US.

The BoI issued letters to all the stakeholders, which reads: “the draft text agreed during the face to face discussions with the US team at Washington on March 9 in the light of the reservations expressed by the stakeholders during the meeting held on February 28 and March 6, 2012.

The BoI states that unresolved issues have been taken out from the text. These issues related to transparency and financial services, claims on behalf of an enterprise and investment agreement.

In response to BoI letter dispatched to stakeholder ministries, the Foreign Office came up with an objection that the Ministry of Commerce should also allow to negotiate on some of the portions related to BIT.