ISLAMABAD, 11 October 2004 — Fourth year into 9/11 that earned Pakistan the dubious distinction of a frontline state against international terrorism, and tons of talk, is more United States business, still coming to Pakistan?
As far as US business and investment coming to Pakistan, the answer is not much encouraging. Senior ministers and officials privately admit, many of their hopes have been nearly dashed. But, Islamabad publicly still clings to high hopes. Humayun Akhtar, minister for commerce, at the end of just-concluded talks with US Trade Representative Robert B. Zoellick, only said in Washington, signing of a Bilateral Investment Treaty (BIT) “will be a step forward in expanding Pakistan-US trade. It will be a modern treaty, addressing modern issues.”
The two sides also had detailed discussions at Washington meeting of their Joint Council (JC) on expanding trade and investment. JC was established on June 25, 2003 under Trade and Investment Framework Agreement (TIFA), but has remained ineffective.
“We pleaded our case for market access. We focused on the issue that US-Pakistan trade and investment relationship should not only be looked at commercially, but since the two countries are strategic partners in war against international terrorism, this relationship should also reflect this strategic aspect,” Akhtar says.
Pakistan has tabled a number of suggestions for the future relationship, which US has promised “to consider very seriously, in moving forward.” Pakistan in its discussions with Zoellick also called for signing a BIT and a Free Trade Agreement (FTA). But, US does not seem to be ready.
As Humayun-Zoellick discussions concluded in Washington, a US Embassy spokesman in Islamabad, dampened Pakistan’s hopes. The spokesman ruled out the possibility of signing of PTA with Pakistan.” I do not think, this is going to happen in the near future,” he said.
US, however, is willing to sign BIT with Pakistan, if Islamabad takes action against piracy of international property rights (IPRs) and institutes an arbitration mechanism, acceptable to Washington. Washington has made it known to Islamabad that BITs are “two-way obligations that are designed to protect and encourage cross-border investment by ensuring equal treatment for foreign and local investors, guarantees regarding cross-border fund transfers, assurances against expropriation and mechanisms for dispute settlement.”
Zoellick, in a statement over the prospects of BIT and FTA said, “the proposed US-Pakistan BIT will level the playing field and ensure, Americans are fairly treated. Pakistan’s 150 million people also offer a large and potentially valuable market for US exporters and investors. At the same time, Pakistan and the United States are partners in combating global terrorism.” He said, “a BIT based on the high standards contained in our model text can play an important role in strengthening Pakistan’s economy, so as to create new opportunities for exporters and investors in both the economies and assist in meeting the economic conditions to counter terrorism.”
Pakistan is hoping to find more FDI in new industrial sectors and services. However, FDI in fiscal 2004 that ended June 30, rose only to $950 million and it is projected to cross $1.0 billion in 2005. The investment in 2004 included $239 million from United States. US FDI inflow in July and August — the first two months of current fiscal 2005 — was $26.6 million. The home remittances sent by Pakistanis living in US increased to $1.23 billion out of total remittances of $3.9 billion in 2004.
US exports to Pakistan rose 21 percent to $843 million in 2003. These were $1.3 billion in the January-July 2004, because of sale of three Boeing 777s to Pakistan International Airlines (PIA). Pakistani exports to US rose 10 percent to $2.5 billion in 2004. US are the single largest market for this country.