United States, Pakistan Begin Bilateral
Investment Treaty Negotiations

09/28/2004

WASHINGTON –U.S. Trade Representative Robert B. Zoellick and Pakistan Minister for Commerce Humayun Akhtar Khan announced today that their two countries would begin negotiations on a bilateral investment treaty (BIT).  The two officials met at the conclusion of the first meeting of the Joint Council established by the U.S.-Pakistan Trade and Investment Framework Agreement (TIFA).
 
“I am very pleased to announce that discussions in the Joint Council have produced an agreement to start negotiating a U.S.-Pakistan BIT,” Zoellick said.  “These agreements level the playing field and ensure that Americans are treated fairly. Pakistan’s 150 million people also offer a large and potentially valuable market for U.S. exporters and investors.
 
“At the same time, Pakistan and the United States are partners in combating global terrorism.  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 economies and assist in meeting the economic conditions to counter terrorism.”
 
Zoellick and Minister Khan discussed a broad range of bilateral trade and investment issues during today’s meeting.
 
The TIFA, signed in June 2003, is an agreement that provides a forum for Pakistan and the United States to examine ways to expand bilateral trade and investment. Specifically the TIFA creates a Joint Council that considers a wide range of commercial issues and promotes principles that underpin the two nations’ trade and investment relationship.
 
U.S. goods exported to Pakistan in 2003 totaled $843 million, and included machinery, yarn and fabric, aircraft, electrical machinery, and fertilizers. U.S. goods exports also included $227 million in agricultural products, such as cotton, soybean oil, and planting seeds.  U.S. goods imports from Pakistan in 2003 were $2.5 billion, and included knit apparel, miscellaneous textile products, cotton, yarn and fabric, woven apparel, and textile floor covering. U.S. imports of agricultural products from Pakistan were $36 million in 2003 and included rice, sugars, sweeteners, beverage bases and spices.
 
Background
 
The United States recently completed a rewrite of the model text it has used in BIT negotiations over the past two decades.  The new model text includes provisions developed by the Administration to address the investment negotiating objectives in the Trade Promotion Act of 2002.  The new model BIT text is substantively similar to the investment chapters of the free trade agreements the United States has concluded during the past two years.
 
U.S. BITs level the playing field and ensure that U.S. investors are protected when they establish businesses in other countries.  By safeguarding foreign subsidiaries of U.S. firms, BITs help promote new U.S. exports to the markets of BIT partners.  BITs also protect the interests of average American investors, whose stock and bond portfolios often include stakes in foreign-invested firms. 
 
Key investor protections in U.S. BITs include an obligation by a host country to treat investors from the other BIT party as favorably as the host treats its own investors or those from any other country.  BIT parties must also permit the free and timely transfer of funds relating to an investment into or out of their territory.  U.S. BITs also include international law standards requiring host countries to provide prompt, adequate, and effective compensation if they expropriate an investment.  Finally, U.S. BITs give investors the right to seek binding international arbitration of claims that a host country government has violated a BIT obligation or certain types of contracts. 
 
The United States currently has BITs in force with 39 countries, providing protection for thousands of U.S.-owned businesses and their U.S. investors.  Earlier this month, the United States and Uruguay concluded negotiations on a BIT based on the new U.S. model text.  As treaties, BITs require the advice and consent of the Senate before they can enter into force.  Responsibility for BIT policy and negotiations is shared by the Office of the U.S. Trade Representative and the Department of State

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Global Trade to Expand by 7.5 per cent This Year
September 17, 2004

According to a World Trade Organization report released this week, world merchandise trade grew by 4.5 per cent in real terms, in 2003, a rate faster than in the preceding year but still well below the average rate in the second half of the 1990s.

The global trade expansion was a consequence of improved economic growth, which strengthened considerably beginning in the second quarter of 2003. In the first quarter of the year, the appearance of Severe Acute Respiratory Syndrome (SARS) in East Asia and the build up of tensions that led to the military conflict in Iraq weakened consumer and business confidence in many regions. Business indicators hit its lowest level in March 2003 before improving from May 2003.

The strengthening of the global expansion in the second half of 2003 is projected to continue in 2004. Global GDP is expected to grow at 3.7 per cent in 2004, up from 2.5 per cent in 2003. In line with the economic recovery, global trade is expected to expand by 7.5 per cent in 2004, twice as fast as output.

Two medium-term developments in international trade highlighted in the report are the above average trade growth in manufactured goods and other commercial services and the increased importance of processed agricultural goods in world trade.

Two notable developments in the structure of world trade are highlighted in the Report.

The first is the varied trade performance of different categories of goods and commercial services since 1985. Manufactured goods and "other" commercial services experienced above average trade growth during this period. By contrast, agricultural and mining products, as well as transport services, saw a relative decline in their trade shares.

The second medium-term development is a structural change in the composition of world trade in agricultural products, with processed agricultural goods becoming more important. This trend towards more processed goods in trade can be observed across countries and agricultural product groups throughout the 1990-2002 period.

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WTO Approves Retaliation Against U.S.
for Byrd Amendment

WASHINGTON, Sept. 1 /PRNewswire/ -- The Consuming Industries Trade Action Coalition (CITAC) said today that the U.S. should take immediate steps to end the Byrd Amendment's payouts to U.S. companies as a result of yesterday's World Trade Organization (WTO) decision to allow retaliation against U.S. exports by the European Union, Japan, Brazil and five other countries.

The "Continued Dumping and Subsidy Offset Act" (CDSOA) -- known as the "Byrd Amendment" -- mandates distribution of antidumping and countervailing duties to companies that have petitioned for trade protection and other supporters of the petition, rather than to the U.S. Treasury, where Customs revenues generally go. In three years, the U.S. Government has paid more than $700 million to U.S. companies from duties collected from other U.S. companies that must pay the import duties.

Yesterday's WTO ruling came as a result of the Congressional failure to end the Byrd payouts which the WTO declared illegal in 2002. The Congressional Budget Office (CBO) earlier this year found that the Byrd Amendment harms the U.S. economy and encourages more antidumping and countervailing duty trade cases covering more products (which forces up the cost of affected imported products to consuming industries). CBO estimates that Byrd distributions to U.S. companies who file successful trade cases will total more than $3.8 billion by 2014.

"The WTO's authorization for retaliation is one more reason that Congress should repeal the Byrd Amendment," said Jon Jenson, CITAC President. "The Amendment is bad policy because it distorts trade, provides an incentive for filing trade petitions and keeps products under trade restrictions that are in short supply in the U.S. or not made here at all. CITAC has long argued that American consumers shouldn't pay the enormous windfalls from Byrd Amendment payouts. Now U.S. exporters may bear the consequences of Congressional failure to end this trade distorting law."

He explained that by placing an import tax on a product, the price of the product is likely to increase, its availability will decrease and those who buy the product take the hit. U.S. consuming industries (including, for example, producers of steel-containing products, candles, pasta, seafood, ball bearings and others) and ultimately the American consumer pay the tax that, as a result of the Byrd Amendment, goes into the pockets of petitioners.

Continued Jenson, "Repealing the Byrd Amendment will avoid retaliatory tariffs, and, as important, end an incentive for companies to file trade cases year after year in order to receive large sums of money at the expense of their customers. In fact, in a case involving shrimp imports, CITAC has documented evidence that law firms were promoting potential Byrd payouts to convince companies to sign onto the trade petitions. Companies should only file trade petitions if there is a legitimate case, and not in the hopes of receiving a windfall of corporate welfare money from the government."

CITAC is a coalition of companies and organizations committed to promoting a trade arena where U.S. consuming industries and their workers have access to global markets for imports that enhance the international competitiveness of American firms.

For addition information, or to view a list of industries that have received Byrd Amendment payouts to date, please visit http://www.citac.info/.