The New Horizon

A new world explored with a rational view

BIPA under microscope

with 2 comments

I saw a lot of articles in popular Bengali blogs on BIPA (Bilateral Investment Treaty between India and Bangladesh – text available here), that is signed between the parties after the newly elected awami League govt came to power. There are a lot of accusitions made against the treaty which allows MFN status between India and Bangladesh. Indian press did not discuss this issue as Bangladesh is not a prime destination of Indian business. However, Bangladesh press wrote and analysed the issues and concerns around it in details.

The prime concerns as we know from one of the writers are :

  1. Granting equal treatment to Indian industry as Local industries might lose out. (Article 4)
  2. Nationalization is almost prohibited. (Article 5)
  3. Transfer of risk of Indian business to Bangladesh Govt. (Article 6)
  4. Repatriation of investment can cause sudden downfall in economy. (Article 7)

He also examplified a few cases where the country of investment actually lost out to the investors due to MFN treaties. At least one of his examples are dubious since the Davol compensation India paid out to investors are not covered under MFN as India does not have any MFN treaty with USA.

I searched the texts for other treaties those Bangladesh has with other Nations. I found a total of 16 bilateral trearies with many other nations, such as – USA, UK, Japan, Netherlands, Korea, Philipines, Iran and many more. I saw most of the treaties share almost the same text of treaty as that of the treaty under review. For example, the treaty with USA, signed in 1986 has the same kind of clause for compensation, equality of foreign investors and repatriation. The exact text might differ in a few words, but the underlying message is the same. The treaty with UK is a bit old, though does not differ much in substance (does not talk about granting treatment as per native companies).

Now the  question becomes, what are the losses that Bangladesh has suffered so far due to these bilateral treaties with various countries? Nothing – to be specific. If (as per his statement) it is a “Slavery Treaty”, Bangladesh is already a “Slave” of 16 different countries. Moreover, the facilities those are extended in MFN treaty are soon going to get globalized. WTO has texts for impartial treatment of all investments and mitigation of risk. So, it is an unavoidable clause that Bangladesh is going to accept.

The fact is that the world is getting increasingly in favor of Capital and Capitalism. Whoever wants to stay away from it, could lose out on the development that the rest of the World enjoys. Bangladesh should take the treaty in positive frame of mind and try to exploit the conditions as much as they can. It is the same for India. Treaties are not made for gains and losses, it’s for creating new oppourtunities. Since this is definitely going to open up new window of investment oppourtunities, it should be a successful treaty.

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Written by Diganta

February 11, 2009 at 5:43 am

Posted in Bangladesh, Economy, India, US

Tagged with , ,

2 Responses

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  1. […] New Horizon takes a closer look at the Bilateral Investment Treaty (BIPA) between India and Bangladesh and comments: […]

  2. First blog I read after wakeup from sleep today!

    —————————-
    Are you tension? panic?

    Brendt

    March 3, 2009 at 2:55 pm


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