WASHINGTON, Aug 4: Pakistan hopes that the draft of a bilateral investment treaty (BIT) with the United States will be placed before the US Congress by early next year, Commerce Minister Humayun Akhtar Khan told reporters here on Friday.

The minister said that the two sides were also close to formalising proposals for reconstruction opportunities zones (ROZs) the US plans to build along the Pakistan-Afghan border and in the earthquake-affected areas.

From Monday, a US team begins a month-long study tour of Pakistan for this purpose. After consultation with Pakistani officials, the team will identify the sites for these zones and the goods that are to be produced at these sites.

All products from such zones will be free from US tariffs. The US already has a similar arrangement with two key allies in the Middle East, Egypt and Jordan.

“We want these zones to be established in the areas that are accessible, have an infrastructure and can attract investment,” Mr Khan said. “We have proposed that while deciding what to produce at these sites, the planners go for the products that Pakistan has some experience of producing.” Afghanistan will also participate in these development projects.

Briefing journalists on his meeting with the US trade representative and other senior officials, the commerce minister said that the two sides were “close to resolving the issues” that had delayed the signing of a bilateral investment treaty.

The treaty was supposed to be signed during President George W. Bush’s visit to Islamabad in March this year but was delayed because of some differences over issues that neither side has explained so far.

“I cannot go into specifics but it is doable,” said Mr Khan when asked to explain what’s causing the delay.

A BIT is the first step towards a free trade agreement that Pakistan ultimately hopes to sign with the US. President Pervez Musharraf first proposed the FTA in December 2004. The delay can hurt Pakistan because it will further reduce US interest in the South Asian region as its engagements in the Middle East increase.

The Washington-based Institute for International Economics issued a study on Thursday showing that an FTA would increase bilateral US-Pakistan trade by 40 to 50 per cent, benefiting US exporters of grain, processed foods and machinery, and Pakistan’s textile sector.

Mr Khan told the institute that $1bn in garment exports to the US would create 200,000 jobs in Pakistan, benefiting more than a million people in a country where families average six members."You can imagine the impact that would have on our society and, in particular, the women in our society," he said.

Analysts say it is not clear whether the United States -- which is negotiating free trade arrangements with Malaysia, South Korea, among others -- has the time or resources to start the process with new partners in the near future.