ISLAMABAD, PAKISTAN - Pakistan hosted high-level talks with the United States on Monday to review steps Islamabad has taken to choke funding sources to terrorist groups.

The two sides, officials say, also discussed ways to increase bilateral trade.

U.S. Principal Deputy Assistant Secretary Alice Wells led her delegation in meetings with senior Pakistani officials at the ministries of interior and commerce to formally begin her four-day visit amid warming relations.

Meanwhile, the Pakistani Foreign Ministry has announced that Prime Minister Imran Khan will hold a bilateral meeting with U.S. President Donald Trump on the sidelines of the three-day World Economic Forum in Davos starting Tuesday. This would be the third interaction between the two leaders since their White House meeting in July 2019.

Wells' discussions in Islamabad come ahead of next month's meeting of the Paris-based Financial Action Task Force (FATF), which monitors global money laundering and terror financing, where Pakistan's efforts will be assessed.

The FATF meeting, hosted by China, will decide whether Islamabad remains on a so-called "gray list" of countries lacking adequate mechanisms to counter terrorism funding.

A Pakistani statement said senior Interior Ministry officials briefed the U.S. delegation about "significant progress" the government has made on "legislative and administrative matters" to ensure compliance with an action plan FATF has outlined for Pakistan. Wells "applauded the progress," it added.

Pakistani officials have been urging the United States, a key FATF member, to help Islamabad exit the gray list.

In October, the FATF asked Pakistan to address all issues identified in the action plan by February 2020. Failure to do so could lead to a downgrade to the agency's blacklist, placing tough sanctions on the country's banking system.

Trade talks

Earlier, the U.S. delegation held extensive talks with top officials at the Commerce Ministry.

"The U.S. is eager to increase the trade potential between our two nations," noted Abdul Razak Dawood, head of the ministry, after his meeting with the U.S. delegation. "Ms. Wells is of the opinion that agriculture is one sector where immediate progress can be made."

He said Wells appreciated the role of several prominent U.S. companies who had worked "very successfully" in Pakistan for a long time.

After her talks with Dawood and his delegation, Wells tweeted that both countries "share the goal of increasing bilateral trade." She praised Pakistan's economic reforms, saying, "They are making it a more attractive environment" for U.S. businesses.

The progress in traditionally turbulent U.S.-Pakistan relations stemmed mainly from Islamabad's cooperation in facilitating Washington's peace talks with Taliban insurgents aimed at bringing an end to the 18-year-old war in neighboring Afghanistan.

Last month, the Trump administration announced it would soon resume International Military Education and Training (IMET) programs for young Pakistani army officers.

The Pakistani government welcomed the move as another step underscoring the growing partnership with the U.S.

A State Department spokesperson noted in remarks emailed to VOA prior to Wells' visit that there is much room to grow the current $6.6 billion annual bilateral trade relationship. The Trump administration sees the U.S.-Pakistan relationship as one of potential, she added.

"We have made clear that fulfilling that potential requires progress on our joint efforts to bring stability to Afghanistan, and on Pakistan taking sustained and irreversible action against the militant groups and terrorist groups that destabilize the region from its soil," the spokesperson stressed.

The IMET was a part of U.S. security assistance for Pakistan worth some $2 billion that Trump suspended in January 2018 to press Islamabad to crack down on militant groups on its soil and help in Afghan peace-building efforts. The overall security assistance remains suspended, however.