In its 10th and concluding meeting, the COE is to finalise sensitive lists for the developed and least developed countries (LDCs) of Saarc, rules of origin, a revenue compensation mechanism for LDCs and identification of areas of technical assistance for the LDCs.

Sources said the deliberations on all these issues are at an advanced stage because these were discussed in the previous nine COE meetings. Preliminary negotiations on sensitive lists have also been held and it is expected that these will be finalised in the forthcoming COE meeting.

The representatives from the customs departments of the member countries are also discussing the rules of origin issue on the sidelines of the COE meetings. There are certain disagreements on the criteria for origin of goods eligible for import under Safta.

However, in the previous meeting of the COE, all members showed flexibility and there is a chance of a consensus during the next meeting, sources said.

Regarding a revenue compensation mechanism, commerce ministry officials said the difference of opinions between the members of LDCs and non-LDCs of Safta is still very wide. There is, however, a possibility that the mechanism could be evolved before the 13th Saarc summit to be held in Dhaka on November 12-13.

The areas of technical assistance for the LDCs of Saarc have been identified and a mechanism to provide this assistance is being deliberated upon.

The Safta agreement, which is due to come into force on January 1, 2006, will reduce the tariffs within the member states through a Trade Liberalisation Programme (TLP), which will be implemented in two phases.

In the first phase, Pakistan and India would reduce tariffs from 0 to 5 percent within seven years (by 2013) and Sri Lanka and the other four LDCs within eight years (by 2016).

Pakistan, India and Sri Lanka, however, will complete their TLP for the four LDCs -- Bangladesh, Nepal, Bhutan and the Maldives -- within three years (by 2009).

Under the Safta arrangements, each member state shall maintain two sensitive lists, one for the non-LDCs of Saarc, Pakistan, India and Sri Lanka and the other for the LDCs of Saarc.

The officials said that Safta has generated considerable interest internationally and the key players in the international trade had been monitoring the progress. Various studies have also been conducted to examine the pitfalls, problems and prospects of this regional initiative.