An inter-ministerial meeting at the Ministry of Commerce yesterday referred the issue to the National Board of Revenue (NBR), seeking a suitable strategy in this regard.

The NBR has been requested to suggest best possible alternatives before the CoEs meeting, an official who attended the meeting told the news agency.

Senior officials from the commerce ministry, other line ministries and agencies were present at the meeting with Commerce Secretary Faruque Ahmed Siddiqi in the chair.

Officials in the commerce ministry said the mechanism for compensation of revenue loss remained the unresolved issue of the Safta negotiation.

Negotiations on the finalisation of respective sensitive lists and rules of origin have made significant progress to conclude in the CoEs meeting in Kathmandu, particularly with the spirit of Saarc leaders' instructions during the 13th Summit in Dhaka on November 12-13, they added.

An official said negotiation on the issue will be the most crucial one to conclude in the CoEs meeting.

During the Saarc Summit in Dhaka, he said, the standing committee discussed the issue whether a mechanism could be devised within six months from January 1, 2006, but the least developed members preferred it to be settled before the commencement of the agreement.

The Safta agreement states that until alternative domestic arrangements are formulated, the contracting states agreed to establish an appropriate mechanism to compensate the LDCs for their loss of customs revenue.

During negotiations in this regard at the earlier CoE meetings, the developing member countries proposed a formula for calculating such loss, meeting sources said.

The formula is so designed that LDCs, which have alternative domestic arrangements in place, will not incur any revenue loss and there will be no compensation.

LDCs did not agree with the formula and tabled alternative formula to ensure compensation for revenue loss, said an official.