ISLAMABAD, Jan 3: The seven Saarc member countries have agreed to scale down their tariffs to 0-5 per cent under South Asia Free Trade Area (SAFTA) treaty that will came into force on January 1, 2006 and will be fully implemented by December 31, 2015.

Official sources told Dawn on Saturday that the council of ministers recommended that SAFTA will enter into force on the due date upon completion of four procedural formalities: formation of sensitive lists; rules of origin, revenue loss compensation mechanism and ratification by the all member states.

The SAFTA treaty will now be signed by the head of states at the Summit on January 5, the officials added.

Elaborating the framework of the treaty, the officials said the non-least developed countries (non-LDCs) will reduce their tariffs to 0-5 per cent in a period of seven years from the date of entry into force of the agreement.

This means that Pakistan and India will reduce their tariffs to 0-5 per cent in seven years period, while Sri Lanka will do the same in eight years of time.

On the other hand, the LDCs including Bangladesh, Nepal, Bhutan and Maldives will have to reduce their tariffs to 0-5 per cent in a period of 10 years.

Explaining further the frame work of the treaty, the officials said every country will have to make two sensitive lists of products on which tariffs will not be reduced. One each list for LDCs and non-LDCs.

This list will be finalized between now and the date on which SAFTA agreement was expected to enter into force on the scheduled date, the officials said.

According to the officials, anti-dumping duties, countervailing duties and safeguard measures will be dealt in accordance with the World Trade Organization (WTO) principles.

The SAFTA will be supervised and guided by SAFTA ministerial council, which will comprise commerce ministers of all member countries. This will be the highest decision making body.

It was also agreed that the technical detail and formation will be worked out and negotiated by the senior officials of trade/commerce ministers of respective member countries. This will be called committee of experts, the officials said.

The officials said that in case of any dispute, which might arise among the member states and the implementation of the agreement shall be settled through mutual consultation failing which the matter will be referred to a committee of experts, which will also work as Dispute Settlement Body (DSB).

The decision of the DSB will be binding on all member states, the officials said and adding the SAFTA ministerial council will work as an Appellate body for dispute settlement.

It was also agreed that any country has the option to withdraw from the arrangement whenever it likes, the officials added.