€9 SAARC

SAARC AGREEMENT ON TRADE IN SERVICES (SATIS)

Preamble

The Governmentsof the South Asian Association for Regional Cooperation

(SAARC) Member Statescomprising the Islamic Republic of Afghanistan,
People's Republic of Bangladesh,the Kingdom of Bhutan, the Republic of
India, the Republic of Maldives, Nepal, the Islamic Republic of Pakistan
and the Democratic Socialist Republic of Sri Lanka hereinafter referred to
individually as "Contracting State" and collectively as "Contracting
States";

Being committed to strengthen SAARC economic cooperation to

maximise the realization of the region's potential for trade and
development for the benefit of their people, in a spirit of mutual
accommodation,with full respect for the principles of sovereign equality,
independenceand territorial integrity of all States;

Recognising that regional trading arrangementsboth in goods and services

in SAARC shall act as avenues for achieving objectives of economic
development and growth in the region by expanding intraregional
investmentand production opportunities;

Noting that the Agreement on South Asian Free Trade Area (SAFTA)
provides for trade liberalization on a preferentialbasis in trade in goods;

Being convinced of the increasingrole that the servicessector is playing in

the economiesand trade of the Contracting States;and immense potential
to augmentintra-regional trade in servicesin a mutually beneficial manner;
and also

Recognizing further that Least Developed countries in the region need to

be accorded special and differential treatment commensurate with their
developmentneeds;

Have agreed as follows:

Article I

Definitions

For the purposesof this Agreement:

l. a juridical personis:

1.1 ownedby personsof a ContractingStateif morethan 50 per

cent of the equity interestin it is beneficially owned by
personsof that ContractingState;

1.2 controlled by personsof a ContractingStateif suchpersons

have the power to name a majority of its directors or
otherwiseto legallydirectits actions;

1.3 affiliated with another person when it controls, or is

controlledby, that other person,or when it and the other
personarebothcontrolledby the sameperson;

2. a service supplied in the exerciseof governmentalauthority

meansany servicewhich is suppliedneitheron a commercialbasis
nor in competitionwith oneor moreservicesuppliers;

3. aircraft repair and maintenanceservicesmean such activities

when undertakenon an afucraftor a part thereof while it is
withdrawn from service and do not include so-called line
maintenance;

4. commercialpresencemeansany type of businessor professional

establishment,
includingthrough:

4.I the constitution,acquisitionor maintenanceof a juridical

person,or
4.2 the creationor maintenance of a branchor a representative
office,

within the territory of a Contracting State for the purpose of

supplyinga service;

J. computer reservation system (CRS) services mean services

providedby computerized systemsthat containinformationaboutair
carriers'schedules,
availability,faresand fare rules,throughwhich
reservationscanbemadeor ticketsmaybe issued;

6. direct taxescompriseall taxeson total income,on total capitalor on

elementsof incomeor of capital,includingtaxeson gainsfrom the
alienationof property,taxeson estates,inheritancesand gifts, and
taxeson the total amountsof wagesor salariespaid by enterprises,as
well astaxeson capitalappreciation;

7. juridical person means any legal entity duly constituted or

otherwiseorganizedunder applicablelaw, whether for profit or
otherwise,and whetherprivately-ownedor governmentally-owned,
including any colporation,trust, partnership,joint venture,sole
proprietorshipor association.
8. juridical person of the other Contracting Statesmeansa juridical
person which is either:

8.1 constitutedor otherwiseorganizedunder the law of the other

Contracting States,and is engaged in substantive business
operationsin the territory of the other Contracting States,
8.2 in the case of the supply of a service through commercial
presence,owned or controlled by:
8.2.1 natural personsof the other Contracting States;or
8.2.2 juridical persons of the other Contracting States, identified
underparagraph8.1.

9. measure meansany measureby a Contracting State,whether in the

form of a law, regulation,rule, procedure,decision,administrative
action, or any other form;

10. measures by Contracting States meansmeasurestaken by:

10.1 central, regional, or local governmentsand authorities; and

10.2 non-governmental bodies in the exercise of powers

delegated by central, regional or local govefilments or
authorities;

11. measures by Contracting States affecting trade in services

include measuresin respectof:

11.1 the purchase,paymentor useof a service;

ll.2 the accessto and useof, in connectionwith the supply of
a service, serviceswhich are required by the Contracting
Statesto be offered to the public generally;
11.3 the presence,including commercialpresence,of persons
of a Contracting State for the supply of a service in the
territory of the other Contracting State;

12. monopoly supplier of a service means any person, public or

private, which in the relevant market of the territory of a
contracting state is authofizedor establishedformally or in effect
by that Contracting Stateas the sole supplier of that service;

13. natural person of a contracting state meansa naturalpersonwho

resides in the territory of the contracting State or elsewhere and
who under the law of that contracting state is a national of that
Contracting State.

14. person meanseither a natural personor a juridical person;

15. sector of a servicemeans.

 (D with reference to a specific commitment, one or
more, or all, subsectorsof that service,as specified
in a Scheduleof the Contractine States.

(ii) otherwise, the whole of that service sector,

including
all of its subsectors;

16. services includes any service in any sector except servicessupplied

in the exerciseof govemmentalauthority;

17. selling and marketing of air transport services mean

opportunities for the air canier concernedto sell and market freely
its air transport services including all aspectsof marketing such as
market research, advertising and distribution. These activities do
not include the pricing of air transport services nor the applicable
conditions;

18. service consumer meansany personthat receivesor usesa service;

19. serviceof the other ContractingStatesmeansa servicewhich is

supplied:

19.1 from or in the tenitory of the otherContractingStates,or in

the caseof maritimetransport,by a vesselregisteredunder
the laws of the other ContractingStates,or by a personof
the other ContractingStateswhich supplies the service
throughthe operationof a vesselandlorits usein whole or
in part;or

19.2 in the caseof the supplyof a servicethrough commercial

presenceor throughthe presenceof naturalpersons,by a
servicesupplierof theotherContractingStates;

20. servicesuppliermeansanypersonthatsuppliesa service;l

21. supply of a serviceincludestheproduction,distribution,marketing,

saleanddeliveryofa service;and

22. trade in servicesis definedasthe supplyof a service:

22.1 from the territoryof a contractingstate into the territory of

the otherContractingState(cross-border);

t
Where the service is not supplied directly by a juridical person but through other forms of
commercial presencesuch as a branch or a representativeoffice, the service supplier (i.e.
the juridical person) shall, nonetheless,through such presencebe accorded the ireatment
provided for service suppliers under this Agreement. Such treatment shall be extendedto
the presencethrough which the service is supplied and need not be extende{ to any other
parts of the supplier located outsidethe territory where the service is supplied.
 222 in the territory of a Contracting State to the service
consumer of the other Contracting State (consumption
abroad);

22.3 by a service supplier of a Contracting State, through

commercial presencein the tenitory of the other Contracting
State(commercial presence);

22.4 by a service supplier of a Contracting State, through

presence of natural persons of a Contracting State in the
territory of the other Contracting State (presence of natural
persons)

Article 2

Objectives,Principles and Guidelines

1. The objectives of this Agreement are to promote and enhancetrade

in services among the Contracting States in a mutually beneficial and
equitable manner by establishing a framework for liberalising and
promoting trade in serviceswithin the region in accordancewith Article V
of GeneralAgreement on Trade in Services.

2. Negotiations for scheduleof specific commitments shall take place

keeping in view the national policy objectives,the level of development
and the size of economies of Contracting States both overall and in
individual sectors.

3. In light of the priority accorded to services by all Contracting

States,the Agreement shall progressively cover liberalization of trade in
services with broad-based and deeper coverage of majority of services
sectors/sub-sectorswith a view to fulfilling the objectivesof Article V of
GATS.

4. A positive list approachshall be followed. Negotiationsfor specific

commitments for progressive liberalization would be based on o'request-
and-offer" approach.

Article 3

Scope

l. This Agreement applies to measures by Contracting States as

defined in Article l.l0 and measuresby the contracting States
affectingtradein servicesas definedin Article l.l l.

2. This Agreement shall not apply to:

(a) governmentprocurement;
 (b) servicessuppliedin the exerciseof governmental
authority;and

(c) transportationand non-transportationair services,

including domestic and international services,
whether scheduledor non-scheduled,and related
servicesin supportofair services2
otherthan:

(i) aircraftrepairandmaintenance services

(iD the sellingandmarketingof air transport
services: anc
(iii) computerizedreservationsystem
services.

The supply of serviceswhich are not technically or technologically

feasible when this Agreement comes into force shall, when they
become feasible, also be considered for possible incorporation
during the review processunderArticle-10.

4. This Agreement shall not apply to measures affecting natural

persons seeking accessto the employment market of a Contracting
State,nor shall it apply to measuresregardingcitizenship,residence
or employment on a permanentbasis.

5. Nothing in this Agreement shall prevent a Contracting State from

applying measuresto regulate the entry of natural persons of the
other Contracting Stateinto, or their temporary stay in, its territory,
including those measuresnecessaryto protect the integrity of, and
to ensure the orderly movement of natural persons across its
borders, provided that such measures are not applied in such a
manner as to nulliff or impair the benefits accruing to the other
Contracting State under the terms of - a specific commitment
undertakenunder this Agreement.3

Article 4

MFN Treatment

l. subject to the provisions of Article 22.b, commitments undertaken

under Article 8 of this Agreement shall be extended to all
Contracting Stateson a most favourednation basis.

2. If, after this Agreement entersinto force, a contracting State enters

into any agreement on trade in services with a non-contracting

'
The Contracting Statesunderstandthat ground handling services are partofrelated
servicesin supportof air services.

-
The sole fact of requiring visa for natural personsof certain Contracting State and not
for those of other Contracting States shall not be regarded as nullifuing or impairing
benefitsunder a specificcommitment.
 State, it shall give considerationto a request by the other
ContractingStatefor the incorporationhereinof treatmentno less
favourablethan that providedunderthe aforesaidagreement.Any
such incorporation should maintain the overall balance of
commitmentsundertakenby each ContractingState under this
Agreement.

Article 5

National Treatment

1. In the sectors inscribed in its Schedule, and subject to any

conditions and qualifications set out therein, each Contracting State
shall accord to services and service suppliers of any other
Contracting State,in respectof all measuresaffecting the supply of
services,treatment no less favourablethan that it accordsto its own
like servicesand service suppliersa.

2. A Contracting State may meet the requirement of paragraph 1 by

according to servicesand service suppliers of the other Contracting
State, either formally identical treatment or formally different
treatment to that it accords to its own like services and service
suppliers.

J. Formally identical or formally different treatment shall be

consideredto be less favourable if it modifies the conditions of
competition in favour of services or service suppliers of a
Contracting State comparedto like services or service suppliers of
the other Contracting State.

Article 6

Market Access

l. With respectto market accessthrough the modes of supply defined

in paragraph 22 of Article 1, each Contracting State shall accord
services and service suppliers of the other contracting State
treatment no less favourable than that provided for under the terms,
limitations and conditions agreed and specified in its schedule of
specific commitments).

o
Specific commitments assumedunder this Article shall not be construed to require any
Contracting State to compensatefor any inherent competitive disadvantageswhith resuit
from the foreign characterofthe relevant servicesor service suppliers.
'
If a Contracting State undertakesa market-accesscommitment in relation to the supply of
a service through the mode of supply referred to in Article | (22) and,if the cross-boider
movement of capital is an essential part of the service itself that Contracting State is
thereby committed to allow such movement of capital. If a Contracting State undertakesa
market-accesscommitment in relation to the supply of a service through the mode of
supply referred to in Article l(22) (iii), it is thereby committed to allow related transfersof
capital into its territory.
2. In sectors where market accesscommitments are undertaken, the
measures which a Contracting State shall not maintain or adopt
either on the basis of a regional subdivision or on the basis of its
entireterritory, unlessotherwisespecifiedin its Scheduleof specific
commitments, are defined as:

(a) limitations on the number of service suppliers whether in the

form of numerical quotas, monopolies, exclusive service
suppliersor the requirementsof an economic needstest;
(b) limitations on the total value of servicetransactionsor assets
in the form of numerical quotas or the requirement of an
economicneedstest;
(c) limitations on the total number of service operations or on
the total quantity of service output expressedin terms of
designated numerical units in the form of quotas or the
requirementof an economicneedstest6;
(d) limitations on the total number of natural persons that may
be employed in a particular service sector or that a service
supplier may employ and who are necessaryfor, and directly
related to, the supply of a specific service in the form of
numerical quotas or the requirement of an economic needs
test;
(e) measures which restrict or require specific types of legal
entity or joint venture through which a service supplier may
supply a service;and
(D limitations on the participation of foreign capital in terms of
maximum percentagelimit on foreign shareholding or the
total value of individual or aggregateforeign investment.

Article 7

Additional Commitments

The contracting States may negotiatecommitmentswith respect to

measuresaffecting trade in servicesnot subject to schedulingunder
Articles 5 or 6, including those regardingqualifications,standardsor
licensingmatters.Such commitmentsshall be inscribedin a Contracting
State'sScheduleof specificcommitments.

Article 8

Scheduleof Specific Commitments

l. Each contracting state shall set out in a schedule the specific

commitments it undertakesunder Articles 5, 6 and 7. with respect
to sectorswhere such commitments are undertaken,each Schedule
shall specify:

u
This paragraph2(c) does not cover measuresof a Contracting State which limit inputs for
the supply ofservices.
 a. terms, limitations and conditions on market access;
b. conditions and qualifications on national treatment;
c. undertakingsrelating to additional commitments;
d. where appropriatethe time-frame for implementation
of suchcommitments;and
e. the date of entry into force of such commitments

2. Measures inconsistent with both Articles 5 and 6 shall be

inscribed in the column relating to Article 6. In this case the
inscription will be consideredto provide a condition or qualification
to Article 5 as well.

a
The Contracting States' schedulesof specific commitments shall be
annexedto this Agreement upon completion of the negotiationsand
shall form an integral part thereof.

Article 9

Modification of Schedules

t. A Contracting Statemay modify or withdraw any commitment in its

Schedule,at any time after three years have elapsed from the date
on which that commitment entered into force, in accordancewith
the provisions of this Article. It shall notify the other Contracting
Statesof its intent to so modify or withdraw a commitment no later
than three months before the intendeddate of implementation of the
modification or withdrawal.

2. At the request of the other Contracting States, the modifying

Contracting State shall enter into negotiations with a view to
reaching agreementon any necessarycompensatoryadjustment. In
such negotiations and agreement, the Contracting State shall
endeavour to maintain a general level of mutually advantageous
commitments not less favourable to trade than that provided for in
Schedulesof specific commitmentsprior to such negotiations.The
contracting Statesshall endeavourto conclude negotiationson such
compensatoryadjustmentto mutual satisfaction within six months,
failing which recoursemay be had to the provisionsof Article 26 of
this Agreement.

3. Compensatory adjustments shall be made on a most-favoured-

nation basis.

4. The modifying contracting State may not modify or withdraw its

commitment until it has made compensatoryadjustment with the
requesting country or in accordance with the decision taken
following the procedureof Article 26 of this Agreement.
 Article 10

ProgressiveLiberalisation

The Schedulesof Specific Commitments annexedto the Agreement

shall be reviewed after every three years, or earlier if mandatedby
SAFTA Ministerial Council (SMC).

Article 11

Domestic Regulations

l. In sectors where specific commitments are undertaken, each

Contracting State shall ensure that all measures of general
application affecting trade in services are administered in a
reasonable,objective and impartial manner.

2. Each Contracting State shall maintain or institute as soon as

practicable judicial, arbitral or administrative tribunals or
procedures which provide, at the request of an affected service
supplier of the other Contracting State, for the prompt review of,
and where justified, appropriate remedies for, administrative
decisionsaffecting trade in services.Where such proceduresare not
independent of the agency entrusted with the administrative
decision concerned, the Contracting State shall ensure that the
proceduresin fact provide for an objective and impartial review.

3. The provisions of paragraph2 shall not be construed to require a

Contracting Stateto institute suchtribunals or procedureswhere this
would be inconsistentwith its constitutional structure or the nature
of its legal system.

4. Where authorizationis required for the supply of a service on which

a specific commitment has been made, the competent authorities of
a Contracting State shall, within a reasonableperiod of time after
the submission of an application considered complete under
domestic laws and regulations,inform the applicant of the decision
concerning the application. At the request of the applicant, the
competentauthoritiesof the Contracting State shall provide, without
undue delay, information concerningthe statusof the application.

5. With the objective of ensuring that domestic regulation, including

measures relating to qualification requirements and procedures,
technical standards and licensing requiremsnts, do not constitute
unnecessarybarriers to trade in services, the contracting States
shall jointly review the resultsof the negotiationson disciplineson
these measures, pursuant to Article VI.4 of the WTO General
Agreement on Trade in Services (GATS), with a view to their

l0
 incorporation into this Agreement.The Contracting Statesnote that
such disciplines aim to ensurethat such requirements areinter alia:

(a) based on objective and transparent criteria, such as

competenceand the ability to supply the service;
(b) not more burdensomethan necessaryto ensurethe quality of
the service;
(c) in the caseof licensingprocedures,not in themselvesa
restriction on the supply of the service.

6. Pending the incorporation of disciplines pursuant to paragraph5, in

sectors where a Contracting State has undertaken specific
commitments, a Contracting State shall not apply licensing and
qualification requirements and technical standards that nullifu or
impair such specific commitmentsin a mannerwhich:

(a) does not comply with the criteria outlined in paragraphs

5(a),5(b) or 5(c);and

(b) could not reasonablyhave been expectedof that Contracting

State at the time the specific commitments in those sectors
were made.

7. In determining whether a Contracting State is in conformity with

the obligation under paragraph 6, account shall be taken of
international standards of relevant international orsanizationsT
applied by that Contracting State.

8. In sectors where specific commitments regarding professional

seryices are undertaken, each Contracting State shall provide for
adequateprocedures to verify the competenceof professionals of
any other Contracting State.

Article 12

Recognition

l. For the purposesof the fulfilment of its standardsor criteria for the
authorisation, licensing or certification of services suppliers, a
contracting state may recognise the education or experience
obtained, requirementsmet, or licenses or certifications granted in
the other Contracting State.

2. After the entry into force of this Agreement, upon a request being
made in writing by a contracting State to any other contracting
State(s) in any regulated service sector, the contracting State shall
ensure that their respective professional bodies negotiate and

'
The term "relevant international organizations"refers to international bodies whose
membershipis open to the relevant bodies of all Contractine States.

1l
 conclude, within a reasonabletime, in that service sector for mutual
recognition of education,or experienceobtained, requirementsmet,
or licenses or certifications granted in that service sector, with a
view to the achievementof early outcomes.Such recognition, which
may be achievedthrough harmonizationor otherwise, may be based
upon an agreementor anangement among the Contracting States.
Any delay or failure by these professional bodies to reach and
conclude agreement on the details of such agreement or
arrangementsshall not be regarded as a breach of a Contracting
State's obligations under this paragraphand shall not be subject to
Article 26 relating to dispute settlementin this Agreement. Progress
in this regard will be continually reviewed by the Parties in the
courseof the review of this Agreementpursuantto Article 10.

a
J. Where a Contracting State recognizes, by agreement or
arrangement, the education or experience obtained, requirements
met or licensesor certifications granted in the territory of a country
that is not a Contracting State to this Agreement, that Contracting
State shall accord the other Contracting State, upon request,
adequateopportunity to negotiateits accessionto such an agreement
or arrangementor to negotiate comparable ones with it. Where a
Contracting State accordsrecognition autonomously, it shall afford
adequateopportunity for the other Contracting State to demonstrate
that the education or experience obtained, requirements met or
licenses or certifications granted in the territory of that other
ContractingStateshouldalso be recognized.

4. Settlement of disputes arising out of or under the Agreements or

Arrangements for mutual recognition concluded by the respective
professional, standard-settingor self-regulatory bodies under the
provisions of this Article shall be the responsibility of the entities
signing the Agreementsor Arrangementsfor mutual recognition.

5. wherever appropriate and if possible Members shall endeavourto

base recognition on regionally agreedcriteria. In appropriatecases,
contracting States shall work in cooperation with relevant inter-
governmental and non-governmental organizations towards the
establishment and adoption of common regional standards and
criteria for recognition and common regional standards for the
practice ofrelevant servicestradesand professions.

Article 13

Monopolies and Exclusive Service Suppliers

l. Each contracting Stateshall ensurethat any monopoly supplier of a

service in its territory does not, in the supply of the monopoly
service in the relevant market, act in a manner inconsistentwith that
Contracting State'sScheduleof specific commitments.

12
2. Where a Contracting State's monopoly supplier competes, either
directly or through an affrliated company, in the supply of a service
outside the scopeof its monopoly rights and which is subject to that
Contracting State's Schedule of specific commitments, the
Contracting Stateshall ensurethat such a supplier does not abuseits
monopoly position to act in its tenitory in a manner inconsistent
with such commitments.

3. If a Contracting Statehas reasonto believe that a monopoly supplier

of a service of the other Contracting State is acting in a manner
inconsistent with paragraphs 1 or 2 above, it may request that
Contracting State establishing, maintaining or authorizing such
supplier to provide specific information concerning the relevant
operationsin its territory.

4. The provisionsof this Article shall also apply to casesof exclusive

service suppliers,where a Contracting State,formally or in effect:

(a) authorizes or establishesa small number of service

suppliers;and
(b) substantiallypreventscompetition among those
suppliersin its tenitory.

Article 14

BusinessPractices

l. The Contracting Statesrecognize that certain businesspractices of

service suppliers,other than those falling under Article 13, may
restrain competition and therebyrestrict trade in services.

2. A Contracting State shall, at the request of another Contracting

State, enter into consultationswith a view to eliminating practices
referred to in paragraph l. The contracting state addressedshall
accord full and sympathetic consideration to such a request and
shall co-operate through the supply of publicly available non-
confidential information of relevanceto the matter in question. The
contracting State addressedshall also provide other information
available to the requestingcontracting state, subject to its domestic
law and to the conclusion of satisfactoryagreementconceming the
safeguarding of its confidentiality by the requesting contracting
State.

Article 15

SafeguardMeasures

l. The contracting Statesnote the multilateral negotiationspursuantto

Article X of the GATS on the question of emergency safeguard
measuresbased on the principle of non-discrimination.upon the

13
 conclusion of such multilateral negotiations,the Contracting States
shall conduct a review for the purpose of discussing appropriate
amendmentsto this Agreement so as to incorporate the results of
such multilateral negotiations.

2. In the event that the implementation of this Agreement causes

substantialadverseimpact to a service sector of a Contracting State
before the conclusion of the multilateral negotiations referred to in
paragraph I of this Article, the affected Contracting State may
request for consultations with the other contracting State for the
purposes of discussing any measure with respect to the affected
service sector. Any measuretaken pursuant to this paragraph shall
be mutually agreed by the Contracting States concerned. The
Contracting States concerned shall take into account the
circumstances of the particular case and give sympathetic
considerationto the Contracting Stateseekingto take a measure.

Article 16

Subsidies

1. Except where provided in this Article, this Agreement shall not

apply to subsidiesor grants provided by a Contracting State, or to
any conditions attachedto the receipt or continued receipt of such
subsidies or grants, whether or not such subsidies or grants are
offered exclusively to domestic services, seryice consumers or
service suppliers. If such subsidies or grants significantly affect
trade in servicescommitted under this Agreement, any contracting
State may request for consultations which shall be accorded
sympatheticconsideration.
2. Pursuantto this Agreement,the Contracting Statesmay, on request,
provide information on subsidies related to trade in services
committed under this Agreement to any requesting contracting
State.
3. The contracting Statesshall review the treatment of subsidieswhen
relevantdisciplinesare developedby the WTO.
4. Provisions of dispute settlement under this Agreement shall not
apply to any request made or consultations held under the
provisions of this Article or to any dispute that may arise between
the contracting Statesout of or under the provisions of paragraphs-
1&2 of this Article.
Article 17

Paymentsand Transfers

1. Except under the circumstances envisaged in Article 1g a

contracting State shall not apply restrictions on international

t4
 transfers and paymentsfor current transactionsrelating to its
specificcommitments.

2. Nothing in this Agreementshallaffectthe rights and obligationsof

the ContractingStatesas membersof the InternationalMonetary
Fund under the Articles of Agreementof the Fund, including the
useof exchangeactionswhicharein conformitywith the Articlesof
Agreement,provided that a ContractingState shall not impose
restrictions on any capital transactionsinconsistentlywith its
specific commitmentsregardingsuch transactions,except under
Article l8 or at therequestof theFund.

Article 18

Restrictions to Safeguardthe Balance of Payments

t. In the event of serious balance of payments and external financial

difficulties or threat thereof, a Contracting State may adopt or
maintain restrictions on trade in servicesin respect of which it has
obligations under Articles 5 and 6 or has made Additional
Commitments including on payments or transfers for transactions
relating to such commitments. It is recognized that particular
pressureson the balance of paymentsof a Contracting State in the
process of economic development may necessitatethe use of
restrictions to ensure, inter alia, the maintenance of a level of
financial reservesadequatefor the implementationof its programme
of economicdevelopment.

2. The restrictions referredto in paragraphI shall:

(a) not discriminate amongthe Contracting States

(b) be consistent with the Articles of Agreement of the
International Monetary Fund;
(c) avoid unnecessarydamageto the commercial, economic and
financial interestsof the other Contracting States;
(d) not exceed those necessaryto deal with the circumstances
describedin paragraph1;
(e) be temporary and be phased out progressively as the
situation specifiedin paragraph1 improves;

3. Any restrictions adopted or maintained under paragraph I, or any

changestherein, shall be promptly notified to the other contracting
States.

4. The Contracting State adopting any restrictions under paragraph 1

shall commence consultationswith the other contracting States in
order to review the restrictions adoptedby it.

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 Article 19

Transparency

l. Each Contracting State may publish promptly ffid, except in

emergency situations, at least fourteen days prior to the entry into
force of all relevant measuresof general application which pertain
to or affect the operation of this Agreement. International
agreementspertaining to or affecting trade in services to which a
Contracting Stateis a signatory shall also be published.

2. Where publication as referred to in paragraph I is not practicable,

such information shall be madeotherwisepublicly available.

a
J. Each Contracting Stateshall respondpromptly to all requestsby the
other Contracting State for specific information on any of its
measuresof general application or international agreementswithin
the meaning of paragraph 1. Each Contracting State shall also
establishone or more enquiry points to provide specific information
to other Contracting State, upon request, on all such matters.
Enquiry Points neednot be depositoriesof laws and regulations.

Article 20

Disclosureof ConfidentialInformation

Nothing in this Agreementshall requireany contractingStateto provide

confidential information, the disclosureof which would impede law
enforcement,or otherwisebe contraryto the public interest,or which
would prejudicelegitimatecommercialinterestsof particularenterprises,
publicor private.

Article 21

Areasfor Cooperation

with a view to augmentingtrade in servicesamongcontracting States,

measuresoutlined below would be focused upon within an agreed
timeframe:

(i) Development of regulatory capacity: The Contracting States

would provide for cooperation among respective regulatory
bodies of the Contracting Statesfor exchangeof experiences
and best practices.For facilitating the cooperation, working
groups may be formed for specific sectors of interest
comprising the relevant national authorities and
stakeholders. These working groups could report to the
institutional mechanismsfor overseeingthe implementation
of this Agreementas provided in Article 27.

l6
 (ii) Cooperation for collection and exchange of statistics and
regulations: A Working Group under the SAARCSTAT
comprising central bank officials and others concerned
would be constituted. They would also develop a
compendium of domestic regulations and seek to improve
collectionoftrade statisticsin services.

(iii) Cooperation in WTOiGATS Negotiations: Contracting

States shall cooperateand coordinate their positions in the
GATS negotiations,as far as possible.

Article22

Special and Differential Treatment for LDCs

In addition to other provisions of this Agreement, all Contracting States

shall provide, wherever possible, special and more favourable treatment to
leastdevelopedcontracting statesas statedin the following sub-paragraphs:

a. There shall be appropriate flexibility for Least Developed

Contracting States for opening fewer sectors, liberalizing
fewer types of transactions, and progressively extending
market accessin line with their developmentsituation.

b. All Contracting States shall, wherever possible, consider

providing special concessions to Least Developed
Contracting States while undertaking commitments on a
request-offerbasis.

c. Technical assistanceshall be provided to LDC Contracting

States for enhancing their supply capabilities in service
sectors and infrastructure development; for research and
capacity building programmes; and for catering to the
institutional and regulatory needs with a view to
strengtheningtheir domestic service capacity, efflrciencyand
competitiveness. Such technical assistancemay be provided
bilaterally or through sub-regional/regionalprojects under
Economic Window of SAARC Development Fund as per its
Charter and Bye-laws. A detailed plan of action including
timeframe for technical assistancein these areas shall be
prepared on a priority basis within a reasonabletimeframe
after entry into force of the Agreement.

Article 23

General Exceptions

1. subject to the requirement that such measuresare not applied in a

manner which would constitutea meansof arbitrary or unjustifiable

t7
 discrimination against any Contracting State, or a disguised
restrictionon tradein services,nothingin this Agreementshall be
construed to prevent the adoption or enforcementby either
ContractingStateof measures:

(a) necessary to protect public morals or to maintain public

order:u
(b) necessaryto protect human, animal or plant life or health;
(c) necessary to secure compliance with laws or regulations
which are not inconsistent with the provisions of this
Agreementincludingthoserelatingto:

(i) the prevention of deceptive and fraudulent practices

or to deal with the effects of a default on services
contracts;
(ii) the protection of the privacy of individuals in
relation to the processing and dissemination of
personaldata and the protection of confidentiality of
individual recordsand accounts:
(iii) safety;

(d) inconsistent with Article 5, provided that the difference in

treatment is aimed at ensuring the equitable or effectivee
imposition or collectionof direct taxes in respectof services
or service suppliersof other Contracting States.

8
The public order exception may be invoked by a Contracting State, including its
legislative, governmental, regulatory or judicial bodies, only where a genuine and
sufficiently seriousthreatis posedto one of the fundamentalinterestsof society.
-
Measuresthat are aimed at ensuringthe equitableor effective imposition or collectionof
direct taxes include measures taken by a Contracting State under its taxation system
which:
(i) apply to non-resident service suppliers in recognition ofthe fact that the tax obligation
of non-residents is determined with respect to taxable items sourced or located in the
Contracting State'sterritory; or
(ii) apply to non-residentsin order to ensurethe imposition or collection of taxes in the
Contracting State'sterritory; or
(iii) apply to non-residents or residents in order to prevent the avoidance or evasion of
taxes,including compliance measures;or
(iv) apply to consumers of services supplied in or from the territory of the other
Contracting State in order to ensure the imposition or collection of taxes on such
consumersderived from sourcesin the Contracting State'sterritory; or
(v) distinguish service suppliers subject to tax on world-wide taxable items from other
service suppliers, in recognition of the difference in the nature of the tax base between
theml or
(vi) determine, allocate or apportion income, profit, gain, loss, deduction or credit
of
residentpersonsor branches,or betweenrelated personsor branchesofthe sameperson, in
order to safeguardthe Contracting State'stax base.
Tax terms or conceptsin paragraph l(d) of this Article and in this footnote are determined
accordingto tax definitionsand concepts,or equivalentor similar definitionsand concepts,
under the domestic law of the Contracting Statetaking the measure.

l8
 Article24

Security Exceptions

l. Nothing in this Agreement shall be construed:

(a) to require a Contracting Stateto furnish any information, the

disclosure of which it considers contrary to its essential
security interests;or

(b) to prevent a Contracting State from taking any action which

it considers necessary for the protection of its essential
securityinterests:

(i) relatingto the supply of servicesas carried

out directly or indirectly for the purposeof
provisioninga military establishment;

(ii) relating to fissionable and fusionable

materialsor the materialsfrom which they
arederived;

(iii) taken in time of war or other emergencyin

intemationalrelations;

(iv) relating to protection of critical public

infrastructure, including communications,
power and water infrastructure from
deliberateattemptsintended to disable or
degradesuchinfrastructure;

(c) to prevent a ContractingStatefrom taking any action in

pursuanceof its obligationsunder the United Nations
Charter for the maintenanceof internationalpeace and
security.

2. EachContractingStateshallinform the other ContractingStatesto

the fullest extentpossibleof measures
takenunderparagraphsr(b)
and(c) andof their termination.

Article 25

Denial of Benefits

1. Subject to prior notification and consultation, a contracting State

may deny the benefits of this Agreement:

(a) to the supply of a service, if it establishesthat the service is

supplied from or in the territory of a country that is not a
Contracting Stateto this Agreement;

l9
 (b) in the caseof the supply of a maritime transport service, if it
establishesthat the serviceis supplied:

(D by a vessel registeredunder the laws of a

non-ContractingState,and

(ii) by a person which operates and/or uses the

vesselin whole or in part but which is of a
non-ContractingState;

2. contracting state may deny the benefits of this Agreement to a

serviceprovider of the other Contracting Statewhere the Contracting State
establishesthat the service is being provided by an enterprisethat is owned
or controlled by persons of a non-Contracting State and that has no
substantive business operations in the tenitory of the other Contracting
State.

3. In caseof specialconcessions,if any, provided exclusivelyto LDC

Contracting States as per Article 22.b, subject to prior notification and
consultation, contracting State may deny the benefits of those special
concessionsto a service provider of the LDC Contracting State where the
contracting State establishes that the service is being provided by an
enterprisethat is owned or controlled by personsof a non-LDC Contracting
Stateand that has no substantivebusinessoperationsin the territory of that
LDC Contracting State.

Article 26

Dispute Settlementand Enforcement

For the purposes of this Agreement the mechanisms available as per

Articles 19 and 20 of the Agreement on south Asian Free Trade Aiea
(SAFTA) would be applicable and enforced through Article 27 of this
Agreement.

Article 27

Institutional Mechanism

The SAFTA Ministerial Council (SMC) constitutedunder the Article l0 of

SAFTA Agreement shall be the highest decision-making body for the
purpose of this Agreement and shall be responsiblefor administration and
implementationof this Agreementand all decisionsand arransementsmade
within its legal framework.

The sAFTA committee of Experts (coE) shall monitor, review and

facilitate implementation of the provisions of this Agreement and undertake

20
any task assignedto it by the SMC. The SAFTA COE shall submitthis
reportto SMC everysix months.

Article 28

Withdrawal

Any ContractingStatemay withdrawfrom this Agreementat anytime after

its entryinto forceasper Article 21 of the SAFTA Agreement.

Article 29

Entry into Force

This Agreement shall enter into force on completion of formalities,

including ratification by all Contracting States and issuance of a
notificationthereofby the SAARC Secretariat.
This Agreementshallbe an
adjunctto the SAFTA Agreement.

Article 30

Annexes

The following Annexesattachedto this Agreementform an integralpart of

this Agreement:

a. The GeneralUnderstandingon Principlesand Guidelinesfor the

- (Annex-I)
Negotiations

b. Schedulesof Specific Commitmentsof Contracting States as

referredto in Article8 (3) - (Annex-II)

Article 31

Amendments

This Agreementmay be amendedby consensus in the SAFTA Ministerial

council. Any suchamendmentwill becomeeffectiveupon the depositof
instrumentsof acceptancewith the secretaryGeneralof SAARC by all
ContractinsStates.

Article 32

Depository

This Agreementwill be depositedwith the SecretaryGeneralof SAARC,

who will promptly furnish a certified copy thereof to each contracting
State.

21
 IN WITNESS WHEREO!- the undersignedbeing duly authorizedtheretcr
by their respectiveGovernmentshave signedthis Agreement'

DONE in Thimphu, Bhutan on This Twenty-ninth Day of April Two

Thousand Ten In Ten Originals In The lJnglish Languagc, All Texts
Being Equally Authentic.

.(),-
r_,/
lzs)
f

Dr. Zalmai Rassoul Dr. Diptr Moni, M'P.

Ministerof ForeignAff-airs Ministcr lor lrorcignAffairs
IslamicRepublicof Afghanistan Peoplc'sRcpublicol' Bangladcsh

i - .-'

Khandu Wangchuk
ilJ"lv
S.l\1.Krishna
of ForcignAlfair:; I\4inister of Ertr:rrralA ftairs
Iv{irristcr'-in-Charge
Kingdomof Bhutan l{cpublicol'lndtu

,4,n -i ,[ L .-L..,---
i.. t
'i

, t . .-,-:-u.,e,"{-'"t-
------" -'/*'-!w'

Ahmed Shaheed Sujata Koirala

lvlirrislcrr-rfFrlreignAffairs DeputyPrirneMinisteran<l
Republicof Maldivcs Ministcrfbr lrorcigrrAllairs
NePal

t\{"
t'-,**,*}'.,.,.4.\.-)
.*_,i.
MakhdoomShanMlnmood Quieshi i Lakshman Peiris
Ministerfor ForeignAtfbirs Ministerof Foreign At{birs
IslamicRepublicof Pakistan SocialistRepublicof Sri l'anka
Democratic

22
 Annex-I

GENERAL UNDERSIANDING ON
PRINCIPLES AND GUIDELINES FOR THE NEGOTIATIONS
ON
SAARC AGREEMENT ON TRADE IN SERVICES (SATIS)

1. This Agreement shall provide real and effective market access

to all Contracting Statesin an equitablemanner.

2. Negotiationsfor scheduleof specific commitmentsshall take

place keeping in view the national policy objectives, the level of
developmentand the size of economiesof contracting states both
overall and in individual sectors.

3. In light of the priority accordedto servicesby all contracting

States,the Agreement shall progressivelycover liberalization of trade
in services with broad-basedand deeper coverage of majority of
servicessectors/sub-sectors with a view to fulfilling the objectivesof
Article V of GATS.

4. A positive list approachshall be followed. Negotiations for

specific commitmentsfor progressiveliberalizationwould be based
on o'request-and-offer"approach.

5. Theremay be specifictexts in mutually agreedareas.

6. MTN/GNS/WI20 (wro Secretariat's services Sectoral

classificationList) could be a basisfor, but may not be limited to, the
sectoralcoverageof the sectorspecificcommitments.

7. Initial offers of the wro-Member contracting states shall be

in addition to their existing levels of multilateral commitmentswith
substantialsectoraland modal improvementover thosecommitments.

8. Agreement and schedulesof specific commitments shall be

subjectto review periodically.
:F:F{<**

23