Arab ministers are to vote on the proposals on Sunday - the latest move to punish Syria for its continuing brutal crackdown on protesters.
Syria's foreign minister has accused the League of meddling in its affairs.
In a letter to the 22-member organisation, Walid al-Muallem said it was seeking to "internationalise" the conflict.
'Humanitarian corridor' More than 3,500 people have died since protests against the Syrian government began in March, the UN estimates.
The League threatened Syria with sanctions earlier this month after President Bashar al-Assad repeatedly failed to implement steps to end the violence, including allowing international observers to enter Syria.
The draft document - drawn up by the Arab League's Social and Economic Committee on Saturday and seen by correspondents - requires the support of two thirds of foreign ministers.
It also includes the freezing of all Syrian assets in Arab countries.
The BBC's Jim Muir in neighbouring Lebanon says the guidelines of the sanctions package had already been set by the foreign ministers, so approval is pretty much a foregone conclusion.
Damascus depends on its Arab neighbours for half of its exports and a quarter of its imports, so the sanctions are expected to have some impact.
But our correspondent says Syria can still count on two neighbours - Iraq and Lebanon - not to enforce them fully. Neither country has endorsed the move.
On Saturday, Mr Muallem hit out at the group after it asked the UN to contribute to the proposed observer mission, calling it an invitation "for foreign intervention instead of a call to avoid one".
Soldier burials Meanwhile, France has suggested creating humanitarian corridors to provide food and medicine to civilians cut off by military operations.
French Foreign Minister Alain Juppe said the plan fell short of a military intervention but acknowledged that such convoys might need armed protection.
Earlier, Syria buried 22 members of the armed forces, including six elite pilots, killed in various attacks.
Activists say at least 16 civilians were killed on Saturday, most of them in the flashpoint Homs province.
A United Nations human rights panel has expressed alarm at reports it has received of security forces in Syria torturing children.
The Geneva-based UN Committee against Torture says it has received "numerous, consistent and substantiated reports" of widespread abuse in the country.
Reports from Syria are difficult to verify as foreign journalists are unable to move around the country freely.