In terms of the economic impact of the withdrawal of GSP benefits by the United States, Tables 21 and 22 show that domestic exports of items which were the top GSP exports in 1988 increased in 1989 despite the loss of GSP privileges. By this score, the economic impact seems inconsequential.

As for trade diversion to Japan and the EC, there seems to be evidence of more domestic exports of items which previously went to the United States under the GSP now going to Japan but not to the EC. With respect to Japan, an increase in Singapore's domestic exports of data-processing machines, other radio receivers, parts of TVs, radios, and plastic articles in particular, was observed for 1989. It must be cautioned, however, that the exact quantum of trade diversion cannot be conclusively determined as other factors such as the exchange rate, trade policies, and relative international competitiveness may have encouraged more of such exports into Japan.

Since one major objective of this study is also to draw implications for the target countries, it may be useful first to briefly review the GSP utilization of the target countries. This is shown in Table 25 as well as in Appendix 3. Two observations may be provided. One is that while the three ASEAN countries, namely, Indonesia, Malaysia, and Thailand, still rely on GSP benefits and would like to resist graduation, they are aware of the sentiments of preference-giving countries and realize that graduation is only a matter of time. Second, in the short run, while the benefits are available, they are trying their best to improve administrative rules and regulations to ensure better GSP performance as measured by the utilization rates.

In the case of Malaysia, specific reference was made of Singapore's loss of its GSP affecting Malaysian industries. This is in respect of certain products, particularly in electrical and electronic sectors, where Singapore inputs are crucial for Malaysia to attain the 35 per cent value-added requirement for the U.S. GSP scheme.