Asian nations long accustomed to programs assisting their exports to developed markets are struggling to retain that break.
The fight is intensifying, and most know they'll eventually lose.Both the United States and the European Union offer a generalized system of preferences, which are designed to help developing countries boost their economies and industry by allowing products to enter the market at low or no duty.
The U.S. program, which applies to more than 4,400 products or categories from 140 countries, is undergoing its annual review. The EU is already announcing cancellations phased in over the next three years.
The Philippines, long the laggard among Pacific Rim economies, has been fighting for two years to retain GSP rights on shipments including electronics to the United States.
Officials say now is not the time to cut benefits just as the economy is expanding.
Earlier this month, U.S. Trade Representative Charlene Barshefsky announced a review to determine whether the Philippines continues to qualify for GSP benefits.
This was prompted by a petition from the Meat Industry Trade Policy alleging failure to adhere to commitments on trade in pork.
Both American and European programs include provisions to phase out the beneficiaries once they are deemed not to need the assistance.
EU STUDYING IMPACT
Criteria include national per capita income - rising rapidly in much of East and Southeast Asia - and the proportion of GSP-aided exports to the total of imports of an item or category. That ''competitive need'' limit imposes a ceiling on GSP imports to avoid disruption in the home market.
The EU is studying the level of competitiveness of all products it buys under GSP.
Pedro Martinez, EU counselor for economic affairs, said during a recent visit to Manila that products found to be competitive will be denied benefit.
Products deemed uncompetitive would face standard duty rates, but be given discounts on a sliding scale of from 10 percent to 60 percent, instead of zero duty.
This graduation mechanism is ''designed to ensure a system of fairness,'' he said.
As a result, the EU expects to withdraw all GSP benefits by 1999 from Argentina, Brazil, Uruguay, Mexico, China, Chile, Ukraine, Indonesia, Malaysia, the Philippines and Thailand.
Asia's early economic Dragons - Hong Kong, Singapore, Taiwan and South Korea - long ago lost their GSP entitlement without missing a beat in their development.
Many others, though developing rapidly, maintain they still need the help. Officials in Washington and Brussels aren't always convinced, sometimes because of complaints that such low-cost imports destroy jobs at home.
For several years, Malaysia was the largest or second-largest beneficiary of U.S. GSP entitlements - more than $4 billion a year - even though that trade represented a bare 2 percent of its exports to the United States.
Ms. Barshefsky was blunt last fall. ''Malaysia captures a quarter of all the program benefits. Malaysia doesn't need it.''
Officials in Kuala Lumpur project the losses at $40 million a year, based on 1995 figures.
While officials complain that it's too soon to go cold turkey, many analysts and industrialists see it as inevitable and even desirable.
''It's nothing to be worried about. The reason Malaysia is graduating is that it has done so well,'' said Rajeev Malik, an analyst in the Singapore office of the Jardine Fleming brokerage.
Others say loss will add to pressure to become more efficient and thus more competitive.
Thailand reckons it will lose $240 million a year and more than 314,000 jobs without GSP benefits. The economy is already in a slump and exports sluggish.
'IT WOULD HURT'
Trade officials are urging exporters and their U.S. partners to lobby Washington to remain in the program. Electronics firms say their goods would be badly hit without GSP assistance because they would lose a competitive edge in pricing.
Thai trade officials say the potential losses can't easily be made up by diverting trade to other markets. Even so, they seem resigned to the inevitable.
''It would hurt. It's a bad time,'' said one official in Bangkok. ''But GSP is looking toward really less developed countries. In time, Thailand will gradu- ate; it's just a question of when.''
The value of Thai exports to the EU is expected to fall by around $50 million in 1999 if the bloc carries out its threat to eliminate benefits from nine product groups, a study by a Thammasat University professor shows.
EU administrators propose to cut benefits 50 percent this year and eliminate them entirely in 1999.
Exports of industrial products, particularly shoes, bed covering fabrics, toy animals made from fabric and baby clothes, are expected to be hard hit.
The study, done at the request of the Commerce Ministry, urges the private sector to concentrate on higher value-added products, increased production capacity and diversion of sales to countries still offering full GSP benefits.