Philippine Garments in the Post-MFA Era: Seeking Protection via Free Trade?

The Philippine garments industry grew rapidly under the quota system of the MultiFiber Agreement (MFA). However, in the post-MFA environment, the industry has been shrinking continuously. One solution being pursued by the government is the development of a bilateral sector-focused free-trade between the United States and the Philippines. This means the assembly of duty-free American-made textiles in the Philippines and their re-export, also duty free, as Philippine garments destined to the American market. The author argues that this proposed arrangement is not necessarily a solution to the Philippine garments crisis given the realities in the global garments market and the weaknesses of the Philippine garments industry. The author concludes that the absence of a strategic industrial policy supportive of an integrated program of industrial development and upgrading is what contributed to the earlier collapse of the Philippine textile industry. This is also the main reason for the present crisis of the country’s garments industry.