IV - Trade Policy Options for the Philippines

Summary

Introduction

This paper explores trade options for the Philippines in the forthcoming Uruguay Round of Multilateral Trade Negotiations. We do not purport to be exhaustive in identifying a wide range of alternatives nor do we claim to have the best ideas concerning the stance the country should take in the negotiations.

The specific objectives of this paper are: (a) to review the trade experience of the Philippines; (b) to indicate some policy options in the context of the Uruguay Round; (c) to describe the products or markets which have apparent importance to the Philippines in the present round, the priorities the country can take, and the new issues that will be covered in the round; and (d) to suggest some strategies which can be pursued by the Philippines in the round.

Trade Structure and Performance

The trade and exchange controls of the 1950s created an economic environment favourable to full-scale import substitution as consumer-goods industries profited from relatively free imports of capital goods and the high domestic price of finished products engendered by the system. The foreign exchange needs of the import-substituting industries were satisfied mainly through the exports of commercial agricultural crops and not through the concomitant break-out into industrial exports. As a result, Philippine exports have been characterized by products with low value added, weak inter-industry linkages, excessive concentration on a few items and continuing reliance on agriculture or agriculture-related products in terms of net foreign exchange earnings, the respectable surge of non-traditional manufactured exports in the late 1970s notwithstanding.