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The participation of the Philippines in the global production network of multinational electronic companies has undoubtedly shaped the pattern and structure of the country's international trade since the early 1990s. While the industry has remained the largest foreign exchange earner for the country, the country's participation in the global production network industry is confronted, for the longest time, with one major issue. That is, the country hardly progressed beyond the lowest level of the production chain--labor intensive and import dependent assembly and testing; and hence, the value added of the industry has remained small. The industry is competitive in 18 electronic products that accounted for about 86 percent of the industry's total exports. The government, however, needs to address the weaknesses and inadequacies of the local support structures that have constrained the ability of the country to move towards higher levels of the value chain in order to ensure that the global players currently operating in the country will remain and expand operations. Since the global production network is market-driven, negotiations under an RP-US Free Trade Area should be focused on trade and investment liberalization and facilitation in order to improve the functioning of the markets of both economies.

The government has implemented substantial trade and investment policy reforms during the last two decades following a three-track approach involving unilateral, regional and multilateral modalities towards freer trade and investment. The reforms resulted to improvements in domestic resource allocation, increased productivity, increased competitiveness of manufacturing industries, expansion of exports and the increased integration of the country in the global market. Yet the growth of the industry sector, particularly manufacturing, has not been as robust as many had expected, leading some sectors to question the reforms. This requires some hard thinking but at the same time pose a great challenge to policymakers. The experience of the country during the past two decades shows that getting the most out of international trade is not just a matter of shift away from exports of primary commodities to exports of manufactures. This paper argues that the effect of international trade on the country's economic growth depends largely on how much of that trade is linked to the domestic economic activity. In effect, the fundamental policy issue for the government is not one of more or less trade liberalization, but how best to extract from the country's participation in the global trading system the elements that will promote economic development, especially now that the global trading environment is becoming much more complex than what it was two decades ago. This paper addresses this issue, including the opportunities as well as the challenges that lie ahead for the country under the emerging more complex global trading environment.

The fast economic integration of the world in the 1990s has brought new players, new products and new technology into the market, paving the way for intense market competition. In response to this development, the Philippines embarked on a clear-cut change in trade policy in the 1990s, via participating into WTO, AFTA and APEC. Recent development includes the objective to fast-track certain liberalization efforts including the Early Voluntary Sectoral Liberalization initiative under APEC and the Information Technology Agreement under WTO. This paper's objective is to analyze the application of these recent trade policy developments and to present a forward-looking approach on how best the business sector and the government can respond and adapt to these changes in the face of the ongoing regional crisis.

Past studies have shown that Philippine productivity growth has been low compared to other ASEAN members. This is specifically attributed to the inward-looking industrial policies pursued by the government. The country has embarked on major trade reforms since 1980s through its commitment to WTO, AFTA and APEC and in the 1990's through the foreign direct investment (FDI) liberalization. How these affect the country's long-term growth depends on whether the trade reform translates into improvements in productivity. This paper examines the country's productivity performance and analyzes whether or not trade and investment policies have had a significant impact on productivity growth. This also tries to explain changes in total factor productivity (TFP) growth by conducting a regression on TFP against trade and policy indicators.

Recognition of the adverse effects of protectionist policies has lead to the Philippine government to undertake major trade reforms in the 1980s and 1990s having efficiency and competitiveness as objectives. This study analyzes the impact of Philippine trade and investment policies on economic growth and on the performance of the manufacturing industries. This also analyzes the trends of the Philippine-Japan economic relations focusing on trade, investments and development assistance and provides possible directions in the role of Japan in the future Philippine development.