Impact of trade liberalization on the Philippine garlic, onion, and potato industries

The study revealed that Philippine trade policies on garlic, onion, and potato industries under the pre-GATT period were restrictive with the imposition of quantitative restrictions on these commodities. However, the trade policy environment gradually became more liberalized with the country's accession to the GATT-WHO in the mid-1990s. Findings of this study shall be considered as partial analysis of trade liberalization effects. Results of the trend analysis revealed that the expected negative effect of trade liberalization on domestic production was observed for potato. However, trade liberalization had positive effects on garlic and onion production. In terms of consumption, the expected effects of trade liberalization on garlic, onion, and potato were consistent with the findings of the study. Implementation of GATT-UR resulted in positive effects on onion, garlic, and potato consumption. As expected, results of the study indicated reductions in prices of selected vegetables both in real farm and wholesale prices (except for onion). The study also revealed that trade liberalization resulted in increased volume and value of garlic and onion exports. The volume of potato exports also depicted a positive trend after GATT. As expected, results of the trend analysis indicated that trade liberalization had positive effects on the volume and value of garlic, onion, and potato imports. Statistical tests revealed that significant differences in mean levels between the pre- and post-GATT period existed for onion and potato production; garlic and onion consumption; nominal prices of garlic, onion, and potato; real prices of onions, volume of garlic and potato imports; and value of garlic, onion, and potato imports. Results of the price competitiveness analysis revealed that domestically produced potato could compete with imported frozen potato but that locally grown garlic and onion were not competitive under the import substitution scenario. Moreover, results of the analysis also indicated that exporting onions appeared attractive, but exporting garlic products was unattractive. The cost competitiveness analysis revealed that locally produced garlic and onion were not competitive as import substitute while local potato could serve as efficient import substitutes. The analysis indicated that, although the country has not competitive advantage in exporting garlic, it has competitive advantage in exporting onions. Problems that adversely affect the performance of the selected vegetable industries are given as well as suggested recommendations to address these problems