The Philippine garments industry surpassed the growth of the entire manufacturing sector between the years 1972 to 1980. However with the dismantling of quotas under the General Agreement of Tariffs and Trade, new exporters threaten the survival of the local garments industry. The situation is further aggravated by the negative total factor productivity experienced by the industry. To become competitive, recommendations given are policy reforms such as cutting down on bureaucratic processes and the development of the textile industry as a support industry. Meanwhile industry's strategy should focus on improving efficiency and productivity through adoption of new technology and development of labor skills.