Industry contributed 10.7 percent of GDP in 1999, a slight decline from 1984, when it contributed 13.8 percent of GDP. The importance of industry to employment is somewhat greater than this, however, since 22.8 percent of the labor force is industrial. Construction was the biggest single sector, followed by manufacturing. The contribution of construction is variable, depending on the expansion of tourism infrastructure (especially hotels) and new businesses in any one year.
The most important manufacturing activities are related to food and timber processing, mainly for the local market. Under a trade agreement with Australia and New Zealand (SPARTECA), Tonga is allowed to export manufactured goods duty-free, and at times has been successful in establishing a market for woolen goods and other products produced in small factories or from home. The advantages of this trade agreement have declined with trade liberalization , which has opened up the Australian and New Zealand markets to cheaper Asian products.