ABSTRACT This thesis aims to analyze governances effort to enhance competitiveness of its local wood carving furniture industry called Mebel Ukir Jepara (MUJ) to deal with global trade competition. This research focuses on governance policy to facilitate upgrading activities and to enhance value added of MUJ, by using upgrading analysis in Global Value Chain. Data was obtained mostly by conducting literature review from journal, newspaper and online articles, as well as many useful data from internet. Furthermore, this research came up with several findings. First, upgrading of MUJ is divided into two categories, static and dynamic upgrading. Second, in order to deal with global trade competition, and to enhance value added, policy rent on upgrading MUJ industry is highly required. Third, upgrading strategic is not able to be applied in MUJ industry because of some obstacles. Knowledge and awareness of the governance also society to develop an efficiency production is substantial toward global trade competition. Keyword: MUJ, upgrading, global trade competition, governance policy, competitiveness.