St. Mary's Law Journal


This Article will discuss the industry and relevant aspects of the legal framework which evolved into the modern maquiladora operation. It will also analyze the possible impact of the ongoing North American Free Trade Agreement (NAFTA) negotiations on the Mexican maquiladora industry. In the late seventies and early eighties, Mexico plunged into an economic crisis brought on in part by its almost exclusive dependence on oil exports. The extreme drop in the international oil market forced the country to restructure its economy with a greater emphasis on manufacturing for export. Mexico’s maquiladora program played a key role in this aspect of Mexico’s economic recovery. The maquiladora industry has not been a panacea for Mexico’s ailing economy. Nevertheless, a review of the policy which gave rise to the industry’s growth demonstrates its significance as a precursor to the industrial integration being contemplated in the negotiation of NAFTA.

It is hoped the industry transformed under NAFTA will depend less on materials sourced outside of Mexico. As preferential tariff treatment is extended to Mexican materials, there will be less incentive to import duty-free components from the United States. Presumably, under these conditions, manufacturers will elect to source in Mexico because of proximity to the manufacturing process. Of course, the decision to use parts and components of Mexican origin is conditioned upon the ability of Mexican firms to produce competitive products. The maquiladora industry, despite its short-comings, serves as an important example to gauge how economies will adapt and integrate under the optimum trade conditions hoped for with NAFTA. Greater direct foreign investment and growth of the Mexican economy would equalize the distribution of production throughout North America. Mexico’s strength for many years to come, however, will continue to be production for export.


St. Mary's University School of Law