During the past decade, Mexico’s policy towards foreign investment has undergone important changes. There is no doubt that the North American Free Trade Agreement has significantly improved Mexico’s access to the U.S. and Canadian markets, and that American direct investment in Mexico has increased considerably due mostly to NAFTA. It is precisely these investments that have helped to create jobs, and generate a new business environment in which Mexico and the United States can explore mutually beneficial ventures.

      However, even before NAFTA, the In-Bond Assembly Plant in Mexico had an explosive growth since its beginning back in 1965. The maquiladora sector has been the most dynamic industrial process, experienced not only by the regional economies of the northern border but also by the Mexican economy as a whole. Since its inception as an emergency measure to provide employment, it has transformed itself into one of the most successful industrialization models of the country. Maquiladora exports have generated more foreign exchange than any other sector in Mexico, with the exception of oil production.

      However, the maquiladora industry is changing. While NAFTA has been a success in boosting trade between the three countries (the United States, Canada and Mexico), recent changes in Mexican tax and customs legislation, that make it difficult and expensive to import inputs and equipment, have contributed to the country’s diminished attractiveness towards direct foreign investment, especially in the manufacturing sector. Certain provisions within   NAFTA have modified customs rules that significantly affect maquila plants. Effective Jan. 1, 2001, if inputs are imported under a maquiladora program from a non-NAFTA country to be incorporated into a product subsequently exported to the United States or Canada, refund or...

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