The Mexican government has published an amendment to the Maquiladora Decree that consolidates existing maquiladora and PITEX programs into a single export promotion program under the Maquiladora Decree, effective Nov. 13, 2006.

      The decree is called the Decree for the Promotion of the Manufacturing, Maquiladora and Exportation Services Industry (Decreto para el Fomento de la Industria Manufacturera, Maquiladora y de Servicios de Exportacion). Therefore, even though the term maquiladora is being preserved, programs will also now be known as IMMEX programs.

      According to the Mexican government, combining the maquiladora and PITEX Decrees was necessary to simplify the administration of the two export promotion programs, and also to consolidate the regulations and legal framework applicable to the export sector into a single document.

      The IMMEX Decree maintains most of the features currently available under the PITEX and maquiladora programs. It provides additional benefits, but introduces additional regulatory requirements and grants to government regulators more discretionary authority. Moreover, we believe that from a regulatory perspective the Decree has complications that could have been easily avoided if a more efficient legal technique had been applied.

      The Decree preserves preexisting tax rules for existing maquiladora operations. Companies that were previously PITEX companies and that like maquildoras are now IMMEX companies will only obtain the full benefits from those tax rules if they adopt an appropriate structure for their operations.

Customs and regulatory aspects

      Terciarizacion is a new modality under which companies (i) authorized to operate as Certified Companies and (ii) that do not have industrial facilities, may carry out industrial processes through third-party manufacturers. This is the first time that an outsourcing concept is included in the manufacturing export industry. However, the requirement of not having industrial facilities represents a limitation to IMMEX companies, since most Certified Companies already have industrial facilities.

            Submanufactura is now what used to be the submaquila operation. The new definition of submanufactura eliminates the requirement of performing a complementary industrial process and changes it to an “industrial or services process directly related with the manufacturing activity,” which now also includes...

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