The signing of NAFTA in 1994 increased the viability of the maquiladora industry. By the year 2000, the sector is estimated to generate 48% of Mexico`s exports. Most importantly, it served to deepen the unequal economic and political ties between Mexico and the United States. According to Dancing on Quicksand: A Retrospective on NAFTA on the Eve of its Replacement by James Cypher and Mateo Crossa, NAFTA was more of an investment project for the United States than a “free trade agreement” that increased U.S. foreign direct investment in Mexico, increased the number of U.S.-owned factories, and facilitated the export of goods. mainly in the US markets. While these reforms have accelerated the flow of goods and capital, they have been accompanied by policies and practices that would reduce the mobility of ordinary people. Mexican President Carlos Salinas said the goal of NAFTA implementation was “to export goods, not people.” In Mexico, the export sector is the main generator of employment: more than half of the new jobs created between 1994 and 2000 were export activities. Employment in the maquila sector has continued to grow and maquiladoras are now responsible for more than 15% of Mexican manufacturing jobs. To date, the maquiladora industry currently employs 1,137,862 people.
Export-oriented manufacturing jobs pay nearly 40% more wages than the rest of manufacturing. In 1965, Mexico relaxed its import substitution strategy by allowing the creation of maquiladoras as part of its border industrialization program (Hansen, 1981). [4] The program allowed companies to import duty-free inputs, machinery and parts they would need to export assembly work. The maquiladoras, as they were called, had to export all the production. To ensure that companies complied with this rule, they had to purchase an obligation equal to the value of their imports, which was returned to them once they had exported all their imported inputs in the form of finished products (hence the term bonded assembly plants). Unlike other companies in the country, maquiladoras could be 100% owned by foreigners. Initially, maquiladoras were to settle within 20 miles of an international border or coast. In 1972, the government relaxed these rules and allowed maquiladoras to settle throughout the country. The presence of maquiladoras is the result of an agreement between Mexico and the United States in the 1960s. These factories benefit from certain tax advantages that make them attractive to companies. Companies can benefit from cheaper labor in Mexico and reap the benefits of doing business in the United States.
The presence of maquiladoras contributed significantly to the industrialization of the U.S.-Mexico border. Even with the new federal initiative to establish migrant shelters along the border and the already existing coordination with the maquiladora industry, connecting migrants with employment opportunities has been slow. In response, INDEX National President Luis Aguirre Lang said efforts to promote vacancies for Central American migrants with work permits in Mexico would intensify in the coming months, highlighting the benefits of employing migrants in maquiladoras. “We are working with the Ministry of Labour to develop a clear strategy for all Central American migrants stranded in border communities. Remember that our industry has been strengthened by these kinds of phenomena. Over the past two decades, Mexico has significantly opened its economy to foreign trade and investment. The country has moved from an inward-looking economy to one where export production is the main source of economic growth. In 2000, international trade accounted for 32 per cent of Mexico`s GDP, up from 11 per cent in 1980.
The most dynamic exporters in Mexico are bonded assembly plants, known as maquiladoras. These factories import parts and components from abroad, assemble inputs for finished products, and then export their production. They are most active in the electronics, auto parts and apparel industries. Maquiladora`s main point of contact with the Mexican economy is the hiring of workers. They buy only a few inputs from Mexico and sell virtually none of their production in the country. The United States is the main source of its intermediate consumption and the main target market for its sales. While all maquiladoras contract with foreign companies to obtain inputs and distribute outputs, not all subsidiaries are multinational corporations. Many are Mexican entities that deal with multinational corporations through arm`s length compliant transactions. Although maquiladoras have benefits for Mexican and foreign companies, workers face serious risks, such as low wages, terrible working conditions, low job security, poor and inadequate education, and high exposure to dangerous and toxic chemicals.
Working conditions are gradually improving, as some workers now receive a minimum wage of $3.40 per hour and factories have moved to modern, automated, air-conditioned facilities. The security situation has improved significantly as Mexico continues to adopt standards popular in other countries. Security scanners, door locks and other sensors are widely used today when plant managers become familiar with the technology. In addition to overcoming risky working conditions, automation and sensors have allowed factories to operate more efficiently and combat problems such as industrial pollution and environmental damage When creating immex, IMMEX has encouraged manufacturers to export goods and strengthen Mexican exports, and that growth continued….