tectionism:
These measures illustrate that Mexico has made it easier for companies to import goods. This does not create a market for goods, but enables companies to restructure their pricing in recognition of reduced tariffs. In addition, the decreased numbers of permits that are required and the lower import duties work to reduce the cost of doing business in Mexico which results in a higher number of goods being imported. That Mexico was able to increase the number of imported goods by 50 percent over 10 years bears out the premise that reduced barriers to trade will result in an increased flow of goods into the target country.
There is another trend in the American-Mexican business relationship which must be taken into account when considering NAFTA: maquiladoras. These are border plants that have traditionally been associated with basic assembly and rough manufacturing work. Introduced in 1965 after the United States modified its immigration laws to make seasonal migration for agricultural jobs in California more difficult, maquiladoras were one-half of a twin plants program. American companies would set up a plant in the United States which manufactured components; these components were then shipped across the border to the maquiladora where the labor-intensive assembly work would take place. The finished piece was then back across the border for distribution and consumption. Duty was paid only on the value added in Mexico. Maquiladoras were initially established in order to take advantage of the low labor rates in Mexico.
There are currently more than 2,200 maquiladora facilities in operation employing more than 500,000 workers. The plants stretch from the Gulf Coast to Tijuana on the Pacific ocean. Raw material is brought into Mexico from throughout the world for final assembly, and companies as diverse as Sony, Mercedes Benz, Nissan and Zenith all operate maquiladoras. Border towns are the most popular...