Most analysts predicted that Mexico's textile industry would take a severe blow when trade quotas were eliminated in 2005. Instead, the country has maintained essentially the same volume of exports to the United States as it maintained prior to the expiration of the trade quota agreement. While Mexico's textile industry overall has seen a decline since the quota was eliminated, the country has managed to hold its own by taking advantage of the market demand for high-value garments in the United States. At present, Mexico offers many economic incentives for investors who wish to take advantage of this market. Three main companies dominate the actual production of textiles, but the production of high-end garments is a field that is still wide open. Akra, Invista, and Cydsa have forced more than 380 Mexican textile companies out of business within the past four years (Barday, 2005), and it is apparent that investors in the Mexican textile industry will benefit mostly from sales that are a result of production of finished fashion garments, rather than from attempting to compete with these three textile giants. Although the term 'textile industry' normally refers to the production of textiles, for the purposes of this paper, whenever the words 'textiles' or 'textile industry' occurs, the reader will understand that the term is referring to that portion of the textile industry which deals with the production of high-value garments, unless otherwise differentiated.
Mexico is a major producer of fibers and textiles, and of the cutting and assembling of textiles into garments. The United States exports a significant amount of fibers to Mexico to be used in the garment-making process. Until the trade quotas were eliminated, much of the textile trade between the two countries consisted of mutual exports and imports. Factories in the United States spun cotton into thread or produced polyester fibers; the fibers and thread were exported to Mexi...