U.S.-Mexico Trade:

Assessment of Mexico's Environmental Controls for New Companies

GGD-92-113: Published: Aug 3, 1992. Publicly Released: Aug 11, 1992.

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Pursuant to a congressional request, GAO assessed Mexico's environmental controls on new U.S. majority-owned companies under the Mexican maquiladora program, focusing on: (1) whether six U.S. maquiladora companies established between May 1990 and July 1991 followed Mexican regulations and procedures before beginning operations; (2) providing information on needed improvements in environmental controls; (3) reviewing Mexico's limitation on public participation in approving environmental impact appraisals and operating permits; (4) assessing Mexico's budget for its environmental protection program; and (5) providing information on U.S.-Mexican cooperation to strengthen and improve environment impact appraisal compliance.

GAO found that: (1) Mexican regulations require owners or operators of companies to submit impact appraisals before construction if their operations would adversely affect the environment or violate federal environmental regulations or standards; (2) owners/operators of new companies must also obtain applicable environmental permits before operating; (3) none of the six companies submitted the required appraisals or received an exemption from the requirement, and all were operating without final operating licenses; (4) noncompliance with environmental regulations is not limited to U.S. maquiladoras; (5) the appraisal process could be strengthened by specific guidance on which companies must do appraisals and other studies, by increased enforcement of the requirement, and by a system to identify noncomplying companies; (6) Mexico is developing the specific guidance needed, and has stopped issuing provisional operating permits in six border states; (7) current Mexican law and regulations allow for public participation in the process only after approval and not at all in operating permit decisions; (8) Mexico is developing a new system to ensure earlier public participation prior to approval; (9) Mexico has increased its staff for the process; (10) Mexico has also increased its funding for these and other environmental protection programs, but future funding is not certain; and (11) U.S. and Mexican agencies have recently agreed to cooperate on improving Mexico's appraisal guidance and training.

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