Commerce Department Conference on Mexico's Maquiladora Program

Testimony was given concerning the Department of Commerce's efforts to promote U.S. firms' participation in Mexico's Maquiladora Program, through which the Mexican government provides incentives to attract foreign direct investment to Mexico. GAO found that: (1) the Expo-Maquila'86 conference, which was in response to American firms' requests for information, represented Commerce's first effort to stage an organized event for the program; (2) Commerce has promoted U.S. investments overseas as part of the Caribbean Basin Initiative; and (3) through Expo-Maquila'86, Commerce aimed to convey the benefits of the Maquiladora Program and to give U.S. firms the opportunity to obtain technical information about establishing and operating maquiladora plants. GAO also found that: (1) the Mexican government initiated the Maquiladora Program in 1965 to generate economic development and employment along Mexico's economically depressed northern border by attracting sub-assembly operations; (2) the program, which at the end of 1965 had only 12 operating plants employing about 3,000 workers, has become one of the most important sectors of the Mexican economy; (3) there also has been a recent trend in the program toward greater sophistication of production processes and greater complexity of products, particularly in electronics and automotive plants; and (4) two of the most important constraints on the continued development of the program were the limited ability of Mexican firms to supply raw materials and inputs to Maquiladora plants and the shortage of skilled labor.