Mexico's maquiladora industry presents tremendous opportunities and challenges for the international investor and legal practitioner. Since 1985, the number of maquiladoras has increased on average 20 percent per year from 785 plants employing 218,000 employees to, in 1996, 2,400 plants employing 650,000 employees. Revenues generated by the maquiladora industry have also increased dramatically from $15 billion a year in 1991 to over $31 billion in 1996. Moreover, following the December 1994 devaluation of the Mexican peso, this rapid growth is anticipated to continue in the near future.

This paper sets forth an historical perspective of the maquiladora industry, highlights the key legal requirements of the maquiladora program, analyzes the impact of the North American Trade Agreement ("NAFTA") on the maquiladoras, and attempts to provide investors and legal practitioners with current information on Mexico's rapidly changing regulatory environment. This paper also discusses methods of structuring maquiladora operations, as well as certain tax issues, environmental compliance, and labor matters which are a primary consideration in operating a maquiladora.