The Maquiladora Industries

Government’s primary role in the business of foreign investment by U.S. companies in other countries like Mexico is in signing the free trade agreements negotiated between the participant countries.  The extent of oversight is therefore confined to the “law” as written into the free trade agreement, which is enforced by investors seeking to protect their interests via international arbitration, before an agency known as the National Administration Office.   On behalf of laborers there are no “right” per se in the typical trade agreement.  In the case of the North American Free Trade Agreement (NAFTA), President William J. Clinton signed the agreement in 1992 on behalf of the U.S., while President Carlos Salinas de Gortari signed for Mexico and Prime Minister Brian Mulroney signed on behalf of  Canada.  NAFTA, in its fifteenth year in 2011, created one of the largest free trade areas and was designed to increase business investment by reducing trading costs (import and export taxes/tariffs).  The extent of regulatory provisions dealing with workers’ interests in safe workplaces and stable living wages would be found in NAFTA’s side agreement known as the North American Agreement on Labor Cooperation (NAALC).

Critics of the quick expansion that followed the liberalization of trade rules under NAFTA noted that companies were likely to push for their interests in a way that would minimize the interests of the workers for having safe workplaces and that in some cases multinational corporations would engage in activities with any regard for the environmental consequences.  By the late 90s at least one study demonstrated that following the rush of industrial activity produced by NAFTA there was a rise in negative environmental impact on both sides of the U.S.-Mexico border because of so many maquiladorasunsafe and illegal disposal practices of toxic waste.

Is governmental oversight of transnational business activities desired?

Under a free trade agreement the stronger of the parties with “right” is obviously the investor.   In the case of the Mexican maquiladoras, the worker must trust her own government to enforce relevant health and safety standards so that workers are not injured from exposure to toxicity, or to enforce the federal labor law so that workers receive minimum wages and guaranteed employee benefits.   To date most maquiladoras have been viewed as having a lax attitude toward compliance with occupational environmental  safety standards.  When enforcement fails as an aspect of the free trade agreement relationship between nations-parties, the only other recourse may be international law.

See further:

The Multinational Monitor: “Double Standards,  U.S. Manufacturers Exploit
Lax Occupational Safety and Health Enforcement in Mexico’s Maquiladoras: an interview with Garrett Brown” (2000)


The World Bank

World Trade Organisation (WTO)

International Monetary  Fund (IMF)