EXPORT PROCESSING ZONES LEARNING OBJECTIVES 1.TO BE ABLE TO DEFINE A EPZ 2.TO IDENTIFY THE ADVANTAGES AND DISADVANTAGES OF EPZ’S 3.TO BE ABLE TO USE MAQUILADORAS IN MEXICO AS A CASE STUDY

WHAT IS IT? A free trade zone (FTZ) or export processing zone (EPZ) is an area of a country where some normal trade barriers such as tariffs and quotas are eliminated and bureaucratic requirements are lowered in hopes of attracting new business and foreign investments. It is a region where a group of countries has agreed to reduce or eliminate trade barriers. Free trade zones can be defined as labor intensive manufacturing centers that involve the import of raw materials or components and the export of factory products.

as labor intensive manufacturing centers that involve the import of raw materials or components and the export of factory products. WHAT IS IT?

ARE THEY POPULAR? In 1997, 93 countries had set up export processing zones (EPZs) employing 22.5 million people, and five years later, in 2003, EPZs in 116 countries employed 43 million people. Brazil, China, the Philippines, Malaysia, Pakistan, Mexico, Costa Rica, Honduras, and Madagascar

CRITICISMS domestically criticized for encouraging businesses to set up operations under the influence of other governments, and for giving foreign corporations more economic liberty than is given indigenous employers who face large and sometimes insurmountable "regulatory" hurdles in developing nations.

Because the multinational corporation is able to choose between a wide range of underdeveloped or depressed nations in setting up overseas factories, bidding wars (or 'races to the bottom') sometimes erupt between competing governments. CRITICISMS

Sometimes the domestic government pays part of the initial cost of factory setup, loosens environmental protections and rules regarding negligence and the treatment of workers, and promises not to ask payment of taxes for the next few years. CRITICISMS

EPZ’S IN MEXICO – MAQUILADORA’S Currently about 1.3 million Mexicans are employed in maquiladoras. By the late twentieth century, the industry accounted for approximately 25 percent of Mexico’s gross domestic product, and 17 percent of total Mexican employment. there still exist over 3,000 maquiladoras along the 2,000 mile-long border, providing employment for approximately one million workers, Importing more than $51 billion in supplies into Mexico. As of 2006, maquiladoras still account for 45 percent of Mexico’s exports

MAQUILADORAS - GENDER Women are considered to be preferred to men because women will typically work for cheaper wages, and are easier for male employers to direct. Some maquiladora operators have admitted a preference for women also because women often display a greater level of patience and higher dexterity than men in performing the standardized and repetitive work of an assembly plant. The maquila industry has been accused of the sexual exploitation of women. have also been accused of discrimination of child-bearing-aged women in order to keep costs down because Mexico’s labor laws contain extensive maternity requirements. They often demand pregnancy tests as a prerequisite to employment or insist that female workers use birth control

MAQUILADORAS - WAGES Mexican women work for approximately one-sixth of the U.S. hourly rate

the La Paz Agreement signed by Mexico and the United States in 1983 requires hazardous waste created by United States’ corporations to be transported back to the U.S. for disposal some companies avoid paying disposal costs by dumping toxins and other waste into Mexico’s rivers or deserts MAQUILADORAS - ENVIRONMENT

United States Environmental Protection Agency reports that only 91 of the 600 Maquiladoras located along the Texas-Mexico border have returned waste to the United States since 1987 some lack proper waste management facilities and the ability to clean up disposal sites Ongoing exposure to toxic wastes can contribute to health problems such as cancer, skin disease, hepatitis, and birth defects MAQUILADORAS - ENVIRONMENT

READ THROUGH THE GEO ONLINE – MAQUILADORA DEVELOPMENT IN MEXICO AND ANSWER QUESTIONS 1 & 2 MAQUILADORAS - TASK