ATTORNEYS AT LAW FOR MEXICO Please contact us at our Mexico offices located at: Apartado Postal No. 9 San Miguel de Allende, Guanajuato, Mexico U.S. TEL: (800) 856-5709 Local Phone & Fax: (415) 152-3648 E-MAIL

For professional assistance & information on legal & business matters regarding Mexico and Latin America, please contact: E-MAIL

BUSINESS CONSULTANTS FOR MEXICO REAL ESTATE BROKERAGE ASSISTANCE FOR MEXICO At our Phoenix or Mexico Offices Tel: (623) 242-7442 Fax: (623) 242-7443 P.O. Box 42773 Phoenix, Arizona 85080 E-MAIL

FREE ZONE

The Free Zone, also known as the the Liberated Zone, or Perimeter Zone or Free Trade Zone is a customs designation only for that area located along the Mexican international land borders and which run inward up to the point at which the Mexican Customs authorities have their first "interior" check point (this is usually about 20 to 26 kilometers in from the border towns - exceptions are on the peninsula of Baja California and places like Puerto Peñasco where it runs to the ocean front) along the main highways.

This area, for customs purposes, is not considered part of Mexico, in that items brought from other countries into this zone are not considered imported into Mexico, and items of (the interior of) Mexico brought into this zone are considered exported from Mexico (as well, items brought into the interior of Mexico from this area are considered imported into Mexico).

In this area, the businesses may import goods (from abroad) into it duty free (if they are not produced therein) (additional exceptions not permitted are items like alcoholic beverages, beer, cigarettes, cigars, and race horses) to satisfy their needs for the manufacturing, assembly and transformation process of industry therein located. Once the process is complete they can return them abroad (in a new product or not) without export duty from Mexico.

This customs designation of "Free Zone" is in direct relation to the "Maquila" program, whereby assistance is provided for entry of goods into it to assist in the export of products from Mexico and to build up the border areas of Mexico.

Under certain restrictions, the products made in this "Free Zone" may be imported into Mexico without import duties.