This thesis examines the impacts of the Offshore Assembly Provision (OAP) on Mexico and the United States. The first portion of the thesis notes the importance of the maquiladora program (the OAP in Mexico) to the Mexican economy and, because of the relatively large size of the U.S. economy, the small impact on the U.S. Also, the maquiladora plants have very low linkages into the Mexican economy, i.e. few nonlabor inputs come from Mexico. The second portion of the thesis is a literature review which discloses the result that a hypothetical repeal of the OAP results in a small loss of welfare in the U.S., a small gain in U.S. employment, and a small loss in employment in Mexico. The third portion uses input-output analysis to discover that maquiladoras provide a very small portion of the expansion of Mexican exports since 1980.