In an effort to stimulate trade between the U.S., Mexican and Canadian economies, the North American Free Trade Agreement (NAFTA) was signed in October 1992 and ratified by the three countries in 1993. In anticipation of the environmental impact that the removal of trade barriers would cause, a side agreement was reached establishing the North American Development Bank (NADBank). The Agreement Between the Government of the United States of America and the Government of the United Mexican States Concerning the Establishment of a Border Environment Cooperation Commission and a North American Development Bank (the Charter) was executed in November of 1993. Chapter II, Article IV of the Charter addresses the Community Adjustment and Investment Operations of the NADBank authorizing the use of grants, loans and loan guarantees for community adjustment and investment in an amount not to exceed 10 percent of the paid-in capital paid to the NADBank by the United States.

The Agreement was implemented by Executive Order 12916 on May 13, 1994 to ensure environmental protection and sustainable development. Representatives of the NADBank Board were named and the provision was made that they be instructed by the Department of Treasury for purposes of loans, guarantees or grants endorsed by the Unites States for community adjustment and investment. The various functions vested in the President pertaining to these regards were delegated to the Secretary of the Treasury; the Secretary of the Treasury in accordance with the recommendations of the Community Adjustment and Investment Program (CAIP) Finance Committee; and the Finance Committee in consultation with the Advisory Committee. Named to the Finance Committee were the Departments of Treasury, Agriculture, Housing and Urban Development, Labor, Commerce, the Small Business Administration and others at the discretion of the Chair, that position being assigned to the Department of the Treasury.

NADBank operations began in the San Antonio office on November 10, 1994 with the initial capital subscriptions of the U.S. and Mexican governments. The USCAIP received $22.5 million. In August of 1995, the Department of Treasury and the NADBank entered into a memorandum of understanding regarding operations of the CAIP. Subsequently the CAIP Finance Committee worked to establish eligibility criteria and guidelines. In June of 1997, the Treasury Department entered into MOUs with USDA and SBA regarding the use of their programs to achieve the objectives of the CAIP with CAIP funds. That same year, the CAIP Direct Loan program was initiated.

The Omnibus Consolidated and Emergency Supplemental Appropriations Act for 1999, approved in October of 1998, included an appropriation of $10 million for CAIP technical assistance, grants, loans, loan guarantees and other financial subsidies endorsed by the Finance Committee. Additional funding of $10 million for the CAIP was approved in November of 1999 and provided with a second Congressional Appropriation in 2000.

Sylvia Lopez Gaona
Director
203 South St. Mary’s, Suite 300
San Antonio, TX 78205
Tel. (210) 231-8000
Fax: (210) 226-5592


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Photo 3 by Alicia Wagner Calzada