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In the post-Cold War period the predominance of economic issues in the Atlantic Rim area has dramatically transformed the content of both conflict and beneficial interaction among the participating nations.  While no one should assume that military conflict has been forever  banished from the Atlantic Rim or from its relations with the rest of the world, it is clear that the balance between armed conflict and beneficial interaction has shifted decidedly toward the latter.  In this section each of the major spheres of interaction will be examined

4a.Trade and investment - The structure of relationships among the Atlantic Rim nations can be indicated most graphically from the magnitude of the trade flows between them.  In Figure 3 each of the arrows linking the individual geographic sub-regions is drawn in accordance with the value of the imports (c.i.f.) of each from each of the others, using data given in Table I.  First, with regard to trade balances: Trade between NAFTA and the EU is roughly in balance, Latin America shows deficits with both NAFTA and the EU, as does the EU with Africa.  Second, the most powerful trade linkage is between the industrialized partners in the North and NAFTA shipments to Latin America are about 60 per cent of those to the EU. North-South trade in the Western Hemisphere is of greater value than is that between the EU and Africa.  Finally, trade between Africa and both NAFTA and Latin America is negligible.

International trade theory would suggest these are exactly the trade flows one should expect.  The North-South trade is largely confined to raw materials and agricultural products.  These goods do not have high income elasticity of demand and should not be expected to grow in magnitude as much as will manufactured goods and services.  Furthermore, countries with similar levels of income should be expected to have the strongest comparability of demand patterns and one should expect a high degree of intra-industry specialization and trade among these economies.  Countries with high per capita incomes should also be expected to meet consumer demands with good produced elsewhere.  The data on Per Capita Income in Table 2 show these income differentials very clearly. Conversely, raw material producers have little to sell to each other and, indeed, often sell the same undiffferentiated goods to the same industrialized markets.  Thus, the magnitude of the arrows in Figure 3 indicate exactly what on eshould expect to find:

- Intense interaction between NAFTA and the EU.

- Little interaction between the two less-developed regions.

In future years one should expect to see increasing demands for industrialized goods from NAFTA and/or the EU as Latin America and Africa begin to grow more rapidly as a consequence of adoption of political and economic reforms.  This is already being observed for Latin America - the region of the two where reform has progressed the furthest.

ers have little to sell to each other and, indeed, often sell the same undifferentiated goods to the same industrialized markets.  Thus, the

Figure 3

Atlantic Rim Trade Flows

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