ABSTRACT
Trends in foreign direct investment flows provide a second potent source of counterprotectionist sentiment. Whatever the causes of these investment trends, the facts of increasing foreign direct investment outflows and coproduction/joint venture arrangements in West Europe, the Newly Industrializing Countries, Japan and Canada are clear. Since 1977, these trends have shifted away from the North Atlantic Treaty Organization (NATO) Allies to favor the developing countries of Asia and Latin America. Economic tensions have posed serious dilemmas for the members of the NATO Alliance since its inception. The chapter shows that economic strains pose a serious immediate threat to NATO cohesion. It reviews the problems posed by protectionism and identifies those trends in trade and investment which represent potentially important counterprotectionist influences at the microeconomic/sectoral levels. The chapter also reviews overall trade and investment trends at the macroeconomic/structural level of the global economy which will affect the longer-term stability and interdependence of the US-Western European relationship.
