Abstract
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This paper gives a broad overview of the changing pattern and nature of trade between the years 1960 and 1985, as European Community (EC) pulp and paper producers have responded to increasing global competition. Specialisation of production for member states was identified in the European trade patterns. Specialisation occurred as a result of industrial restructuring within each member state, rather than for the EC as a whole. There is no common industrial policy in the Treaty of Rome. Explanation for the nature of trade, for the member states, was provided by Porter's (1990) theory of competitive advantage. Innovative responses by firms to maintain their competitive advantage in a dynamic economy, rather than neo-classical free market principles, are emphasised in Porter's theoretical framework. -Author