Easing the pain of trade liberalisation

The lesson to draw from the 2005 textiles crisis is that adjustment aid will be very much in demand in today's fast changing global economy. The surge in Chinese textiles exports was entirely predictable. The decision to end textile quotas was taken in 1995, so the EU and the US had over a decade to encourage textiles firms to adjust - but they did not do so properly. If the textiles crisis is not to be replicated in industry after industry, the US and the EU need to agree on the ways that governments can help local companies adjust to the new economic realities. And the world trade rules must be changed to permit such an adjustment process.