Outlines the global structure of the textiles and clothing industry and reviews trading patterns under the Multi-Fibre Arrangement (MFA), highlighting the impact of trade policies in the European Union and the USA. Examines the issue of labour standards as a new non-tariff barrier to trade. Investigates prospects for trade from the perspective of exporting countries in South Asia, and evaluates the challenges facing the sector in Bangladesh. Proposes an upgrading strategy for developing countries to enhance their competitiveness in the post-MFA era.