This paper analyzes the impact of the Agreement on Textile and Clothing (ATC) and a worldwide tariff reduction on textiles and wearing apparels on Bangladesh. In both scenarios Bangladesh reduces its wearing apparel production and faces a welfare loss. The main reason is that Bangladesh has free access to its most important export market, the EU. Further trade liberalizations are therefore worsening the Bangladeshi position opposite to its competitors. The analysis stands on the general equilibrium model of the Global Trade Analysis Project (GTAP).