Abstract: The reaction to the impact of phasing out of Multi Fiber Agreement (MFA) is mixed. While some people argued that the impact of phasing out will bring more wellbeing under free trade agreement (FTA) (Panagariya & Dttagupta, 2000), some other people argued that the post MFA era for textile and clothing industry will be clouded (Spinanger, 1998). The situation worsens because there are only 30 importing countries for textile & clothing products in the world whereas the number of exporting countries is more than 130 (Keraney: 2003). As we nearer to the 2005, the time limit to withdraw all kinds of quantity restrictions in the field of textile and clothing industry (T&C), the data shows that a disorderly situation may emerge in post MFA era in the field of T&C. Though it is argued that developing countries will be benefited from the withdrawal of restrictions but this article unveils that some countries will severely suffer by the disorderly situation of phasing out of MFA. Bangladesh is one of the countries which might suffer in post MFA era though it`s ranked fourth in the world trade of clothing products. In this article attempt has been made to analyze the world trade of T&C under ATC and the impact of phasing out of restrictions. Specifically, the impact of phasing out on socio-economic conditions of Bangladesh is clearly analyzed and some recommendations are forwarded to overcome the severity of the situation. This article has importance for theoreticians, chamber bodies, international trade regulatory bodies and policy makers.