International trading rules are undergoing significant changes that will reshape the future of trade in textiles and clothing. These changes include the abolishment of the quota system by 2005; China's accession to the WTO; emergence of new tools of protectionism; growth of intra-regional trade within trading blocs; and the increasing role of global commodity chains. While these changes reflect a higher level of trade liberalization and hence more export opportunities, they also pose great challenges for the future of Egypt's textiles and clothing exports. The study explores the future of this sector in light of two scenarios. The first is to maintain the status quo, which means not doing any domestic reforms. The second is to take the necessary measures to adapt to and maximize benefits from such changes. The analysis shows that under the first scenario, this sector will be incapable of reaping the benefits of trade liberalization and preserving its current share of international exports. It is imperative therefore to follow the second choice. To conclude, the study stresses that increasing Egypt's share of the international textile and clothing trade requires making significant progress in three main areas, namely, creating the right incentives for producers to export; increasing the competitiveness of Egypt's textiles and clothing exports; and meeting international standards and criteria to ensure access of such exports to overseas markets.