This study is an empirical examination of the impact of abandoning the Agreement on Textiles and Clothing (ATC) on product-intensive and extensive margins of Pakistan’s exports in textile and clothing to its major destination markets – the EU and the USA. Additionally, study also analyses the impact on Pakistan’s textile and clothing exports of abolishment of quota on China which was imposed in EU and USA. Study also computed margins of trade preference with both these changes. ATC is important as post ATC saw a sudden increase in regulations and trade restrictions for the textile and clothing sector. Post-ATC further complicated export potential of textile and clothing items for Pakistan as it has to face preferential arrangements between its trading partners and competitors and barriers like safeguard measures. Utilizing data from 2000-2018 and applying Tobit regression model, the results advocate that growth in extensive margins resulting from lower barriers is consistent with predictions of the heterogeneous firms model. Results indicate that reduction in trade costs could bring trade to those sectors which were either hardly traded or not traded at all. Supervisor:- Prof. Dr. Abdul Jalil