Textile and clothing industry in the EU is, since the beginning of 2005, facing a free competition world. In the past decades has been widely protected. However after the Marrakesh Agreement of 1994 the final stage of liberalization begun and came to an end at the end of 2004. In these years Chinese industry has grown preparing itself for competing in the free international market. The same we cannot say of the EU industry that has missed to implement major adjustments and changes. For this very reason the industry is facing increasing difficulties to face the fierce competition of China's production. In the first half of 2005 there have been strong possibilities for a trade war between EU and China. The solution has been found in the Agreement signed by the two parties on June 10, 2005.