Guatemala's apparel and textiles industry has lost 10,842 jobs this year as falling exports to the US triggered the closure of 35 textiles mills, despite a highly controversial Central American Free Trade Agreement (CAFTA-DR).

Critics say that the free trade deal is failing to benefit Guatemala, Central America´s largest economy.

Exports fell 11.3% in the January-October period to EUR1.157bn (US$1.67bn), down from EUR1.305bn in the same 2006 period, local newspaper Prensa Libre reported, quoting data from top trade lobby Guatemalan Apparel and Textile Industry Commission (Vestex). Consequently, Guatemala lost 9.28% of its export market share to the US to 1.65% compared to 2.2% in 2006.

Industry observers said the industry´s decline is do to competition from Asian countries, particularly China, Vietnam and Bangladesh, which make cheaper products than Guatemala. An uncompetitive exchange rate and higher energy prices are also hurting the industry, despite producers´ efforts to transform their businesses into suppliers of fast, "full package" apparel.

Vestex officials were quoted as saying that Guatemala is increasing fabric and raw material exports to its block neighbours which are then exporting the finished product to the US. During the 17th Annual Apparel Sourcing Show (APPS), Vestex´s general manager, Carla Caballeros, said she expected CAFTA to show its full benefits in 2010, once the industry has restructured to benefit from the free trade accord.

By Ivan Castano.