US apparel maker VF Corporation has announced plans to close three factories in Costa Rica and dismiss 400 workers amid falling sales to the US.

In a statement, the company said it will end all operations on 16 July and shut the three plants, which made jeans for the Wrangler and Lee brands.

The announcement comes as Costa Rica's textiles and apparel industry is struggling to survive amid rising competition from neighbouring countries Guatemala and Nicaragua, whose sales to the US have risen under the Central American Free Trade Agreement (CAFTA)-DR.

In 2002, Costa Rica exported $811m worth of textiles to the US. Last year, that number fell nearly 50% to $429m.

During that time, over 100 companies folded, further shrinking the industry, which employed some 15,000 people in 2007.

Top industry lobby CATECO has urged the government to ratify CAFTA which has become a hugely controversial issue in the country.

"Obviously we need to join CAFTA or the textiles industry will continue to die," a CATECO official told just-style. "We are hopeful that this can still be done."

Costa Rica was expected to ratify CAFTA in February but failed. However, the country has received a seven-month extension to join the treaty this autumn.

Costa Rica's citizens approved CAFTA in a high-profile referendum last fall but different government coalitions continue to oppose the deal as one that could bring job losses to the key agricultural or telecommunications sectors.

By Ivan Castano-Freeman.