MANAGUA, Nicaragua (AP) -- A women's sewing cooperative founded by hurricane refugees has obtained designation as a free trade zone, boosting the seamstresses' hopes of serving as a new model for business in Nicaragua.

The cooperative supports 47 full-time workers in Nueva Vida, or New Life, a small town seven miles (11 kilometers) east of Managua that was settled by people fleeing the devastation of Hurricane Mitch in 1998.

"We made it by clawing our way with all our might and with the help of good friends," said Yadira Vallejos, 28, a founding member and president of the cooperative that opened its doors in 2001.

After her home was inundated by Lake Managua, Vallejos was evacuated to Nueva Vida, where she and her neighbors confronted an 80 percent unemployment rate.

"We never imagined we'd have this," Vallejos said of the sewing shop, whose concrete foundation and metal frame were raised by seamstresses.

Sewing mostly organic clothing for export to the United States, the cooperative and its customers hope the new free-trade designation will cut through bureaucratic red tape that has held up shipments and stunted growth.

The free-trade designation also makes the cooperative eligible for special utility rates and exempts it from some Nicaraguan taxes on profits, said Mike Woodard of the nonprofit Center for Development in Central America.

"It allows these women to compete on a level playing field with all of the big companies," Woodard said.

The development center, an advocate for sustainable growth that is located next door to the cooperative, arranged a $100,000 loan as startup capital for the sewing co-op, known as Maquiladora Mujeres in Spanish.

The cooperative represents an alternative to the breakneck production schedules and exploitative wages of many Nicaraguan textile assembly lines, Woodard said.

Factory workers in Nicaragua's free trade zones make about $2 a day on average, while the cooperative's employees earn about $4.50 a day, Woodard said.

"We would like to see a lots of shops organize this way," Woodard said. "We really wouldn't see that as competition. We would see that as an expansion of this idea. [The cooperative's members] would like to see other women take control of their lives."

For the maquiladora's largest customer -- Maggie's Organics of Ypsilanti, Michigan -- the sewing cooperative provided an ethical way of doing business overseas after its U.S. sewing contractors shut down in the late 1990s.

Maggie's delivers rolls of organic cotton, grown in the United States and Peru without the use of potentially harmful pesticides, to the co-op's Nicaragua factory for sewing.

We made it by clawing our way with all our might and with the help of good friends.
-- Yadira Vallejos, co-op founder

"Given the fact that they have a vested interest, the women can sew way beyond the quality of their equipment," Maggie's Organics President Bena Burda said by telephone.

She said the business relationship also is based on "fair-trade" principles that emphasize the long-term benefits of treating workers with decency.

The cooperative expects to close the year with sales of $330,000 and to achieve sales of $1.5 million in 2005 under its new free-trade area status, administrator Rosa Davila said.

Cooperative members also hope to expand operations by opening an organic-cotton spinning mill, after applying this year for a $1.5 million loan from the Inter-American Development Bank.

"We want to create a whole production chain," Davila said.