Colombia looks to the Irish model

Mary Anastasia O'Grady:

When Colombia's trade minister visited the Journal's New York offices two weeks ago, the last thing I expected to come up in our conversation was Ireland. To my surprise, it was the first subject he raised.

No sooner had Luis Plata sat down then he started talking about the Irish economic transformation -- from impoverished ugly duckling to swanky swan of Europe in just two decades -- and why a similar growth model is just what Colombia needs.

Some of the necessary policy adjustments are already under way in Bogotá, he said, and with any success, the reforms can be deepened. But the big question mark is whether the U.S. Congress will approve the pending Free Trade Agreement. The FTA, Mr. Plata explained, is as important to Colombia's growth as European Union membership has been to Ireland's.

To think that Democrats might undermine Mr. Plata's visionary agenda is troubling. In 2006, U.S. official development assistance aimed at alleviating poverty around the globe was $23.5 billion and it was pretty much money down a rat hole. That's because development requires economic liberalization, and leaders of poor countries have little incentive to disturb the status quo of monopolies and protectionism that put them in power. Their incentives are even less when rich-country handouts are flowing.

Now along comes Colombia, with a leader -- President Álvaro Uribe -- who is willing to risk political capital to open domestic markets, cut taxes and spur competition in a bid to grow fast à la Ireland. All his government asks from Washington is two-way trade, but Democrats want to slam the door in his face.

Before Mr. Plata became trade minister last year, he headed a government export agency. "We starting going to Ireland several years ago, he says, "because we were looking at countries around the world that had been successful in attracting foreign direct investment. What we found was that Ireland had lowered its corporate tax rate from 40% to 12.5%," and as a result "was attracting investment, had lowered tax evasion and had increased tax collection. We went back to Colombia and said, 'why don't we just bring [our corporate rate] from 38% to 12.5%.'"

...

All of this begs the question of why congressional Democrats want to reject the Colombian trade agreement. They say it's because Mr. Uribe hasn't done enough to quell violence against labor leaders in the country. But murders are down dramatically, and as Mr. Plata says, "you can't make the case that killing the FTA will make things better."

What will make things better is investment, which is fundamental to reducing poverty. Peru, Mexico and Central America all have FTAs with the U.S., which means that Colombia is automatically disadvantaged if it is denied one. And that could harm national security, which is so fragile. As Mr. Plata pointed out, "You don't win the peace with soldiers alone. You have to have a functioning economy." Surely Democrats can't be against that.

Democrats have sold Colombia out for trade union support. Some unions are against competition and they are willing to give money to Democrats to prevent it. It is a very short sighted and selfish plan that will hurt US national security interest to favor Democrats' special interests. Colombia is close to winning a 40 year old counterinsurgency operation. Pelosi is big on saying that the five year Iraq operation is a war without end, but with the end in sight in Colombia the Democrats are pushing policies to prolong it.