Daniel Duquenal has a fascinating post on Colombia’s new free trade pact with the U.S., and explains why it is causing so much distress among the Chavistas next door in Caracas. Their rage has a basis. It turns out Colombia is eating Venezuela’s lunch already in the economic arena and the free trade pact with the gringos will only raise their appetite.

Here’s what’s going on:

Chavez has driven most of Venezuela’s industries out of business, declaring them a class enemy. That in turn has provided a massive market opening for Colombian manufacturers who have taken over what had been the markets of the Venezuelan manufacturers.

For instance, if you make paper cups and plates in Venezuela, and Chavez forces your business into a workers’ collective, or drives you just plain bankrupt, there’s still a consumer market out there that wants paper cups and plates. That’s why the markets for domestic cups and plates (and a whole host of other manufactured goods) are being taken over by increasingly productive and profitable Colombian industries, which incidentally are about to get a tax cut from Colombia’s President Alvaro Uribe to help strengthen their capacity to create jobs and expand production still further!

Venezuelans spend money and Colombians sell them things. That’s why Colombia has a massive trade surplus of cold hard cash.

With that cash on hand, Colombians are now getting ready to compete in the Big League, to take on the Mighty American Market, the largest, and richest, and most opportunity-filled market anywhere on earth. Ooh, and they pay in dollars over there!

But a lot of countries have come before them, like China and Chile and yeah, France (The U.S.’s Number 2 8 (thanks, Jim!) Trading Partner), and lots of other smart places. They’ve already figured out how to productively outdo the Americans and to sell all the goods they can get into the country to the gringos.

For Colombia, a bit of a latecomer, but certainly not too late, that will be a challenge. Will their roses be produced more cheaply and plentifully than Ecuador’s? Will their oil be better and cheaper than Saudi Arabia’s? Will their electronics manufactured at the local Sony plant be better and faster than the electronics the Mexicans are turning out at THEIR local Sony plants? Will their vegetables be fresher and cheaper than Chile’s? This is how international trade works.

So Colombia is kind of nervous as it takes on the Big League.

Fortunately, it has a financial cushion, that huge trade surplus it has with Venezuela. It’s beating Venezuela bigtime on the productivity front because Chavez has declared his local Venezulan producers his enemy and tried to turn them all into collective farms to punish them for their ‘profits.’

Colombia therefore has lots and lots of money for investment to ensure that its Sony plants will have the best and fastest technology, the better to compete with the Mexicans on store shelves of Target and Wal-Mart.

In short, Venezuela is financing Colombia’s rapidly advancing prosperity. Hugo Chavez is ensuring that his country will be left in the dust as Colombia steps up to join the First World.

Pretty sick, don’t you think? All Hugo Chavez has to do is quit being a communist, quit abusing his industries, quit treating them as the enemy and do what Colombia is doing, like make money and create jobs. Will Chavez do it? You be the judge.

Never for one minute can anyone think that Trade is not Revolution. It is the most potent weapon the U.S. has against the likes of despots like Hugo Chavez.

Through trade we will destroy tyrants.

Daniel’s fascinating story is here.

UPDATE: Breaking news from El Universal – Chavez is raging again about the Free Trade Pact with the Americas. He just can’t take it. The item is here.