The United States and the Philippines have reached an agreement to establish a high-tech industrial center, marking the latest move by the Trump administration to weaken China’s influence over global supply chains. This agreement will allow American companies to bypass Beijing’s control and access critical minerals and other important raw materials.
According to the Wall Street Journal, the goal of the agreement is to develop American manufacturing in certain areas of the island of Luzon in the Philippines. The agreement was signed by both parties on Thursday.
Jacob Helberg, the Deputy Assistant Secretary of State for Economic Affairs, stated that this manufacturing center will be AI-driven and is planned to be built on a 4,000-acre land provided by the Philippines to the United States. The U.S. will use the land rent-free and manage it as an economic zone.
The manufacturing center will have diplomatic immunity similar to that enjoyed by U.S. embassies, and will operate under U.S. common law – a first-of-its-kind arrangement globally. The two-year lease can be extended and potentially last up to 99 years.
Companies interested in participating in the construction of this manufacturing center will need to submit proposals. The U.S. government will prioritize bids that contribute to the transfer of critical mineral processing and manufacturing processes away from Chinese suppliers. Investments must come from private enterprises rather than the U.S. government.
This initiative aims to accelerate U.S. manufacturing in defense and other key industries while reducing China’s control over critical minerals and other key components in the electronics sector. This is part of the Trump administration’s agenda to place more supply chains under U.S. control.
“If your minerals and processing materials are controlled by your adversary, they can cut off your supply tomorrow, and then you won’t be able to build anything in Ohio,” Deputy Assistant Secretary Helberg said in an interview.
Currently, China is the primary supplier and processor of critical minerals worldwide, controlling 70% of rare earth mining and 90% of rare earth processing. In recent years, critical minerals have become a diplomatic weapon for Beijing, often used to coerce other countries by restricting the export of these minerals.
“The current structure of global supply chains is entirely unsustainable,” Helberg said.
Helberg noted that the Philippines has resources such as nickel, copper, chromite, and cobalt, which can be utilized by U.S. companies operating in the Philippines or exported to the U.S. for manufacturing purposes.
This agreement makes the Philippines the latest country to join the “Pax Silica” alliance. “Pax Silica” is a coalition of over a dozen U.S. partner countries established in December last year to safeguard supply chain security and counter Chinese penetration in the field of artificial intelligence.
The agreement between the U.S. and the Philippines to establish a high-tech manufacturing zone comes at a time when tensions between the Philippines and China are escalating due to frequent maritime conflicts. On April 9, the Philippines accused the Chinese military of firing flares directly at an unarmed Philippine Coast Guard aircraft during a patrol near the South China Sea.
The Philippines stated that this act “not only violates established international aviation safety standards and the spirit of regional peace, but also directly endangers the safety of personnel on board,” calling it a “blatantly deliberate act of bullying.”
The strained relations between China and the Philippines have prompted the Philippines to align closer with the United States, frequently engaging in joint military exercises.