The United States expects to soon reach a deal with the Philippines on the long-term framework for the establishment of an economic security zone under Washington’s Pax Silica initiative, according to a senior Trump administration official.
Manila last month became the 13th country to join the technology supply chain alliance, which was established in December with the aim of establishing a secure technology supply chain, including critical minerals, advanced manufacturing, computing, and data infrastructure.
Under this framework, the Philippines and the U.S. have agreed to jointly establish a 1,620-hectare Economic Security Zone on Luzon Island. According to the U.S. State Department, this zone is intended to “surge production for inputs vital to U.S. supply chains” and to “serve as a staging point for a purpose-built platform for allied manufacturing.”
In an interview with Reuters published yesterday, U.S. Under Secretary of State for Economic Affairs Jacob Helberg said that the two nations are in talks over a long-term framework for the establishment of the zone.
“I expect the United States and the Philippines to reach a deal sooner rather than later,” said Helberg, who this week paid a visit to the proposed site in New Clark City, not far from the former U.S. Clark Air Base, which was closed in 1992. He added, “There’s an enormous amount of momentum behind this.”
Helberg said that the two allies are also setting “sectoral industrial priorities for the kinds of economic activities” that will take place in the zone, in Reuters’ paraphrase. In other interviews, Helberg has suggested that U.S. companies operating in the zone will be granted access to essential inputs such as critical minerals over which China currently exercises tight control. Accompanying him on his visit to the zone earlier this week were representatives of more than a dozen U.S. companies, Reuters reported, including 8VC, Foxconn, Agility Robotics, Joby Aviation, and Valar Atomics.
Helberg also told Reuters that there was a high level of interest in the zone from U.S. firms, including both those that accompanied him to the site this week and others.
One area of apparent disagreement is how the zone should be governed. On April 16, the Wall Street Journal reported that the U.S. would “occupy the site rent-free and administer it as a special economic zone.” It also stated that the zone would have diplomatic immunity similar to the protections afforded to a U.S. embassy, and operate under U.S. common law, which the Journal described as “the first arrangement of its kind anywhere in the world.”
However, Joshua Bingcang, president and chief executive of the Bases Conversion and Development Authority (BCDA), said that the Philippines had not agreed to any such proposals, the Straits Times reported on May 18.
“That’s their request, but we did not agree to that,” Bingcang told the media when asked about the Wall Street Journal report. “There will be no special arrangement accorded to the U.S.”
He said that the zone would be governed by the country’s Special Economic Zone Act and a BCDA law, which oversees the conversion and development of former U.S. military bases – including the former Clark Air Base and nearby Subic Bay Naval Station – into investment hubs.