Pax Silica: Inside the Trump Administration’s Tech Strategy with Jacob Helberg

Details of the Economic Security Zone02:01

Is this set up as a special economic zone in the Philippines? Right now there are two phases to the plan. The first phase is the State Department taking into custody the zone. Referring to it as an economic security zone because it is a very unique type of arrangement. The State Department has authorities to take land and property into custody sort of how foreign governments gift the State Department counselors and consulates and embassies. It's very unique to do a gift of 4,000 acres, but fortunately there's no statutory limits on how big or small property can be. So right now it's actually diplomatic property that is effectively governed by the same laws as our embassies are. Phase two will be the long-term development and build-out of the land. Going to spend a two-year window to negotiate the details with our Filipino counterparts on the investor protections that will apply to the land, the taxation regimes, and all of the different legal safeguards that investors will be able to benefit from for the long term. The goal is within that two-year window to actually have a long-term framework that will be multiple decades.

Investment Domains04:00

The goal is really to actually test a concept that could potentially be replicable. When we think about the AI supply chain, a lot of people just think of chips, but the reality is that the AI supply chain actually includes thousands of inputs like precision reducers, server motors, rare earth magnets, and actuators. Our concentration risk as a country is incredibly high for basically all of those inputs. The goal is to identify key geographies that actually have industrial strengths and bring unique capabilities to the table that could actually help us move the needle meaningfully in different segments of the supply chain. The Philippines already has a native indigenous manufacturing ecosystem that's already quite deep. It's our oldest ally in Asia. So, we have a very deep values alignment with the Philippines and the nexus between the values alignment combined with their industrial advantages actually makes for a very compelling value proposition for a lot of companies. Talking with a number of companies focused on the robotics supply chain. Robotics is an incredibly promising industry that really is poised to change a lot of things in manufacturing as well as in people's daily lives and the supply chain is right now completely dominated by China.

Contrast with China's Belt and Road Initiative06:02

When most people hear economic security policy, one of the first things they think of is the Belt and Road Initiative. The Belt and Road Initiative is a very large foreign policy project of the Chinese government that basically involved using state-owned enterprises that are essentially extensions of the government to carry out massive infrastructure projects overseas. The idea is using infrastructure projects as a tool of foreign policy to achieve foreign policy outcomes. Big build-outs, for example, in Africa that did it in a variety of countries. Whether it's creating mines or processing facilities, a lot of the times it involved building out very big roads, sometimes bridges, a lot of the times it included railways. Fundamentally what it was was state-owned enterprises building government-operated railways, government-built roads and bridges. The Chinese government, by virtue of its system, really built all of this in-house. Which for us, when we think about how should we secure supply chains, we need to make a lot of investments that touch upon these kinds of industrial capabilities, but as Americans, we're not going to do this in-house inside of the government. Effects of this for China was basically both building out their industrial base, but then also securing natural resources in some of these countries. They were able to build a network that ensured that their factories in China had all the inputs in order to actually thrive. Shenzhen today is really the world's factory floor because they have deep relationships with suppliers and vendors on every continent, basically. The infrastructure that they leverage allows them to get access in a way that's very competitive.