Washington is pressing Manila to grant unprecedented legal protections—potentially including a form of diplomatic immunity—to secure American corporate investments in the planned mega artificial intelligence (AI) hub in New Clark City, a proposal Philippine officials have already rejected.

US Undersecretary of State for Economic Affairs Jacob Helberg said the US and the Philippines have two years to negotiate the terms for the 1,600-hectare economic security zone located north of Manila.

“So now we’re going to begin negotiations and have a discussion about the best way to enhance investor protections in the hub,” he said on the sidelines of his visit to the project’s site on Monday, May 18.

Helberg indicated that one of the protection measures up for negotiation is designating the industrial hub as a diplomatic property, similar to how embassies are governed.

Under this scheme, the site would operate under US common law despite being on Philippine soil, covering protections similar to diplomatic immunity.

Helberg said providing a stable legal framework would offer much-needed assurance to investors that their capital would remain protected even when the administrations of both countries change.

“There needs to be an element of durability and certainty. And so that's where, you know, our focus is really going to be on predictability, certainty, speed, and scale,” he said.

Bases Conversion and Development Authority (BCDA) president and chief executive officer (CEO) Joshua Bingcang said the US had already requested such a scheme during negotiations for the economic security zone, which the government outright rejected.

Bingcang said the industrial hub, which will be managed by the investment promotion agency, would only be subject to two domestic policies, namely the Investors’ Lease Act and the law granting powers to the BCDA.

He said going beyond this mandate would be against the law, essentially putting the ambitious project at risk of being scrapped even before groundbreaking.

“So it will be treated as a regular business development contract, no special arrangement to be accorded to the US government,” he stressed.

The economic security zone, also referred to as a forward-deployed industrial base, is the US’ latest effort to become more competitive in the global AI supply chain, which is currently dominated by China.

The initiative forms part of the Pax Silica partnership, an economic coalition aimed at securing the supply chains needed for AI. The US welcomed the Philippines as the 13th member of Pax Silica last month.

The upcoming industrial hub in Luzon would be the first of its kind under Pax Silica, which Helberg said would also mark the US’ first attempt at creating a program similar to China’s Belt and Road Initiative, but the “American way.”

Unlike China, which leveraged state-owned enterprises to develop infrastructure projects, he said the US would have the private sector take the lead in developing projects for the benefit of the US economy and its allies.

“America does not do well when it tries to compete on someone else's terms, tit-for-tat, by imitating them. The American way is to win by building something entirely new,” said Helberg.

“The products we build enchant and delight billions of users and unlock new markets that never existed before. That's our unique strength as a country, and we'll outcompete others by leaning into that strength,” he added.

Based on information provided by Helberg and the Department of Trade and Industry (DTI), more than 20 US investors have already expressed interest in the economic security zone in New Clark City.

These interested firms are involved in advanced manufacturing, robotics, electronics manufacturing, renewable energy, and water management systems, among others.

Once these companies begin their respective site inspections, construction of manufacturing facilities in the industrial hub is expected to follow within the coming year, according to Helberg.

“Obviously, we need to conclude the agreement [with the Philippines]. So I'm not going to put specific timelines and milestones just yet. But all I can say is so far our focus has been on speed, and we're going to continue executing against that,” said Helberg.