The Exchanges

Q Is this set up as a special economic zone in the Philippines or can you tell us more about the details beyond, um, sort of the, the legal side that you mentioned?

A Yeah, absolutely. So, um, it, so right now the, there are two phases to the plan. Um, the first phase is, uh, the State Department taking into custody the, the zone. Uh, we, we are, we are referring to it as an economic security zone because, uh, it is a very unique type of arrangement. The State Department has authorities to take in, um, Land and property into custody, sort of how foreign governments gift the State Department counselors and councilates and embassies. It's very unique to, uh, do a gift of 4000 acres, but fortunately there's no statutory limits on how big or small property can be. And so that's phase one. So right now it's actually diplomatic property, um, that is effectively, you know, uh, governed by the same laws as, as our embassies are. Um, phase two will be the long-term development and build out of the land, and so we are gonna spend, ah, we have two years, a two-year window to negotiate the details with our, ah, Filipino counterparts on the investor protections that will apply to the land, the tax, taxation regimes, and, ah, and all of the different, you know, legal safeguards that investors will be able to benefit from, from for the long term, and the goal is within that two-year window, To actually have a long-term framework that will be multi, um, multiple decades.

AI assessment note: “we are referring to it as an economic security zone because, uh, it is”

Q not actually rare, but they're called rare earth, and then they're fundamentally mined in a small subset of countries that actually have access to them. Should the US be changing its mining policy around this? Should we be, should Canada? I'm sort of curious how you think about how to address that, because there's a few different ways to approach it. One is just to mine more in certain places.

A China only emerged as a rare earth mining superpower about 10 years ago. It came out, uh, in twenty-fifteen with its Made in China twenty-twenty-five plan, and from that date onwards, we actually saw China's, um, refining activity of rare earth, uh, materials skyrocket. So what happened was they pursued a very aggressive industrial policy to build, uh, refinering capacity in China. Uh, and they started to flood the market, which sunk the price and started to really squeeze refineries located in the West, in, in, uh, Australia and Canada and in the United States. We actually have refineries. Historically, we have had refineries. And, uh, there is a huge refinery in Tennessee. Um, there, there are refineries in Arizona and Georgia. And, um, and so the, The solution to help put the genie back in the bottle is, I think actually the DoD's deal with MP Materials offers a good template, which is you need an anchor buyer and an end customer, and you need a price floor. So you need to agree with the supplier, in this case MP Materials, on a floor for a price, because what happens when these big off-take agreements, um, When, when a western refinery tries to compete with China, is China will artificially sink the price, the global price, depress it, in order to put western alternatives out of business, and then they raise the price again, which is classic monopolistic behavior. Um, we ca…

AI assessment note: “The solution to help put the genie back in the bottle is... a price floor”

Q When you think about the 14 countries that are already part of PAC silica or, uh, you know, this as a potential blueprint for others to be involved in American for deployed industrial bases, like, what's the value prop for them?

A So the value prop is, um, one of the amazing things that we're seeing is obviously the AI revolution is leading to huge growth. I mean, despite the volatility in the energy markets, um, You know, the American economy has been proven incredibly resilient, and a big part of that is AI being this incredible, you know, incredibly strong economic force that is already fueling over a third of our economic GDP growth right here in the US. Overseas, we're leading, we're seeing that growth translate to record demands for copper, record demands for cobalt, record demands for, you know, lots of different inputs that go into data centers and, Um, and, you know, record demand for electricians and all the rest. And so the takeaway for a lot of these countries is, um, if they find ways of actually, um, having a bigger part and a bigger stake in that supply chain at different layers, layers that make sense for their companies and their economy, they can actually derive a lot of economic growth from that revolution. Because, you know, the amazing thing about the tech industry, especially when we go through these inflection points, Um, as you guys know, is the pie grows really fast, and so it's really not zero sum, which actually makes it, uh, incredibly conducive to forge very mutually beneficial partnerships because we're not approaching it as, you know, what I gain, someone else loses. It's a…

AI assessment note: “they can actually derive a lot of economic growth from that revolution.”

Q When we last spoke to you on NoPriors, you were just beginning your tenure at the State Department. What has the biggest surprise been? You've been very active since you started.

A Well, I, the biggest surprise is honestly how entrepreneurial, um, it's the, the Trump administration has been, because I think the stereotype for people who work outside of the government is usually really focuses on, you know, this idea that the government is super bureaucratic, and obviously that's not to say that the government is a massive enterprise, um, and lots and lots of, you know, uh, people involved, lots of processes, Um, but the, the really extraordinary thing is we have a president who, you know, also spent most of his life in the private sector and who really likes speed. I mean, you know, the running joke, um, especially, you know, with our current counterparts overseas that deal with the Trump administration is that we like to move in Trump time, um, because, you know, the president, when he likes something, he wants it yesterday. And, and so that part's really been amazing because The appetite to try new things and the appetite for risk and, and to move really, really fast is highly unusual, um, by government standards and really speak for the philosophy that President Trump brings to, uh, brings to bear in the Oval Office. And so that part's really been extraordinary. That combined with the, the really great leadership that we've been able to benefit from at the cabinet level from Secretary Besant, Secretary Lutnik, Secretary Rubio, um, Secretary Burgum, who…

AI assessment note: “the biggest surprise is honestly how entrepreneurial, um, it's the, the Trump administration has been”

Q One last question for you on just, like, what other parts of the economy you focus on. So there's energy, there's obviously intelligence, um, there's sort of inputs and, um, rare earth, uh, magnets and, uh, minerals and, like, what other, Are there other domains where you think competitiveness is like essential from a security perspective or from a strategic perspective?

A Yeah, so I tend to think of, of my work being very supply chain focused is because, um, it allows, it gives me a mental framework for thinking about these issues holistically, um, by looking at the supply chain as a layered pyramid that, uh, includes energy, minerals, uh, component manufacturing, semiconductor manufacturing, data centers, models, and apps. And, and I think, you know, you, you, As a country, we kind of need a strategy that is holistic at the different layers of the supply chain. Um, we're actually in a really good position at most of them. We have abundant energy, although we need to increase our supply. Um, we, we're, our, our biggest exposure points are component manufacturing, semiconductor manufacturing, and minerals, and, you know, there's a lot that we can do to move the needle there. Um, but, but transportation logistics is another Really interesting, um, really interesting area where, um, a policy can actually help play a role, and the Chinese have been masters at, you know, through their Belt and Road Initiative at actually having a supply chain plan that includes a global transportation logistic network to get minerals from Africa back to China, refined in China, exported back everywhere else, And, and I think we need, as you know, we used to do this with the Panama Canal with, you know, these big investments that we used to make in transportation logi…

AI assessment note: “transportation logistics is another Really interesting, um, really interesting area”

Q the U.S., obviously, we have Meta as a champion for open source. In Europe, there's Mistral. But my sense is that, uh, there's a lot of, um, Chinese government involvement in some of these open source models in terms of funding them or promoting them or accelerating them. Uh, what role, if any, do you think the U.S. government should play in our own sort of open source AI ecosystem?

A Well, I think we need to have a strategy to figure out how we promote American, uh, the American stack, um, overseas, and whether that's through open source or, um, or through other models. Um, I mean, the, I would argue, again, reasonable people have different takes on, you know, what happened with DeepSeq. I think the basic building blocks of, um, the, the main takeaways of, of how DeepSeq achieved the performance, uh, its performance was, um, Incremental efficiency gains. Um, they lied about their compute capacity because they have a billion dollar cluster, and they distilled ChatGPT's model weights. So while DeepSeq is open source, I would argue it's not really open source if they stole the model weights from a model that is, um, is closed source. Um, with that being said, it will definitely be an integral part of China's strategy to try to get market share, uh, by, by using the open source ecosystem. And so, In that sense, I think Meta's efforts are very important. Um, but, um, but I think having a holistic approach to make sure that we have the very best models and they're as widely used is super important.

AI assessment note: “we need to have a strategy to figure out how we promote American, uh, the American stack”