The Philippines’ government last week refuted a report that a US-backed, planned industrial hub on the island of Luzon would provide diplomatic immunity to US personnel, or otherwise operate under American law.The Wall Street Journal reported in April that an artificial intelligence-powered manufacturing hub planned under the US’ Pax Silica initiative would be administered by the US tax-free as a special economic zone. The roughly 1,620-hectare hub would allow US companies access to essential inputs like critical minerals, in a bid to bypass China’s control, the report said.However, Philippine officials refuted these claims and said that the site, part of the Luzon Economic Corridor announced in April, would be covered under local laws, with “no special arrangement” for the project.Here is what to know.What to know about the hub and the Luzon Economic CorridorThe proposed hub will be a 9,450-ha government-developed industrial and smart city built on former US military land in New Clark City, about 100km north of Manila. Its location is significant: The Philippines is home to some of the world’s largest nickel reserves, and is positioning itself as a potential processing hub for minerals used in batteries and data centres.Over 20 companies have recorded their interest in investing, covering sectors such as robotics, electronics manufacturing and renewable energy, the Manila Bulletin reported Monday (May 25). Luzon Economic Corridor (Source: US Embassy in the Philippines)The hub is an integral part of the wider Luzon Economic Corridor (LEC), a connectivity project by the Philippines, US and Japan, which was formed in 2024 to invest in transportation, clean energy, semiconductor supply chains and other critical industries.Story continues below this adThe corridor was announced as the outcome of the first-ever trilateral summit among the trio in April 2024, which followed a joint meeting of their national security advisors and a joint naval exercise in 2023.Announced as the first Partnership for Global Infrastructure and Investment (PGI) corridor in the Indo-Pacific, the LEC enhances connectivity between Subic Bay, Clark, Manila, and Batangas. The project is estimated to attract up to $100 billion in investments over the coming years.In May, the partnership was expanded to include Australia, Canada, Denmark, France, Italy, the Republic of Korea, Sweden, and the United Kingdom.The disagreementAccording to the WSJ report, the hub would enjoy diplomatic immunity, with protections similar to those afforded to an American embassy, and operate under U.S. common law. In practice, this would mean that the site grants US personnel unprecedented legal safeguards and would be exempt from the jurisdiction of local courts.Story continues below this adIf implemented, this would be the first arrangement of its kind worldwide, while the two-year lease could be renewed for 99 years.However, Joshua Bingcang, president and chief executive of the Bases Conversion and Development Authority (BCDA), refuted the report and said that the Philippines had rejected this proposal. Instead, the hub will be governed by the Special Economic Zone Act, which governs investment incentives and operations in Philippine economic zones, and the BCDA Law, which oversees the conversion of former US military bases into special economic zones.Pax Silica is a US-led initiative that aims to secure the full technology supply chain, from the critical mineral components to advanced manufacturing and data infrastructure.Overall, it aims to counter China’s dominance in new-age sectors such as critical minerals, which has resulted in a wide gap in the price points of Chinese products and those produced elsewhere. The US has been engaged in a trade war with China, and it aims to decouple due to the widening trade gap.Story continues below this adAccording to the US, Pax Silica aims to bring “friendly and trusted” countries together to reduce “coercive dependencies”, protect materials and capabilities “foundational to artificial intelligence”, and “ensure aligned nations can develop and deploy transformative technologies at scale”.Measures under Pax Silica include pursuing new joint ventures and strategic co-investment opportunities, protecting sensitive technologies and critical infrastructure from undue access or control by countries and building trusted technology ecosystems, including Information and Communication Technology (ICT) systems, fibre-optic cables, data centres, foundational models and applications. India, for instance, has had concerns over China’s involvement in critical infrastructure, such as telecom.