From coral to critical minerals, FSM’s rising value in the global tug-of-war
- Admin
- May 8
- 4 min read
Veteran’s Affairs. USAID. Voice of America. National Institutes of Health. The list is longer than my arm. All of them gutted—not just of employees, but of the essential services they provide to the nation and countless countries around the world.
And let’s not forget the trade tariffs that have cratered the global economy in one fell swoop with a formula that defies logic—except to members of the current U.S. administration.
Palau dodged the blow, but the Federated States of Micronesia was lumped into the ambiguous “all others” category of countries targeted for a blanket 10 percent tariff on its meager exports. In 2023, the U.S. exported $52 million in goods to the FSM and imported a mere $1.9 million in goods from the FSM—primarily fish fillets ($423,000), live fish ($199,000), and coral/shells ($145,000).
The administration’s wonky tariff math apparently ignores the $3 million worth of exports sent to Guam that same year—approximately 11.77 percent of its total exports. That may be small change compared to trade with larger nations, but you would think the U.S. would still be pleased with the sale of that amount of goods and services, regardless of how much the U.S. buys. Yet, this practical reality has no place in the bizarre arithmetic of the tariff war.
At the same time, the FSM, particularly Yap, is perched atop some of the world’s richest deep-sea mineral deposits. Forget fish and shells. Think minerals.
I’ve often noted that China plays the long game. Patient, methodical. Years can pass before it makes its move. And it did—when the U.S. stopped paying attention. Chinese “developers” arrived in Yap, delegations showed up in Chuuk, money and gadgets, trips and cars flowed to national politicians, and grandiose casino schemes promised infrastructure overhauls and charter flights teeming with tourists.
Then the pandemic hit, and the borders slammed shut. But Beijing never lost sight of the prize. They waited like a smug Cheshire Cat ready and waiting to pounce.
Now, the new U.S. president has handed the cat exactly what he wanted: a fat mouse in the form of a tariff war that has driven China closer to its trading partners and flung the door wide open to expand its access to rare earth minerals in the FSM’s seabed.
According to a January 2024 report by the Center for Strategic and International Studies, “Rare earth elements—a group of 17 metals—are used in defense technologies, including missiles, lasers, vehicle-mounted systems such as tanks, and military communications. They are also used in computers, televisions, and smartphones, along with various clean energy technologies central to decarbonization.”
The report, titled “What China’s Ban on Rare Earths Processing Technology Exports Means,” continues: “At present, China produces 60 percent of the world’s rare earths but processes nearly 90 percent, which means that it is importing rare earths from other countries and processing them. This has given China a near monopoly. Benchmark Minerals Intelligence has flagged that the United States is particularly exposed to processing restrictions for heavy rare earths, given China separates 99.9 percent of them. The United States has been aware of this vulnerability but has only meaningfully acted on it within the last several years.”
Chinese “research” vessels have been operating within FSM waters for years. The Asia Maritime Transparency Initiative found that China operated by far the largest fleet of government research vessels in the Indo-Pacific region, many of which conduct marine scientific research illegally “without the permission of coastal states.”
On the heels of the tariff announcement in April, Vice President Aren B. Palik traveled to China at the invitation of Secretary General Zhang Jun of the Boao Forum for Asia. During the jam-packed, 10-day, multi-city schedule, Palik’s delegation met with high-level leaders, including Vice Premier Ding Xuexiang, to discuss “strengthening the Comprehensive Strategic Partnership” and exploring deeper collaboration on “climate change, economic development, and cultural exchange.”
Ding underscored China’s view of the FSM as a key partner in the Belt and Road Initiative, leveraging each other's strengths in trade, infrastructure, maritime economy, and agriculture.
Conspicuously absent from the FSM Office of the President’s Facebook recap of the junket? Any mention of those sexy, valuable minerals. But the message is clear: China has its eye on the prize. And so does the FSM.
The Pacific Island Times reported on Jan. 15, 2024, that the FSM had “filed a new claim on extended continental shelves located in the north of Yap”— an area encompassing approximately 72,500 sq mi believed to be rich in rare earth metals.”
Perhaps to the detriment of the U.S.—or simply short-sightedness—the Compact of Free Association does not address deep-sea mining or seabed governance. Worse still, the U.S. has yet to ratify UNCLOS, the international treaty that governs the world’s oceans. As a result, the U.S. has no formal seat at the table of the International Seabed Authority, which oversees deep-sea mining in international waters.
In contrast, the FSM joined a coalition of 32 nations launched by Palau President Surangel Whipps Jr. at the 2022 UN Ocean Conference in Lisbon calling for a moratorium on deep-sea mining.
Maybe that’s why rare earth minerals were not on the public agenda for Palik’s China trip. Meanwhile, China is rolling out the red carpet with extravagant displays of good will, fawning words, new bridges, roads and buildings.
China has had years to plan. The waiting is over. The door is wide open.
Joyce McClure is a former senior marketing executive and former Peace Corps volunteer in Yap. Transitioning to freelance writing, she moved to Guam in 2021 and recently relocated back to the mainland. Send feedback to joycemcc62@yahoo.com
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