Win-wins are gems in politics—Australia and the United States got a gem on Oct. 20 in their $3 billion rare earth minerals and Virginia-class submarine agreement, as it addresses key security concerns: the United States has the naval weapons Australia needs through the sale of Virginia-class submarines, while Australia has the rare-earth minerals and mining expertise that the United States lacks. Both countries should ratify the deal and, in future agreements, expand the security guarantees.
The United States relies on China, which has quickly become its main foreign policy rival, for rare earth minerals used in the production of much of the current advanced technology, such as chips, advanced medical equipment, smartphones, and advanced weapons systems. In 2024, the United States imported $170 billion in rare earth minerals, with 70% coming from the People’s Republic, down from $186 billion in 2023. The United States needs a way to protect its economy from its main rival by finding new suppliers of rare earth minerals, and Australia has some of the world’s largest reserves. Like for the United States, China poses significant security concerns for Australia; it is an authoritarian regime that has committed cyber and physical espionage to attack the basic foundations of Australia’s world-leading democracy, such as attempting to hack both government and private security networks. In other cases, they have also conducted sovereignty-violating military operations using its navy against its other neighbors. Submarines are becoming a primary source of military hard power worldwide, and the United States has the new Virginia-class submarine, the best new Submarine in the world.
Alignment with the United States could harm Australian trade, as China is the country’s largest trade partner. Although trade reductions could occur in the short term, in the long term, trade with China is a Faustian bargain: untenable, as it seeks to eliminate liberal democracies in its region and will try to cut off Australia from its true allies under a policy of divide et impera, harming long-term Australian economic prosperity.
Despite the long-term benefits that can come from trade on both sides of the Pacific, there are incentives for either country to ‘cheat’ the other in the deal. For example, the United States is delaying delivery of the submarines due to backups at U.S. shipyards or Australia could impose export taxes or controls on rare-earth minerals. To mitigate these concerns, both governments should avoid the calls by a small number of their citizens for protectionist policies against the other government, for the common good. The deal’s structure, which also calls for further investments by both countries into rare-earth mineral production, will make the countries more integrated by tying the interests of domestic firms to those of the other countries’ firms, thereby reducing the likelihood of cheating.
More arms sale agreements will be needed in the future, including economic or industrial compensation to Australia known as “offsets” to build more drone and missile parts in Australia to limit disruptions to the NATO supply chain, while also attracting foreign investment to American firms, similar to what has been done with the F-15K in South Korea. Not only are the American weapons systems highly effective, but they will also be vital in countering any future Chinese aggression. In addition, being interconnected in military arms will make the United States and Australia more interconnected to one another in national security interests.
Liberty dies without a firm foreign policy to defend it. Ratifying this gem of a deal and pursuing further military cooperation will be part of this necessary, pro-liberty foreign policy.
