August 15, 2022
The Compacts of Free Association
Overview
assistance is currently provided largely through Department
The Compacts of Free Association govern the relationships
of the Interior mandatory funding. The FAS are also
between the United States and the Republic of the Marshall
eligible for some U.S. federal programs and services.
Islands (RMI), Federated States of Micronesia (FSM), and
Economic assistance is set to expire at the end of FY2023
Republic of Palau. The Marshall Islands, Micronesia, and
for the RMI and FSM and at the end of FY2024 for Palau.
Palau were districts of the former U.S.-administered United
Defense, security, migration, and other Compact provisions
Nations Trust Territory of the Pacific Islands, established
are to continue unchanged. Once bilateral agreements on
after World War II, and later became sovereign countries in
renewing assistance are reached, both houses of Congress
“free association” with the United States. The Compacts
must approve them through implementing legislation.
grant the United States the prerogative to operate military
bases in the RMI, FSM, and Palau (Freely Associated
Compact negotiations, led on the U.S. side by the State
States or FAS) and make decisions related to their external
Department, began in 2020 but stalled later that year and
security, and they entitle the FAS to U.S. security
remained largely suspended through early 2022. Several
guarantees and economic assistance.
factors played into the breakdown in negotiations: the
COVID-19 pandemic, which prevented in-person
Citizens of the FAS have the right to reside and work in the
discussions; Trump Administration proposals to provide
United States and its territories as lawful non-immigrants or
future Compact assistance through discretionary rather than
“habitual residents.” More than 94,000 FAS citizens live in
mandatory funding; the lack of a high-level, political
the United States, including children under age 18 who
appointee to lead negotiations and coordination among
were born in the United States and hold dual citizenship.
agencies on the U.S. side; an absence of specific funding
Citizens of the FAS, which do not have their own militaries,
proposals from the FAS; and resistance by some U.S.
are eligible to join the U.S. military; several hundred FAS
agencies to continue programs in the FAS due to costs.
citizens currently serve in the U.S. armed forces.
Figure 1. The Freely Associated States
The three Compact countries cover a maritime area larger
than the continental United States, govern over 1,000
islands and atolls, and have a combined population of
approximately 200,000. The FAS economies face structural
challenges similar to many other Pacific Island counties
(PICs), including lack of economies of scale, small land
areas, limited natural and human resources, remote
locations, poor infrastructure, and vulnerability to climate
change. The RMI, FSM, and Palau rank 184th, 190th, and
96th, respectively, out of 229 countries by gross domestic
product per capita.
Located roughly 2,500 miles southwest of Hawaii, the FAS

play a role in supporting the U.S. security presence in the
Sources: CRS. Information from Esri and U.S. Department of State.
Pacific Islands region at a time of increasing strategic

competition between the United States and its allies, on one
hand, and the People’s Republic of China (PRC), on the
In March 2022, following calls by some Members of
other. The Biden Administration’s Indo-Pacific Strategy,
Congress and others for the Biden Administration to
released in February 2022, articulates U.S. goals in the
jumpstart talks, the Administration appointed Ambassador
Pacific Islands region, including building climate resilience,
Joseph Yun as Special Envoy for Compact Negotiations. It
addressing needs in the areas of information and
also pledged to seek mandatory funding for future
communications technologies; and protecting fisheries. It
assistance. Yun has led several bilateral rounds of
emphasizes, “We will also prioritize negotiations on our
negotiations with the FAS as of August 2022. U.S.
Compacts of Free Association with the Freely Associated
negotiating teams have included personnel from the
States as the bedrock of the U.S. role in the Pacific.”
Departments of State and the Interior and U.S. Indo-Pacific
Compact Negotiations
Command. U.S. and FAS officials have expressed hope of
completing negotiations in 2022.
The main FAS-related issues facing Congress center on
negotiations to renew U.S. economic assistance pursuant to
Title II of the Compacts of Free Association. Such
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The Compacts of Free Association
Congressional Considerations
fund contributions to the RMI are to total $722 million and
Congress may consider requesting that the Administration
$276 million, respectively. Micronesia is to receive $1.6
provide regular briefings on the Compact negotiations’
billion in grant assistance and $517 million in trust fund
progress, as well as holding hearings. Congress may seek to
contributions during the same period. According to the
weigh in on the levels of funding and types of economic
Government Accountability Office, total Compact-related
assistance to be extended; FAS eligibility for U.S. federal
assistance during the second term is to total $3.6 billion for
programs and services; federal assistance for FAS migrants
both countries. Between 1995 and 2009, Compact
in U.S. states and territories; and the lingering effects and
assistance to Palau, including grant assistance, road
possible further U.S. compensation and health care
construction, and the establishment of a trust fund, totaled
assistance related to U.S. nuclear testing over the Marshall
$574 million. Economic assistance pursuant to the 2010
Islands. The Senate Committee on Energy and Natural
agreement is to total $229 million.
Resources held a hearing on the FAS in March 2022, and
the Oversight and Investigations Subcommittee of the
The United States is the largest provider of economic
House Committee on Natural Resources held a hearing on
assistance to the FAS; other major contributors of
Runit Dome and the U.S. nuclear legacy in the RMI in
assistance are Japan, the PRC, and Australia. Taiwan is also
October 2021. More broadly, Congress may consider the
an important source of aid to the RMI and Palau, which are
roles of the FAS in the context of the Biden
among thirteen countries (including two other PICs), plus
Administration’s Indo-Pacific Strategy and other regional
the Vatican, that have diplomatic relations with Taiwan and
objectives. Some analysts argue that failure to complete
not the PRC. The Trilateral Partnership for Infrastructure
negotiations on time may weaken U.S. standing and
Investment, launched by Australia, Japan, and the United
influence among the FAS and other PICs as China increases
States in 2018, has financed telecommunications networks
its economic and security presence in the region.
in the region, including undersea cables connecting
Micronesia, Palau, and other PICs. Since 2010, the U.S.
History and Key Dates
Agency for International Development has provided annual
The Marshall Islands, Micronesia, and Palau signed
weather-related disaster prevention and response assistance
Compacts of Free Association with the United States in
to the RMI and FSM ($500,000 annually).
1982. The Compacts were approved by plebiscites in the
Marshall Islands and Micronesia and by the U.S. Congress
Security Presence and Cooperation
in 1985 (P.L. 99-239), becoming effective in 1986. In 1986,
The United States maintains a dominant security presence
Palau and the United States signed a 50-year Compact of
in the Micronesian subregion of the Southwest Pacific,
Free Association. The Palau Compact was approved by
where the FAS as well as Guam and the Commonwealth of
Congress (P.L. 99-658 and P.L. 101-219), but not ratified in
the Northern Mariana Islands are located. In addition to air
Palau until 1993 (entering into force in 1994, with U.S.
and naval bases on Guam, the U.S. military operates the
assistance beginning in 1995). Each Compact included
Ronald Reagan Ballistic Missile Defense Test Site (RTS) at
economic assistance that would expire after 15 years.
U.S. Army Garrison-Kwajalein Atoll in the RMI. RTS
supports missile and missile defense testing, space launch,
Although negotiations to renew the economic provisions of
and space surveillance activities. The amended Compact of
the Compacts between the United States and the RMI and
2003 extended U.S. base rights on Kwajalein Atoll through
FSM were not completed before the end of the first
2066, with the U.S. option to continue the arrangement for
Compact term (1986-2001), grant assistance continued
an additional 20 years. The Department of Defense (DOD)
while negotiations went on. Following the completion of
is building a high-frequency radar system in Palau and
negotiations in 2003, Congress approved the agreements
seeks to use Micronesia as a location for U.S. Air Force
(P.L. 108-188), amending the Compacts and extending
Agile Combat Employment operations.
assistance for another 20 years (2004-2023). Two new
features of the assistance were trust funds established with
The National Defense Authorization Act (NDAA), 2022
the aim of providing sustainable sources of revenue after
(P.L. 117-81) states that the Secretary of Defense should
2023 and new oversight mechanisms. In 2010, the United
engage with the FAS “with the goal of strengthening
States and Palau concluded the U.S.-Palau Compact
regional security and addressing issues of mutual concern,
Review Agreement, to extend economic assistance and trust
including protecting fisheries from illegal, unreported, and
fund contributions for another 15 years (2010-2024).
unregulated fishing” (Sec. 1252) and mandates a study on
Although the U.S. government continued to provide annual
the Runit Dome nuclear waste site in the RMI (Sec. 3140).
grant assistance to Palau after 2009, Congress did not
The House-passed version of the NDAA, 2023 (H.R. 7900)
approve and authorize full funding pursuant to the
includes provisions (Sec. 5813) emphasizing the
agreement until 2018 (P.L. 115-91 and P.L. 115-141).
importance of the Compacts for U.S. national security and
defense commitments to the FAS, and requiring the
Compact Grant and other Assistance
Secretary of Defense to report to Congress on the role of
Pursuant to the Compacts, the United States provided grant
DOD in Compact negotiations.
assistance worth approximately $661 million to the RMI
and $1.54 billion to the FSM between 1987 and 2003. In
ï‚· For further information, see CRS Report R46573, The
addition, the United States spent $309 million on nuclear
Freely Associated States and Issues for Congress, and
test-related assistance and compensation for the Marshall
CRS In Focus IF11208, The Pacific Islands.
Islands pursuant to the Compact. During the second
Compact term (2004-2023), U.S. grant assistance and trust
Thomas Lum, Specialist in Asian Affairs
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The Compacts of Free Association

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