Updated October 18, 2023
The Compacts of Free Association
Overview
Marshall Islands and Micronesia and is set to expire at the
The Compacts of Free Association govern the relationships
end of FY2024 for Palau. Compact provisions related to
between the United States and the Republic of the Marshall
defense, security, migration, and other areas are to continue
Islands (RMI), Federated States of Micronesia (FSM), and
unchanged. The Department of the Interior (DOI) has
Republic of Palau. The Marshall Islands, Micronesia, Palau,
funded and administered this assistance, also referred to as
and the Northern Mariana Islands were districts of the
grant assistance, through mandatory or permanent
former U.S.-administered United Nations Trust Territory of
appropriations since the Compacts’ inception. The FAS also
the Pacific Islands, established after World War II. In 1978,
are eligible for some U.S. federal programs and services.
the Marshall Islands, Micronesia, and Palau rejected the
option of U.S. territorial or commonwealth status and
Figure 1. The Freely Associated States
instead chose the status of free association with the United
States. The Northern Marianas chose commonwealth status,
and nearby Guam, occupied by the United States after the
Spanish American War ended in 1898, became a U.S.
territory in 1950.
Citizens of the RMI, FSM, and Palau (Freely Associated
States or FAS) have the right to reside and work in the
United States and its territories as lawful non-immigrants or
“habitual residents.” More than 94,000 FAS citizens live in
the United States, including children under age 18 who
were born in the United States and hold dual citizenship.
The FAS do not have their own militaries, and FAS citizens
are eligible to join the U.S. military; over 1,000 FAS

Source: CRS. Information from Esri and U.S. Department of State.
citizens serve in the U.S. Armed Forces.

The FAS cover a maritime area larger than the continental
United States, govern over 1,000 islands and atolls, and
Since March 2022, Ambassador Joseph Yun, the State
Department’s Special Envoy for Compact Negotiatio
have a combined population of approximately 200,000. The
ns, led
FAS economies face structural challenges similar to many
talks with the FAS to renew Compact economic assistance.
other Pacific Island countries (PICs), including lack of
In May 2023, the United States signed agreements with the
economies of scale, small land areas, limited natural and
FSM and Palau on extending economic assistance for 20
human resources, remote locations, poor infrastructure, and
years, and in October 2023, the United States signed a 20-
vulnerability to climate change. The RMI, FSM, and Palau
year economic assistance agreement with the RMI.
rank 162nd, 192nd, and 118th, respectively, out of 229
Although Compact economic assistance for Palau does not
countries by gross domestic product per capita.
expire until the end of FY2024, the United States and Palau
agreed to start the next (third) term of assistance at the
Located roughly 2,500 miles southwest of Hawaii, the FAS
beginning of FY2024, along with the RMI and FSM. The
play a role in supporting the U.S. security presence in the
next phase of Compact assistance to the FAS is to include
Pacific Islands region at a time of increasing strategic
greater support for the environment, climate change
competition between the United States and its allies, on one
adaptation, health care, education, and infrastructure.
hand, and the People’s Republic of China (PRC or China),
on the other. The Biden Administration’s 2022 Indo-Pacific
In June 2023, the Department of State submitted a draft bill
Strategy refers to the Compacts of Free Association as “the
(joint resolution) to Congress that if approved would amend
bedrock of the U.S. role in the Pacific.” The RMI and Palau
the Compacts and implement the agreements. The
are among four PICs that have diplomatic relations with
agreements include grant assistance and trust fund
Taiwan and not the PRC. Micronesia, along with some
contributions for the RMI, FSM, and Palau that total
other PICs, rejected a 2022 PRC proposal for a sweeping
approximately $2.3 billion, $3.3 billion, and $0.9 billion,
diplomatic, economic, and security pact between China and
respectively, for FY2024-FY2043. In addition, the
10 PICs with which China has diplomatic relations.
agreements include $634 million to continue the U.S. Postal
Service in the FAS. The Continuing Appropriations Act,
Compact Negotiations
FY2024 (P.L. 118-15), which was signed into law on
Economic assistance pursuant to Title II of the Compacts of
September 30, 2023, extends grant assistance to the FSM
Free Association expired at the end of FY2023 for the
through November 17, 2023.
https://crsreports.congress.gov

---

The Compacts of Free Association
Compensation for past nuclear testing was a sticking point
Economic assistance pursuant to the 2010 CRA amounted
in the U.S.-RMI Compact negotiations. From 1946 to 1958,
to $229 million.
the United States conducted 67 atmospheric atomic and
thermonuclear weapons tests over the Marshall Islands
U.S. Security Presence
atolls of Bikini and Enewetak. Since the nuclear testing
The United States maintains a dominant security presence
program ended, the U.S. government has provided, by some
in the Micronesian subregion of the Southwest Pacific,
estimates, roughly $600 million for damages,
where the FAS as well as Guam and the Commonwealth of
environmental cleanup and restoration, resettlement, and
the Northern Mariana Islands are located. In addition to air
health and medical programs. The RMI claims roughly $3
and naval bases on Guam, the U.S. military operates the
billion in uncompensated damages. The 20-year, $2.3
Ronald Reagan Ballistic Missile Defense Test Site (RTS) at
billion economic assistance package for the RMI includes a
U.S. Army Garrison-Kwajalein Atoll in the Marshall
$700 million trust fund that the RMI government states will
Islands. The amended Compact of 2003 extended U.S. base
be used to address the needs of those affected by the
rights on Kwajalein Atoll through 2066, with the U.S.
nuclear testing program.
option to continue the arrangement for an additional 20
years. The U.S. military is building a high-frequency radar
Compact History
system in Palau. In 2021, the U.S. and FSM governments
The governments of the Marshall Islands and Micronesia
agreed to establish a U.S. military facility in Micronesia.
signed Compacts of Free Association with the United States
in 1982. The Compacts were approved by plebiscites in the
Congressional Oversight
Marshall Islands and Micronesia and by the U.S. Congress
Key issues that Congress may consider related to the
in 1985 (P.L. 99-239), becoming effective in 1986 (with
renewal of Compact assistance include changes to oversight
economic assistance beginning in FY1987). The U.S.-Palau
mechanisms; the possible reestablishment of an Office of
Compact of Free Association was approved by Congress in
FAS Affairs and/or an Interagency Group on the FAS
1986 and 1989 (P.L. 99-658 and P.L. 101-219) and ratified
located in the State Department; and possible increased
in Palau in 1993 (entering into force in 1994, with
support to FAS communities that serve U.S. military
economic assistance beginning in FY1995). Each Compact
facilities, such as the roughly 900 residents of the RMI
provided for economic assistance for a period of 15 years.
island of Ebeye who work at RTS. Congress also may
consider policy options related to federal assistance for FAS
The first term of economic assistance under the RMI and
migrants living in U.S. states and territories.
FSM Compacts formally expired in FY2001. In 2003, the
United States and the RMI and FSM signed agreements to
The 118th Congress has held the following hearings focused
renew Compact assistance, and Congress passed legislation
on the FAS: Indian and Insular Affairs Subcommittee of the
(P.L. 108-188) amending the Compacts and extending
House Committee on Natural Resources, Preserving U.S.
economic assistance for 20 years (FY2004-FY2023). New
Interests in the Indo-Pacific: Examining How U.S.
features of the assistance included trust funds, joint
Engagement Counters Chinese Influence in the Region
oversight committees, and sector grants targeting education,
(May 16, 2023); House Committee on Natural Resources,
health, the environment, public sector capacity building,
Indo-Pacific Task Force, How the Compacts of Free
private sector development, and infrastructure. In 2010, the
Association Support U.S. Interests and Counter the PRC’s
United States and Palau concluded the U.S.-Palau Compact
Influence (June 14, 2023); Senate Committee on Energy
Review Agreement (CRA), to extend economic assistance
and Natural Resources, Full Committee Hearing to Receive
and trust fund contributions through FY2024. Although the
Testimony Regarding the Compact of Free Association
U.S. government continued to make annual assistance
Amendments Act of 2023 (July 13, 2023); House Committee
available to Palau after 2009, Congress did not authorize
on Natural Resources, Indo-Pacific Task Force, The Biden
full funding pursuant to the CRA until FY2018 (P.L. 115-
Administration’s Proposed Compact of Free Association
91 and P.L. 115-141).
Amendments Act of 2023 (July 18, 2023).
Compact Assistance Numbers
The National Defense Authorization Act, FY2022 (NDAA;
Compact assistance to the FAS ($232 million in FY2023)
P.L. 117-81) states that the Secretary of Defense should
has amounted to roughly 80% of all U.S. assistance to the
engage with the FAS “with the goal of strengthening
Pacific Islands region, according to some estimates. As
regional security and addressing issues of mutual concern,
reported by DOI, pursuant to the Compacts, the United
including protecting fisheries from illegal, unreported, and
States provided grant assistance worth $690 million to the
unregulated fishing” (§1252) and mandates a study on the
RMI and $1.54 billion to the FSM between FY1987 and
Runit Dome nuclear waste site in the RMI (§3140). The
FY2003. During the second Compact term (FY2004-
FY2023 NDAA (P.L. 117-263) includes provisions (§5591)
FY2023), U.S. grant assistance and trust fund contributions
emphasizing the importance of the Compacts for U.S.
to the RMI totaled $722 million and $276 million,
national security and of renewing economic assistance to
respectively. The FSM received $1.6 billion in grant
the FAS for regional security.
assistance and $517 million in trust fund contributions
during the same period. In addition, U.S. payments to the
For further information, see CRS Report R46573, The
RMI for the military use of Kwajalein Atoll amounted to
Freely Associated States and Issues for Congress.
$412 million (1987-2023). Between FY1995 and FY2009,
Compact assistance to Palau, including grant assistance,
Thomas Lum, Specialist in Asian Affairs
road construction, and a trust fund, totaled $574 million.
IF12194
https://crsreports.congress.gov

---

The Compacts of Free Association


Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.

https://crsreports.congress.gov | IF12194 · VERSION 25 · UPDATED

---