The Compacts of Free Association

The Compacts of Free Association

Updated April 25, 2024
The Compacts of Free Association
Overview
defense, security, migration, and other areas continue
The Compacts of Free Association govern the relationships
unchanged. The Department of the Interior (DOI) has
between the United States and the Republic of the Marshall
funded and administered this assistance, also referred to as
Islands (RMI), Federated States of Micronesia (FSM), and
grant assistance, through mandatory or permanent
Republic of Palau. The Marshall Islands, Micronesia, Palau,
appropriations since the Compacts’ inception. The FAS also
and the Northern Mariana Islands were districts of the
are eligible for some U.S. federal programs and services.
former U.S.-administered United Nations Trust Territory of
the Pacific Islands, established after World War II. In 1978,
Figure 1. The Freely Associated States
the Marshall Islands, Micronesia, and Palau rejected the
option of U.S. territorial or commonwealth status and
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.

Source: CRS. Information from Esri and U.S. Department of State.
The FAS do not have their own militaries, and FAS citizens
are eligible to join the U.S. military; over 1,000 FAS

citizens serve in the U.S. Armed Forces.
In 2023, after over two years of negotiations, the United
The FAS cover a maritime area larger than the continental
States signed agreements with the FAS on extending
United States, govern over 1,000 islands and atolls, and
economic assistance for 20 years. Although Compact
have a combined population of approximately 200,000. The
economic assistance for Palau does not expire until the end
FAS economies face structural challenges similar to many
of FY2024, the United States and Palau agreed to start the
other Pacific Island countries (PICs), including lack of
next (third) term of assistance at the beginning of FY2024,
economies of scale, small land areas, limited natural and
along with the RMI and FSM. Pursuant to the 2023
human resources, remote locations, poor infrastructure, and
agreements, Compact assistance is to include greater
vulnerability to climate change.
support for the environment, climate change adaptation,
health care, education, and infrastructure.
Located roughly 2,500 miles southwest of Hawaii, the FAS
play a role in supporting the U.S. security presence in the
The agreements include grant assistance and trust fund
Pacific Islands region at a time of increasing strategic
contributions for the RMI, FSM, and Palau that total
competition between the United States and its allies, on the
approximately $2.3 billion, $3.3 billion, and $0.9 billion,
one hand, and the People’s Republic of China (PRC or
respectively, for FY2024-FY2043. In addition, the
China), on the other. The Biden Administration’s 2022
agreements include $634 million to continue the U.S. Postal
Indo-Pacific Strategy refers to the Compacts of Free
Service in the FAS.
Association as “the bedrock of the U.S. role in the Pacific.”
The RMI and Palau are among three PICs that have
The Consolidated Appropriations Act, 2024 (P.L. 118-42,
diplomatic relations with Taiwan and not the PRC.
Division G, Title II, Section 201, the “Compact of Free
Association Amendments Act of 2024”
Micronesia, along with some other PICs, rejected a 2022
) approved Compact
PRC proposal for a sweeping diplomatic, economic, and
economic packages for the FAS. President Joe Biden signed
security pact between China and the region.
the bill into law on March 9, 2024. Between October 1,
2023, and March 9, 2024, three successive continuing
2024 Compact Renewal
resolutions provided some continued U.S. funding to the
Economic assistance pursuant to Title II of the Compacts of
FSM and RMI (P.L. 118-15, P.L. 118-22, and P.L. 118-35).
Free Association expired at the end of FY2023 for the
The Compact amendments establish an Interagency Group
Marshall Islands and Micronesia and is set to expire at the
on the Freely Associated States (P.L. 118-42, Sec.
end of FY2024 for Palau. Compact provisions related to
208(d)(1)), authorize expanded access to Department of
Veterans Affairs (VA) health care services to FAS veterans
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The Compacts of Free Association
who served in the U.S. Armed Forces (Sec. 209(a)), and
during the same period. In addition, U.S. payments to the
make FAS migrants in the United States eligible for U.S.
RMI for the military use of Kwajalein Atoll amounted to
federal programs (Sec. 209(f)).
$412 million between1987 and 2023. Between FY1995 and
FY2009, Compact assistance to Palau, including grant
Compensation for past U.S. nuclear testing was a sticking
assistance, road construction, and a trust fund, totaled $574
point in the bilateral negotiations to extend Compact
million. Economic assistance pursuant to the 2010 CRA
assistance for the RMI. From 1946 to 1958, the U.S.
amounted to $229 million.
military 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 (CNMI) are located. In
health and medical programs. The RMI claims roughly $3
addition to air and naval bases on Guam, the U.S. military
billion in uncompensated damages. The 2023 U.S.-RMI
operates the Ronald Reagan Ballistic Missile Defense Test
Compact agreement includes a $700 million trust fund that
Site at U.S. Army Garrison-Kwajalein Atoll in the Marshall
the RMI government states will be used to address the
Islands. The amended Compact of 2003 extended U.S. base
needs of those affected by the nuclear testing program.
rights on Kwajalein Atoll through 2066, with the U.S.
option to continue the arrangement for an additional 20
Compact History
years. The U.S. military is building a high-frequency radar
The governments of the Marshall Islands and Micronesia
system in Palau, and reportedly plans to upgrade an airport,
signed Compacts of Free Association with the United States
deploy air defense assets, and conduct military exercises on
in 1982. The Compacts were approved by plebiscites in the
Yap Island in the FSM.
Marshall Islands and Micronesia and by the U.S. Congress
in 1985 (P.L. 99-239), becoming effective in 1986 (with
Selected Congressional Actions
economic assistance beginning in FY1987). The U.S.-Palau
The National Defense Authorization Act (NDAA), FY2024
Compact of Free Association was approved by Congress in
(P.L. 118-31, Sec. 1301) states, “It is the sense of Congress
1986 and 1989 (P.L. 99-658 and P.L. 101-219) and ratified
that the Secretary of Defense should continue efforts that
in Palau in 1993 (entering into force in 1994, with
strengthen United States defense alliances and partnerships
economic assistance beginning in FY1995).
in the Indo-Pacific region ... including by ... engaging with
the Federated States of Micronesia, the Republic of the
Each Compact provided for economic assistance for an
Marshall Islands, and the Republic of Palau.... ” Section
initial period of 15 years. The first term of economic
5412, the CONVENE Act of 2023, requires the U.S.
assistance under the RMI and FSM Compacts formally
government to assist in the establishment of national
expired in FY2001. In 2003, the United States and the RMI
security councils in the FAS. The explanatory statement to
and FSM signed agreements to renew Compact assistance,
the Further Consolidated Appropriations Act, 2024 (P.L.
and Congress passed legislation (P.L. 108-188) amending
118-47, Division F, Section 7043) authorizes an unspecified
the Compacts and extending economic assistance for 20
amount of funding for the FAS out of the Countering PRC
years (FY2004-FY2023). New features of the assistance
Influence Fund.
included trust funds, joint oversight committees, and sector
grants targeting education, health, the environment, public
The FY2023 NDAA (P.L. 117-263) includes provisions
sector capacity building, private sector development, and
(Sec. 5591) emphasizing the importance of the Compacts
infrastructure. In 2010, the United States and Palau
for U.S. national security and of renewing economic
concluded the U.S.-Palau Compact Review Agreement
assistance to the FAS for regional security. The FY2022
(CRA), to extend economic assistance and trust fund
NDAA (P.L. 117-81) states that the Secretary of Defense
contributions through FY2024. Although the U.S.
should engage with the FAS “with the goal of strengthening
government continued to make annual assistance available
regional security and addressing issues of mutual concern,
to Palau after 2009, Congress did not authorize full funding
including protecting fisheries from illegal, unreported, and
pursuant to the CRA until FY2018 (P.L. 115-91 and P.L.
unregulated fishing” (Sec. 1252) and mandates a study on
115-141).
the Runit Dome nuclear waste site in the RMI (Sec. 3140).
Compact Assistance Numbers
The Guam Host Community Compensation Act (H.R. 6273,
Compact assistance to the FAS ($232 million in FY2023)
introduced November 7, 2023) would, among other
has amounted to roughly 80% of all U.S. assistance to the
measures, extend annual Compact Impact grant funding
Pacific Islands region, according to some estimates. As
provided under the Compact of Free Association
reported by DOI, pursuant to the Compacts, the United
Amendments Act of 2003 (P.L. 108-188, Sec. 104(e))
States provided grant assistance worth $690 million to the
through 2043 for American Samoa, the CNMI, and Guam.
RMI and $1.54 billion to the FSM between FY1987 and
FY2003. During the second Compact term (FY2004-
For further information, see CRS Report R46573, The
FY2023), U.S. grant assistance and trust fund contributions
Freely Associated States and Issues for Congress.
to the RMI totaled $722 million and $276 million,
respectively. The FSM received $1.6 billion in grant
Thomas Lum, Specialist in Asian Affairs
assistance and $517 million in trust fund contributions
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The Compacts of Free Association

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