The Compacts of Free Association (COFA) are international agreements establishing and governing the relationships of free association between the United States and the three Pacific Island sovereign states of the Federated States of Micronesia (FSM), the Republic of the Marshall Islands (RMI), and the Republic of Palau. As a result, these countries are sometimes known as the Freely Associated States (FASs). All three agreements next expire in 2043.
These countries, together with the Commonwealth of the Northern Mariana Islands, formerly constituted the Trust Territory of the Pacific Islands, a United Nations trusteeship administered by the United States Navy from 1947 to 1951, and by the U.S. Department of the Interior from 1951 to 1986 (to 1994 for Palau).
The compacts came into being as an extension of the US–UN territorial trusteeship agreement, which obliged the federal government of the United States "to promote the development of the people of the Trust Territory toward self-government or independence as appropriate to the particular circumstances of the Trust Territory and its peoples and the freely expressed wishes of the peoples concerned." Under the compacts, the U.S. federal government provides guaranteed financial assistance over a 15-year period administered through its Office of Insular Affairs in exchange for full international defense authority and responsibilities.
The Compacts of Free Association were initiated by negotiators in 1980, and signed by the parties in the years 1982 and 1983. They were approved by the citizens of the Pacific states in plebiscites held in 1983. Legislation on the compacts was adopted by the U.S. Congress in 1986, and signed into law on November 13, 1986.
Each of the associated states actively participates in all Office of Insular Affairs technical assistance activities. The U.S. gives only these countries access to many U.S. domestic programs, including disaster response and recovery and hazard mitigation programs under the Federal Emergency Management Agency; some U.S. Department of Education programs, including the Pell Grant; and services provided by the National Weather Service, the United States Postal Service, the Federal Aviation Administration, the Federal Communications Commission, the Federal Deposit Insurance Corporation, and U.S. representation to the International Frequency Registration Board of the International Telecommunication Union. The Compact area, while outside the customs area of the United States, is mainly duty-free for imports.
Most citizens of the associated states may live and work in the United States, and most U.S. citizens and their spouses may live and work in the associated states. In 1996, the U.S. Personal Responsibility and Work Opportunity Act removed Medicaid benefits for those from the COFA states living in the US, even after the five-year waiting period that most other resident aliens have. However, in December 2020, Congress restored Medicaid for Compact of Free Association communities.
The COFA allows the United States to operate armed forces in Compact areas, and to demand land for operating bases, subject to negotiation, and excludes the militaries of other countries without U.S. permission. The U.S. in turn becomes responsible for protecting its affiliate countries, and responsible for administering all international defense treaties and affairs, though it may not declare war on their behalf. It is not allowed to use nuclear, chemical, or biological weapons in Palauan territory. In the territories of the Marshall Islands and the Federated States of Micronesia, it is not allowed to store such weapons, except in times of national emergency, state of war, or when necessary to defend against an actual or impending attack on the U.S., the Marshall Islands, or the Federated States of Micronesia.
Citizens of the associated states may serve in America's armed forces, and there is a high level of military enlistment by Compact citizens. For example, in 2008, the Federated States of Micronesia had a higher per-capita enlistment rate than any U.S. state, and had more than five times the national per-capita average of casualties in Iraq and Afghanistan: nine soldiers out of a population of 107,000.
21st-century renewal and updates
In 2003, the compacts with the RMI and FSM were renewed for 20 years. These new compacts provided US$3.5 billion in funding for both countries. US$30 million was also be disbursed annually among American Samoa, Guam, Hawaii, and the Northern Mariana Islands in "Compact Impact" funding. This funding helped the governments of these localities cope with the expense of providing services to immigrants from the RMI, FSM, and Palau. The U.S. use of Kwajalein Atoll for missile testing was renewed for the same period. The new compacts also changed certain immigration rules. RMI and FSM citizens traveling to the U.S. are now required to have passports. The US Postal Service was given the option to apply international postage rates for mail between the U.S. and RMI/FSM, phased in over five years. The USPS began implementing the change in January 2006, but decided to resume domestic services and rates in November 2007.
The renewed compact, commonly called "Compact II," took effect for the FSM on June 25, 2004, and for RMI on June 30, 2004.
The economic provisions of the Compact for Palau, which provided $18 million in annual subsidies and grants, expired on September 30, 2009, and the renewal talk was concluded in late 2010. U.S. financial support for Palau is based on a continuing resolution passed by the U.S. Congress. The Compact Trust Fund set up to replace U.S. financial aid underperformed because of the Great Recession. The military and civil defense provisions remained until 2015.
An amended Compact, enacted December 17, 2003, as Public Law 108-188, provided financial assistance to the Marshall Islands and Micronesia through 2023. The Compact of Free Association agreement with the Republic of Palau, enshrined in US Public Law 99-658, was followed by a Compact Review Agreement signed between the U.S. and Palau in 2018, extending certain financial provisions through September 30, 2024.
Negotiations to extend the compacts became stalled in December 2020. In February 2022 the Republic of the Marshall Islands' Ambassador to the United States, Gerald Zackios, attributed the impasse to Washington's failure to appoint a negotiator empowered by the president to discuss key issues beyond economic assistance, including remuneration for the legacy of nuclear testing on the islands, the continuing presence of U.S. military bases and the ballistic missile test site at Kwajalein Atoll and climate-change mitigation. Citing "the critical nature of these complex negotiations," U.S. Secretary of State Antony Blinken announced the creation of the position of Special Presidential Envoy for Compact Negotiations on March 22, 2022, President Joe Biden named Ambassador Joseph Yun as the envoy to take over negotiation for amendment and continuation of COFA.
Between March 2022 and October 2023, negotiations led by Ambassador Yun were held with the Compact states, and with the bipartisan support of the US Congress, the framework of the amendments were agreed to, with Yun soon after resigning from his position.
Palau Finance Minister Kaleb Udui Jr. and U.S. Ambassador Yun signed Palau's COFA extension on May 22, 2023, with the island government previously requesting to advance their date more in line with the other two countries. On May 23, 2023, FSM negotiator Leo Falcam, Jr. and a State Department representative signed Micronesia's extension at the U.S. embassy in Pohnpei. Marshall Islands' Minister of Foreign Affairs and Trade Jack Ading, alongside Ambassador Yun, signed the RMI's agreement on October 16, 2023. Total funding for all three agreements is $7.1B paid over 20 years ($889M to Palau; $3.3B to the FSM; $2.3B to the RMI; and $634M for the U.S. Postal Service to offset continuing domestic rate mail service). Approval by each legislature, to include a funding mechanism in Congress, is the final step to bring each agreement into force. On March 8, 2024, the renewed Compacts of Free Association (COFA) were officially signed into law as part of the Consolidated Appropriations Act.