The Compact of Free Association was the result of more than 15 years of often arduous negotiations. With its approval by the FSM, Marshall Islands and the U.S. in 1986, negotiators for Micronesia and the United States had developed a political status unique in international relations. The Compact is a milestone document forming the foundation for relations between the U.S. and the FSM, RMI and Palau. Perhaps more importantly, the agreement served to set the terms of a lasting relationship between the U.S. and entities of the former Trust Territory of the Pacific Islands.

Compact Negotiating Sessions, 1972-86

From 1969 to 1986, a total of 15 formal negotiating sessions were held, as were numerous informal meetings and head of delegation "roundtables."

While an offer of Micronesian Commonwealth status was initially proposed by the United States in 1969, this was rejected by all the territorial districts except the Marianas, in favor of a status of "free association." The concept was then relatively new to international relations, and developed largely by Lazarus Salii of Palau, who chaired the Micronesian Joint Committee on Future Status (later the Commission on Future Political Status and Transition) in the early years of the negotiations. Salii was influenced by his travels in the South Pacific, during which he investigated the free association arrangement between the Cook Islands and New Zealand.

While all political status options remained open throughout most of the negotiations, both sides continually expressed a desire for a close and lasting relationship. In light of these sentiments, it was determined that free association would best serve the interests of all parties.

Negotiations began in 1969 between the U.S. and a single Micronesian entity comprised of the districts of the Trust Territory of the Pacific Islands: the Central Caroline Islands (the future FSM - Chuuk, Kosrae, Pohnpei, and Yap), Marshall Islands, Northern Mariana Islands, and Palau. In 1972, the Northern Marianas sought a separate political status, culminating in a 1975 Commonwealth agreement with the United States. Later, the Marshalls and Palau also sought separate negotiations with the U.S., and would ultimately sign separate Compacts.

Early negotiations resulted in an initialed Compact in 1976 with only the matter of marine jurisdiction remaining to be resolved. However, a series of developments prompted the breakdown of talks and disagreement on several key points. As a result, negotiations were suspended, but would later resume in October 1977.

A landmark was reached in April 1978 with the adoption of the "Hilo Principles," and eight-point document of broad concepts to be included in the Compact. These eight principles would serve as the basis for future negotiations.

The Compact was initialed in 1980 and signed by all parties in 1982. FSM voters approved the Compact in a plebiscite held during 1983, and the document was transmitted to the U.S. Congress in 1985. However, the signed agreement was subject to a series of amendments in the U.S. Congress, primarily in the areas of tax and trade, with the end result being a substantial reduction in benefits for the Freely-Associated States (FAS) in these areas. To compensate for these reductions, Congress passed a package of benefits that included extension of additional federal programs and the financing of a FSM Investment Development Fund.

The Compact legislation was adopted by the U.S. Congress in late 1985, and transmitted to President Reagan, who signed the bill into law on November 13, 1986. In addition to the Compact itself, 24 related bilateral and multilateral agreements were adopted.

The Compacts with the FSM and the Republic of the Marshall Islands (RMI) provide for U.S. economic assistance, extension of federal programs, defense of the FAS, and other benefits in exchange for U.S. defense and operating rights in Micronesia, denial of access to FAS territory by third party states, and other aspects. The Compact itself is of indefinite duration, although certain provisions would expire after 15 years. Renegotiation of these provisions are mandated by the Compact to begin in November 1999. The Republic of Palau adopted a similar Compact in 1996, with many of its terms set at 50 years.

Negotiations of expiring provisions of the Compact were conducted by the JCN under its mandate. For a brief history of these negotiations, please see the schedule page here.