§ 1901. Approval of Compact of Free Association

[Pub. L. 108–108, title I, Nov. 10, 2003, 117 Stat. 1261, which directed amendment of section 231 of Pub. L. 99–239, was executed by amending section 231 of the Compact of Free Association, set out above, to reflect the probable intent of Congress. Pub. L. 99–239, which sets out the Compact, does not contain a section 231.]

[For abolition of Immigration and Naturalization Service, transfer of functions, and treatment of related references, see note set out under section 1551 of Title 8, Aliens and Nationality.]

[For transfer of all functions, personnel, assets, components, authorities, grant programs, and liabilities of the Federal Emergency Management Agency, including the functions of the Under Secretary for Federal Emergency Management relating thereto, to the Federal Emergency Management Agency, see section 315(a)(1) of Title 6, Domestic Security.]

[For transfer of functions, personnel, assets, and liabilities of the Federal Emergency Management Agency, including the functions of the Director of the Federal Emergency Management Agency relating thereto, to the Secretary of Homeland Security, and for treatment of related references, see former section 313(1) and sections 551(d), 552(d), and 557 of Title 6, Domestic Security, and the Department of Homeland Security Reorganization Plan of November 25, 2002, as modified, set out as a note under section 542 of Title 6.]

[For transfer of authorities, functions, personnel, and assets of the Coast Guard, including the authorities and functions of the Secretary of Transportation relating thereto, to the Department of Homeland Security, and for treatment of related references, see sections 468(b), 551(d), 552(d), and 557 of Title 6, Domestic Security, and the Department of Homeland Security Reorganization Plan of November 25, 2002, as modified, set out as a note under section 542 of Title 6.]

[For termination, effective May 15, 2000, of provisions of law requiring submittal to Congress of any annual, semiannual, or other regular periodic report listed in House Document No. 103–7 (in which reporting requirements under section 211(c) of the Compact of Free Association, set out above, are listed as the 5th and 6th items on page 115), see section 3003 of Pub. L. 104–66, as amended, set out as a note under section 1113 of Title 31, Money and Finance.]

Clarification of Certain Trade and Tax Provisions of Compact of Free Association

Title IV of Pub. L. 99–239 provided that: “SEC. 401. FREELY ASSOCIATED STATES TARIFF TREATMENT.“(a) Section 242.—Section 242 of the Compact [set out above] shall be construed and applied as if it read as follows:“ ‘Section 242 “ ‘The President shall proclaim the following tariff treatment for articles imported from the Federated States of Micronesia or the Marshall Islands which shall apply during the period of effectiven[e]ss of this title: “ ‘(1) Unless otherwise excluded, articles imported from the Federated States of Micronesia or the Marshall Islands, subject to the limitations imposed under sections 503(b) and 504(c) of title 5 of the Trade Act of 1974 (19 U.S.C. 2463(b); 2464(c)), shall be exempt from duty. “ ‘(2) Only canned tuna provided for in item 112.30 of the Tariff Schedules of the United States that is imported from the Federated States of Micronesia and the Marshall Islands during any calendar year not to exceed 10 percent of the United States consumption of canned tuna during the immediately preceding calendar year, as reported by the National Marine Fisheries Service, shall be exempt from duty; but the quantity of tuna given duty free treatment under this paragraph for any calendar year shall be counted against the aggregate quantity of canned tuna that is dutiable under rate column numbered 1 of such item 112.30 for that calendar year. “ ‘(3) The duty-free treatment provided under paragraph (1) shall not apply to— “ ‘(A) watches, clocks, and timing apparatus provided for in subpart E of part 2 of schedule 7 of the Tariff Schedules of the United States; “ ‘(B) buttons (whether finished or not finished) provided for in item 745.32 of such Schedules; “ ‘(C) textile and apparel articles which are subject to textile agreements; and “ ‘(D) footwear, handbags, luggage, flat goods, work gloves, and leather wearing apparel which were not eligible articles for purposes of chapter V of the Trade Act of 1974 (19 U.S.C. 2461, et seq.) on April 1, 1984. “ ‘(4) If the cost or value of materials produced in the customs territory of the United States is included with respect to an eligible article which is a product of the Federated States of Micronesia or the Marshall Islands, an amount not to exceed 15 percent of the appraised value of the article at the time it is entered that is attributable to such United States cost or value may be applied for duty assessment purposes toward determining the percentage referred to in section 503(b)(2) of title V of the Trade Act of 1974.’. “(b) Section 243.—Section 243 of the Compact shall be construed and applied as if it read as follows:“ ‘Section 243 “ ‘Articles imported from the Federated States of Micronesia or the Marshall Islands which are not exempt from duty under paragraphs (1), (2), (3), and (4) of section 242 shall be subject to the rates of duty set forth in column numbered 1 of the Tariff Schedules of the United States and all products of the United States imported into the Federated States of Micronesia or the Marshall Islands shall receive treatment no less favorable than that accorded like products of any foreign country with respect to customs duties or charges of a similar nature and with respect to laws and regulations relating to importation, exportation, taxation, sale, distribution, storage, or use.’. “SEC. 402. CONSTRUCTION OF SECTION 253 OF THE COMPACT.“(a) Subsection (a) of section 253 of the Compact shall not apply. “(b) Subsection (b) of section 253 of the Compact shall apply only to individuals who are nonresidents and not citizens of the United States. “SEC. 403. CONSTRUCTION OF SECTION 254 OF THE COMPACT.“The relief from liability referred to in the second sentence of section 254(a) of the Compact means only—“(1) relief in the form of the foreign tax credit (or deduction in lieu thereof) available with respect to the income taxes of a possession of the United States, and “(2) relief in the form of the exclusion under section 911 of the Internal Revenue Code of 1986 [26 U.S.C. 911]. “SEC. 404. CONSTRUCTION OF SECTION 255 OF THE COMPACT. “Section 255 of the Compact shall be construed and applied as if it read as follows:“ ‘Section 255 “ ‘(a) Extension of Section 936 to the Marshall Islands and the Federated States of Micronesia.—For purposes of section 936 of the Internal Revenue Code of 1986, the Marshall Islands and the Federated States of Micronesia shall be treated as if they were possessions of the United States. “ ‘(b) Exchange of Information.—Subsection (a) shall not apply to the Marshall Islands and the Federated States of Micronesia (as the case may be) for any period after December 31, 1986, during which there is not in effect between the appropriate government and the United States an exchange of information agreement of the kind described in section 274(h)(6)(C) (other than clause (ii) thereof) of the Internal Revenue Code of 1986. “ ‘(c) Procedure If Section 936 Incentives Reduced.—If the tax incentives extended to the Marshall Islands and the Federated States of Micronesia under subsection (a) are, at any time during which the Compact is in effect, reduced, the Secretary of the Treasury shall negotiate an agreement with the Marshall Islands and the Federated States of Micronesia under which, when such agreement is approved by law, they will be provided with benefits substantially equivalent to such reduction in benefits. If, within the 1 year period after the date of the enactment of the Act making the reduction in benefits, an agreement negotiated under the preceding sentence is not approved by law, the matter shall be submitted to the Arbitration Board established pursuant to section 424 of the Compact. For purposes of Article V of Title Two of the Compact, the Secretary of the Treasury or his delegate shall be the member of such Board representing the Government of the United States. Any decision of such Board in the matter when approved by law shall be binding on the United States, except that such decision rendered is binding only as to whether the United States has provided the substantially equivalent benefits referred to in this subsection.’. “SEC. 405. THE MARSHALL ISLANDS AND THE FEDERATED STATES OF MICRONESIA TREATED AS NORTH AMERICAN AREA.“For purposes of section 274(h)(3)(A) of the Internal Revenue Code of 1986 [26 U.S.C. 274(h)(3)(A)], the term ‘North American Area’ shall include the Marshall Islands and the Federated States of Micronesia. “SEC. 406. EFFECTIVE DATE.“This title shall apply to income earned, and transactions occurring, after September 30, 1985, in taxable years ending after such date. “SEC. 407. STUDY OF TAX PROVISIONS.“The Secretary of the Treasury or his delegate—“(1) shall conduct a study of the effects of the tax provisions of the Compact (as clarified by the foregoing provisions of this title), and “(2) shall report the results of such study before October 1, 1987, to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate.[The due date for the report referred to in section 407 of Pub. L. 99–239, set out above, was extended to Jan. 1, 1991 by Pub. L. 101–508, title XI, § 11831(b), Nov. 5, 1990, 104 Stat. 1388–559.] “SEC. 408. COORDINATION WITH OTHER PROVISIONS.“Nothing in any provision of this joint resolution [see Short Title note above] (other than this title) which is inconsistent with any provision of this title shall have any force or effect.”

Ex. Ord. No. 12569. Management of Compact of Free Association With Republic of the Marshall Islands, Federated States of Micronesia, and Republic of Palau

Ex. Ord. No. 12569, Oct. 16, 1986, 51 F.R. 37171, as amended by Ex. Ord. No. 12877, Nov. 3, 1993, 58 F.R. 59159, provided:

By the authority vested in me as President by the Constitution and laws of the United States, including the Compact of Free Association (the Compact) [set out above] and Public Law 99–239, (the Act) [see Short Title note above], it is ordered as follows:

Section 1. Responsibility of the Secretary of State. The Secretary of State shall conduct the government-to-government relations of the United States with the Republic of the Marshall Islands, the Federated States of Micronesia, and the Republic of Palau (the “Freely Associated States”), including any subdivisions, officials or persons thereof, and may delegate or allocate such of his authority under this Order to such other United States officials as he may from time to time deem desirable. The authority of the Secretary of State shall include, consistent with Article V of Title One of the Compact and section 105(b)(1) of the Act [48 U.S.C. 1905(b)(1)], the establishment and maintenance of representative offices in the Freely Associated States and supervision of the United States representatives and their staff. The Secretary also shall provide, in accordance with applicable law, for appropriate privileges, immunities, and assistance to representatives to the United States designated by the Governments of the Freely Associated States, together with their officers and staff. In accordance with applicable law and the provisions of this Order, the Secretary also shall have the authority and responsibility to take such other actions as may be necessary and appropriate to ensure that the authorities and obligations of the United States set forth in the Compact and its related agreements and in the laws of the United States as they relate to the conduct of government-to-government relations with the Freely Associated States are carried out. The Secretary shall provide from appropriations made to the Department of State such funds as may be necessary to carry out the provisions of this Order in relation to the activities of the Department of State.

Sec. 2. Responsibility of the Secretary of the Interior. The Secretary of the Interior shall be responsible for seeking the appropriation of funds for and, in accordance with the laws of the United States, shall make available to the Freely Associated States the United States economic and financial assistance appropriated pursuant to Article I of Title Two of the Compact; the grant, service, and program assistance appropriated pursuant to Article II of Title Two of the Compact; and all other United States assistance appropriated pursuant to the Compact and its related agreements. The Secretary shall coordinate and monitor any program or any activity by any department or agency of the United States provided to the Freely Associated States and shall coordinate and monitor related economic development planning. This Section shall not apply to services provided by the Department of Defense to the Freely Associated States or to activities pursuant to Section 1 of this Order, including activities under the Peace Corps Act [22 U.S.C. 2501 et seq.].

Sec. 3. Interagency Group on Freely Associated State Affairs and the Office of Freely Associated State Affairs.

(a) There is established an Interagency Group on Freely Associated State Affairs for the purpose of providing guidance and oversight with respect to the establishment and implementation of policy concerning the Compact and United States relations with the Freely Associated States.

(b) The Interagency Group shall consist of the Secretary of State or his designee, who shall chair the Group, and of the principal officers or their designees from the Departments of the Interior, Defense, Commerce, Energy, and Justice, the Organization of the Joint Chiefs of Staff, the Office of Management and Budget, the National Security Council, and such other departments and agencies as may from time to time be appropriate.

(c) The Interagency Group shall make such recommendations as it shall deem appropriate to the President, through the Assistant to the President for National Security Affairs, concerning United States relations with the Freely Associated States. The Interagency Group also shall provide such guidance as it deems appropriate to departments and agencies delegated authority by this Order concerning administration of laws with respect to the Freely Associated States.

(d) If any department or agency charged by this Order with implementation of the Compact or other laws of the United States with respect to the Freely Associated States concludes that noncompliance sanctions pursuant to section 105(g) of the Act [48 U.S.C. 1905(g)] are appropriate, it shall make appropriate recommendations to the Interagency Group. The Interagency Group shall consider these recommendations and report its findings to the President for his review in making that determination.

(e)(1) The Secretary of State shall be responsible for the conduct of United States relations with the Freely Associated States, carry out related matters, and provide appropriate support to the Interagency Group, bearing in mind the continued special relationship between the United States and the Freely Associated States.

(2) The Secretaries of Defense and Interior may, to the extent permitted by law, delegate any or all of their respective authorities and responsibilities as described in this Order to the Secretary of State or his or her designee. The Secretary of State or his or her designee shall serve as Executive Secretary of the Interagency Group.

(3) Personnel additional to that provided by the Secretary of State may be detailed to the Department of State by the Executive departments and agencies that are members of the Interagency Group, and by other agencies as appropriate. Executive departments and agencies shall, to the extent permitted by law, provide such information, advice, and administrative services and facilities to the Secretary of State as may be necessary to conduct United States relations with the Freely Associated States.

Sec. 4. United States Representatives to the Freely Associated States. The United States Representative assigned to a Freely Associated State in accordance with Article V of Title One of the Compact shall represent the Government of the United States in an official capacity in that Freely Associated State, and shall supervise the actions of any Executive department or agency personnel assigned permanently or temporarily to that Freely Associated State.

Sec. 5. Cooperation among Executive Departments and Agencies. All Executive departments and agencies shall cooperate in the effectuation of the provisions of this Order. The Interagency Group and the Secretary of State shall facilitate such cooperative measures. Nothing in this Order shall be construed to impair the authority and responsibility of the Secretary of Defense for security and defense matters in or relating to the Freely Associated States.

Sec. 6. Delegation to the Secretary of the Interior. The following authorities are delegated to the Secretary of the Interior:

(a) Reporting to the Congress on economic development plans prepared by the Government of the Federated States of Micronesia and the Government of the Marshall Islands, pursuant to sections 102(b) and 103(b) of the Act [48 U.S.C. 1902(b), 1903(b)];

(b) The determination required by section 103(e) of the Act concerning the qualifications of the investment management firm selected by the Government of the Marshall Islands;

(c) Reporting to the Congress with respect to the impact of the Compact of Free Association on the United States territories and commonwealths and on the State of Hawaii, pursuant to section 104(e)(2) of the Act [48 U.S.C. 1904(e)(2)]; and

(d) Causing an annual audit to be conducted of the annual financial statements of the Government of the Federated States of Micronesia and the Government of the Marshall Islands, pursuant to section 110(b) of the Act [48 U.S.C. 1910(b)].

Sec. 7. Delegation to the Secretary of State. The following authorities are delegated to the Secretary of State:

(a) Reporting to the Congress on crimes in the Federated States of Micronesia and the Marshall Islands which have an impact upon United States jurisdictions, pursuant to sections 102(a)(4) and 103(a)(4) of the Act [48 U.S.C. 1902(a)(4), 1903(a)(4)];

(b) Submitting the certification and report to the Congress for purposes of section 5 of the Fishermen’s Protective Act of 1967 [22 U.S.C. 1975], pursuant to section 104(f)(3) of the Act [48 U.S.C. 1904(f)(3)]; and

(c) Reporting, with the concurrence of the Secretary of Defense, to the Congress on determinations made regarding security and defense, pursuant to section 105(q) of the Act [former 48 U.S.C. 1905(q)].

Sec. 8. Supersession and Saving Provisions.

(a) Subject to the provisions of Section 9 of this Order, prior Executive orders concerning the former Trust Territory of the Pacific Islands are hereby superseded and rendered inapplicable, except that the authority of the Secretary of the Interior as provided in applicable provisions of Executive Order No. 11021, as amended [formerly 48 U.S.C. 1681 note], shall remain in effect, in a manner consistent with this Order and pursuant to section 105(c)(2) of the Act [48 U.S.C. 1905(c)(2)], to terminate the trust territory government and discharge its responsibilities, at which time the entirety of Executive Order No. 11021 shall be superseded.

(b) Nothing in this Order shall be construed as modifying the rights or obligations of the United States under the provisions of the Compact or as affecting or modifying the responsibility of the Secretary of State and the Attorney General to interpret the rights and obligations of the United States arising out of or concerning the Compact.

Sec. 9. Effective Date. This Order shall become effective with respect to a Freely Associated State simultaneously with the entry into force of the Compact for that State.