United States – Federated States of Micronesia Compact of FreeAssociation

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United States – Federated States of Micronesia Compact of Free Association

Opening Statement of Allen Stayman, U.S. Special Negotiator First Round: US-FSM Compact Negotiations (Honolulu, Hawai’i, November 3, 1999)

(NOTE: See First U.S.-FSM Compact Renewal Negotiating Round Concludes In Honolulu at http://pidp.ewc.hawaii.edu/PIReport/1999/November/11-08-01.htm)

Thirteen years ago, the Compact of Free Association went into effect and established a special relationship between the United States and the Federated States of Micronesia (the "FSM"). The Compact signaled an end to the United Nations Trusteeship and the beginning of a new and special relationship—free association—between the U.S. and the FSM. I can say without hesitation that the Compact has been a tremendous success in meeting its primary goal—affirming the right of the people of the FSM to enjoy self-government. The Compact has been the catalyst for achieving the FSM’s political transition from Trust Territory status to membership in the family of nations.

We are here today to begin discussions on the expiring provisions of the Compact, which include certain financial and program assistance provisions set forth in Title II (Economic Relations), and Title III (Security and Defense Relations). As stated in the first sentence of Title II, this assistance is provided to "assist the Government of the Federated State of Micronesia in their efforts to advance the economic self-sufficiency of their peoples…". Put in other terms, we are now focusing on the task of furthering the economic transition from Trusteeship to self-government. I believe that all would agree that the pace of this economic transition has not met our expectations. This does not lessen our desire, as President Clinton stated last November in Guam, to remain a partner in the efforts of the FSM to "promote growth, reform, and good government." I share President Falcam’s desire, as expressed in his inauguration speech, "to ensure a mutually beneficial association with the United States for many years to come."

Upon my selection as Special Negotiator and prior to seeking my initial negotiating authority, I consulted with numerous officials in the Administration and in the Congress. They pointed out that, before considering future U.S. assistance, they will need information in two general areas.

First, many of these officials seek an accounting and assessment of past U.S. assistance in order to understand the role of such assistance in meeting Title II’s objective of advancing self-sufficiency. In particular, they wish to know what lessons have been learned from the previous thirteen years that could be applied in the future.

Second, these officials wish to see the FSM’s strategy for advancing economic self-sufficiency in the future. This information is needed in order to understand the context within which any future U.S. assistance would be used and to consider how any such assistance can be used most effectively.


The United States has already begun a review of past assistance. As you know, the Chairman of the U.S. Senate Committee on Energy and Natural Resources and the Chairman of the House Subcommittee on East Asia and the Pacific have requested that the General Accounting Office ("GAO") report to these Committees on U.S. assistance provided under the Compact, make an assessment of that assistance, and make recommendations on future U.S. policy. I have copies of those requests for your information. I understand that the GAO plans to have a preliminary draft of its accounting of U.S. assistance by early December of this year. Congressional sources have also told me to expect oversight hearings at the beginning of the next session of Congress.

To begin this process of review, I have shared a preliminary summary of assistance that has been made available to my office. This assistance is generally available in two areas: financial assistance and program assistance. My objective for this review is two-fold: first, to develop a general statement, with an estimate and description of U.S. financial and program assistance that the FSM has received since the Compact went into effect, and second, to explain the role of such assistance in meeting Title II’s goal of advancing the FSM’s economic self-sufficiency.

Economic Strategy

During my trip to Pohnpei in July, I was pleased to learn of the plans for your government’s Second National Economic Summit. This effort meshes well with the request made by various officials for information on the government of the FSM’s strategy for advancing economic self-sufficiency. Because it has been generally recognized that economic development has not met expectations, the United States, the Asian Development Bank, and other donors have lent their support to the FSM’s planning efforts in recent years by providing special technical assistance. With this technical assistance, a two-pronged economic development strategy was developed that focused on promoting public sector reform and private sector development. In the broadest terms, the goal of this strategy is to shift the FSM’s economy from its dependence on U.S.-financed public sector jobs to locally-financed private sector jobs. The United States government is eager to learn how this strategy is developing.

Given the GAO report and the anticipated oversight hearings, I believe we need to focus our first several months of effort on working together to provide GAO and the Congress with the information they seek. It is imperative that there be an accounting and assessment of Compact assistance that will respond to these broad questions before we can move on to our next task—developing recommendations for the future.

Not only is it important to respond to inquiries of the Congress and the Interagency Group, but to use the time remaining through 2001 to meet the existing planning, reporting and meeting requirements under current U.S. law. These requirements include: (1) submission of a five-year overall economic development plan; (2) provision of annual reports; (3) annual economic bilateral meetings; (4) submission of annual plans regarding the special block grant set forth in section 221(b) of the Compact, and (5) submission of annual reports concerning the Investment Development Fund. I strongly urge that you submit these materials as quickly as possible. More than mere words, these actions will communicate to the Interagency Group and the Congress a commitment to current accountability requirements.

Organization and Negotiating Authority

I would like to describe to you briefly my current negotiating authority. As you know, U.S. policy for the Freely Associated States is developed within the Interagency Group on Freely Associated State Affairs (the "Interagency Group"). The Interagency Group was established by Executive Order 12569 and is chaired by a designee of the Secretary of State. The Group is co-chaired by the Director of the U.S. Department of the Interior’s Office of Insular Affairs. As Special Negotiator, I am the Director of the Office of Compact Negotiations, an office within the State Department’s Bureau of East Asian and Pacific Affairs ("EAP"), and I report directly to the Deputy Assistant Secretary of State for EAP, who is also the Chairman of the Interagency Group. I also report to officials at the National Security Council and the Office of Management and Budget. Both are a part of the White House. Finally, given my experience with the negotiations of the Compact in the 1980s, I have been particularly sensitive to the need for close and continuing contact with members and staff in the U.S. Congress.

Consistent with long-standing practice, all United States Government representatives who are empowered to negotiate binding commitments must have the scope of their negotiating authority approved in advance within the Administration. It is common for this authority to be modified as negotiations evolve. At this time, my negotiating authority as Special Negotiator is limited to discussing the scope of negotiations and proposing general principles to guide us in our talks. Before seeking further negotiating authority, I will work with the Interagency Group to assess past assistance and to consider ways the United States might help you to advance economic self-sufficiency in the future. Only after thorough discussions within the Administration, and with Congress, will I seek authority to negotiate provisions for the future.

Scope of Negotiations

In addition to beginning discussions on the use of past U.S. assistance and on the FSM’s strategy for promoting economic self-sufficiency, I believe we should begin outlining the scope of our negotiations. While we will obviously be addressing the expiring provisions of the Compact—specifically, several provisions in Title II (Economic Relations), and all of Title III (Security and Defense Relations)—I believe these negotiations provide the best opportunity to make other necessary adjustments to the Compact and its subsidiary agreements. To date, I have received instructions to raise the subject of the immigration privileges found in Title I of the Compact. I also expect that other issues for negotiation will arise as our talks proceed and I receive more feedback from other U.S. agencies through the Interagency Working Group. These negotiations offer an excellent vehicle for obtaining Congressional consideration and approval of other changes we may agree to. At the same time, we do not want to burden ourselves with so many issues that we risk running out of time before expiration of the current term of assistance. As a practical matter, it is reasonable to expect that Congress will require two years—a full Congress—to consider and enact new provisions.


A number of members of the U.S. Congress have already brought to my attention a specific issue that does not involve an expiring Compact provision. That issue concerns the privilege afforded to certain citizens of the FSM to enter, reside in, and engage in employment in the United States. While the immigration provisions of the Compact are not expiring, they are of concern to the United States. Several members of Congress have voiced their desire to see, among other things, that the existing grounds for inadmissibility currently in effect under U.S. immigration law—including those related to health, criminal background, and the likelihood of becoming a public charge—be more vigorously enforced. Consequently, I will need to work closely within the Interagency Group to develop an appropriate mechanism for ensuring admissibility of FSM citizens prior to their arrival in the United States.

In addition, I have been told by certain members of Congress that Compact impact funding—that is, payment of the compensation authorized to the U.S. territories and the State of Hawaii for the impact of migration of freely associated state citizens on educational and social services—remains a key issue in considering future assistance to the FSM. I believe these negotiations are the proper forum for revisiting the existing Compact provisions regarding immigration, to determine how to respond to these concerns.

Statement of Principles

A final topic for initial discussion is the desire to develop a general statement of principles. Reaching an agreement on fundamental principles would be helpful in guiding future discussions and in signaling to our respective governments that the basis of our special relationship of free association remains strong. I believe it is important to let the world know that, while our nations may have disagreements, those disagreements do not affect our underlying special relationship. I therefore propose we make a joint statement continuing our commitment to: (1) advance economic self-sufficiency for the people of the FSM; (2) affirm current economic strategy objectives of reforming the public sector and supporting the private sector; (3) develop more effective accountability mechanisms for the use of future U.S. assistance, and (4) continue the security and defense relationship as set forth in Title III of the Compact. We have considered your initial response to our proposed principles, and we will be working informally over the next several days to reach agreement on a joint statement of principles.


In closing, I want to point out that we are entering into a process in which many people will ask tough questions about the use of past U.S. assistance, and about the desirability of continuing assistance in the future. Others have asked, and will continue to ask, whether the FSM is truly committed to fundamental public sector and private sector reforms. I need your help in answering these difficult but important questions.

The FSM is a trusted partner and ally to the United States, and an esteemed member of the family of nations. I believe in the special nature of U.S.-FSM relations, and in our continuing mutual interest in maintaining our special relationship.

Times have changed since 1986. So, too, have the interests of the United States and the FSM. As in all relationships, ours must adapt to changing times. That is our challenge, and I believe we will succeed in the task before us.

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