JOINT COMMUNIQUÉ: on the Initialing of Economic Provisions of the Compact Free Association between The Republic of the Marshall Islands and the United States of America

JOINT COMMUNIQUÉ on the Initialing of Economic Provisions of the Compact Free Association between The Republic of the Marshall Islands and the United States of America November 1, 2002 Majuro, Republic of the Marshall Islands

Representatives of the governments of the United States and the Republic of the Marshall Islands met in Majuro, the Republic of the Marshall Islands on November 1, 2002, to initial ad referendum amended Compact (Title Two) economic provisions that will provide continued United States economic assistance to the Republic of the Marshall Islands under the Compact of Free Association, for a period of twenty years after which a trust fund will continue to provide funding support. In addition, both sides initialed amended Title Three provisions extending the bilateral defense and security relationship and amended Title Four survivability and termination provisions.

Title Two of the Compact sets forth the economic and financial understandings of the two governments regarding U.S. grants and access to Federal programs and services. In contrast to the previous fifteen-year arrangement, U.S. grants will now be extended over twenty years, principally in six sectors: education, health, infrastructure, public sector capacity building, private sector development, and the environment, with priorities in education and health. The RMI has reserved on the adequacy of the annual grant assistance and trust fund contribution pending conclusion of negotiations involving the defense sites at Kwajalein Atoll. In addition, the RMI reserved on the need for a fully indexed inflation rate.

A select group of U.S. Federal services, including those of the United States Postal Service, the Federal Emergency Management Agency, the USAID's Office of Foreign Disaster Assistance, the Federal Aviation Administration, and the Department of Transportation, among others, will also be continued with certain changes. The RMI has reserved on disaster assistance in respect to the elimination of certain FEMA programs. Finally, to the extent authorized by Congress, U.S. Federal programs available to the RMI during the year prior to the date the amendments take effect shall continue to the extent that they remain available to state and local governments in the United States.

In addition, both sides initialed a subsidiary agreement on fiscal procedures that elaborates how U.S. grants will be applied and administered. A key feature will be a new management body called the "Joint Economic Management and Financial Accountability Committee" (JEMFAC). It is the intention of the parties that, through this partnership, the effectiveness of Compact grant funds and programs would be increased and that previous shortcomings in accountability and transparency would be overcome.

Title Three of the Compact sets forth the defense and security relationship between the Republic of the Marshall Islands and the United States of America. Title Four of the Compact has been amended chiefly to address the establishment of a trust fund. The RMI initialed the texts of Titles Three and Four with Notes concerning certain understandings of the RMI.

The U.S. and RMI representatives initialed a subsidiary agreement to establish a trust fund, the corpus of which will be built up over the twenty-year period through annual contributions by the United States, the Republic of the Marshall Islands, and by contributions from other donors, both public and private. The purpose of the Fund is to contribute to the economic advancement and long-term budgetary self-reliance of the Republic of the Marshall Islands by providing an annual source of revenue after FY-2023 when U.S. direct financial assistance ends.

The U.S. and RMI representatives also engaged in wide-ranging discussions of the RMI Government’s eight-point conceptual proposal to extend the Military Use and Operating Rights Agreement governing the defense sites on Kwajalein Atoll. The U.S. delegation updated the RMI Government and the Kwajalein landowners on U.S. efforts to formulate a response to each of the eight points proposed. These discussions improved understanding of the positions of both sides and will facilitate U.S. efforts to craft an appropriate response to the RMI proposal.

Desiring to complete the negotiating process as soon as possible in order to facilitate early submission of the Compact amendments by both parties to their respective approval processes, U.S. and RMI representatives resolved to concentrate their efforts during the coming weeks in order to overcome remaining issues concerning the RMI’s reservations to Title Two, Title One including immigration and other matters, and possibly agreeing to an extension of the Military Use and Operating Rights Agreement for Kwajalein Atoll.

Finally, at the invitation of Senator Tomaki Juda, President Kessai H. Note and Deputy Assistant Secretary David Cohen made a visit to Kili Island to meet with the Bikini community living there since being relocated after the nuclear testing program.

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