One of the options presented in the proposed Puerto Rico Status Act for a new U.S.-Puerto Rico relationship is for Puerto Rico to achieve sovereignty but also sign a comprehensive Articles of Free Association with the U.S.
The description of free association in the bill includes lots of privileges for Puerto Rico that the U.S. has provided to no other sovereign nation, including the three current Pacific Island countries in free association with the U.S.
“At any time during the aforementioned transition period the terms of this subsection may be modified by agreement between the United States and the nation of Puerto Rico,” the bill says.
This implies that the terms could not be changed unilaterally by either side.
Yet this is not the way our current free association agreements work in practice. In fact, Congress has changed the terms of free association agreements without consulting free association partners.
The initial Compact of Free Association between the Marshall Islands and the U.S. provided for compensation to the Marshall Islands if the country could demonstrate adverse impacts on its finances and economy as a result of unilateral changes the U.S. Congress made to the tax and trade provisions in the original compact.
In 2009, an interagency group convened by the Department of State concluded that the Marshall Islands had “reasonably demonstrated net adverse impacts” from Congress’ decision to unilaterally change the terms of the Compact.
In 2010, the State Department notified Congress of its findings.
In 2018, the General Accounting Office observed that the promised funds had not yet been paid. In a footnote buried on page 83 of the report, the GAO noted that the U.S. owed up to $60 million dollars to the small Pacific Island nation but that “funds have not been appropriated to make such a payment.”
Do the U.S. funds matter to the FAS?
The United States has provided economic assistance to the Freely Associated States, as the Puerto Rico Status Bill proposes they should do for Puerto Rico. The combined FAS population for all three nations is well under 200,000 people, and the amount of funding for this population is similarly small relative to the size of the U.S. budget.
For years, the U.S. has prepared to shift the FAS from reliance on annual assistance to use instead of the interest from trust funds the U.S. set up for the islands. The Government Accountability Office reports that the nations’ “trust funds may not provide sustainable income after the compact grants end.” In fact, their predictive models suggest that there will be years when the trust funds will provide no income at all.
While self-sufficiency has been a goal for the Freely Associates States, both the Republic of the Marshall Islands (RMI) and Federated States of Micronesia (FSM) currently depend on the United States for more than half their revenue. Since they are both sovereign nations, they do not have any representation in the U.S. Congress, but they have a high level of dependence on the decisions of Congress.
“All funding provided to the FSM and the RMI under the amended Compacts is reviewed semiannually in two, bilateral, joint economic management committees,” the Department of the Interior (DOI) explains. “These committees are chaired by the Department’s Director of the Office of Insular Affairs.”
The articles of free association are not one-and-done permanent treaties. The DOI materials go on to say, “An expiration of federal financial assistance in just four years could carry dire consequences for the well-being for the people of three of the United States’ closest partners. People from these nations have also offered the United States unequalled numbers in the blood and sweat of their own youth in service to our Armed Forces.”
Puerto Rico’s expectations
The description of a freely associated state of Puerto Rico in the Puerto Rico Status Act presents a picture of an independent nation that will have the benefits of U.S. citizenship while receiving substantial support from the federal government for its population of over three million.
A more realistic picture should acknowledge that articles of free association can – and do – change. Voting for a particular dream of free association does not mean that this particular dream will come true.