Bill summaries are authored by CRS.

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Reported to Senate amended, 2nd committee reporting (07/29/1985)

(Reported to Senate from the Committee on Finance with amendment (without written report))

Grants congressional approval of the Compact of Free Association between the United States, the Marshall Islands, and the Federated States of Micronesia. Sets forth the provisions of such Compact. (Declares that the people of such territories are self-governing. States that the United States shall provide grant and program assistance to such territories. Declares that the United States has full authority and responsibility for the security and defense of such territories.)

Declares that the defense sites of the United States established in the Marshall Islands or the Federated States of Micronesia in accordance with such Compact and its related agreements are within the special maritime and territorial jurisdiction of the United States.

Provides that upon the effective date of the Compact: (1) the laws of the United States generally applicable to the Trust Territory of the Pacific Islands shall continue to apply to the Republic of Palau; and (2) Palau shall continue to be eligible for such proportion of Federal assistance as it would otherwise have been eligible to receive under such laws prior to the effective date of such Compact and as provided in appropriation Acts.

Provides that any amendment, change, or termination of the Compact shall be made only by an Act of the Congress.

Provides that authorizations provided for the Trust Territory of the Pacific Islands under the Trusteeship Agreement between the United States and the U.N. Security Council shall remain available after the effective date of the Compact for specified purposes with respect to the Federated States of Micronesia and the Marshall Islands. Provides for technical assistance and other specified programs and services by Federal agencies to the Trust Territory of the Pacific Islands prior to the effective date of the Compact.

Permits the President to continue any Federal program extended to the Federated States of Micronesia and the Marshall Islands for a period not to exceed three years if he determines that a continuation of such programs is necessary. Provides that appropriations made under the Compact may be made only to the Secretary of the Interior who shall have authority over any program or activity provided to the Federated States of Micronesia or the Marshall Islands.

Sets forth provisions with respect to the beneficiary country status of the Marshall Islands and the Federated States of Micronesia.

Declares that foreign tax credit and deduction and the exemption from U.S. income tax shall not apply to U.S. citizens who reside in the Marshall Islands and the Federated States of Micronesia. Sets forth provisions relating to tax incentives and exchange of tax information.

Includes the Marshall Islands and the Federated States of Micronesia as part of the "North American Area" for certain tax purposes.

Requires the Secretary of the Treasury to conduct a study of the effects of the Compact's tax provisions and to report such results to specified congressional committees.