A Free Associated State or FAS is an independent nation with a special relationship with the United States. There are currently three of these: the Republic of Palau, the Marshall Islands, and the Federated States of Micronesia.
All three use the American dollar for their currency, receive some financial support from the U.S., and have a promise of military defense from the U.S. in exchange for a promise not to allow any other country military access. The people of the FASs are able to work in the United States and to serve in the U.S. military. But each one has a different relationship with the United States, with different specific rights and obligations, which has been negotiated between the U.S. and the FAS. Each agreement has to be renegotiated regularly, and all the agreements must be approved by Congress. The length of time between negotiations is generally only 15 years, and most of the agreements expire automatically if they are not renegotiated. Palau’s agreement has no expiration date, but must be revisited in 15 years, 15 more years, and 10 more years beyond that. The amounts of financial support for the FASs have been reduced at each renegotiation, and movement toward complete independence is often encouraged.
The U.S. and the Free Associated States also have the ability to leave the relationship without the agreement of the other party at any time.
The White House Task Force on Puerto Rico defines FAS in this way:
Free Association is a type of independence. A compact of Free Association would establish a mutual agreement that would recognize that the United States and Puerto Rico are closely linked in specific ways as detailed in the compact. Compacts of this sort are based on the national sovereignty of each country, and either nation can unilaterally terminate the association.
In order to become a Free Associated State, Puerto Rico would have to become independent and then negotiate the terms of the relationship between the U.S. and Puerto Rico. Some of the things the “commonwealth” party has recommended in a new FAS are ideas that never materialized under “commonwealth” or have yet to be approved by Congress, such as dual citizenship with the ability to travel on either a U.S. or a Puerto Rican passport; a guarantee of continued financial support for 30 years in addition to continued participation in Social Security, Medicaid, and Medicare; and revocation of the laws requiring Puerto Rico to use U.S. ships and crews.
A Free Associated State cannot set the terms of the agreement or make them permanent. The United States could refuse to allow the people of a new Free Associated State of Puerto Rico to keep U.S. citizenship, for example, or could limit financial support. If Puerto Rico were unable to negotiate acceptable terms with the U.S., the only recourse would be to refuse the FAS relationship and become completely independent. Puerto Rico would no longer be a territory of the United States, and statehood would no longer be an option.