oF SECTION-BY-SECTION ANALYSIS OF THE COMPACT OF FREE ASSOCIATION AND DESCRIPTION OF ITS TERMS The Compact of Free Association is divided into a preamble and four titles: Governmental Relations; Economic Relations; Security and Defense Relations; and General Provisions. PREAMBLE The Preamble states that the relationship which will exist between the United States and the three states emergent from the Trust Territory of the Pacific Islands is "Free Association." The Preamble recognizes that the agreement is concluded on a government-to-government basis; that the peoples of the Trust Territory have and retain their sovereignty and their sovereign right to self-determination; that the Freely Associated States (FAS) are self-governing under their own constitutions; and that the political and legal relationship between the FAS and the United States is fully described and governed by the Compact. The Preamble recognizes the competence of the constitutional governments with the Trust Territory to enter into the Compact and supports the legitimacy of the new political status as consistent with the goals of the United Nations trusteeship system and consequently as a basis for termination of the Trusteeship. TITLE ONE GOVERNMENTAL RELATIONS Article I, Self-Government Section lll. This section recognizes that the peoples of the FAS, acting through their constitutional governments, are self-governing. This recognition is the foundation of the government-togovernment agreement and is consistent with the international political status of free association. Article II, Foreign Affairs Section 121. The United States, in this section, recognizes the capacity of the FAS to conduct foreign affairs in their own name and right. This includes the capacity to enter into treaties and other international agreements with other governments or international organizations, as appropriate. This recognition of foreign