The Compact of Free Association Act (FAS) provides for the duty-free entry of most merchandise from the Marshall Islands, Federated States of Micronesia, and Republic of Palau. It is intended to encourage economic growth and development in those countries.

Duty-free treatment is granted to any otherwise eligible article that (a) is the growth, product or manufacture of a freely associated state; (b) is imported directly from a freely associated state into the US customs territory; and (c) meets a value-added requirement.

B. Insular Possessions of the US

HTSUS General Note 3(a)(iv) provides for the duty-free entry of merchandise from the insular possessions of the US that are outside the US customs territory: US Virgin Islands; Guam; American Samoa; Wake Island; Midway Island; and Johnston Atoll. (For purposes of this provision, merchandise from the Commonwealth of the Northern Mariana Islands is given the same tariff treatment as merchandise from Guam.)

Duty-free treatment is granted to any otherwise eligible article that (a) is the growth, product or manufacture of an insular possession of the US; (b) is imported directly from the insular possession into the US customs territory; and (c) meets a value-added requirement.