November 30, 1987

To the Congress of the United States:

I transmit herewith for the consideration of the Congress a proposed Joint Resolution that, in accordance with Section 101(d)(B) of Public Law 99 - 658, would enable the Government of the United States and the Government of Palau to implement the "Compact of Free Association'' on a date mutually agreed to by our Governments.

In accordance with Section 101(d)(A) of Public Law 99 - 658, I hereby certify to the Congress that the Compact of Free Association between the United States and Palau has been approved in accordance with Section 411 (a) and (b) thereof, and that there exists no legal impediment to the ability of the United States to carry out fully its responsibilities and to exercise its rights under Title Three of the Compact.

The foregoing certification is based upon notification by the Government of Palau that its internal constitutional approval process has been completed. Specifically, on August 29, 1987, President Lazarus E. Salii certified in writing to the Department of State that 73 percent of the people of Palau voting in a plebiscite observed by the United Nations on August 21, 1987, approved the Compact. The Palau National Congress gave its final approval to the Compact on August 27, 1987. Under their constitution, the people of Palau have freely chosen self-government and free association with the United States.

The proposed Joint Resolution would also amend Section 104(e) of Public Law 99 - 658 in two ways. First, additional language would be added to the first sentence of this subsection, stating that money payable by the United States to Palau shall be paid to Palau in accordance with procedures provided by the Compact and its related agreements. For example, Palau may wish to issue a bond and grant its creditor a security interest in some of the anticipated Compact funds from the United States, a procedure possible under the Fiscal Procedures Agreement with Palau. The additional language would clarify that payment into such an encumbered bank account would be consistent with U.S. responsibilities to Palau. This would place Palau on an equal footing with the other freely associated states.

Second, the proposed Joint Resolution would repeal the last sentence of Section 104(e), which purports to strip United States courts of jurisdiction over commercial litigation now pending in the Federal courts between Palau and certain of its creditors. This attempt to grant Palau sovereign immunity for a single case relating to a power plant project is inconsistent with United States law and policy as embodied in the Foreign Sovereign Immunities Act of 1976. Repeal of this provision would protect the reputation of the United States as an international financial center and allow Palau and its creditors to pursue the rights and remedies available to them through the judicial process. Such repeal would also permit the routine application of the Foreign Sovereign Immunities Act. This would not in any way prejudge the matter, but merely enable the case to be heard in the courts of the United States.

Approval of the enclosed Joint Resolution would enable the United States to bring the Compact into effect and end application of the 1947 Trusteeship Agreement with the United Nations Security Council, under which the United States has administered Palau. The end of the trusteeship would mean the beginning of a new era of political, economic, strategic, and cultural partnership between the United States and Palau.

Therefore, I urge the Congress to pass the attached proposed Joint Resolution authorizing entry into force of the "Compact of Free Association.''

Ronald Reagan

The White House,

November 30, 1987.