The Compact of Free Association is the name for the legal relationship between three nations- The Federated States of Micronesia, the Marshall Islands, and Palau, and the United States of America. The Compact of Free Association is a rather interesting arrangement, of a kind not currently common in international politics.
To understand why the Compact of Free Association is interesting, two concepts of international politics have to be explained. These are sovereignty and autonomy, and they are not entirely clear concepts. Sovereignty especially is a tricky concept, since it has to do with the quasi-mystical foundational rights of a nation. Autonomy refers to a nation's (or other political unit's) rights to set their own laws. Most nations are sovereign, but some are not. Canada, for example, is a fully autonomous nation that still theoretically derives its sovereignty from elsewhere, in this case from The British Crown.
So the Compact of Free Association is between three sovereign nations and the United States of America. These nations, while still possessing the somewhat ineffable state of sovereignty, have voluntarily agreed to give up their autonomy to the United States of America, and have their national defense, as well as certain other parts of government, regulated by United States laws. Prior to these states becoming independent, they were in a United Nations Trust Territory operated by the United States. This in turn came out of their World War II experience. The practical reasons for these countries' relationship with the United States is that they are financially dependent on the United States, and the United States needs them for strategic reasons. The countries are also very small, with all three together having a population of around a quarter million people.
While the relationship is based on practicalities, in some ways mutually beneficial, and is (as far as I know), not currently a matter of political dissent in the nations involved, it is still to me somewhat bizarre and has distasteful overtones. Even though the nations are small, they are still sovereign nations, so they are theoretically equals to the United States. For the United States to administer their internal affairs is just as weird if Belgium or Egypt one day up and announced that they needed the United States to take over their countries for a while. This is also something that was not foreseen in the United States Constitution, and while (again, as far as I know) there has never been a legal challenge relating to the Compact of Free Association, there could be one. If these nations are under United States law, do (for example) people charged of crimes their have the rights of US Citizens granted in the Bill of Rights? While the Founding Fathers did imagine areas being temporary territories, and had provisions for that, the US Constitution never addressed the issue of the United States taking sovereign nations on the other side of the globe under its tutelage, and the idea would have probable been troublesome to many of the Founders.
Another obvious fact about the Compact of Free Association is that it has obvious undertones of racism. The three nations involved are all heavily Pacific Islander, and for them to be under the de facto rule of a far away nation, built on European traditions, without having any representation in that nation, seems to be imperialistic and racist. So while the Compact of Free Association might currently not be an issue, it still fails to live up to the ideals of the United States of America. However, since it seems to be a workable relationship currently, it will probably not become a cause for dissension any time soon.