The U.S. is considering entering into a Compact of Free Association (COFA) agreement with Greenland, according to a new report from Reuters. At the moment, only Micronesia, the Marshall Islands and Palau have COFA agreements with the U.S.
What is a Compact of Free Association Agreement?
The exact benefits of being a COFA partner varies, but typically includes things like mail services, military protection, and “largely duty-free” trade. The U.S. military is also allowed to be present in COFA countries.
Sources close to the matter have stated that the U.S. is also considering alternative plans for Greenland and that a COFA agreement would be subject to political challenges. The COFA “could be an elegant way to address some of the concerns that we have when it comes to Greenland security,” an administration official told Reuters.
The S&P 500 has not shown a significant reaction to the news and is nearly unchanged on the day.
