The United States government is looking at terminating financial assistance to the Marshall Islands in their Compact of Free Association Funding agreement.
A statement from the US State Department says Washington wants to terminate financial assistance by 2023.
Instead the US is proposing the setting up of a trust fund by the year 2004, to partially offset the termination of direct US financial assistance.
The statement said the US government would contribute 8-million US dollars annually to the trust, while Marshall Islanders will have to contribute 30-million dollars before the year 2004.
Other funding on the use of Kwajalein Atoll as a military base would be diverted to other sectors such as health, education and infrastructure.
Negotiations on the amendments between the two governments is ongoing and should be completed by the end of 2003.