An associated state is a territory that effectively has independence, but chooses to have constitutional links with another, larger, country that handles its external affairs, unless it decides to seek full independence. This is also known as "free association".
Examples of this include the relationship of the Cook Islands with New Zealand, and the Federated States of Micronesia, Palau, and the Marshall Islands with the United States (these US relationships are known as the Compact of Free Association).
Constitutional Links and Political Integration
The constitutional links to the sovereign power can include citizenship, although the associated state may have its own immigration policy, and currency. However, the associated state does not usually have any political integration with the sovereign power, on the grounds that it is a separate jurisdiction with its own government and legislature. For example, the Cook Islands have no representation at all in the New Zealand Parliament, but this is because New Zealand laws have no application in the Islands.
Since 1998, New Caledonia has enjoyed a similar relationship with France as an 'overseas country' (pays d'outre-mer in French) which includes the right to full independence if it so desires, although it continues to have representation in the French parliament.
Foreign affairs are generally handled by the sovereign power, but an associated state can operate its own diplomatic missions, independently of that country, as is the case of the Cook Islands, which has its own missions in several neighbouring countries, including New Zealand.
A similar relationship existed between the United Kingdom and its former colonies of Antigua and Barbuda, Grenada, Saint Lucia, Saint Kitts and Nevis, and Saint Vincent in the Caribbean, under the Associated Statehood Act 1967. Under this arrangement, each State had full control, over its Constitution, although all of them have since been granted full independence.
- Cook Islands Government (http://www.ck/govt.htm)