November 19-20, 2009

The Shangri-La Hotel ,

SUMMARY REPORT

Highlights for action:

1. Promote Canada and Korea’s “special partnership” beyond functional cooperation and develop mutual understanding by, for instance, concluding the FTA negotiations. 2. Canada and Korea must take advantage of the unique opportunity to shape the transition to the G20 in 2010. 3. The agenda would benefit from the guidance of a steering committee, or “non- secretariat”, to ensure that preparation begins well in advance. One option is to develop a “quintet” that would include the host country, the future host country, the previous year’s host country, and the United States and China. 4. President Lee’s personal representative should be invited to all G8 preparatory meetings and President Lee should be invited to the G8 meeting in Toronto. The Minister of Finance should also be invited to all finance ministers’ meetings. 5. Learning from the Pittsburgh Summit, the next G20 Summit must be kept as intimate as possible and the agenda and issues must be thoroughly investigated and prepared in advance. 6. Develop the transition from stimulus measures in the current global economic crisis to a new growth model that effectively addresses the current structural imbalances in the global economy. 7. Acknowledge the importance of open and inclusive East Asian institution-building and pursue ways of balancing inter-Asian and trans-Pacific multilateral mechanisms. 8. Canada could seek a role in the six-party talks through a “second circle of countries”.

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Canada-Korea Forum 7: An Overview

On November 19-20, 2009, the Asia Pacific Foundation of Canada and the Seoul Forum for International Affairs hosted the seventh Canada-Korea Forum. The Forum is a “track two” mechanism for high-level discussion on bilateral relations and on global issues of interest to Canada and Korea. This year’s meeting discussed Canada-Korea Strategic Cooperation, the 2010 G8/G20 Summits in Toronto and Seoul, the post-financial crisis environment, Northeast Asian security, and opportunities for future bilateral collaboration. (Please see Annex 1 for a copy of the agenda.)

We were honoured to welcome to Vancouver a high-profile Korean delegation led by Dr. Han Sung-Joo, Honorary President of the Seoul Forum for International Affairs, former Minister of Foreign Affairs, and former President of Korea University. He was accompanied by leading scholars, heads of think tanks, industry chiefs, and members of the National Assembly. Along with our Korean guests, we were pleased to have a diverse group of Canadian professors, economists, business people, members of the Korean-Canadian community, government officials, and parliamentarians in their private capacity. The Canadian co-chair of the Forum was Dr. Stephen Toope, President and Vice-Chancellor of the University of British Columbia. (Please see Annex 2 for a complete list of participants.)

There were several marked contrasts with last year’s meeting in Seoul, when we were dealing with a Canadian federal election, uncertainty in the run-up to the United States presidential election, stalled six-party talks, and frustrations over the negotiation for a Canada-Korea Free Trade Agreement. Now, as we are emerging from the worst financial crisis in decades, we are working towards a period of greater cooperation, multilaterally and bilaterally. There has been a distinct shift in the Canadian government’s attitude towards Asia; there is a new government in Japan that is trying to find its foreign policy footing; there are new debates over the meaning and significance of Asia-Pacific regionalism, and a new administration in Washington.

The objectives of our meeting were to advance cooperation on key aspects of the Canada- Korea relationship and to increase mutual understanding in advancing the upcoming joint G8/G20 Summits that will be co-hosted by Canada and Korea. The 2010 Summits have added to the salience and importance of our meeting. There was a general recognition that Canada and Korea will need to cooperate to make these meetings a success.

Both countries now find themselves in a strategic position where they can work to help each other establish multilateral gains. We share common commitments to higher education, market economics, promotion and protection of human rights, and democratic politics, in addition to our dedication to multilateralism. Both Canada and Korea are showing leadership in the economic recovery and both recognize the importance of an open and inclusive APEC. Our strong people-to-people links – the Korean-Canadian community is 220,000-strong, there are about 8000 teaching English in Korea, and 26,000 Canadians fought in the Korean War – is one of our most robust shared assets.

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The Canada-Korea Relationship

As our bilateral relationship shifts into high-gear with the upcoming G8/G20 Summits, there is the need to promote our “special partnership” beyond functional cooperation by, for instance, putting security and political cooperation on the agenda, establishing a strategic dialogue, and seeking ways to promote our shared values. Now is the time for the Canada-Korea relationship to move beyond “functional cooperation” and develop mutual understanding. Furthermore, as we mark the 60 th anniversary of the Korean War in 2010, joint events could be held to commemorate this important occasion.

The Canada-Korea Free Trade Agreement negotiations remain one of the most contentious aspects of our relationship. The negotiations are still stuck on issues of automotives and beef. Short-term prospects for an agreement have been stymied by the collapse of the North American auto sector, the negative public reaction in Korea to the beef issue in KORUS, and Canada’s decision to refer the beef dispute to the WTO. The suggestion was made at the Forum that it might be time to consider opening the markets and dealing with these difficult issues later.

(During Prime Minister Harper’s visit to Korea in December, President Lee made the suggestion that Korea might be willing to relax its beef ban.)

The 2010 G8/G20 Summits

The G20 Summit in Pittsburgh was a bigger success than expected. The Summit made three key changes in an effort to prevent another global recession: new systemically important economies were included; the leaders agreed to cooperate to take concerted policy measures; and the leaders agreed to produce deliverables, rather than empty rhetoric. The objective was to make the meeting an effective venue for dialogue between the advanced and developing economies. It was generally agreed that the G20 meetings must not be considered as a sideshow to the G8 Summit. The G20 process played a pivotal role in containing the recession by coordinating policy for expansionary monetary and fiscal policies, as well as drawing out general principles on strengthening financial regulation and supervision. The G8 has thus far been a good coordination mechanism, but the G20, in addition to the economic and financial themes, offers the potential to resolve major deadlocked global issues.

The G20 is an instrument to shape consensus on major transnational issues. State leaders, not trade or finance ministers, must make those key decisions. A small group of leaders who have established real relationships is critical. There were 55 people around the table in Pittsburgh, which made the meeting far too unwieldy. Korea and Canada have the opportunity to establish the guidelines to ensure G20 effectiveness. It is an opportunity to shape the kind of summit that will most benefit the two countries. Real leadership from both Canada and Korea will be required in order to ensure that the meeting is prepared to confront issues of good governance and accountability. It also should plan to review issues such as the possibility of a permanent secretariat or other mechanisms for ensuring continuity in the leadership of the G20 meeting,

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as well as discuss the relationships with the G7/G8, other international institutions, non-G20 countries, and NGOs.

The agenda for the two meetings will be critically important. The reform of international financial institutions should be discussed in an effort to address some of the causes of the current financial crisis. There is almost a built-in programme for the 2010 meetings, as exit strategies from fiscal stimulus measures followed by future plans will likely be priority issues. Canada and Korea are well-placed to analyze these topics. Other international concerns such as climate change, infectious diseases, unemployment, trade liberalization, and transnational organized crime ought to be dealt with as well. One option could be to conduct a meeting of parliamentarians from the G20 countries in order to broaden the dialogue and develop a better sense of priorities prior to the meeting. The G20 needs to address big-picture issues that cut across ministerial portfolios. Preparation will be crucial and the cooperation process should be well underway.

The agenda would likely benefit from the guidance of a steering committee, or “non- secretariat”, to ensure that preparation begins well in advance. One option is to develop a “quintet” that would include the host country, the future host country, the previous year’s host country, and the United States and China. (For 2010, such a quintet would include Korea, Canada, France (2011 host), the United States, and China.) President Lee’s personal representative should be invited to all G8 preparatory meetings and President Lee should be invited to the G8 meeting in Toronto. His presence will help ensure continuity between the G8 and G20 meetings in 2010. The Minister of Finance should also be invited to all finance ministers’ meetings. A variety of consultative mechanisms will be required in order to ensure that voices from developing countries and non-G20 voices are heard.

Progress requires multi-element “grand bargains”, or package deals that allow every country to emerge a net “winner”. It is important to keep the final joint communiqué concise; there is no need to incorporate everyone’s desires. It must concern sustainable and balanced growth, and be prepared to react to crisis. Learning from the Pittsburgh Summit, the next G20 Summit must be kept as intimate as possible and the agenda and issues must be thoroughly investigated and prepared in advance.

The Post-Financial Crisis

One of the goals of the 2010 meetings will be to develop plans for a post-crisis future. Canada and Korea are both in a positive position to contribute to this discussion. Canada has a strong and stable banking system, while the 1997 financial crisis conditioned Korea to maintain conservative financial policies. Four key causes of the economic crisis were expressed during our meeting: the easy monetary policy of the United States coupled with no inflationary change; the collapse of the global imbalance; the interconnectedness and high level of development of financial markets; and the excessive risk taken by the banks, along with the destabilization factor of short-term capital flows.

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The delegates discussed three issues that will need to be addressed in order to move back to a “normal” economic path. Firstly, it was suggested that exit strategies should be developed to move away from stimulus spending, although the consensus still seems to be that such a move would be premature at this point. Secondly, financial regulation could prove useful if implemented properly. As part of this, the regulation of short term capital flows of the type seen recently in Brazil should be studied. Thirdly, it will likely be necessary to confront the global imbalance, one of the major causes of the crisis. Solutions call for rebalancing the growth pattern at the national level, the consumption pattern at the household level, and the investment pattern at the corporate level. It was proposed that rebalancing should also provide for financial safety nets. The Seoul Summit will likely be concerned with making a historical agreement on rebalancing the demand sources of global economic growth.

The Role of the US Dollar

As the global recovery begins, there are worrying questions about the status of the US dollar. It is clear that at some point, the dollar is going to be forced to share the spotlight with the euro or other currencies. Emerging markets, and in particular the BRIC countries, are going to grow much faster than the mature economies.

The mere whispers of a G2 are telling. The role of the US dollar will depend on how the US government will manage its economy, as well as Chinese government financial policy. It seems almost certain that the renminbi will be convertible by 2030. Where will China want to position itself as the US dollar loses its dominance? The dollar has become an unstable anchor, although some suggest that the real problem is excessive exchange rate volatility, rather than the currency itself.

East Asia

New sustainable sources of economic growth are needed. They will likely come from China and India, as well as from other emerging countries such as Brazil and Mexico. Potential sources of long-term growth will likely be increased domestic demand in China, especially on social sector priorities such as health care, and increased household disposable income leading to increased consumer spending.

Cooperation on the financial front in Asia is stalled, especially in the relations between China, Japan, and Korea. Further cooperation on currency reserves could prove productive; China, in particular, needs to develop clearer policies regarding its massive foreign reserves. China, Korea, and Japan must work towards a more meaningful reconciliation of historical enmities.

Both Canada and Korea must better develop their relationships with China, as a partner and as a neighbour. The Canadian government has finally appeared to realize that “cool politics, warm economics” is unlikely to be successful. This is clearly a significant moment for Canada with regards to China, but for Korea as well. The rise of China and the new security paradigm forces

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Korea to carve its own diplomatic role and path and forces Canada to confront Asia-only institutions.

The participants generally agreed that both Canada and Korea need to acknowledge the importance of open and inclusive East Asian regionalism and seek ways of balancing inter-Asian and trans-Pacific multilateral mechanisms. It was suggested that Korea might recognize that Asian-only institutions could exacerbate rivalries between China and Japan, while reinforcing Canada’s concerns about being excluded. Canada should be prepared to support nascent regional institutions, but must also choose how it will articulate its presence amid the competing concepts of what multilateralism in the Asia-Pacific means.

Northeast Asian Security and the Six-Party Talks

There exist at least three possible scenarios for North Korea. Firstly, there is the possibility that the state could collapse; secondly, there is the possibility that the state could become a nuclear power; thirdly, there is the option of accepting the current state of nuclear capacity. China, for instance, appears to have concluded that denuclearizing North Korea is not feasible. North Korea is presently uninterested in any “grand bargain” or “comprehensive resolution” and as such, the six-party talks have stalled, but there is presently no better alternative.

The primary goal in the resolution of the North Korean nuclear problem is the realization of a denuclearized, WMD-free Korean peninsula. A comprehensive and strategic macro-perspective solution must be developed that includes political contingencies, the humanitarian crisis, and conventional military threats. Two track policies are necessary to distinguish between the totalitarian regime and the general public. The real threat for North Korea could come from within, rather than externally.

In Northeast Asia, bilateral security arrangements will remain the backbone of security in the region; however, the countries of the region need to develop various multilateral settings, such as the Northeast Asia Security Dialogue (NEASED) that was proposed by the Korean government in 1994. Tangible progress in inter-Korean relations should be the precondition to guaranteeing the stability of the region. Seoul and Washington, as well as the rest of the international community, must be prepared to deal with the collapse of North Korea. Furthermore, China’s balancing act will be crucial to this process. It must avoid confrontation with the United States, as well as maintain its influence in North Korea. Regional cooperation will be essential to this process. Furthermore, the uncertainties of the region are magnified by the change of government in Japan.

Both the leaders of the United States and South Korea agree that the North’s provocations have been rewarded by the international community with fuel, loans, and food. Both “carrots and sticks” will need to be used when confronting North Korea: inducements, as well as punishments, are necessary. The five parties involved in the six-party talks must be prepared to use coercive diplomacy and possible punitive action against the North.

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The suggestion was also made that Korea and other Asian countries are becoming increasingly interested in the Canadian ideas of human security and the Responsibility to Protect. At the same time, however, Canadian government interest in the concept has declined, leading to questions about the role that Canada wants to play internationally. If the Canadian government expressed its interest, Canada could play in a role in the talks through a so-called “second circle” of countries that would support the talks by stepping up economic contacts with the North Korea and supporting capacity-building contacts in coordination with the six- party process. Increasing educational ties would be one option for Canada to signal that North Korea is not isolated.

Next Steps?

2010 and the G8/G20 Summits present a unique chance to strengthen Canada-Korea relations; however, the window of opportunity is narrow and requires genuine interest and will on both sides. We are at an inflexion point in the global economy with the transfer from the G8 to the G20. Both Canada and Korea have the chance to reposition themselves as part of the transition. President Lee has already expressed his desire for a “Global Korea”, but there remains uncertainty regarding where and how Canada wants to situate itself internationally. In the next stage of bilateral and multilateral cooperation, the participants of the Canada-Korea Forum generally agreed that we must work together to develop a careful plan of action in the months to come. Considering the opportunities that 2010 will bring, we believe that the scope for more extensive, effective, and meaningful cooperation is very great indeed.

We conveyed the results of the seventh Canada-Korea Forum to Prime Minister Harper in advance of his trip to South Korea in December 2009. This summary report has also been provided to Prime Minister Harper and President Lee, for their reference.

Drafted by: Leah Sarson Asia Pacific Foundation of Canada January 14, 2010

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ANNEX 1

November 19-20, 2009

The Shangri-La Hotel Vancouver, British Columbia

AGENDA

Wednesday, November 18

18:00-20:00 Dinner and reception hosted by the Consul General of the Republic of Korea in Vancouver, Mr. Suh Tong-Mo

Thursday, November 19

8:30-9:00 Breakfast ( Pre-function foyer, Level 6 )

9:00 Welcome and Introductions ( Conway Room, Level 6) Chair: Mr. , President and CEO of the Asia Pacific Foundation of Canada Opening remarks by the Co-chairs of the Canada-Korea Forum, Dr. Han Sung-Joo, Honorary President of the Seoul Forum for International Affairs, former Minister of Foreign Affairs and President of Korea University and Dr Stephen Toope, President and Vice-Chancellor of the University of British Columbia

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9:30 Opening Remarks: Mr. Eric Walsh, Director, North Asia Relations, Foreign Affairs and International Trade Canada ( Conway Room, Level 6)

10:00 Session 1 : One Year after the Global Financial Crisis: Assessments and Prospects ( Conway Room, Level 6) Chair: Dr. Kim Dal-choong, President of the Seoul Forum for International Affairs and Professor Emeritus at Yonsei University Presenters: Dr. Jung Ku-Hyun, Senior Advisor at the Samsung Economic Research Institute and Dr. James W. Dean, Professor Emeritus at Simon Fraser University and Fulbright Professor of North American/Asian Trade and Finance at American University

12:30 Lunch ( Conway Room, Level 6) – with luncheon speaker Mr. Barry Devolin, Member of Parliament for Haliburton-Kawartha Lakes-Brock and Co-Chair of the Canada-Korea Inter- Parliamentary Friendship Group

14:00-16:30 Session 2 : The Changing Strategic Environment of Northeast Asia and Regional Security Architecture ( Conway Room, Level 6) Chair: Dr. Kyung-Ae Park, Korea Foundation Chair and Acting Director of the Centre for Korean Research at the University of British Columbia Presenters: Dr. Kim Sung-han, Professor at Korea University and Dr. Paul Evans, Director of the Institute of Asian Research at the University of British Columbia

18:00-21:00 Reception and dinner, co-hosted by the University of British Columbia and the Asia Pacific Foundation of Canada ( MARKET at the Shangri-La)

Friday, November 20

8:30-9:00 Breakfast ( Pre-function foyer, Level 6 )

9:00 Session 3 : Canada-Korea Cooperation on the G-20 and G-8 ( Conway Room, Level 6) Chair: Dr. David Dewitt, Associate Vice-President Research, Social Sciences and Humanities at York University Presenters: Dr. Barry Carin, Associate Director of the Centre for Global Studies and Director of its Globalization and Governance Program at the University of Victoria, and Senior Fellow at Centre for International Governance Innovation, Dr. Gordon Smith, Executive Director of the Centre for Global Studies at the University of Victoria and Dr. Lee Kyung-tae, President of the Institute for International Trade

12:00 Lunch ( Library, Level 6 )

14:00-16:00 Session 4 : Canada-Korea Strategic Cooperation for the Future ( Conway Room, Level 6)

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Chair: Dr. Tae Hoon Oum, UPS Foundation Chair Professor, Sauder School of Business at the University of British Columbia Presenters: Mr. Dan Ciuriak, Senior Associate, Centre for Trade Policy and Law at Carleton University-University of Ottawa and Dr. Lee Shin-wha, Professor at Korea University

16:30-17:30 Public Panel on Canada-Korea Relations ( Conway Room, Level 6) Co-Chairs: Dr. Stephen Toope, President and Vice-Chancellor of the University of British Columbia and Dr. Han Sung-Joo, Honorary President of the Seoul Forum for International Affairs, former Minister of Foreign Affairs and President of Korea University Opening remarks by Mr. Charles Kim, President of Trans-Pac Fibre, Inc.

17:30-18:30 Networking reception, featuring the Honourable Richard Lee, Parliamentary Secretary for the Asia Pacific Initiative, Government of British Columbia ( Library, Level 6)

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ANNEX 2

November 19-20, 2009

Vancouver, British Columbia

LIST OF PARTICIPANTS

Co-Chairs:

Dr. Han Sung-Joo – Honorary President of the Seoul Forum for International Affairs, Former Minister of Foreign Affairs , and President of Korea University

Dr. Stephen Toope – President and Vice-Chancellor of the University of British Columbia

Korean Delegation:

Dr. Chung Ok-Nim – Member of the National Assembly of the Republic of Korea

Dr. Jung Ku-Hyun – Senior Advisor at the Samsung Economic Research Institute

Dr. Kim Dal-choong – President, Seoul Forum for International Affairs and Professor Emeritus at Yonsei University

Dr. Kim Sung-han – Professor at Korea University

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Mr. Lee Ha-won – Correspondent for Diplomatic Affairs, The Chosun Daily

Dr. Lee Kyung-tae – President, Institute for International Trade

Ms. Lee Mikyung – Member of the National Assembly of the Republic of Korea

Dr. Lee Shin-wha – Professor at Korea University

Mr. Shim Deok-Seob – Minister at the Embassy of the Republic of Korea in Canada

Mr. Suh Tong-mo – Consul General, Korean Consulate General in Vancouver

Mr. Jung Yung-Soo – First Secretary at the Embassy of the Republic of Korea in Canada

Additional Participants:

Ms. SooKyung Ahn – Senior Manager - Korea, International Relations and Business Development Branch, Asia Pacific, Trade and Investment Division, Ministry of Small Business, Technology and Economic Development, Government of British Columbia

Dr. Donald Baker – Professor of Korean Civilization, Department of Asian Studies at the University of British Columbia

Dr. Richard Barichello – Professor, Food Nutrition and Health at the University of British Columbia

Mr. Donald Campbell – Senior Strategy Advisor to Davis LLP, Chair of the Canadian Committee of the Pacific Economic Cooperation Council, and a Distinguished Fellow at the Asia Pacific Foundation of Canada

Dr. Barry Carin – Associate Director of the Centre for Global Studies and Director of its Globalization and Governance Program; Adjunct Professor in the School of Public Administration at the University of Victoria, and Senior Fellow at the Centre for International Governance Innovation

Ms. Hanna Cho – Project Manager, 25@25, Asia Pacific Foundation of Canada

Mr. Dan Ciuriak – Senior Associate, Centre for Trade Policy and Law at Carleton University- University of Ottawa

Dr. James W. Dean – Professor Emeritus of Economics at Simon Fraser University and Fulbright Professor of North American/Asian Trade and Finance at American University

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Mr. Barry Devolin – Member of Parliament and Co-chair of the Canada Korea Inter- Parliamentary Friendship Group

Dr. David Dewitt – Associate Vice-President of Research, Social Sciences and Humanities and Professor of Political Science at York University

Mr. Brian Ebel – Policy Officer for China, Mongolia, and the Arctic, North Asia Relations, Foreign Affairs and International Trade Canada

Dr. Paul Evans – Director of the Institute of Asian Research and a Professor with the Liu Institute for Global Issues at the University of British Columbia

Mr. Marcus Ewert-Johns – Executive Director, International Relations and Business Development Branch, Asia Pacific, Trade and Investment Division, Ministry of Small Business, Technology and Economic Development, Government of British Columbia

Mr. Robert Fairweather – President of the Canada Korea Business Association

Mr. Don Fast – Deputy Minister of the Ministry of Small Business, Technology and Economic

Ms. SuYun Geithner – Deputy Director - Korean Peninsula, North Asia Relations, Foreign Affairs and International Trade Canada

Mr. George Hungerford – Senior Legal Counsel, British Columbia Securities Commission

Mr. Paul Irwin – Senior Director - North Asia, International Relations and Business Development Branch, Asia Pacific, Trade and Investment Division, Ministry of Small Business, Technology and Economic Development, Government of British Columbia

Mr. Charles Kim – President and CEO of TransPac Group

Mr. John C. H. Kim – Lawyer at Fasken Martineau DuMoulin LLP

Mr. Tong-op Kim – Consul at the Consulate General of the Republic of Korea in Vancouver

Mr. Y. K. Kim – President of POSCO Canada Ltd.

Dr. John Kirton – Director of the G8 Research Group, Co-director of the G20 Research Group, Associate Professor of Political Science, Research Associate of the Centre for International Studies and a Fellow of Trinity College at the University of Toronto

The Honourable Richard Lee – Parliamentary Secretary for the Asia Pacific Initiative, Government of British Columbia

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The Honourable Yonah Martin – Senator for British Columbia

Mr. Paul Norila – Trade Commissioner (Korea), North Asia Commercial Relations Division, Foreign Affairs and International Trade Canada

Ms. Trang Nguyen – Post-Graduate Research Fellow, Asia Pacific Foundation of Canada

Dr. Tae Hoon Oum – UPS Foundation Chair Professor, Sauder School of Business at the University of British Columbia

Dr. Kyung-Ae Park – Korea Foundation Chair and Acting Director of the Centre for Korean Research at the University of British Columbia

Mr. David Pryce – Senior Director Global Policy at Research in Motion

Mr. Wayne Robson – Regional Director and Senior Trade Commissioner in Vancouver, Foreign Affairs and International Trade Canada

Ms. Leah Sarson – Post-Graduate Research Fellow, Asia Pacific Foundation of Canada

Dr. Doo-Ho Shin – President of the National Unification Advisory Council, Vancouver Chapter

Dr. Gordon Smith – Executive Director of the Centre for Global Studies and Adjunct Professor of Political Science at the University of Victoria

Mr. Eric Walsh – Director, North Asia Relations, Foreign Affairs and International Trade Canada

Mr. Yuen Pau Woo – President and CEO of the Asia Pacific Foundation of Canada and Convener of the Canada-Korea Forum 7

Mr. Ho Sang Yoo – Director and General and Chief Trade Commissioner, Korea Trade- Investment Promotion Agency, Vancouver

Mr. John Zahary – President and CEO of Harvest Energy

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We are grateful to our sponsors for their generous support.

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