제 10 차

한국-캐나다 포럼

Korea-Canada Forum

REPORT

 일 시: 2012년 10월 4일 – 6일  장 소: 서울 신라 호텔  공동 주관 • 서울국제포럼 (The Seoul Forum for International Affairs)

• The Asia Pacific Foundation of Canada

 후 원: 한국국제교류재단, 한국가스공사 (KOGAS)

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목 차

I. 포럼 개요 …………………………………………………………………………………….………… 3

II. 포럼 프로그램 ……………………………………………………………………………….…..… 3

III. 주요 토의 내용 ……………………………………………………………………………………… 6

IV. 참석자 명단 ………………………………………………………………………………………… 32

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Ⅰ. 제 10 차 한국-캐나다 포럼 개요

1. 일 시: 2012년 10월 4일 - 6일

2. 장 소: 서울 신라 호텔

3. 공동 주관

• 서울국제포럼 (The Seoul Forum for International Affairs)

• The Asia Pacific Foundation of Canada

4. 주 제: Beyond the Canada-Korea Special Partnership: Building Middle Power Leadership

5. 재정지원: 한국국제교류재단, 한국가스공사 (KOGAS)

II. 포럼 프로그램

October 4, Thursday

18:30-20:00 Welcoming Dinner for Canadian Delegation hosted by Hong-Koo LEE, Chairman of The Seoul Forum for International Affairs, Former Prime Minister Venue: Orchid Room (23F)

October 5, Friday Venue: Orchid Room (23F)

8:30-9:00 Registration

9:00-9:20 Welcome and Introduction

Chair: Ku-Hyun JUNG, President of The Seoul Forum for International Affairs

Opening remarks by the co-chairs of the Korea-Canada Forum, Sung-joon YIM, Distinguished Professor at the Hankuk University of Foreign Studies, Former Ambassador to Canada Stephen TOOPE, President and Vice-Chancellor of the University of British Columbia 3

9:20-10:00 Opening Speech

Sihyung LEE , Deputy Minister for Trade, Ministry of Foreign Affairs and Trade

10:00-12:00 Session I: Political Developments and International Relations of Canada and Korea

Chair: Sung-Joo HAN, President Emeritus of the Seoul Forum for International Affairs, Former Minister of Foreign Affairs

Political Developments:

Presenters: Korea – Hyehoon LEE, Member, Supreme Council, Saenuri Party Canada – Stockwell DAY, Former Minister of International Trade & Minister Responsible for the Asia-Pacific Gateway & Corridor Initiative, APFC, Distinguished Fellow, Board Member of RCI Capital Group

International Relations:

Korea – Jin PARK, Executive President of Asia Future Institute, Former Member of the National Assembly Canada – Paul EVANS, Professor, Liu Institute for Global Issues, Director, Institute of Asian Research, University of British Columbia

12:15 Lunch Venue: Pine &Bamboo Room (23F) Hosted by Korea Gas Corporation (KOGAS)

Luncheon Speaker: Hong-Koo LEE, Chairman of The Seoul Forum for International Affairs, Former Prime Minister

14:00-15:45 Session II: Global Economic Crisis and Economic Prospects in Korea and Canada

Chair: Yuen Pau WOO, President & CEO, Asia Pacific Foundation of Canada

Presenters: Canada – Leonard EDWARDS, Former Deputy Minister, Department of Foreign Affairs & International Trade, Former Ambassador to Korea and Japan, G20/G8 Sherpa to the Prime Minister from 2008-2010, APFC Distinguished Fellow Korea – Jong Wha LEE, Senior Advisor to President Lee Myung-Bark, The Blue House and Korea’s G-20 Sherpa for 2011 Kihwan KIM, Distinguished Visiting Scholar, Korea Development Institute (KDI)

15:45-16:00 Coffee Break

16:00-18:00 Session III: Korea-Canada Partnership for Energy and Sustainable Development

Chair: Sung-joon YIM, Distinguished Professor at the Hankuk University of Foreign Studies, Former Ambassador to Canada

Presenters: 4

Korea – Hoesung LEE, Vice Chair of the UN Intergovernmental Panel on Climate Change (IPCC) Yonghun JUNG, Counsellor for Energy and Environment to the Minister, Ministry of Knowledge Economy Canada – Gary WEILINGER, Vice President, Strategic Development External Affairs, Spectra Energy Transmission West John PARK, President, RCI Capital Group Philip LEE, Vice-President, RCI Capital Group

19:00 Dinner Hosted by David Chatterson, Canadian Ambassador to Korea Venue: Ambassador’s Residence

October 6, Saturday Venue: Orchid Room (23F)

9:00-10:45 Session IV: Middle Power Leadership in Global Affairs: Soft Power and Public Diplomacy

Chair: Leonard EDWARDS, Former Deputy Minister, Department of Foreign Affairs & International Trade, Former Ambassador to Korea and Japan, G20/G8 Sherpa to the Prime Minister from 2008-2010, APFC Distinguished Fellow

Presenters: Canada – Kyung-Ae PARK, Korea Foundation Chair, Director, Centre for Korean Research, University of British Columbia Tom PERLMUTTER, Government Film Commissioner & Chairperson, National Film Board of Canada Korea – Woosang KIM, President, The Korea Foundation Jie-ae SOHN, President and CEO, The Korea International Broadcasting Foundation (Arirang TV & Radio)

10:45-11:00 Coffee Break

11:00-12:00 Roundtable: The Future Role of Canada-Korea Forum

Chair: Dalchoong KIM, President Emeritus, the Seoul Forum for International Affairs Professor Emeritus, Political Science, Yonsei University

Panelists: Yuen Pau WOO, President and CEO, Asia Pacific Foundation Paul EVANS, Director, Institute of Asian Research, University of British Columbia Jae- Seung LEE, Professor, Korea University

12:00-12:15 Wrap-Up Session

Co-chairs: Stephen TOOPE and Sung-joon YIM

12:30 Lunch Venue: Pine &Bamboo Room (23F)

Afternoon: Optional Tour 5

III. 주요 토의 내용 (Presentations & Discussions)

Session I :

Political Development and International Relations of Canada and Korea

1. POLITICAL DEVELOPMENT:

Presentation by Hyehoon LEE, Member, Supreme Council, Saenuri Party; Stockwell DAY, Former Minister of International Trade & Minister

Republic of Korea

Currently, multiple political leadership changes are happening in Northeast Asia. Along with this megatrend of leadership changes, various other changes are taking place, including the rise of nationalism due to territorial disputes; power shifts; the shifting balance of power; the rise of China; a rebalancing or pivoting US; a returning Russia; a Japan trying to ‘normalize’ by erasing the image of defeat post-WWII; South Korean policy changes towards North Korea; and North Korea’s reprioritizing from a Military First policy to party and economy first policy. Thus, change in international relations is expected to be extremely dynamic if all of these trends are set in motion.

Within Korean domestic politics, there will be a presidential election on December 19th. Currently, there are three candidates running: Madam Park, daughter of the former President Park Chung-Hee, is running as the ruling party’s nominee; Ahn, a successful businessman, is running as an independent; and Moon, a lawyer and chief of staff for former President Roh, is the nominee of the main opposition party, the Democratic United Party. In a recent public opinion poll, Park scored 37.7%, Ahn 29.8% and Moon 22.5%. Although the poll illustrated Park’s prominent position in a three-way competition, if Ahn and Moon supporters are merged, Park would lose. In the case of the 2002 presidential election, President Roh and Jeong agreed on a single candidacy at the very last minute. Timing thus seems the most important part when forming an alliance.

All three candidates declared economic democratization as the upcoming election’s main issue. Economic democratization has never been an issue until general public started to think about it due to ongoing polarization. A recent public survey showed that 98% of people considered economic democratization as the most important topic for the election. In essence, economic democratization can be described as building a safety net to protect ‘economically weak’ small and medium enterprises (SME) from chaebol, or business conglomerates. Over the years, Korea’s chaebols have developed through economic concentration. SMEs, usually subcontractors, are shaken or collapse according to the chaebols’ decision. Thus, new policies of limiting economic concentration by the chaebol are highly expected to be proposed by each candidate.

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Usually, discussions in presidential elections focus heavily on different visions and policies related to people’s livelihood. However, in the current election, rather than policy discussions, the focus has been on the candidacy collision issue. It is time for candidates to debate over different policies such as economic democratization rather than focusing on candidacy alliances. In other words, the election should be more policy-oriented, or else it will lead to a tragic result.

Canada

For Canada, three points bear mentioning. For starters, looking at Canadian politics in the past, the Liberal Party became the governing party in 1990 when the Conservative parties split the votes. But in 2000, the two Conservative parties came together under the name of Alliance Party. In politics, having two or more political parties means having two or more different policy options that people can choose from. It is certainly beneficial to people since they can make decisions more easily when there is a clear policy distinction. In Canada, two opposite parties had clear differences in fiscal and economic policies.

In terms of economic policies along with political development, Canada did not consider a stimulus during the 2008 world economic crisis. Even during this economic downturn, when most of the world was considering a stimulus, Canada had very limited view of it. Quantitative easing sounded attractive, but this would increase the money supply and possible lead to an increase in inflation and a decrease in debt and credit capability. In January, 2013, the United States will face a downgrading since pumping in 40 billion dollars every month will not be plausible or possible. With a very limited view of quantitative easing, Canada introduced significant rules, including a banking regulatory system. As a result, the World Economic Forum, OECD and IMF all pointed to Canada as the most stable financial system in the G20. Although GDP has slowed in Canada, jobs lost in 2008 were replaced and there was no mortgage foreclosure problem.

Because Canada is a Confederation, doing business there should be thought of carefully since it is different from other nations. The federal government does not have provincial jurisdiction, so provincial issues are considered to be more important for foreign investment in Canada.

Most likely, Canada will face three negative influencing factors: the EU, US and PRC. The EU is a noble experiment that actually has failed, and the US economic crisis will continue and will negatively influence Canada. Also, concerns about a slowdown in China will affect Canada. However, with a relatively strong fiscal position created by low taxation and high fiscal capability, in Canada there still is a significant hope for ongoing growth in the future.

2. INTERNATIONAL RELATIONS:

Presentation by Jin PARK, Executive President of Asia Future Institute; Former Member of the National Assembly; Paul EVANS, Professor, Liu Institute for Global Issues, Director, Institute of Asian Research, University of British Columbia

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Inter-Korean Relations

International relations in the Northeast Asian region face dramatic changes at this time and such changes will directly influence Korea’s international relations.

North Korea, under the young and inexperienced Kim Jong-Un leadership, continuously clings on to its “Military First” policy while searching for economic breakthroughs through the 6.28 reform measures. The 6.28 reform measures consist of production allocation, independent financial management, and introduction of a monthly payment.

North Korea, at this point, faces three challenges. For starters, the key question is regime sustainability. With collective leadership system with Kim Jong-Un on top, economic power is shifting from the military to the Party and the Cabinet. How the military will react to this change will be questioned. Second, North Korea’s growing dependence on China seems to be a serious challenge to Korean unification. If North Korea becomes a satellite nation of China, it will be a stumbling block to Korean unification. Lastly, North Korea’s nuclear ambitions will definitely be the most serious challenge between two Koreas. The nuclear issue has been dealt with through inter-Korean dialogues and Six Party Talks, but neither of methods has worked. Unless there is a sign of nuclear renunciation by North Korea, the future of the two Koreas seems uncertain. In addition, although North Korea’s military equipment is outdated, North Korea’s military capability, in both conventional and nuclear terms, should never be ignored.

South Korea’s policy towards North Korea would also dramatically alter, or improve, through the 2012 presidential election. The three main presidential candidates call for different policies on the North Korean issue. Park insists on a confidence-building process and respect for previous agreements between two Koreas. Moon plans on holding an inter-Korean summit meeting and creating a South-North economic union council. And Ahn calls for inter-Korean dialogue and resumption of economic cooperation and the Six-Party Talks. Along with the three candidates’ policies, South Korea’s policy choices and capabilities for managing inter-Korean relations are put to the test.

China-Japan

Considering the changing balance of power in Asia, the China-Japan relation is considered one of the most critical elements. Especially through territorial disputes, often considered a zero-sum game, nationalism in both nations has been sharpened and mutual public antipathy has erupted in both countries. The US tries to act neutrally between the two. The US maintains a US-Japan alliance while insisting on a G2 partnership with China. South Korea also faces difficulty in not taking a side. Historical and territorial disputes with both Japan and China will remain as the most difficult obstacles for Korea to come close to either nation. Korea will remain neutral, and at the same time will try to engage middle power diplomacy. For example, the Korea-China-Japan Trilateral Summit and Korea-China-Japan Trilateral Cooperation Secretariat are great examples of trilateral cooperation among three nations. Korea can not only engage in bilateral relations, but it can also play a middle power role to keep peace and stability in Northeast Asia.

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US-China

Obviously, US-China relations remain the most significant influence in Asia. The G2 strategic partnership, working through competition and cooperation, will eventually be a major stake-holder not only in Asia but also in the world. On one hand, changes in the G2 balance of power are unavoidable in the Asia Pacific, where the Korean peninsula would be one of the areas most sensitive to such changes. South Korea should therefore examine the G2 carefully; meanwhile, inter-Korean economic cooperation should take place where South Korea’s capital and technology combined with North Korea’s workforce and resources will be a win-win game. US-China relations directly affect the unification of Korea. The unification of Korea will not be realized through benchmarking the German model for several reasons, including North Korea’s nuclear ambitions and the absence of a regional institution such as the EU and NATO. Political and military confidence building is expected to continue through various means such as mutual arms reduction initiatives, inter-Korean high-level talks, and US and Chinese support. According to an opinion survey conducted in August, 2012 by KBS research institute and Mbizon, 88.8% of respondents think that Korean unification can be achieved, and 74% think that it will happen in less than 30 years. The result of the survey question, ‘who will help Korean unification?’ has turned out to be somewhat surprising: 51.7% said ‘no one’, compared to 39.7% who answered that way in 2011.

Human rights issues in North Korea have become serious. Around 25,000 North Korean refugees currently reside in South Korea, where a small-scale unification is happening. For the human rights issue, there is a perception difference between the US and China. The US insists on the North Korean Human Rights Act, whereas China regards North Korean refugees as “illegal cross-border migrants.” A cooperative US-China relationship benefits Korea’s national interest. Korea’s strategic options should include reinvigorating the Korea- US alliance, conducting strategic dialogue with China, and exercising middle power diplomacy both bilaterally and multilaterally.

Korea-Canada Partnership

Likeminded middle powers, Korea-Canada partnership contributed a lot to peace and stability in the Asia Pacific since the 1993 APEC Summit. Canada, which contributed the third most troops - 26,791 - in the Korean War, is considered a real friend to Korea. Moreover, Canada always has supported the two Koreas’ peaceful unification by making consistent efforts to support the denuclearization of the Korean peninsula and strongly supporting South Korean government’s position following the sinking of Cheonan Corvette. Now it is time for Korea and Canada to strengthen the special partnership to build a “Golden Bridge” of strategic cooperation across the Pacific linking Northeast Asia and North America.

Canada’s International Relations

Canada’s foreign policy under a Conservative government has gradually changed over the years. The concept of a middle power was universally embraced with the middle power role 9 being defined as a supporter and mediator. Along with the rebalancing of the US in this region, Canada has also awakened or reawakened to Asia in the last few years and is trying to deepen the connection. This shift has been especially notable among the Canadian business community, which now says that a significant presence in Asia is not an option but a necessity. With this movement, bilateral and multilateral FTAs will also be necessary.

Canada’s awakening to Asia is consistent with its interests and values. Over the years, Canadians have had several relations with China. Chinese officials are calling the current period of Canada-China relations as a “golden period” due to the rapidly growing trade volume between two nations. Both Chinese investment in Canada and Canadian exports of energy to China have increased. Chinese have even referred to Canadians using terms such as ‘friend,’ ‘strategic partner’ and ‘alliance.’

Canada and China are approaching each other economically. However, as mentioned earlier, a strategic partnership becomes complicated due to the human rights issues. Like Korea and Australia, which have a security alliance with the US and an economic partnership with China, Canada’s awakening as a middle power in Asia might develop similarly. The Conservative government wants to treat China as not a strategic enemy, but as a friend or a balanced competitor.

Whether Canada can pursue this middle power position will be an open question. There should be a strategic balance with China and Canada should still find a way to work with China. A number of Chinese officials are concerned about deteriorating perceptions of China and a new assertiveness in the region that has undermined some of the hopes of their diplomacy. China hopes that Canada can play a middle power role, and Canada considers regional rules and laws essential. All should think about trust politics and strategic trust among nations.

Discussion – Dokdo Issue

Between Korea and Japan, there is a boundary dispute, although Dokdo is culturally and legally a part of Korea. Although Japan wants to bring this issue to the International Court of Justice, Korea would not consider it as even an ‘issue.’ Regarding the Korean definition of sovereignty, Dokdo is Korean territory and has never been negotiable in any sense. Korea still needs to make efforts to ensure that this is accepted not only by people in Korea but also by people throughout the world. If Korea considers the Dokdo issue ‘non-negotiable,’ there will be no point of discussion and no progress in current territorial dispute. US policy is also important in the Dokdo issue since massive lobbying of the US by the Japanese was done during the San Francisco treaty process in 1951. Recently, after President Lee officially visited Dokdo, more than 70% of Japanese became familiar with the Dokdo issue, whereas only 30% of them knew about it prior to his visit. While the President’s visit was good, it also brought about some negative results as well.

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Session II: The Global Economic Crisis and Economic Prospects in Korea and Canada

1. Presentation by Leonard Edwards, Former Deputy Minister, Department of Foreign Affairs and International and Trade

There is much uncertainty in the global economy. The IMF, OECD, and ADB are all talking about the downward forecast on growth. Countries are in need of getting industrial production and employment back on track as well as stimulating more demand in domestic and export markets.

Given its neighborhood status, the US holds huge importance to the Canadian economic performance. Seventy-five percent of Canada’s exports go to the US market, and exports represent 60% of Canada’s GDP. Yet, the US recession seems far from recovery, especially in the area of employment growth. Internally, the US continues to grow through the deleveraging process away from high levels of household debt. However, the really serious issue is the fiscal cliff, where if Congress and the Obama Administration are unable to come to an agreement by Jan. 1, 2013, all fiscal consolidation plans for the US government will be off with two possible consequences: 1) the Bush administration’s tax cuts will expire Jan. 1, 2013; and 2) a pre-program spending reduction worked out by the Administration and Congress last year will come into effect. This will lead to a 4% hit on GDP.

Conditions in Europe are also quite gloomy. The Euro zone is technically in recession as of the 3rd quarter of this year. While Germany continues to grow modestly, France’s economy is at a stand-still, the Italian and Spanish economies are shrinking this year and will likely shrink next year, and Europe in general is facing frustration through its inability to solve this sovereign debt crisis. This has been a failure of political leadership and euro-zone institutions and their structure have shown weaknesses.

In order to overcome this financial crisis, Europeans have done bailouts beginning in May 2010 and continuing through 2012. European Central Bank ECB measures have injected liquidity into the system, but this has only served to buy time. One positive feature is the incremental movements, such as the fiscal package of December 2011 and July 2012 agreements to move to a banking union, which have increasingly dealt with the underlying institutional problems. Still, more time is needed.

Canada has welcomed Europe’s recent measures, but expects European leaders to promptly implement all necessary procedures. For example, the June 2012 agreement means establishing a single banking supervisory authority as a precondition for the operation of a European stability mechanism which will capitalize banks. In addition, the ECB’s recently announced bond buying plan (Outright monetary transaction) will bring the ECB unlimited resources to support the sovereign bonds market.

Yet, marked countries are reluctant to agree to the conditions. (For example, Spain needs the support, but that country’s Prime Minister rejected the conditionality). So even if all these procedures are followed, Canada does not believe that the problem will be solved until Europe really moves to a banking fiscal union. 11

Canadian Economic Performance

Canada’s Economic performance has been fairly sound due to 1) its banks being healthy with a strong regulatoy framework with high capital requirement and prudent mortgage rules; and 2) its fiscal position being solid, with the government providing the third largest stimulus package among the G7 countries, amounting to 4% of GDP over two years, a quick rebound with combined temporary spending measure and permanent tax reduction. Sound monetary policy has also allowed Canada’s banks to provide strong monetary stimulus.

Nevertheless, there are still serious weaknesses with respect to Canada’s exports. Canada experienced the largest drop in real exports among the G7. Lowered global commodity prices also lowered Canadian export prices, which led to the deterioration in trade.

Thus, although Canada has done well in throughout the recession because real GDP has grown by 3.7%, the strongest in the G7, especially in terms of employment creation, it still needs to make progress for higher growth.

This year’s fiscal plan will be a shift from economic stimulus to restraining spending growth, ending the temporary stimulus measure as planned (reduction in government spending). The government plans to return to a balanced budget by 2015. The plan is to return the federal debt to GDP ratio to the pre-recession level of 36% by 2017. That 36% is one-third of the G7 average, and two-thirds better than Germany.

But there are also downside risks to Canada’s economy, including:

1) Household indebtedness, which has risen above 70% of disposable income 25 years ago to over 150% today.

2) Poor labor productivity, currently the second worst in G7 in terms of labor productivity, which relates to Canada’s aging population. An increase in commodity prices fueled growth over the decade, but Canada cannot count on increasing prices and it must prepare for high volatility.

In order to deal with these risks and continue to grow in the uncertain global climate, the government has taken some steps. It has continued to build a competitive business tax system relative to the US and other G7 countries. It has also expanded the trade and tariff free zones for Canadian manufactures. Over the last few years, tariffs have been eliminated for 1600 items, amounting to $445 million per year in tariff relief. Canada has created the first tariff-free manufacturing zones in the G20. It has also modernized the regulatory system, particularly in major project reviews such as oil and sand; made large investments in major public infrastructure; created a more flexible immigration system to attract skills from abroad, and taken an aggressive approach to the FTA negotiation in the new trade deal in Asia Pacific.

As Canada is heavily dependent on the external environment, particularly the US, the government is trying to minimize any negative impact and return to a balanced budget and fixed fiscal rectitude.

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2. Presentation by LEE Jong Wha, Senior Advisor to President Lee Myung Bak, the Blue House

The issue here is the global crisis of 2008, with the Euro-zone crisis as the most urgent. Europe is under a sovereign debt crisis that has multiple features: financial crisis, political crisis of confidence, and a social crisis. Europe needs a comprehensive and decisive action to address the structural and institutional problems.

Economic stagnation in advanced economies is affecting the emerging economies with a negative spillover in trade and financial transmission channels. Korea’s exports to Europe declined significantly, as have China’s exports to Europe. There is a repercussion effect, with Korea’s export to China also declining in recent months.

One significant factor during the global crisis is what the rating agencies will do. When they downgrade the credit ratings of the advanced countries, this impacts the financial market. The market is still suspicious of the government’s ability to achieve deficit reduction. Rising credit risk on sovereign debt has pushed up the borrowing cost of the government, making it more difficult for those countries to finance their fiscal deficit.

Before the 2008 financial crisis, there was a question about whether emerging economies have decoupled from the advanced countries. Crises in advanced countries led to a slowdown of emerging economies and countries, especially in exports. Even in the financial market, stock prices in the US, Canada, Europe, and Korea are all quite closely interlinked. So the bottom line is that all global economies are interdependent as demonstrated by this crisis.

Issues of Global economic crisis

Volatile commodity prices: Rising food prices are good for the exporting country, but negative for the importing country due to higher inflation and lower growth. (Thus, President Lee sent letters to all G20 leaders on Aug. 23 for collective action on the potential risk from the agriculture market.)

Euro zone crisis: Euro-zone countries have sufficient resources and capacities to solve their problems and restore confidence and growth. The problem, however, is that the zone encompasses countries that are quite distinct. When these countries do not behave in a coordinated manner, it creates institutional problems that require specific solutions. That is why European leaders need to take more comprehensive and decisive action. They should work together, especially the surplus countries to help the deficit countries to generate more economic growth. And countries with structural problems need to correct these as this crisis may be another opportunity for the EU to strengthen the governance and institution mechanisms for a well functioning monetary union. Sometimes pressure from the market and the public may be needed to initiate drastic reform measures, and it will take much longer for the political process to happen since all 70 countries in Europe would have to reach a consensus.

There is a need for a fundamental tradeoff between national sovereignty and the common goal for the Euro-Zone countries. In the long term, the tradeoff might be to give up some 13 national sovereignty, although this is not politically popular. Sometimes crisis can help leaders implement certain policies that involve giving up national sovereignty in exchange for strengthening the institutional mechanisms and reaching the common goal.

Global problems need global solutions and global cooperation. Even though important policies are implemented at the national level, sometimes international policy can increase the impact of national policies to address those specific problems.

The G20 is a new global governance system. It proved its effectiveness by successfully coordinating policies in the global financial crisis of 2008. With a broad membership of 85% of world GDP and two-thirds of the world’s population, it can be very effective in credibly responding to global problems. Thus, by engaging non-G20 members and regional and institutional actors, the G20 should work to improve the existing structure such as the IMF system.

Korea’s economy

Korea’s crisis in 1997 and 1998 provided an opportunity to reform the structure. With a relatively sound fiscal and external balance (international reserves increased to more than US$314 billion, and short-term debt to international reserved ratio declined significantly) Korean people are used to high economic growth and per capita income over US $20,000, , quite high compared to other advanced countries. It is actually difficult to maintain high growth over 5% without creating inflation or a current account deficit. Thus, Korea should follow and maintain stable growth.

Exports declined by 2% in the first nine months of the year. The Korean government is taking necessary steps to boost domestic demand and expand exports and overseas construction plans. Korea’s trade dependency is 100%, so it is difficult to avoid negative impacts from external shocks.

Short-term risk and long-term challenges

In the short term, there is still the issue of volatile capital flows. Global utility expanded to quantitative easing, especially with the US’s third quantitative easing. The Bank of Japan increased utility. Europe and the European Central Bank engaged in quantitative easing. Because Korea maintained more favorable economic conditions, net capital inflows to Korea have continued to increase. The question is whether the sudden reversal of capital flows will destabilize the Korean financial market.

As for banking flows, bank borrowing increased, but during the crisis, a sudden withdrawal can cause the problem of a lack of utility, including international utility. So the government has reduced the short-term borrowing of the banking sector. There is no sudden withdrawal. The government has also introduced a number of macro-prudential measures (called macro prudential stability levy), imposing non-deposit foreign currency liability held by domestic and foreign banks. It has also put a ceiling on banks for foreign exchange position.

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The household debt issue is a risk factor. The debt level is 89% of GDP, and 157% of household disposable income. Based on the Mckinsey chart of the 10 largest mature economies, many countries are already trying to deleverage their debt. Korea’s household debt is not high compared to the other countries in the chart, but the speed of increase has been very quick over the past four years. The government has tried to reduce the speed from last year, and while it has had some success, it is still a concern because when we control the growth especially in the banking sectors, household lending by the nonbanking sector increases. This year, the government is trying to control lending by the nonbanking sector. It also tried to control the household debt growth, but wanted to avoid a hard lending. It cannot simply quit lending the household loan due to risk in paying back. It must ensure soft lending.

Three Long-Term issues

1) Low productivity in service industries. There is a gap between manufacturing and service sectors in labor productivity, which has increased significantly over the past 10 years. As an international comparison, Korea’s service sector productivity ranked second to last in the OECD. Service liberalization and capital and labor market reforms are needed.

2) Rise income inequality. From the year 2000, Korea has been continuously deteriorating in income inequality. This has been partly due to the impact from the 1997-98 crisis. One mistake Korea has made is that it did not have a sufficient social safety net. Moreover, it implemented drastic reforms which increased the number of unemployment and also temporary workers.

3) In terms of its aging population, the combination of a declining birth rate and increasing life expectancy will mean that the labor force will decline beginning in 2020. The population of elderly will increase to 16% of the total population. The Korean government is therefore expanding public support for childcare and education.

Conclusion

Korea overcame hardship and achieved strong and balanced growth. Korea can continue to manage long-term and short-term challenges and pursue the right policies for stable growth. Korea will continue remove risks factors and maintain fiscal prudence and sustain growth. Korea will continue to improve its service industry; support small and medium enterprises; and will improve free market capitalism to establish shared and sustainable growth. It is undergoing a challenge now, but must find effective methods to close the gaps between rich and poor, large and small firms, and manufacturing and service sectors. But the new paradigm is in green growth. In other words, Korea must satisfy the need for economic growth while protecting the environment.

Global leadership as a middle power nation. Canada has been very active as a middle power in reforming the governance system and global problems. Korea is following in Canada’s footsteps, as demonstrated through the success of the Seoul summit. Emerging economies can play a global leadership role as bridge builders, as seen in the hosting of the G20 Summit. 15

Korea has been pushing agendas such as development, green growth, and controlling commodity price volatility. Korea believes that with its development experience (while it may not be applicable to all developing countries), it can share the experience with others in how Korea achieved strong growth and democratization in one generation. Emerging countries’ power increased during the crisis, so Korea needs to play a better role in taking responsibility in the community.

3. Presentation by KIM, Ki Hwan, Distinguished visiting scholar, Korea Development Institute (KDI)

Key questions and Answers

. Over the past half century, Korea has achieved remarkable economic progress. However, it continues to be faced with many new challenges as well as opportunities. . What are the challenges? What model strategy should we adopt? And how to implement it?

Major challenges

1) A steady fall in growth: KDI and other institutions like the OECD believes that potential for Korea by end of this decade will fall to the 2% range. Low growth means problems, such as 1) not providing enough employment, particularly for the young generation; and 2) as people get older, Korea needs to provide welfare, but cannot expand welfare without economic growth.

2) There is also the seriously “disguised” unemployment rate, especially among youth. Official statistics in Korean may be a model for everyone. Unemployment is 3% overall, and 7% among young people. But the definition of who is unemployed is someone who has been actively seeking employment for six weeks continuously and did not work more than one hour per week for a day. In terms of statistics on young people, the UK, the US, and France are better than Korean with respect to the unemployment rate.

3) Deterioration in income distribution: within the context of the OECD, Korea is average. But for the last 20 years, income distribution has deteriorated rapidly, much more quickly than in the US.

4) The rise of China has been positive since it helped Korea grow, but Korea has become too dependent on China.

5) There is a growing need for technological innovation---Korea has done well for the past 50 years, yet experts say that Korea is weak in creative source technology, and in technology trade, Korea is still a deficit country.

6) There is a shift of the center of global economic gravity to Asia---this is a new opportunity Korea should take advantage of.

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Overcoming Challenges: Toward Business and Cultural Center

Becoming a business and cultural center means providing high value-added services to the surrounding countries and to the world. Most business centers of the world are very fruitful through market principles as a result of economic dynamics and efficiency. Korea should become a multi-functioning business and cultural center, a much larger version of Singapore or Hong Kong, Switzerland or the Netherlands.

How to become a business center?

First, Korea should make good use of its strengths, such as:

1) A highly educated population. Korea spends more per pupil than any other country. 2) Advanced technology: in terms of triadic patents, Koreans rank about fifth in the world; Korea spends a lot on R & D based on GDP. 3) Korea is already a trading center. It has concluded so many FTAs, particularly with big markets. Korea is the only country in Asia that has completed FTAs with the EU and US. 4) Good strategic location, which is excellent for commerce between China and Japan, the second- and third-largest economies in the world: Incheon Airport and Busan port are becoming hubs in the region. 5) Strong in finance. Corporations are not heavily in debt and government finance is sound. A recent survey by Zen Group in London rated Seoul as the 6th global financial center in the world. But our main weakness is the Korean won, which is still inconvertible. As a result, its foreign exchange market is small and shallow, making the country suffer from unnecessary and extremely high volatility in exchange rates to the detriment of all economic players in Korea. 6) First class medical skills and facilities by offering high-quality medical and health services provided by a large number of talented and well-trained doctors. 7) Becoming a popular tourist destination: spending by inbound tourists currently accounts for only 5.1% of GDP, about one half of the OECD average. 8) Growing Recognition for Korea’s design skills: In 2010, the IDA and the ICSID designated Seoul as the World Design Capital (WDC). 9) Korea’s new soft power: The so-called hallyu (Korean Wave) represents the best amalgam of traditional Korean culture and Western culture in many manifestations. The rising popularity of hallyu not only provides Korea with many business opportunities, but also enhances its national image. 10) New leadership role in the global community. For example, Seoul is now the home for the Global Green Growth Institute jointly operated and funded by other advanced countries. It transitioned from being an aid recipient to an aid donor, and even played the regional role of implementing “the Tripartite Environment Minister Meeting (TEMM) in 1999 to strengthen the tripartite relationship among China, Japan, and Korea.

Second, Korea should undertake reforms to overcome current weaknesses. For example, it must strengthen the market economy by reinforcing the rule of law; reduce entry and exit barriers; increase the competitiveness of the tax system; and reduce policy uncertainty due to frequent elections and the government changes. It must complete its market opening to the outside world by liberalizing agricultural imports on a pre-announced schedule and opening

17 its high value-added services markets to foreign competition. It should develop efficient utilization of human resources and expansion of the demographic base through increasing female participation in the workforce and encouraging greater participation of older citizens in the labor market. It should upgrade its higher education system by, for example, increasing foreign faculty and students.

These are all critical steps Korea should take in order to move forward and grow.

4. Discussion

R&D

Much of the R&D activities in Korea were actually carried out by the private sector. The government-funded organizations may appear to be the ones leading, but the effective work of R&D has come from chaebols such as Samsung, LG and so on. Thus, expenditure on R&D has not been much more efficient than in Canada. The government does not want to be outdone, so it continues to invest on R&D. Nevertheless, R&D is weak in the public sector, especially in the universities.

Canada actually has a strong SR&ED program, but it can be efficiently conducted by companies if the correct incentives are there in terms of tax application for internal research and development. The tax approach seems to be the right way, as governments should not be the one to choose the winners and losers in gaining government support.

But there is a direct interplay between the lack of R&D expenditure in private industry and lower productivity. Canada has created tax incentives and the government’s policy has, in theory, been doing what is expected. The large challenge relates to the industry structure. In Canada, more than 90% of industry is small and medium enterprises. It is difficult to find the connecting point of public expenditure of R& D into industry that is comprised of small and medium enterprises. But every government in Canada is trying to address this issue because unless Canada solves the productivity problem, the long-term economic prospects are not as positive as they should be.

Service industry & innovation

Service is in two areas: 1) traditional services, such as retail and construction; or 2) the high value-added industry, such as education, medical technology, the tourism industry, for which Korea needs to accumulate more skills.

Korea’s economic success owes a lot to the liberalization of the 1980s, although it came with political difficulties. But liberalization has not extended to the service industry to this day.

We must recognize the current innovation potential in Korea and Canada, but we must also make progress on their weaknesses.

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Session III: Korea-Canada Partnership for Energy and Sustainable Development

Presentations by Hoesung LEE, Vice Chair of the UN Intergovernmental Panel on Climate Change (IPCC); Yonghun JUNG, Counsellor for Energy and Environment to the Minister, Ministry of Knowledge Economy; Gary WEILINGER, Vice President, Strategic Development External Affairs, Spectra Energy Transmission West; John PARK, President, Philip LEE, Vice-President, RCI Capital Group

1. Korea’s Energy Dependency

Since the 8th forum, energy-related issues have been actively discussed. It is now the 3rd forum in which we are discussing energy. Over the years, energy has become one of the Forum’s main topics. To some degree, the war on energy is a hotter issue than the war on terror these days. As the fourth largest energy importer, Korea spent $171 billion, accounts for 32.6% of all national imports. Since Korea’s dependency on energy imports is about 96.5%, President Lee declared energy diplomacy a priority for the nation. The main goal of the energy plan is to decrease energy dependency on fossil fuels and increase nuclear or renewable energy. Canada has a great volume of energy resources. Korea and Canada can begood partner on energy trade. Recently, due to the shale gas boom in the US and Canada, the Korean government decided to increase its share of shale gas in LNG imports to up to 20% by 2020. This is, as well, reflected in the American case where the shale gas industry grew by 45% annually from 2005 to 2010. It is known that shale occupies 25% of America’s gas production. This has become a significant comparative advantage of the US.

2. Sustainable Development

For sustainable development, fossil fuel use must decrease. Although the resource base of fossil fuels is large, these fuels affect climate change, which in turn affects many sectors negatively.

This year is the 25th anniversary of invention of the word ‘sustainable development.’ Economic development should encompass three pillars: economy, ecology and society. Looking at the chronology, this message was truly embedded in the 1992 Rio summit, which produced two legally binding treaties: a climate change treaty and a biodiversity treaty. In 2008, UNEP produced the ‘Green Economy Initiative.’ The message was that the green economy was the new engine for growth, employment and poverty eradication. In 2009, the Korean government introduced the term ‘eco-friendly.’ Korea’s green economy drive contributed to the world’s green economy. In 2011, the OECD also proposed green growth, emphasizing that green growth is a new source of growth in job productivity. During the Rio+20 meeting in 2012 a plan of doubling the rate of energy efficiency by 2030 and doubling the share of renewable energy in the global energy mix by 2030 was presented. Also, poverty eradication has been identified as the greatest global challenge and indispensable requirement for sustainable development. Finally, the green economy is said to be one of the tools for sustainable development. 19

Interestingly, sustainable development is firmly embedded in climate change treaty which has not changed much since 1997 Kyoto protocol. Obviously, climate change is not an easy matter to grapple with. Thus, it should be done in a sustainable manner. Almost 85% of climate change problems are generated from the energy side, and only 15% from land use changes. Climate change affects all sectors and systems, such as: water, ecosystems, food, coasts, and health. Among them, the most vulnerable sector is the ecosystem. If climate change occurs up to 1 degree C, about 30 species are expected to become extinct.

Climate change will negatively affect everything in an interrelated manner. Thus, fossil fuel use should decrease. It is considered to account for up to 85% of the problem in climate change. Human contribution of emissions counts for about 6 giga tons of carbon every year. Comparatively, fossil fuel emits 4,000 giga tons. Five thousand to Eight thousand giga tons of coal, fossil fuel resources, is stored and available for the next 6,000 years for humans, an enormous amount. But people do not believe there is an abundance of fossil fuel. For fossil fuel, there is an energy inventory management issue, not scarcity management issue. This also implies that fossil fuel resources are abundant. Nonetheless, we cannot use all of the resources due to many reasons and the task is to reduce the use of fossil fuels. Thus, coincidently, the only key problem is that the resource is in abundance.

So, what is the implication for sustainable development? Global greenhouse gas emissions must peak in 2000-2015 if we are to achieve temperature stabilization below 2 degree C warming. It is important to find ways to reverse biodiversity loss and nitrogen and phosphorus flows below critical threshold points.

Then, will the green economy deliver an answer to this call? Not quietly. There are several reasons for this. First, it does not provide a concrete plan of action for climate change. Second, targets for renewable energy and efficiency improvement were considered, but then dropped. Third, the focus on energy is on access for developmental needs. And finally, under a green economy, fossil fuel will be acceptable if it is clean technology.

What will be the options for Korea and Canada? As Korea is a top importer of energy and Canada is a top exporter of energy, a bilateral partnership can bring about productive outcomes.

Therefore, key questions would be: will the traditional objective of cooperation (resource acquisition) be valid in a future carbon-constrained world? Is the Chinese model of state- driven global resource equity ownership one Korea should consider following? What are options for cooperation in renewable energy, nuclear energy, carbon capture storage, and energy efficiency improvement? How can Canada-Korea cooperation contribute to eradicating poverty in the least developed regions for sustainable development? And can Canada-Korea ‘middle power leadership’ help?

3. Canada’s Energy Industry: Spectra Energy

As for Spectra Energy, the reason why Canada is interested in continuously looking for markets and customers in natural gas is that there are multiple potential customers and demand throughout the world. Spectra Energy’s transportation pipeline supplies energy to areas in the US, such as Chicago, Washington and Idaho. 20

There is a significant attention on safety and liability these days. Spectra Energy, when expanding pipelines, had a series of discussion with local communities, the media and others about safety and liability. Through the discussion, Spectra Energy even decided to open a hotline for customer concerns. For natural gas companies like Spectra Energy, local politics is extremely essential, meaning that that local communities like Fort Nelson are important and there must be some benefit for them. Spectra Energy helped local people in various ways such as building cellular phone network coverage, preserving fisheries and providing scholarships. As a result, people wanted to live and work in Fort Nelson.

In terms of the ownership of oil sands in Canada, companies get long-term leases from the government. It is renegotiated depending on the situation. Not all land is free to drill underground for gas. Some land is not adequate for building structures and in these cases drilling is strictly prohibited.

As previously mentioned, economic development will have to encompass three pillars: economy, ecology and society. Such pillars can be applicable to sustainable development in energy. For ecology, people will be aware of the importance of the environment regarding new infrastructure that will need to be built for energy development. In terms of society, new sites for energy can bring in education. And last, the energy sector can create jobs, which will positively affect the economy.

For sustainable development in energy, the environmental issue will be the main concern. British Columbia’s annual sequestration of CO2 has been reduced from 200 thousand tons to 130 thousand tons. The goal is to maximize the amount of natural gas and minimize the carbon footprint. In British Columbia, total emissions of CO2, as a result of combustion, are 13 million tons. Comparing this to other fossil fuels, amount of CO2 emission and natural gas is benign. In Fort Nelson alone, there are 2.2 million tons of CO2 emissions.

The process of inventing and researching how to capture CO2 in the atmosphere and re- injecting it into the ground is being actively discussed. Although it looks infinitely do-able and technically feasible, the challenge is that it requires a large investment.

Natural gas has tremendous future potential and is a reliable source of energy. Increased use of natural gas will be a form of sustainable development. Balancing the economy and the environment will always be a challenging issue. For sustainable development in energy, constructive partnerships like the ones between Korea, an energy importing nation, and Canada, an energy exporter, should continue.

4. Canada’s Energy Export and Gas Import in Northeast Asia

In the midst of the US’s large investment and production of gas, Korea and Canada could possibly take a chance on the shale revolution. In the fields of energy cooperation, electricity vehicles, smart grids and combined power, Korea’s Ministry of Knowledge Economy (MKE) and Natural Resources Canada (NRCan) jointly initiated green energy technology cooperation through a MOU signed in February 2011. Korea is becoming more active in its investments in the energy sector. Korean upstream operations like Korea National Oil Corporation (KNOC) and Korea Gas Corporation (KOGAS) are already investing in places

21 like Fort Nelson, BC. It is now necessary for Canada and Korea to seriously think about energy cooperation in the future.

Canada’s shale gas is exported largely to the US. Relying heavily on the US, or on any one nation alone, increases a risk as soon as that such trade relationship becomes less essential. Currently, there is huge opposition in the US to importing energy from Canada. This implies that the situation might be different in the future. In fact, Canada’s gas export to the US have dropped from 64 million on to 45 million tons recently.

On the other hand, Korea is facing an electricity shortage. Checking power demand on a daily basis, 98% of Korea’s energy imports come from the Middle East. The US dislikes Korea for importing oil from Iran threaten energy security of Korea considering Korea’s energy demand still on a robust growth. As for Japan, the nuclear issue has become sensitive recently. Japan will not restart nuclear power in near future. In Japan, of the 54 nuclear power plants, only 2 are in operation now. Last year alone, Japan imported 12 million extra tons of energy. China also is short on energy, currently demanding more gas, coal and oil.

So, for both Canada and the Northeast Asian region, natural gas exports and imports will be more active at this point. Canada will have no other export option other than the US, and the Northeast Asian nations will have no other import option other than the Middle East. Especially, considering the transportation cost per million BTU from Louisiana to Panama being only $4, from Kitimat to Korea the cost will only be $2. Such a cost advantage will be a greater benefit for both Canada and the Northeast Asian region. Canada’s oil production is on 3 mbpd and in 2011 about 28 mb of crude oil was exported to the US. There still is a huge export capacity of oil sands and petrochemical products; thus, if s pipeline is built to Canada’s west coast, such export capacity can be focused on Northeast Asia. Currently, there is a lot of consultation being done for advancing the project of a 700km-long pipeline from Fort Nelson to Kitimat.

It is critical for Canada to find new trading partners. Canada’s gas storage tank is already 95% full, and it will be counterproductive if more gas is produced. In the long run, there is a growing risk of being left with “stranded” with oil and gas in places like Keystone XL. If Canada does not find outlets for gas and oil other than the US, it will face a great risk of overstock. Along with the US LNG project, the Alaska Project, which is 800 miles long, and knowing that there is a high demand from Northeast Asian region, Canada must find ways to export gas to Asia through a pipeline. In this regard, Korea and Canada will have much more to do together in energy development. In order to carry this out successfully, both parties need to engage in continual high-level engagement.

There is ongoing Chinese involvement in Canada in oil investment, whether it is partial or complete acquisitions. There certainly is s possibility for other nationals, including Koreans, to invest in oil sands, and Canadians are actively leading other nationals to invest in. Korean upstream operations are already involved. KNOC (Korea National Oil Corporation) and KOGAS (Korea Gas Corporation) are investing in places like Fort Nelson. In terms of statistics, Japan takes up to 80%, Korea 2%, and China 2-3% in total oil and gas foreign equity in North America.

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Session IV: Middle Power Leadership in Global Affairs

1. Introduction by Leonard Edwards, Former Deputy Minister, Department of Foreign Affairs & International Trade.

The term soft power is elusive, an outgrowth of reputation and brand, that takes much time to evolve, but is also difficult to create and easy to change. At the same time, this concept is critical in how other nations and peoples view your country.

With that stated, emphasis should be put upon Canada’s and Korea’s ability to exalt soft power, and how the two countries’ position as middle powers impacts and influences others in the world.

In terms of brands, Canada and Korea are transforming. While Canada is moving farther down the list in the use of real power and the ability to exercise influence in the world, Korea is moving up the scale, facing new challenges, responsibilities, and expectation to take more of a leadership role. Nevertheless, as demonstrated in the 2010 G20 Summit, there is much potential for Canada and Korea to lead into a greater partnership, using soft power of leadership, capacity, and economic skills that branded the two together and give credibility to do things.

2. Presentation by Tom Perlmutter: Government Film Commissioner & Chairperson, National Film Board of Canada

The Digital Powers

The traditional term of soft power by Joseph Nye in the 1990s began with the assumption of power as “attracting others to do what you want them to do through your values, culture, policies, and institutions (primary currencies).” And throughout the years, the application and acceptance of soft power have been observed in countries all around the world through cultural (values) exchange. For example, the application of sports, Cultural Olympiads, Pan American Games, and Asian Games to portray the countries’ specific cultures and values to others with the possibility to impact and influence is a traditional feature of soft power.

However, when Joseph Nye published his book in the 1990s, there was no influence of the internet. There was no Facebook or Twitter, and Google was just in its beginning stage. The current reality is that one-third of the total population, approximately 2 billion people, are connected to the internet with 4 to 5 billion mobile phones (where1 billion of them are smart phones with some access to the internet). Thus, the political impact from this social network and the ability for ordinary people to take control of communication must be analyzed. The digital revolution has become disruptive to the traditional form of creation and

23 communication, and to the traditional notion of culture or soft diplomacy. And this is a significant impact because it undermines the normal gatekeeping and boundary mechanisms.

As noted by Nicklaus, a British diplomat back in 2007, the digital revolution has three fundamental impacts on the international relations: 1) it amplifies the numbers of voices in international policymaking, complicating international decision making and reducing the control of states over the process; 2) it enables traditional diplomacy to be delivered faster and more cost effectively; and 3) it accelerates the dissemination of information, whether accurate or not. And with the term, “Digital Diplomacy,” recently been branded as an open policy, global networks are used to harness ideas and communication, becoming the hallmark of modern diplomacy. The federal government has opened 194 Twitter accounts with over 200 Facebook pages. The New York Times expressed that the style of engagement is now cross social networking culture and the foreign policy arena, a hybrid approach, where soft power has become a culture that is inextricable.

This holds particular significance to Korea and Canada as the two most digitally connected countries in the world. The two countries’ populations, across all demographics, live in the digital world, and stand only at the beginning of the revolution. The next generation will be “digital natives” and the ways in which they will connect among themselves and across borders is both fluid and in constant revolution. Thus, there are profound implications in the sphere of economics, social organization, cultural development and international relations through this new culture.

Middle –level powers like Korea and Canada can exert proportionally greater influence in the world if they leverage their very strong digital positions. Unlike the past division between the rich and the poor, the new distinction is between the digitals haves and the digitals have nots, with Korea and Canada as “digital have” nations. Although the two countries have not fully explored the implications of what this means for their roles on the world stage at the present moment, the future well-being of both nations will be impacted by the “power of digital.”

3. Presentation by Kyung-Ae Park, Korea Foundation Chair, Director, Center for Korean Research, University of British Columbia

As articulated by Joseph Nye, soft power is the ability to achieve goals through attraction rather than by threat or coercion. Soft power exists when a dominant party possesses a sufficiently attractive resource such as culture, political values, or policies, and a subservient party is willing to pursue and internalize that resource. Attraction to those soft power resources can shape others’ preferences, compelling them to cooperate and making them “willing interpreters and receivers” of soft power.

Non-state actors can also develop and possesses soft power independent of the state. In particular, educational institutions can enhance and leverage soft power to influence a society by educating its social and political elites as well as future leaders. And that is what the University of British Colombia has begun through the knowledge sharing program, the Canada-DPRK Knowledge Partnership Program.

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Why Knowledge sharing?

Knowledge sharing is a good tool to improve the economy and the quality of life, and provides tangible input into the development process where practical knowledge and techniques are transferred. It is a powerful confidence building tool that facilitates personal and institutional relationships, even superseding political relations.

Canada-DPRK Knowledge Partnership Program

Undertaken in year 2010, the Canada-DPRK Knowledge Partnership Program (KPP) is designed to facilitate human capacity building in North Korea by providing its scholars with an in-depth knowledge of the international economy, with the ultimate aim of empowering North Koreans to improve the quality of life for their own people, and thus create social change over time. Through this six-month program, six North Korean professors have been invited to learn modern economic theory, finance, trade, and business practices with the anticipation of transferring the newly acquired knowledge to their students or policymakers.

The Impact of the KPP

The outcome of the program is still too early to measure as it is only the second year of implementing the initiative. Nevertheless, the exit interviews of the six North Korean professors and Dr. Park, Kyung Ae’s follow-up visit in June demonstrate the success of the program in giving new knowledge with all participants’ preparing to introduce and implement in North Korea what they have learned at UBC. In fact, some professors expressed that this new knowledge would be felt in the future, as their students benefitting from this knowledge will be assigned, upon graduation, to key posts in the policy making system.

Thus, as long as partner institutions are sensitive to North Korea’s promotion of programs that are directed to substantive and issue-specific activities with limited goals and no political ramification, there is great potential.

But another key factor to note about UBC’s success in the KPP relates to the ability to leverage personal and institutional contacts, and the positive reputation gained through these contacts over the last 15 years.

4. Presentation by Woosang Kim, President, The Korea Foundation.

There are three key words in this discussion: Middle Power, Soft Power, and Public Diplomacy, but the focus here is on Korea’s middle power role and its strategic importance.

Becoming a middle power leader means having strong soft power, as having strong soft power with skillful public diplomacy helps your country become an important middle power. Canada has been recognized as an important middle power for decades, whereas Korea is just beginning.

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Like many other countries in the region, Korea is facing challenges ranging from the global and regional levels to the peninsula level. (The global level includes the global economic crisis, climate change, and natural disasters; the regional level includes the rise of china and its potential impact on global and regional architecture, East Asian territorial issues, and past history issues becoming tenser; the Korean peninsula level includes serious security threats, especially from North Korea’s nuclear program). To deal with these challenges, Korea needs a coherent foreign policy, which means maintaining a strong Korea-US alliance relationship that will send out a positive image of Korea as being ready to meet these challenges (with the support of its ally), as well as building a strong economic partnership with China. Korea’s trade volume with China is larger than with the US and with Japan. And through the two relationships (US-Korea and China-Korea) Korea’s position is enhanced on a more equal basis when dealing with each country.

Yet, in addition to the two relationships Korea holds, Korea’s active middle power role in various human security and environmental issues can lead Korea to successfully deal with many other potential challenges.

While there is no accurate definition of what a middle power is, many suggest that to be recognized as middle power requires two criteria in its capability and behavior: 1) it must have enough economic, demographic, military capabilities to influence regional and global affairs; and 2) it must have the intention to actively engage in global and regional affairs, seeking compromise, multilateral solutions to global issues and demonstrating good citizenship.

Historically, Korea has been limited in playing a middle power role. Geo-strategically surrounded by great powers and not having enough capability, Korea played the follower role and relied heavily on the great power. Nevertheless, Korea’s integration into the global economy, its emergence as a democratic state, and its increasing relevance in global society are now well-recognized. Once devastated by war, Korea is among the 10 largest economies and 20 most democratic countries in the world. It is a donor country of the OECD. It joined as the 7th member of the 20/50 club (20,000 GDP per capita/50,000 million population size) and hosted the Olympic Games in 1988 and the World Cup Soccer Games in 2002. It has produced international leaders, such as the current UN Secretary-General and the President of the World Bank. It has also successfully hosted different summits, including the 2010 G- 20 Summit, and has actively participated in promoting green growth and raising awareness about climate change. Certainly, all these demonstrate its middle power leadership role.

In fact, there are a significant number of benefits to playing the middle power role. Surrounded by four great powers, Korea will remain a small power unless it actively engages in regional and global affairs. Thus, it should take roles in humanitarian, ethnical, moralistic, sacrificing and peace loving aspects. The more middle power leadership role Korea plays, the more it will be respected by others and better known by global citizens.

Therefore, the Korea Foundation’s main purpose is to promote public diplomacy. Its mission is to make friends for Korea by providing traditional and modern art and culture, language, history, people-to-people exchange (including like the Canada-Korea Forum). It strives to expand projects with other middle power countries, so that Korea can make friends with those middle powers.

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5. Presentation by Jie-Ae Sohn, President and CEO, the Korea International Broadcasting Foundation

One way to promote Korea and Canada is through the promotion of broadcasting foundation such as Arirang. To provide some history, the Arirang channel started in 1996 with the Korea wave beginning in 1997. In 1997, there was a popular TV drama <사랑이 뭐길래?> (What is Love?), which became a hit in China, Taiwan, and Vietnam. By 2000, Winter Sonata became a hit in Japan, and by late 2000, K-POP began to spread and is now taking over the younger generation (which is referred to as the Revolution of 0.7% because Korea’s population is only that, but K-POP is taking over the younger generation of the world, with UKiss in Bogota and Psy’s Gangnam Style as examples).

What is behind K-Pop?

While the visual appearance of the artists may be one reason for K-Pop’s popularity, K-pop is not a development unique to Korea, but a collaboration of other members of the young generation of the world. And it is well appreciated and easily accepted by the Asian region, which fond of things that are not Western. But a significant attribute is through the digital media, where people access K-Pop.

Media as a critical tool for diplomacy

CCTV news, NHK world, and other broadcasts of non-local news have been used as tools to represent those specific nations. They have been utilized to the spread democracy, values, soft diplomacy and culture.

For example, BBC, which started in 1932, was actually set up for Great Britain to communicate with its colonies. And in the US, Hilary Clinton has referred to the crucial role Russian CCTV News plays in soft diplomacy, admitting that America is a step behind in a world of information.

Thus, digital media plays a strong role in soft diplomacy. Every country in the world, especially the superpower, utilizes media as a tool for soft diplomacy.

6. Discussion:

What does it mean by soft power in the middle power activities? Soft power is used to make a national image, brand and commercialize, but what does this mean for middle powers? There is a category of activities that middle powers can perform. What would that look like in the context of new diplomacy, public diplomacy and focusing on building the common good?

Even for Korea, while there is regional economic integration and the deepening of ties with other countries in the region, along with the connection between K-pop and the younger generation, there is also the negative aspect of nationalism and unresolved historical issues.

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How to deal with these issues using soft power? Can it have any influence? Can it change public opinion?

What type of ideological or cultural impact can knowledge sharing (soft power) have on North Korea? Is reform possible through the use of soft power?

Soft power is not soft governmental power, but it is soft people power, including People-to- people exchange, civil society linkages, and educational exchange. The role the government can play is either to facilitate or block soft power, but perhaps the middle power role is to facilitate that.

Session V—Roundtable: The Future Role of the Canada-Korea Forum

1. Introduction by Dalchoong Kim, President Emeritus, The Seoul Forum for International Affairs

Next year will be the 50th anniversary of bilateral diplomatic relations between Canada and Korea. The next forum will be held in Canada.

2. Presentation by Yuen Pau Woo, President and CEO, Asia Pacific Foundation

The document entitled, 2013 Year of Korea, is a list of activities in celebration of the 50th anniversary of bilateral relations between Canada and Korea. With many activities, a stark question is raised: how would the Canada-Korea Forum be different from other activities? What role does the Canada-Korea forum play? It is an opportunity to reflect on what the forum does especially in business, trade, investment, and culture exchange.

In terms of digital diplomacy and implication, the Canada-Korea forum is an old track two model. It is a small elite group over the age of 40, quite different from the demographic of the new digital era and still holds a traditional structure that does not interact with the new media.

It is thus time for the Korea-Canada Forum to explore some new elements that would make it relevant to the new generation, as this forum may be a modest extension of soft power. Perhaps it is an opportunity for the forum to test this soft power in the way it influences the Canada-Korea relationship, both economic, and cultural aspects.

Features the Korea-Canada forum can improve on: a. The possibility of an intercessional research project that will allow us to pick up from where we left off instead of repeating the same discussion.

28 b. Holding a larger format of forum, such as a public conference. Add an event after the forum to include young people, media, and businesses. The focus is on how to reach a larger audience of leaders in the Canada and Korea relationship. c. Or perhaps we could introduce a media sector to our forum to get the discussion out to the public? Important topics such as middle power leadership should be discussed more openly.

3. Presentation by Paul Evans, Director, Institute of Asian Research, University of British Columbia

Kim Kihwan’s idea for Korea’s future as a business center and a cultural center is something Canada can learn from. Korea as a business center has been well accepted, but the cultural aspect needs to be further discussed as Korea is going beyond K-pop, including fashion and design and value-added services. To think about what is next, how to transform ourselves is something we should think about, Canada can definitely learn from this as well.

Thoughts on Dokdo

Park Jin made a sincere comment that “Dokdo belongs to Korea” and Stephen Toope mentioned the possibly of taking the case to the International Court of Justice.

The middle power instinct is not about capability, but also attitude: Rule-based behavior sometimes requires concession. Canada is imperfect in that sense, but the middle power spirit inside of Canada means that if faced with a challenge like that, the approach is to find a diplomatic, multilateral solution. That is the middle power experience.

One suggestion is that the next forum could deal with energy with a different approach. Canada’s current focus is debates on energy, pipelines, and exports.

Kim Kyung Won’s idea is that a meeting is a conversation, not a performance. Conversation means not briefing each other, but discussing an issue. Our time together is so precious. We bring different perspectives by a top-rate group. How can we have a better medium in a meeting like this? Earlier meetings did not include presentations, but more emphasis on interaction.

Finally, as mentioned by Yuen Pau Woo,, outreach is very important, and could possibly include half-day event at a campus. We should think of ways to get our points across.

4. Presentation by Jae-Seung Lee, Professor, Korea University

As a first impression, the Korea-Canada Forum is a wisdom house, not just a knowledge house. So how can we ensure this wisdom has a bigger impact?

1. Intercessional activities. A new initiative, journals/professional articles/perhaps we (Korean & Canada authors) can work on a paper on middle power/leadership. Somewhere between this session and the next. 29

-Creating digital content would bring more creativity. (We have some leading media experts, so we can create more digital content, not quantity, but high in quality for greater impact)

2. Middle power is a facilitator, but should also be a creator. Somewhere in the middle, middle power leadership can create something that will become more valuable.

3. Finally, Paul Evans suggested that in the next session we should talk more about energy and environment. While we shared a lot of thoughts about natural gas and other meaningful projects that are currently going on, we should also bring more future- oriented issues related to energy and the environmental agenda as the energy issue is a long-term one with a broad spectrum. The Korean side could focus on ecological peace in the DMZ, green energy future, and natural gas as a bridging form of energy. We did not talk a lot about the G8 or G20 like last year, but Canadian contribution to G8 and G20 is knowledge good to the world. Korea would like to take part in that type of effort.

Appendix: Discussions on Canada-Korea Free Trade Agreement

The year 2013 marks the 50th anniversary of the diplomatic relationship between Canada and South Korea. It is also the 60th year of the Korean War Armistice with the remembrance of the sacrifice the Canadian soldiers made for the freedom and democracy of Korea. And now, passing over half a century of genuine friendship built between the two countries, we anticipate a stronger partnership and greater cooperation in areas including economic, political, and cultural features. On the other hand, in the midst of celebrating this genuine friendship, the question is on the much delayed completion of the Korea-Canada Free Trade Agreement that began back in July 2005.

Key elements discussed during the Korea-Canada Forum

Negotiation for the Korea-Canada Free Trade Agreement (FTA) was launched back in July 2005 with a common belief by both Canadian and Korean governments that there is much potential in terms of bilateral trade and investment between the two countries with the bilateral trade volume already reaching 10 billion US dollars for the first time. Yet, negotiations came to a halt in March 2008. Both Canada and South Korea have expressed the desire to move the stalled FTA negotiations forward with the leaders of the two countries reaffirming the need to have a bilateral FTA last June, as well as the trade ministers attempting to reinvigorate the negotiations by sorting out remaining issues during their engagements in the multilateral minister meetings over the year. The foreign ministers of Canada and South Korea also met two weeks ago, establishing a common understanding of the need for flexibility for the bilateral Canada-Korea FTA to be completed in a mutually beneficial manner. And based on these high level consultations, the Korean government is taking appropriate domestic procedures with the expectation that the Canadian side will also show flexibility to advance the FTA. 30

Possible Impact of KORUS FTA on Korea-Canada FTA

KORUS FTA definitely has some impact on the future Korea-Canada FTA. That is why Canada wants to complete the deal as early as possible and Korea does not think otherwise. FTA is a preferential agreement, so while the US has a FTA with Korea, Canada has been discriminated against even though this is legally justified. But to narrow the gap of discrimination, the only answer is to make the deal between Canada and Korea or to make the deal in Geneva, which doesn’t seem very feasible at this time. So to get to the level playing field is to complete the FTA between Canada and Korea. However, it has been delayed, so we are hoping that it will soon move forward, especially after having the two foreign ministers expressing the need to take the next step in the Korea-Canada FTA.

Korea’s view on the KORUS FTA

There have not been major issues to re-negotiate or re-open because the agreement is still too early in stage. But there are certain parts of the agreement, which we might take domestic procedures including ISD codes to be reviewed. Otherwise, there is no plan to revisit the agreement itself, as once it is approved, the next step is to implement to the full spirit of the agreement.

Where is Korea on the TPP (Trans Pacific Partnership)?

In regards to the TPP, the official stance is that Korea is closely monitoring the exercise while keeping the door open for Korea’s side as well as for the 11 participants (including Canada). If you look at the nine names of the TPP participants, many have already formed bilateral trade with Korea, or are in negotiation. Hence, Korea is not in a hurry to jump on the TPP bandwagon. But there will be a time when Korea would need to make a decision. For now, there is no pressing need to join the TPP. Of course, this does not mean that Korea does not value the TPP itself, rather Korea is looking at the process closely for the right moment to make the decision. Yet, at the moment, Korea will keep it open.

Status of the Japan-China-Korea three-way arrangement: What is the potential movement for a trilateral FTA and other economic/financial cooperation in the midst of a complex security context?

In regards to the Trilateral Free Trade Agreement, on May 12, 2012 the three leaders (China, Japan, and South Korea) agreed to launch the trilateral FTA before the end of this year. But since that period, there have been sensitive events occurring in the area, which naturally created doubts. On the other hand, last week, the three countries’ representatives gathered in Korea and completed all the groundwork to launch the trilateral FTA. Hence, technically, the procedures necessary for the three countries are ready for further actions. In fact, Korea is preparing for domestic procedures in receiving decision by the cabinet as well as reporting to the national assembly. Yet, the political situation is different. As of now, all three 31 governments expressed the wish to separate the trade and economic issues from the political issues, but it is complicated to make a clear division. Thus, we will have to see until the new leadership from China... But for Korea, we are ready and willing to take part in the trilateral FTA as well as ASEAN plus 6 as scheduled, at the same time, waiting to see if there is anything we need to take note of.

Note on Canada’s view on trade and Asia

Canada is looking forward to its engagement with Asia, especially on the issue of trade. With plans for bilateral trade negotiation with Japan at the end of the year, it is predicted that Canada will also negotiate with China. In the meantime, Canada is participating in the TPP talks and is about to conclude a deal with Europe (zero tariff). However, the delay on the Korea-Canada FTA has drawn some concerns.

IV. 참석자 명단 (List of Participants)

[Canadian Participants]

Marie ALNWICK, Second Secretary, Political and Economic Affairs, Embassy of Canada to Seoul

David CHATTERSON, Canadian Ambassador to Korea

Eugénie CORMIER-LASSONDE, Program Manager, Korean Peninsula at DFAIT

Michael DANAGHER, Minister-Counsellor (Commercial), Embassy of Canada to Seoul

Stockwell DAY, Former Minister of International Trade & Minister Responsible for the Asia-Pacific Gateway & Corridor Initiative 2008-2010

Leonard EDWARDS, Former DFAIT DM & Ambassador to Korea, Distinguished Fellow, Asia Pacific Foundation

Paul EVANS, Director, Institute of Asian Research, University of British Columbia

Genny KIM, Acting Chairperson, Canadian Chamber of Commerce in Korea(CCCK)

Philip LEE, Vice-President, RCI Capital Group

Christine NAKAMURA, Public Relations, Marketing & Policy Coordination, Asia Pacific Foundation, former Counsellor, Embassy of Canada in Seoul

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Paul NORILA, Trade Commissioner, Embassy to Seoul

John PARK, President, RCI Capital Group

Kyung-Ae PARK, Korea Foundation Chair, Director, Centre for Korean Research, University of British Columbia

Tom PERLMUTTER, Government Film Commissioner & Chairperson, National Film Board of Canada

Stephen TOOPE, President of University of British Columbia

Gary WEILINGER, Vice-President, Strategic Development & External Affairs, Spectra Energy Transmission West

Yuen Pau WOO, President and CEO, Asia Pacific Foundation

[Korean Participants]

AHN Byung-joon, Visiting Professor, The KDI School of Public Policy and Management

CHO Hae-Hyeong, Chairman & CEO, Nara Holdings Corp.

HAN Sung-Joo, President Emeritus of The Seoul Forum for International Affairs, former Minister of Foreign Affairs

HYUN Hong-choo, Senior Partner, Kim & Chang Law Offices, former Ambassador to the UN and U.S.

JUNG Ku-Hyun, President of The Seoul Forum for International Affairs, Visiting Professor at KAIST School of Business

JUNG Yonghun, Executive Director, Korea Energy Economics Institute

KIM Dalchoong, President Emeritus, The Seoul Forum for International Affairs, Professor Emeritus, Political Science, Yonsei University

KIM Hang-Kyung, Endowed Professor of Kangnam University, former Ambassador to Canada

KIM Jin Hyun, Chairman, World Peace Forum, former Minister, Ministry of Science&Technology

KIM Kiwhan, Distinguished visiting scholar, Korea Development Institute (KDI)

KIM Woosang, President, The Korea Foundation, former Ambassador to Australia

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LEE Chung Min, Professor of International Relations, Yonsei University, former Ambassador for International Security Affairs, ROK

LEE Hoesung, Vice Chair of the UN Intergovernmental Panel on Climate Change (IPCC)

LEE Hong-Koo, Chairman of The Seoul Forum for International Affairs, former Prime Minister

LEE Hyehoon, Member, Supreme Council, Saenuri Party LEE In-ho, Chairperson, The Asan Institute for Policy Studies, former Ambassador to the Russian Federation

LEE Jae-Seung, Professor, Korea University

LEE Jong Ho, Executive VP, Resources Development Division, Korea Gas Corporation

LEE Jong Wha, Senior Advisor to President for International Economy

LEE Sihyung, Deputy Minister for Trade, Ministry of Foreign Affairs and Trade

LEE Yong Ho, Senior Manager, Production Project Team, Korea Gas Corporation

MOON Young-suk, Dean, College of International Studies, Kangnam University

PARK Jee-Youn, Third Secretary, North America Division Ⅱ, Ministry of Foreign Affairs and Trade

PARK Jin, Executive President of Asia Future Institute, former Member of the National Assembly

PARK Kyung-Sick, General Manager, Production Project Team, Korea Gas Corporation

SOHN Jie-ae, President and CEO, The Korea International Broadcasting Foundation

YIM Sung-joon, Distinguished Professor at the Hankuk University of Foreign Studies, former Ambassador to Canada

YOON Young-kwan, Professor, Seoul National University, former Minister of Foreign Affairs and Trade

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