CANADA ECONOMICS

WEF

Prime Minister to attend World Economic Forum in Davos Ottawa, Ontario - January 16, 2018

The Prime Minister, Justin Trudeau, today announced that he will travel to Davos, Switzerland, from January 22 to 25, 2018, to attend the World Economic Forum annual meeting.

At the meeting, the Prime Minister will meet with other world leaders, global business leaders, and representatives of civil society to explore ways to grow Canada’s middle class and create new opportunities for Canadian businesses. He will stress the need for investments and innovation as we look to create jobs, develop a well-educated and highly skilled workforce, and promote clean growth and renewable energy.

Prime Minister Trudeau will also discuss Canada’s focus on advancing gender equality and women’s empowerment, and hold a public session with Malala Yousafzai to explore how we can create a better future through women’s education and empowerment.  

Quote

“I look forward to this year’s World Economic Forum annual meeting as an opportunity to share and hear ideas on how we can work together to promote women’s important role as leaders and entrepreneurs. We must have the full and equal participation of all to have economies that work for everyone and a future that is fairer, more inclusive, and more compassionate.”

—Rt. Hon. Justin Trudeau, Prime Minister of Canada

Quick facts

• The World Economic Forum brings together the world’s private, public, and civil society leaders in collaborative activities focused on shaping global, regional, and industry agendas.
• The Prime Minister will be joined in Davos by Minister of Innovation, Science and Economic Development Navdeep Bains, Minister of Finance Bill Morneau, Minister of Foreign Affairs Chrystia Freeland, and Minister of Status of Women Maryam Monsef, each of whom will have their own program of meetings during the four-day meeting. Canada’s strong presence at the Forum underscores the importance of this meeting for shaping the international agenda and advancing economic opportunities for Canadians.
• Under the theme “Creating a Shared Future in a Fractured World,” this year’s Forum will encourage leaders from all sectors to explore bold ideas and exciting opportunities for collaboration and co-operation with a view to improving global governance and building more sustainable economies that work for everyone.
• In 2013, Malala Yousafzai and her father founded the Malala Fund, an organization that promotes girls’ education, with the help of Shiza Shahid.

World Economic Forum annual meeting: https://www.weforum.org/events/world-economic-forum-annual-meeting-2018

The Globe and Mail. 17 Jan 2018. World Economic Forum needs to foster a new spirit of openness. Chief executive officer of Bank of Montreal who will be attending the World Economic Forum in Davos
DARRYL WHITE

Eliminating barriers to trade brings us closer together. Shared enterprise means common interests, and less impetus for distrust and confrontation. How we achieve this in North America, in a modernized North American free-trade agreement, depends largely on how the United States decides to engage with others.

Regardless of where NAFTA lands, the United States and Canada will continue to be primary trading partners; 32 U.S. states currently count Canada as their biggest export market.

Next week, businesses, government leaders and researchers will be participating in the annual World Economic Forum in Davos, where the topic is “Creating a Shared Future in a Fractured World.” This gathering in Europe takes place while the next round of North American free-trade agreement negotiations – widely expected to be one of the most consequential and where a U.S. termination is a real risk – occurs in Montreal.

Given the coincidence of these events, the theme of this year’s forum could easily be recast for North American attendees as “Preserving the Gains North America Has Realized with NAFTA.” The uncertain future of our North American economic union remains a substantial risk to shared prosperity.

My company has seen firsthand the benefits of trade openness, chief among them the twoway growth opportunities NAFTA provides for our Canadian and U.S. customers, and the communities we serve.

Eliminating barriers to trade brings us closer together. Shared enterprise means common interests, and less impetus for distrust and confrontation. How we achieve this in North America, in a modernized North American free-trade agreement, depends largely on how the United States decides to engage with others. Large economies such as that of the United States can be tempted – as the current administration seems to be now – to see trade as a zero-sum game, and seek to maximize value for themselves at the expense of others. Yet, experience has shown that the benefits of trade are more than a simple tally of trade surpluses or deficits. Our aim, therefore, should be to ensure citizens of all countries – including the largest – see the benefits of growing economic opportunities for everyone.

We should all remember that NAFTA has brought the freer movement in goods, services, people and investment in North America which in turn improved the allocation of capital – boosting efficiency, reducing the cost of capital and helping to increase the competitiveness of North American businesses in the global economy. This has helped support investment and jobs; it is no accident that unemployment rates in North America are now close to their lowest levels in decades.

Not to be overlooked, the increased efficiency from more integrated trade helps reduce prices to consumers. While many factors drive inflation, the average consumer price inflation rate in Canada since NAFTA has been less than 2 per cent a year; it averaged more than 6 per cent in the 25 years before the agreement came into force.

Conversely, we expect Canadian consumer prices would be nearly 1 per cent higher without NAFTA – a result of a weaker exchange rate and higher tariffs. In the United States, consumers will face upward pressure on prices as well; as an example, the average price of a car could ultimately rise by $1,000.

While everyone shares in the benefits of wider choice and greater affordability, some inevitably – and understandably – fail to acknowledge the benefits because they have been negatively affected by a changing marketplace. For those left behind during the transition, we need to establish better adjustment programs – both to help firms that need to refocus their operations, and workers who need retraining for new and different skills. We also need to ensure we share the benefits of globalization with all.

We must not let new trading relationships take the blame for the other forces of economic dislocation. As innovation and new technologies drive workplace change, our labour markets must adapt, as they always do.

Regardless of where NAFTA lands, the United States and Canada will continue to be primary trading partners; 32 U.S. states currently count Canada as their biggest export market. But, for the future of Canadian businesses and consumers, it’s also incumbent on the federal government to remain focused on diversifying Canadian trade. We urge it to continue prioritizing free-trade talks with our largest export markets, such as China, India and the Trans-Pacific Partnership countries. Freer access to new customers, which such agreements bring, will strongly benefit the economy, workers, consumers and society in general, both for us and for our trading partners. Arguably, consumers realize the biggest benefits of all, due to much wider choice and better affordability of a wide variety of products and services.

When we consider the current political environment, we should be concerned (but perhaps not surprised) at the push for more protectionist trade policies. In such an environment, it’s incumbent on those who support liberalized trade to speak out and to demonstrate its benefits in a way that refutes these populist sentiments. This responsibility to play a part is particularly important for both Canadian and U.S. businesses which have seen the benefits first-hand. As a major CanadaU.S., cross-border bank, BMO is committed to playing its part.

WTO

The Globe and Mail. 17 Jan 2018. Australia is taking on Canada at the World Trade Organization over the sale of wine in British Columbia, Ontario, Quebec and Nova Scotia. Australia challenges provinces’ wine sales at WTO. Complaint: B.C. will work closely with Ottawa ‘to defend [its] interests’ in WTO case
DAVID EBNER, TORONTO

Australia is taking on Canada at the World Trade Organization over the sale of wine in British Columbia, Ontario, Quebec and Nova Scotia, alleging that a variety of measures “appear to discriminate” against imported wine.

The complaint follows an existing case filed by the United States last year at the WTO that specifically takes on B.C., where the rules allow only B.C. wine to be sold on the shelves of the province’s grocery stores. Australia, New Zealand, Argentina and the European Union have all joined the United States in that complaint, one that is currently in process.

The new Australian complaint includes the B.C. grocery-store issue and expands on the U.S. case to also claim that imported wine in B.C. is “subject to a wide range of mark-ups, fees and taxes.” Australia further argues that measures around the sale of wine in Ontario grocery stores appear to favour Canadian wine. Quebec and Nova Scotia are also alleged to have measures in place to favour wine from those provinces.

The broader backdrop to the trade dispute is the larger question of the proposed Trans-Pacific Partnership trade deal. The original agreement was made in 2016 but the United States pulled out. Of the remaining 11 countries, Canada now stands as a holdout, after contentious meetings in November in which the other countries, including Australia, were ready to push ahead.

Canada is balancing the TPP talks with the negotiations over the future of the North American free-trade agreement with the United States and Mexico.

Canadians buy about $7-billion of wine each year, according to Statistics Canada. B.C. residents account for about $1-billion, while Ontarians spend the most, at $2.4-billion.

Of the total, Canadians spend $5-billion on imported wine and $2-billion on domestic wine.

Australia exports about $2-billion of wine a year. A 10th – $200-million or so – goes to Canada, according to trade group Wine Australia.

British Columbia will work closely with Ottawa “to defend B.C.’s interests” as the WTO process unfolds, Bruce Ralston, the B.C. minister in charge of trade, said in a written statement.

When David Eby, now B.C.’s Attorney-General, was in Opposition, he said that British Columbia would likely lose the WTO case the United States had filed. The NDP MLA made the comments in early 2017 and blamed the then-Liberal provincial government for “the mess their policy created.”

If Australia prevails, B.C. grocery stores could see imported wines on their shelves, competing with B.C. wines, and other purported advantages in the other provinces could be reduced, giving imports a leg up. Ottawa on Tuesday noted the wine issue falls under provincial authority, and Global Affairs Canada spokeswoman Natasha Nystrom said Ottawa works with the provinces to ensure policies around the sale of alcohol “are consistent with our international trade commitments.”

Australia’s Trade Minister Steven Ciobo, in an interview with The Australian newspaper, said: “I want to make sure we stand up for our producers and not allow other countries to discriminate against us, costing us export income and potentially jobs.”

Australian wine would benefit from the broader TPP deal, said Peter Clark, a trade expert who is president of Ottawabased consultancy Grey Clark Shih. The WTO complaint “shows that they’re irritated with Canada,” he said.

The specific question of B.C. wine in B.C. grocery stores is somewhat narrow. The provincial government several years ago introduced rules to allow for the sale of wine in grocery stores but they were convoluted. As of mid-2017, there were only 21 grocery stores that sold B.C. wine on their shelves. None of them are in Vancouver, where city council has chosen the “store within a store” concept. In this model, which is an option across B.C., all alcohol can be sold, including imported wine, but grocery stores do not favour it because of space requirements and other restrictions.

Both Australia and United States allege that limiting imported wine to a liquor store within a grocery store is discriminatory.

INTEREST RATE

BANK OF CANADA. January 17, 2018. Bank of Canada increases overnight rate target to 1 1/4 per cent

Ottawa, Ontario - The Bank of Canada today increased its target for the overnight rate to 1 1/4 per cent. The Bank Rate is correspondingly 1 1/2 per cent and the deposit rate is 1 per cent. Recent data have been strong, inflation is close to target, and the economy is operating roughly at capacity. However, uncertainty surrounding the future of the North American Free Trade Agreement (NAFTA) is clouding the economic outlook.

The global economy continues to strengthen, with growth expected to average 3 1/2 per cent over the projection horizon. Growth in advanced economies is projected to be stronger than in the Bank’s October Monetary Policy Report (MPR). In particular, there are signs of increasing momentum in the US economy, which will be boosted further by recent tax changes. Global commodity prices are higher, although the benefits to Canada are being diluted by wider spreads between benchmark world and Canadian oil prices.

In Canada, real GDP growth is expected to slow to 2.2 per cent in 2018 and 1.6 per cent in 2019, following an estimated 3.0 per cent in 2017. Growth is expected to remain above potential through the first quarter of 2018 and then slow to a rate close to potential for the rest of the projection horizon.

Consumption and residential investment have been stronger than anticipated, reflecting strong employment growth. Business investment has been increasing at a solid pace, and investment intentions remain positive. Exports have been weaker than expected although, apart from cross-border shifts in automotive production, there have been positive signs in most other categories.

Looking forward, consumption and residential investment are expected to contribute less to growth, given higher interest rates and new mortgage guidelines, while business investment and exports are expected to contribute more. The Bank’s outlook takes into account a small benefit to Canada’s economy from stronger US demand arising from recent tax changes. However, as uncertainty about the future of NAFTA is weighing increasingly on the outlook, the Bank has incorporated into its projection additional negative judgement on business investment and trade.

The Bank continues to monitor the extent to which strong demand is boosting potential, creating room for more non-inflationary expansion. In this respect, capital investment, firm creation, labour force participation, and hours worked are all showing promising signs. Recent data show that labour market slack is being absorbed more quickly than anticipated. Wages have picked up but are rising by less than would be typical in the absence of labour market slack.

In this context, inflation is close to 2 per cent and core measures of inflation have edged up, consistent with diminishing slack in the economy. The Bank expects CPI inflation to fluctuate in the months ahead as various temporary factors (including gasoline and electricity prices) unwind. Looking through these temporary factors, inflation is expected to remain close to 2 per cent over the projection horizon.

While the economic outlook is expected to warrant higher interest rates over time, some continued monetary policy accommodation will likely be needed to keep the economy operating close to potential and inflation on target. Governing Council will remain cautious in considering future policy adjustments, guided by incoming data in assessing the economy’s sensitivity to interest rates, the evolution of economic capacity, and the dynamics of both wage growth and inflation.

Information note

The next scheduled date for announcing the overnight rate target is March 7, 2018. The next full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR on April 18, 2018.

Monetary Policy Report – January 2018

Growth in the Canadian economy is projected to slow from 3 per cent in 2017 to 2.2 per cent this year and 1.6 per cent in 2019.

FULL DOCUMENT: http://www.bankofcanada.ca/wp-content/uploads/2018/01/mpr-2018-01-17.pdf

THE GLOBE AND MAIL. JANUARY 17, 2018. BANK OF CANADA. Bank of Canada hikes rates again, but warns of NAFTA fallout
BARRIE MCKENNA, OTTAWA, Columnist

The Bank of Canada is raising its key interest rate for the third time in six months as the Canadian economy gathers steam, but it warned that its next moves may hinge on the fate of NAFTA.

Governor Stephen Poloz and his central bank colleagues raised the benchmark rate by a quarter percentage-point to 1.25 per cent Wednesday. The move follows similar rate hikes in July and September.

"Recent data have been strong, inflation is close to target and the economy is operating roughly at capacity," the bank said in statement accompanying its rate decision.

While economic conditions look good now, the bank expressed growing concern about the future of the North American free-trade agreement – the foundation of Canada's trade with the United States. The bank said speculation the U.S. may pull out of the deal is already holding back business investment in Canada and it poses a threat future exports.

"Uncertainty about the future of NAFTA is weighing increasingly on the outlook," the bank said.

The growing uncertainty over NAFTA may temper expectations of quick further rate increases, CIBC chief economist Avery Shenfeld said in a research note.

"We share the Bank of Canada's view that higher rates will be needed over time," Mr. Shenfeld said. "But perhaps not as fast and furious as the market was starting to think."

The central bank's latest forecast, also released Wednesday, predicts economic growth will slow significantly to 2.2 per cent this year and 1.6 per cent in 2019, down from an estimated pace of 3 per cent in 2017. The projections are roughly in line with the bank's October forecast.

The latest projections reflect the bank's "negative judgment on business investment and trade," according to the statement.

Trade uncertainty is already affecting investment by U.S. and European companies, which the bank said have been making fewer new investments in Canada since mid-2016. The bank estimates that trade uncertainty will cut business investment over the next two years by 2 per cent. That translates into a 0.3 per cent per year drag on growth – a slightly larger hit than the bank estimated in October.

"At this stage, it is difficult to predict the possible outcomes of trade negotiations and the timing, incidence and magnitude of their effects," the bank added in its Monetary Policy Report.

The threat of greater protectionism remains the most significant risk to Canada's export-dependent economy, the bank said. The bank pointed out that roughly half of Canada's exports to the U.S. benefited from preferential NAFTA tariffs in 2016. The U.S. buys roughly three-quarters of what this country exports.

The recent move by the U.S. to slash business taxes cuts both ways for Canada, creating a small net positive for the economy. Tax relief will boost U.S. growth, driving Canadian exports higher, but also cause some companies to shift investment south of the border to take advantage of those tax breaks, according to the Bank of Canada.

Many economists expect the central bank to raise rates at least two more times this year.

But the bank said it remains "cautious" about raising rates further.

"While the economic outlook is expected to warrant higher interest rates over time, some continued monetary policy accommodation will likely be needed to keep the economy operating close to potential and inflation on target," according to the statement.

The central bank judges that 3 per cent is the neutral level for its overnight rate – the point where interest rates are neither revving up growth nor applying the brakes.

Beyond the NAFTA uncertainty, most economic pieces are falling into place for the Bank of Canada. Inflation has inched up to near the bank's 2  per cent target and should stay close to that level over the next two years, in spite of "temporary" fluctuations in energy prices in the months ahead, the bank said.

Meanwhile, strong job gains are driving consumer spending and housing investment. The bank also highlighted "promising signs" in capital investment, company formation, and more workers joining the labour force.

Canada's economy generated an impressive 420,000 jobs in 2017. At 5.7 per cent, unemployment hasn't been this low since 1976. Wages are starting to creep up after years of stagnation. And companies are busier than they've been since the last recession.

The bank also pointed out that Canada's economy is getting a lift from higher oil prices, now at more than $60 (U.S.) per barrel for many grades. But those benefits are being "diluted" because of a widening spread between Canadian and world crude prices.

Going forward, the engines of growth for the economy will be business investment and exports, rather than consumers and home construction, according to the bank. That's largely because of higher interest rates and new tighter mortgage rules put in place this month.​



REUTERS. JANUARY 17, 2018. Bank of Canada hikes rates, says accommodation still needed
Andrea Hopkins, Leah Schnurr

OTTAWA (Reuters) - The Bank of Canada raised interest rates on Wednesday, as expected, but said that while more rate hikes are probably warranted, some continued monetary policy accommodation will likely be needed to maintain optimal growth and inflation.

The third rate increase in seven months took borrowing costs to their highest level since 2009, but the bank’s cautious tone on the future of NAFTA trade pact accomplished the so-called dovish hike that many analysts had predicted.

“While the economic outlook is expected to warrant higher interest rates over time, some continued monetary policy accommodation will likely be needed to keep the economy operating close to potential and inflation on target,” the bank said.

The future of the North American Free Trade Agreement, which U.S. President Donald Trump has threatened to terminate, was the most significant downside risk cited by the bank in an otherwise bullish report on the outlook for Canada’s economic growth.

The Canadian dollar weakened modestly after the hike as investors realized that markets may have gone too far in pricing in more or faster rate hikes than the bank is contemplating.

“It seems the Bank of Canada is leaning towards a more dovish stance and certainly playing up the concerns around NAFTA. That should pose some questions to all those rate hikes priced into the market,” said Adam Cole, chief currency strategist at RBC Capital Markets in London.

The hike acknowledges that recent data has come in stronger than the bank had expected, inflation is close to its 2 percent target, and the economy is now operating at full potential with no output gap.

The central bank raised its forecast for GDP growth and inflation in 2018, noting stronger-than-expected consumption and residential investment, and said business investment and exports are expected to contribute more to growth going forward.

It also said labor market slack is being absorbed more quickly than anticipated.

Still, while the bank’s forecasts looked relatively robust, its cautious tone signaled policymakers will not rush their efforts to return rates to more normal levels after they were slashed to historic lows in the wake of the financial crisis.

The bank said that trade uncertainty is expected to cut investment by about 2 percent by the end of 2019, while U.S. tax reforms will trim another 0.5 percent as firms may decide to redirect spending from Canada to the United States to benefit from lower corporate taxes.

Additional reporting by Fergal Smith in Toronto and Saikat Chatterjee in London; Editing by Bernadette Baum

BLOOMBERG. 17 January 2018. Bank of Canada Raises Rates But Cautions Stimulus Still Needed
By Theophilos Argitis

• Policy makers increase benchmark interest rate to 1.25 percent
• Central bank says accommodation needed to remain at target

The Bank of Canada pushed forward with its third quarter-point interest rate since July, while cautioning it’s in no rush to return borrowing costs to more normal levels as uncertainty around Nafta talks cloud the outlook.

Policy makers led by Governor Stephen Poloz increased the benchmark overnight rate to 1.25 percent, bringing it to the highest since the global recession. The move is a nod to a red-hot economy running up against capacity with a jobless rate at the lowest in more than four decades.

At the same time, central bank officials repeated their dovish language about moving ahead cautiously and warned they expect the economy will require continued stimulus to remain at capacity. The Canadian dollar and bond yields slipped while stocks rallied.

“While the economic outlook is expected to warrant higher interest rates over time, some continued monetary policy accommodation will likely be needed to keep the economy operating close to potential and inflation on target,” the Bank of Canada said Wednesday in a statement from Ottawa. “Governing Council will remain cautious in considering future policy adjustments.”

Key Takeaways

• In raising rates, the Bank of Canada points to strong data, inflation at target and economy at capacity -- and says more hikes are expected.
• At the same time, it retains cautious language about future adjustments and adds new language around the need for continued monetary accommodation
• The central bank cites growing risks around North American Free Trade Agreement negotiations, which are “weighing increasingly” on Canada’s economic outlook

Canada becomes the first major central bank to move ahead with a rate increase in 2018. Investors have spent the early days of the year watching central banks around the world for signs the period of extraordinary stimulus is coming to an end. The Bank of Japan jolted bond markets with a surprise change to its purchasing program, while some European Central Bank officials have called for their bond-buying program to end in September.

For months, Poloz has been trying to strike a balance between gradually bringing interest rates back to more normal levels amid faster-than-expected growth and an employment boom, without triggering a slowdown.

A recent run of strong economic data has made that task more difficult, and the improved outlook was evident throughout Wednesday’s rate statement and monetary policy report.

The central bank painted a picture of an economy with inflation already close to target, output largely at capacity, a stronger- than-expected housing sector, and a faster-than-expected reduction in labor market slack. That prompted officials to increase their projections for inflation in 2018, and growth over the next two years.

The reasons to remain cautious are less tangible, centered around growing concerns about the outcome of Nafta talks, which resume next week in Montreal.

“Uncertainty surrounding the future of the North American Free Trade Agreement is clouding the economic outlook,” the central bank said.



There are also questions about the economy’s sensitivity to interest rate increases and whether its potential growth could be accelerating. The bank said wage gains remain modest, even with a recent pickup.

The Bank of Canada forecast a bigger hit on exports and business investment due to worries about Nafta, and incorporated an increased sensitivity of interest rates because of the country’s high household debt levels.

The central bank is taking a warranted “wait and see” approach on the impact of Nafta and U.S. tax reform, Steve Ambler, the David Dodge Chair in Monetary Policy at Canada’s C.D. Howe Institute​, said by phone. The combined effect is “going to make firms look long and hard before they sink money into the Canadian economy rather than the American economy.”

The rate increase was expected by 26 of 27 economists surveyed by Bloomberg and investors had almost fully priced in a hike.

Questions remain about how quickly the central bank will raise from here and where rates will eventually settle. Markets had been pricing in at least three increases this year, which would bring the benchmark rate to 1.75 percent. Odds were largely unchanged following the statement.

Market Reaction

The Canadian dollar fell 0.4 percent to C$1.2486 per U.S. dollar at 10:41 a.m. in Toronto trading. Two-year Canadian government bond yields fell 2 basis points to 1.75 percent.

“We share the Bank of Canada’s view that higher rates will be needed over time. But perhaps not as fast and furious as the market was starting to think,” Avery Shenfeld, chief economist at Canadian Imperial Bank of Commerce, said in a note to investors.

The Bank of Canada retained its estimate that its so-called neutral rate -- a sort of Goldilocks rate that keeps the economy neither too hot nor too cold -- at about 3 percent. But the comments on the need for continued accommodation at full capacity could suggest policy makers aren’t anticipating a return to neutral any time soon.

The central bank also increased its forecast for how quickly the economy could grow without triggering inflation -- to an average of 1.6 percent over the projection horizon. The central bank said it is monitoring the extent to which strong demand could boost potential growth further.

“In this respect, capital investment, firm creation, labor force participation, and hours worked are all showing promising signs,” it said, adding that wages have picked up by less than what “would be typical” for a labor market without slack.

— With assistance by Greg Quinn, Erik Hertzberg, Luke Kawa, and Josh Wingrove

FOREIGN POLICY

Global Affairs Canada. January 16, 2018. Co-chairs’ summary of the Vancouver Foreign Ministers’ Meeting on Security and Stability on the Korean Peninsula. Statements

On January 16, 2018, Foreign Ministers and representatives of 20 countries from across the globe met in Vancouver, Canada, to demonstrate global solidarity in opposition to North Korea’s illegal and dangerous actions, and to advance diplomatic efforts towards a more stable, secure and denuclearized Korean Peninsula. Nearly seven decades after these states ‎stepped up to restore stability on the Korean Peninsula, Ministers unequivocally declared that North Korea will never be accepted as a nuclear power and committed to exerting continued pressure, including by strengthening sanctions, in order to bring North Korea back to negotiations. They reaffirmed that these measures will remain in place until North Korea changes its course and takes decisive, irreversible steps to denuclearize. The Ministers agreed, however, that a diplomatic solution is both essential and possible.

2. Ministers recognized the importance and special responsibility of China and Russia in contributing to a long-term solution on the Korean Peninsula. They welcomed the United States and the Republic of Korea’s reiteration that they do not harbour hostile intent towards North Korea, nor do they seek regime change, instability, or accelerated unification on the Korean Peninsula.  A North Korea that completely, verifiably and irreversibly dismantles its nuclear program has a secure place in the international community. Such a decision would contribute to the security and economic development of North Korea, leading to a brighter, safer and more prosperous future for its people. It is up to North Korea to choose the future it wishes for itself.

Non-Proliferation

3. The Ministers noted that North Korea’s reckless nuclear tests and ballistic missile launches pose a grave and growing threat to the Republic of Korea, the Asia-Pacific region, and the world. In the past year alone, North Korea conducted its largest ever test of a nuclear device, test-launched three intercontinental ballistic missiles, and twice sent ballistic missiles over the territory of Japan, threatening the safety of the Japanese people and introducing serious risks to international civil aviation traffic. These actions violate successive UN Security Council resolutions, clearly demonstrating North Korea's disregard for international law.

4. The Ministers acknowledged that beyond advancing its weapons of mass destruction (WMD) and missile delivery system programs, North Korea has long covertly trafficked conventional weapons in order to raise revenues for its own illicit programs and undermine the global non-proliferation regime.  As North Korea feels the impact of sanctions, it will become more reliant on state-sponsored criminal activity, including through cyber operations, to help fund its WMD programs. North Korean cyber-attacks and other malicious cyber activities pose a risk to critical infrastructure in countries around the world and to the global economy. The Ministers also discussed past experiences with safeguards verification in North Korea conducted by the International Atomic Energy Agency.

Sanctions

5. The Ministers noted that sanctions are a tool of diplomacy aimed at creating the conditions for a negotiated solution. They recalled that the UN Security Council has adopted 10 separate resolutions which implement a comprehensive set of sanctions measures intended to prevent North Korea from further advancing the capabilities of its WMD programs. Ministers embraced steps by China and Russia to comply with UN sanctions and called on all states to fully enforce these measures. The Ministers reaffirmed that the purpose of sanctions is not to harm the North Korean people, but noted that Pyongyang has consistently prioritized its illicit weapons programs over the needs of its citizens, including in the period predating sanctions imposed by the UN.

6. The Ministers noted that this international effort is having an effect, stemming the flow of funds, limiting the ability of proliferators to travel and abuse the international banking system, and curtailing North Korean officials’ fund-raising activities abroad. However, North Korea’s systems for circumventing sanctions are sophisticated and continue to evolve, requiring continued vigilance and determined action.

Diplomacy

7. The Ministers welcomed the recent inter-Korean dialogue and North Korea's intent to participate in the Pyeongchang Winter Olympic and Paralympic Games. They expressed their hope that such actions will lead to the peaceful holding of the Pyeongchang Winter Games, the easing of tensions on the Korean Peninsula, improvements in inter-Korean relations, and progress in denuclearization dialogue.

8. The Co-Chairs stressed the important role for civil society actors and non-governmental organizations in supporting efforts to foster the conditions for a diplomatic solution and, in particular, noted the critical role women and women’s organizations can play in contributing to conflict resolution and enduring peace.

9. The Ministers expressed concern that, according to the UN Commission of Inquiry on Human Rights in the DPRK, North Korea has engaged in systematic, widespread, and grave human rights violations against its citizens. The Ministers noted the ongoing human cost of the frozen conflict on the Korean Peninsula, including on divided families, as well as abductees and their families. Regrettably, North Korea continues to prioritize its WMD and ballistic missile programs at great humanitarian cost.

10. Ministers called upon North Korea to create conditions conducive to dialogue by ceasing all provocations and complying with its international obligations, noting that meaningful negotiations cannot be expected unless Pyongyang shows sincere will and concrete actions toward denuclearization. Together, the Ministers resolved to apply the full range of measures available to make clear to North Korea that a diplomatic solution leading to complete, verifiable, and irreversible denuclearization is North Korea’s only viable option.

Next Steps

11. The Ministers emphasized the urgency of addressing the current instability. In order to persuade North Korea to abandon its current course and create conditions conducive to dialogue, they stressed their collective resolve to undertake the following concrete actions:

• support progress in the inter-Korean dialogue, in hopes that it leads to sustained easing of tensions;
• maintain readiness to support a political solution, and recognize China’s special role and responsibility to contribute to this effort;
• work closely with partners in the region and globally, including China and Russia, to ensure full and effective implementation of existing sanctions on North Korea, particularly through enhanced information sharing and expanded support to the UN Panel of Experts, to combat sanctions evasion;
• further strengthen the international pressure campaign through diplomatic advocacy with states that lack the political will to implement sanctions;
• help to build global capacity to effectively implement sanctions and prevent proliferation financing, including from criminal activities and cyber operations;
• sever financial lifelines for all of North Korea’s WMD programs, including through enhanced coordination within the region and internationally;
• counter North Korea’s maritime smuggling in accordance with relevant UNSC resolutions, including measures to stop its illegal use of “ship-to-ship transfers”;
• agree to consider taking steps to impose unilateral sanctions and further diplomatic actions that go beyond those required by UN Security Council resolutions;
• undertake preparatory efforts to outline principles and requirements for a verification mechanism sufficient to guarantee the complete and irreversible dismantlement of all of North Korea’s WMD programs and related delivery systems;

12. The Vancouver Foreign Ministers’ meeting is evidence that North Korea represents a security challenge of the highest priority for the international community. Ministers agreed to work individually and collectively, in support of the efforts of the United Nations, toward a stable, secure and denuclearized Korean Peninsula

Vancouver, Canada
16 January 2018

Backgrounder

Canada has announced a $3.25-million contribution from its Weapons of Mass Destruction (WMD) Threat Reduction Program.

Support for efforts to counter North Korean WMD development and financing

• Funding announced: $3.25 million
• Time frame: January 2018 to December 2018

In an effort to assist partner countries to fully implement UN Security Council (UNSC) resolutions and strengthen efforts to prevent North Korea from financing its WMD programs, Canada is providing support to the U.S. Department of State’s Office of Cooperative Threat Reduction to undertake capacity-building activities.

As part of these activities, focused training will be given to foreign ministry, law enforcement, customs, regulatory and border security officials on:

1. understanding and implementing North Korea-related UNSC   resolutions;
2. developing and implementing measures to combat money laundering by North Korean nationals and front companies; and
3. enforcing UNSC resolutions and identifying the illicit networks and tactics North Korea has used to finance and procure dual-use goods and technologies for its nuclear and missile development.

Release

Canada is actively engaged in efforts to build a secure, prosperous and denuclearized Korean Peninsula.

The Honourable Chrystia Freeland, Minister of Foreign Affairs, today concluded the Vancouver Foreign Ministers’ Meeting on Security and Stability on the Korean Peninsula, co-hosted with the Honourable Rex Tillerson, Secretary of State of the United States.

At the foreign ministers’ meeting, Minister Freeland reiterated Canada’s unequivocal commitment to diplomatic efforts that increase pressure on North Korea to abandon its current path and set the conditions for a diplomatic solution to the crisis. The Minister reaffirmed that Canada will continue to work with partners in the region and globally to ensure that sanctions imposed on North Korea are strictly enforced.

Minister Freeland also met several counterparts, including Taro Kono, Japan’s Minister for Foreign Affairs, and Kang Kyung-wha, South Korea’s Minister of Foreign Affairs, to discuss shared concerns about North Korea’s nuclear weapons and ballistic missile programs, as well as human rights violations against the North Korean people.

Minister Freeland announced a $3.25 million commitment aimed at strengthening the global sanctions regime and countering North Korea’s sanctions evasion and proliferation networks. The initiative will be implemented in partnership with the United States. Among other elements, this initiative will help build the capacity of partner countries to more effectively implement United Nations Security Council (UNSC) sanctions against North Korea.

Quotes

“The grave and growing threat posed by North Korea’s nuclear weapons and ballistic missile programs is a global challenge. Canada has taken a leadership role with the United States to pursue all available avenues to achieve our common objective of a secure and stable Korean Peninsula. Together with regional and international partners, we will continue to address the threat posed by the North Korean crisis. A diplomatic solution is both essential and possible and is the only viable option to ensure a positive future for the people of North Korea and the Asia Pacific region.”

- Hon. Chrystia Freeland, P.C., M.P., Minister of Foreign Affairs

Quick Facts

The Vancouver Foreign Ministers’ Meeting on Security and Stability on the Korean Peninsula, co-hosted by Canada and the United States, provided foreign ministers from across the globe with an opportunity to demonstrate solidarity in opposition to North Korea’s dangerous and illegal actions and to work together to strengthen diplomatic efforts toward a secure, prosperous and denuclearized Korean Peninsula.

The UNSC has adopted 10 separate resolutions imposing sanctions in response to North Korea’s destabilizing actions, which have included six nuclear tests and dozens of ballistic missile tests.

Established in 2002, Canada’s Weapons of Mass Destruction (WMD) Threat Reduction Program (formerly the Global Partnership Program) works with partner countries and organizations to implement concrete measures aimed at preventing WMD proliferation and terrorism.

FULL DOCUMENT: https://www.canada.ca/en/global-affairs/news/2018/01/canada_and_unitedstatesconcludevancouverforeignministersmeetingo.html

U.S. Department of State. January 16, 2018. Remarks With Canadian Foreign Minister Chrystia Freeland, South Korean Foreign Minister Kang Kyung-wha, Japanese Foreign Minister Taro Kono, and UK Foreign Secretary Boris Johnson at the Vancouver Foreign Ministers' Meeting. Remarks. Rex W. Tillerson, Secretary of State. Vancouver Convention Centre, Vancouver, Canada

FOREIGN MINISTER FREELAND: So what we’re going to do now just so everybody knows, we’ll have some brief opening remarks open to the press from me, Rex, Minister Kono, Minister Kang, and Boris. And then we will bid our journalistic pals farewell. For me and Boris that’s a particular sadness, as we used to be members of the press ourselves. And then we will proceed to our deliberations.
PARTICIPANT: (Off-mike.) (Laughter.)

FOREIGN MINISTER FREELAND: So Your Excellencies, colleagues, ladies and gentlemen, thank you for joining us here in Vancouver. I’d like to begin by acknowledging that the land on which we gather is the unceded territory of the Coast Salish people including the territories of the Musqueam, Squamish and Tsleil-Waututh Nations, as Deanna has reminded us.

The North Korean nuclear crisis is one of the greatest threats the world is facing today, and it is what brings us here to Vancouver. Let me extend a special welcome to Minister Kang of the Republic of Korea and to Minister Kono of Japan. The people of your countries are most directly affected by instability on the Korean Peninsula.

I’d also like to welcome U.S. Secretary of State Rex Tillerson, my friend. Thank you, Rex. We are truly honored to cohost these talks with our American neighbors.

(In French.)

Canada is determined to work for peace and security in the Asia Pacific, to strengthen the rules-based international order that preserves peace and security for us all. The ties between Canadians and Koreans have been forged both in times of conflict and peace for more than a century. In fact, more than 206,000 Koreans or people of Korean descent now live in Canada. Ours is one of the largest Korean diaspora communities in the world. And in fact, I am proud that many of these Korean Canadians live in the riding that I have the honor of representing, University-Rosedale in Toronto, which is where Toronto’s Koreatown is found.

These ties only increase our firm desire to avoid a devastating conflict on the peninsula. We welcome last week’s agreement between North and South Korea to hold military-to-military discussions and for North Korea to participate in the Winter Olympics next month. These are encouraging signals.

But let me be clear: No true progress can be made in addressing instability in the Korean Peninsula until North Korea commits to changing course and verifiably and irreversibly abandoning all of its weapons of mass destruction. Like all of you, we in Canada understand that in these extraordinary times it is vital that we come together as neighbors, friends, partners, and allies to confront threats of aggression. Nowhere in the world do we see the proliferation of weapons and materials of mass destruction on the scale of North Korea’s program. We cannot stand by and let this threat persist. At stake are the safety and security of all the people of the world.

We therefore gather here to work together for peace in the Korean Peninsula and to demonstrate our unity and our resolve. As a global community, we have shown in both word and deed that we will not accept North Korea as a nuclear threat to the world. To this end, the UN Security Council has imposed sanctions on North Korea. The 20 nations here in Vancouver must work to make sure these measures are fully and faithfully implemented, and we must use this meeting – and I’m confident that we will – to hone their effectiveness.

Sanctions, however, are not an end in and of themselves. They are important tools of diplomacy aimed at bringing North Korea to the table and setting out the diplomatic path to a peace that we all seek. Our message to the people of North Korea is clear: Despite the brutal hardships that you face, we know that the foremost threat is the regime of North Korea.

To North Korea’s leadership our message is also clear: The pursuit of nuclearization will bring you neither security nor prosperity. Investing in nuclear weapons will lead only to more sanctions and to perpetual instability on the peninsula.

The states represented at this meeting harbor no hostility to North Korea. On the contrary, we seek neither a regime change nor a collapse. We are working to resolve this crisis and are aiming for what is in our collective best interest: security and stability on the Korean Peninsula and throughout the world. We know this to be true: A decision by the North Korean regime to verifiably abandon all of its weapons of mass destruction will contribute to North Korea’s security and economic development, leading to a better, brighter, safer, and more prosperous future for the North Korean people. It is now up to North Korea to choose the future it wants for itself.

As Lester B. Pearson, a great Canadian foreign minister and prime minister, said when he accepted his Nobel Peace Prize just 60 years ago, “Of all our dreams today, there is none more important or so hard to realize than that of peace in the world. May we never lose our faith in it or our resolve to do everything that can be done to convert it one day into reality.”

Despite the immense challenges that the world faces today, let us never lose sight of this dream, and let’s endeavor to do all we can today in these meetings to live up to Pearson’s words. Thank you. And once again, colleagues, welcome. I’m looking forward to our conversations.

Okay, and I’m now going to turn it over to Rex. Please.

SECRETARY TILLERSON: Well, first let me thank Foreign Minister Freeland for agreeing to cohost this event, and also thanks to Canada for allowing us to meet in Vancouver as well. North Korea is just one of many security issues of which the United States knows we can rely on our neighbor and friend, Canada, for close alignment. I also want to recognize Foreign Minister Kang, the Republic of Korea’s Foreign Minister Kono, and thank them for joining us as well. As allies, their nations have been at the center of the maximum pressure campaign against the DPRK, and our lockstep coordination with them will continue. The United States extends its appreciation to all nations here for their efforts to date in the pressure campaign.

This assembly of representative countries of the original UN Command sending states are all represented by foreign ministers and diplomats. These are nations that answered the call almost or about 60 years ago to fight for freedom on the Korean Peninsula, to ensure freedom would be preserved on the Korean Peninsula, and through great sacrifice secured freedom on the Korean Peninsula for the people of the Republic of Korea. And while that conflict remains frozen in time with an armistice, all of these nations have never lost their interest in ensuring freedom is maintained on the peninsula.

And I think as President Trump highlighted so well in his remarks to the Republic of Korea’s General Assembly in November, the differences between freedom and democracy for the people of the Republic of Korea is striking when compared to the conditions of life for the people who live under the tyranny of the regime in North Korea. And it is only a threat of this nature, a serious nuclear weapons threat, that would unite what were once enemies – the sending states with China – in a common goal to denuclearize the Korean Peninsula. And the sending states stand shoulder-to-shoulder with China, with the Republic of Korea, with Japan, with Russia, and is now joined by the entire international community in saying to the regime in North Korea we cannot and will not accept you as a nuclear state.

It has been nearly one year since the United States in concert with our allies and partners initiated the global campaign to maximize pressure against North Korea. As it was in the beginning, the great goal of the pressure campaign is to cut off the sources of funding that the DPRK uses to finance its illegal nuclear and ballistic missile programs. Additionally, we must increase the cost of the regime’s behavior to the point that North Korea comes to the table for credible negotiations.

The object of negotiations, if and when we get there, is the complete, verifiable, and irreversible denuclearization of North Korea. All nations here today are united on that goal. Let me clear: We will not allow North Korea to drive a wedge through our resolve or our solidarity. We reject a “freeze-for-freeze” approach in which legitimate defensive military exercises are placed on the same level of equivalency as the DPRK’s unlawful actions.

The pressure campaign will continue until North Korea takes decisive steps to denuclearize. This is a strategy that has and will require patience, but thanks to everyone’s support at this table and around the world, the regime is already facing costs that it is having difficulty bearing. The purpose of our meetings today is to improve the effectiveness of the maximum pressure campaign and combat North Korea’s attempts to evade sanctions. The United States looks forward to hearing from all participants on how we can best do that.

Today the United States is encouraged by the steps that nations around the world have already taken. In 2017, the UN Security Council passed three unanimous resolutions, levying the toughest-ever sanctions on North Korea. And nations around the world have taken their own unilateral actions, such as expelling North Korean laborers, closing North Korean embassies, and banning the importation of North Korean goods. The United States commends those nations for taking these actions.

This progress is encouraging, but we cannot be complacent. Kim Jong-un’s regime continues to threaten international peace and security through unlawful ballistic missile and nuclear tests. I ask you to take a look at a map behind me, and this is to make the point of the equivalency of military – defensive military exercises and their irresponsible testing. The map is a snapchat of air traffic in Asia on the morning of Friday, January the 12th – a rather ordinary day. Each plane icon represents a plane passing through the region, and as you can see, a lot of activity is in the skies each day.

The potential for a North Korean missile or parts of it to affect civilian aircraft is real. On November 28th, individuals on the flight traveling from San Francisco to Hong Kong witnessed with their own eyes parts of the North Korea ICBM test flying through the sky. According to the Federal Aviation Administration, the flight was 280 nautical miles from point of impact, and at the time there were nine other flights within that range. Over the course of that day, according to the Department of Defense, an estimated 716 flights were due to pass within that range. The FAA says the total available seats on those 716 flights were 152,110. That’s a lot of people from a lot of countries being put at risk by an irresponsible testing of ballistic missiles.

My point is this: North Korea’s willingness to launch missiles at any time presents a threat to people of all nationalities in the region’s air space each day. Based on its past recklessness, we cannot expect North Korea to have any regard for what might get in the way of one of its missiles or part of a missile breaking apart. This is to say nothing of potential technological errors associated with a launch that could result in disaster.

Of course, this is hardly the only threat or likeliest threat posed by North Korean missiles. Twice last year, North Korea launched missiles over Japan, which could have fallen on population centers. The North Korean threat has many dimensions, all of which must be countered. The regime has shown a recklessness among the nations of the world. Based on its actions now, we can see what North Korea may very well do later if it obtains complete nuclear and missile delivery capabilities.

When we consider the DPRK has avowed strikes on civilian targets, that Oslo is nearer to Pyongyang than Seattle, that London is nearer to North Korea than Los Angeles, that Amsterdam, Ankara, Brussels, Beijing, Paris, and Moscow are nearer than New York City, we see a global problem requiring a global solution. In light of North Korea’s steep trajectory of regression, we must implement a permanent and peaceful solution to avert a future crisis. North Korea’s provocations have been and continue to be met with clear and substantial consequences, as are appropriate.

First, we all must insist a full enforcement of UN Security Council sanctions, as this is the letter of the law. We especially urge Russia and China in this matter. Full implementation is an essential measure for the security of their people and a clear indication of their willingness to honor their international commitments. We cannot abide lapses or sanctions evasions. We will continue to call attention to and designate entities and individuals complicit in such evasive actions.

Second, we all must work together to improve maritime interdiction operations. We must put an end to illicit ship-to-ship transfers that undermine UN sanctions. And third, there must be new consequences for the regime whenever new aggression occurs.

We recognize that no one action or resolution will compel North Korea to give up its nuclear program, but if all countries cut off or significantly limit their economic and diplomatic engagements with North Korea, the sum total of our individual national efforts will increase the chances of a negotiated resolution. Our nations desire a future for North Korea, but the ultimate responsibility for producing that new future lies with North Korea. Only by abandoning its current path can North Korea achieve the security and stability it desires and a prosperous future for its people.

On behalf of the United States, I look forward to sharing ideas today with our allies and partners to strengthen the maximum pressure campaign and provide a pathway to security for all of our people as a result. Thank you.

FOREIGN MINISTER FREELAND: Okay. Thank you very much, Rex, and thank you for bringing visual aids. We really appreciate that, and thank you very much for cohosting this and all the work you’re doing. And next we’re going to hear from Minister Taro Kono of Japan. As Rex has pointed out, Japan is very directly implicated, and we’re honored that you’re here with us today, Minister.

FOREIGN MINISTER KONO: Madam Chairperson, Mr. Chairperson, honorable ministers, distinguished delegates, let me begin by expressing my deep appreciation once again to Foreign Minister Freeland and Secretary Tillerson for their untiring efforts to gather all of us at today’s meeting. I am also grateful for their generosity to allow me to speak following their remarks.

As we have all witnessed, North Korea has been escalating its outrageous act of provocation. The international community must counter in unison the grave and imminent threat posed by North Korea. Last month the United Nations Security Council briefing was convened under my presidency, and it was made crystal clear in the briefing that a nuclear-armed North Korea will never be accepted. Against this backdrop, today’s meeting is very timely and meaningful. The international community will once again gather strength in order to materialize North Korea’s denuclearization. Today, I would like to start with how I see the current situation as well as North Korea’s intention, and also like to touch upon some thoughts on the way forward.

First, my observation on the current situation on the peninsula: As was expressed by Prime Minister Abe, my government welcomes the recent talks between South and North Koreas with regard to the latter’s participation to the PyeongChang Olympic. After all, the Olympic and Paralympic Games are peaceful festivals. And we all support the ROK Government’s effort to make these events successful.

That being said, we should not avert our eyes from the fact that North Korea relentlessly continues its nuclear and missile programs. I am aware that some people argue that now that North Korea is engaging in inter-Korean dialogue, we should reward them by lifting up sanctions or by providing some sort of assistance. Frankly, I think this view is just too naive. I believe that North Korea wants to buy some time to continue their nuclear and missile programs. They simply want to get something out of this dialogue. I would, therefore, argue that this recognition should be the starting point of today’s discussion.

Secondly, we should judge its intention in terms of what they are actually doing, not in terms of what we hope they are doing. How should we interpret North Korea’s willingness toward dialogue and its continued obsession with the nuclear and missile programs? Number one, they must be hoping to get sanction lifted by some countries. Number two, they must be attempting to obtain some financial assistance in whatever form, exploiting the goodwill of others. Number three, they must also be hoping that the military exercise between the United States and the ROK militaries be canceled. Number four, they must be intending to drive a wedge between those tough countries and those that are not so tough. In addition, if the inter-Korean dialogue does not advance as North Korea wishes, North Korea may blame others and use it as a pretext to conduct further provocative and dangerous actions.

In any case, what we should have in mind is that North Korea continues to advance its nuclear and missile programs even as we speak and we should not be naive about their intent, nor should we be blinded by North Korea’s charm offensive. In short, it is not the time to ease pressure or to reward North Korea.

My last point comes from my earlier observation, namely to uphold the maximum pressure campaign. International sanctions have gradually borne fruits. The increasing number of ship-to-ship transfer is a testament that the current sanction regime is finally biting. It is also likely that sanctions will reproduce even further result this year. The fact that North Korea is engaging in dialogue could be interpreted as proof that the sanctions are working. I would therefore argue that now is the time for all the country to renew their determination to implement relevant Security Council resolutions fully and rigorously, reinforcing autonomous measures when and where available. This could include cutting off diplomatic ties with North Korea, as well as repatriating North Korean workers. Only through these measures can we make North Korea change a policy. In this regard, the Hashemite Kingdom of Jordan has just decided to cut its diplomatic ties with North Korea. Japan highly appreciate Jordan’s initiative and expects other countries to follow the same path and take further actions.

As I mentioned at the beginning, this year started with North Korea’s move towards inter-Korean dialogue. However, there has not been any positive move in terms of resolving the nuclear missile programs, as well as the abductions issue. Today’s foreign ministers’ meeting provides a timely opportunity to demonstrate an unwavering commitment of the international community to achieve complete, verifiable, and irreversible denuclearization of the Korean Peninsula and to stop North Korea’s other provocations. Together we should continue to maximize pressure on North Korea and corner North Korea in order to change its policy towards denuclearization.

Thank you very much. Thank you, Chairman.

FOREIGN MINISTER FREELAND: Well, thank you very much, Minister Kono. Thank you for your wise words and for your commitment to this effort. And next we are going to hear from Minister Kang. We’ve all been talking about the common threat that we face and I think we all need to acknowledge that no country has a greater interest in this matter than our friends and allies in South Korea. So Minister Kang, we’re delighted you’re here.

FOREIGN MINISTER KANG: Thank you very much, Chrystia. Thank you. Minister Freeland, Secretary Tillerson, colleagues, friends, ladies and gentlemen, first of all, I would like to thank you, our two cohosts, for your very hard work and meticulous arrangements in bringing this group together, and thank you for your support. With the rapid pace of recent developments on the Korean Peninsula, today’s meeting could not be more opportune. As you know, South and North Korea have jumpstarted talks this year after several years of hiatus, and despite the long absence, I have to report that the dialogue has been rather productive and positive.

At the high-level talks on January 9th, the two sides agree to cooperate for North Korea’s participation in the in the PyeongChang Winter Olympic and Paralympic Games, work together to lower tension and create a peaceful environment on the Korean Peninsula, and resolve all issues between the two sides through dialogue. This is no doubt an important development for the PyeongChang games as well as a significant first step towards restoring inter-Korean relations, which have been frozen for many years. And we hope to build on this initial breakthrough to ease tension in the region and forge favorable conditions for a peaceful resolution of the North Korean nuclear issue, as well as the establishment of lasting peace on the Korean Peninsula.

Colleagues and friends, excellencies, despite these overtures to improve relations with the South, North Korea has yet to show any intention to fulfill its international obligations regarding denuclearization. To the contrary, North Korea adheres to its stated claim of having completed its state nuclear force, and now boasts that its ballistic missiles tipped with nuclear warheads can strike anywhere in the United States. Indeed, the security threat posed by North Korea’s nuclear and missiles program is no longer confined to Northeast Asia but has become truly global. In response, the international community has been working closely together to underscore the point that North Korea’s nuclear ambitions are not acceptable and that it must return to the path of denuclearization. And thus, in the latter half of 2017 alone, three more UN Security Council resolutions were passed unanimously with incrementally stronger sanctions, and many member-states are implementing unilateral measures to put additional pressure on North Korea.

The Republic of Korea is working closely with key partners and the international community as a whole to implement the Security Council sanctions so as to compel North Korea to change course and to come to the table for denuclearization talks. And to this end, ensuring the faithful implementation of the UN Security Council sanctions by all members of the United Nations and enhancing their effectiveness is crucial. My government is actively participating in these efforts by faithfully implementing the sanctions as well as sharing information and the best practices with concerned partners.

We have urged North Korea to stop the provocations and return to dialogue, and made it clear through action that its continued provocations will only be met with further sanctions and pressure. At the same time, President Moon Jae-in and many other leaders have repeatedly made the point in public statements as well as in messages delivered to the North that we stand ready to provide a brighter future for North Korea if it makes the right choice. And I believe the two tools, these two tools – tough sanctions and pressure on the one hand and the offer of a different, brighter future on the other – has worked hand in hand. Indeed, the concerted efforts of the international community has begun to bear fruit. We should take note that the North has come back to inter-Korean dialogue for its participation in the Winter Games as evidence and observations accumulate to show that sanctions and pressure are beginning to take effect.

Ladies and gentlemen, while we endeavor to make the most of the new, opening in inter-Korean dialogue, we are well aware that sustained improvements in inter-Korean relations cannot take place without advances in efforts to resolve the North Korean nuclear issue and vice versa. The two tracks must be pursued in complementarity. Denuclearization is a fundamental element of a lasting peace on the Korean Peninsula. Thus, as we endeavor to engage the North before, during, and perhaps beyond PyeongChang, we do so in clear sight of the denuclearization imperative.

The complete, verifiable, and irreversible denuclearization of North Korea remains the unwavering goal of the Korean Government and the international community. And as long as North Korea continues down the path of nuclear development, sanctions will remain in place and Korea will continue to work closely with the international community to force a change of course on North Korea. The fundamental resolution of the Korean Peninsula-related issues cannot be achieved without the denuclearization of North Korea, and we will continue to seek realistic and effective ways to resume denuclearization talks at the earliest possible date.

Friends and colleagues, almost 70 years ago, members of the international community sent troops and humanitarian aid to help defend a fledgling democracy in the southern half of the Korean Peninsula. We, the Korean people, will never forget the noble sacrifices made by the men and women of the countries represented here. And the best expression of our gratitude is being able to show the veterans, their families, and countrymen the good that has resulted from their service and sacrifice. This small nation utterly destroyed by the war has worked very hard and has become a beacon of freedom, democracy, and economic vitality in Northeast Asia and beyond. But we will not rest until we achieve the ultimate prize for their sacrifice – that is, lasting peace on the Korean Peninsula.

Friends and esteemed colleagues, the PyeongChang Winter Olympic and Paralympic Games are now less than a month away. North Korea’s participation has created much additional work for us in the preparations, but we are working assiduously to ensure that their participation adds to the enjoyment and celebration of the games by all: athletes, officials, spectators, and cheering crowds alike. It will surely be a rare opportunity for the North Korean participants to interact with the international sporting community, and we hope the momentum for engagement will continue well beyond PyeongChang.

We ask for your support in these endeavors and hope that we can stand united in getting North Korea to change course and pursuing the peaceful resolution of the North Korean nuclear issue and the establishment of lasting peace on the Korean Peninsula. Our meeting today is a timely demonstration of the solidarity of the international community on this matter, and I very much look forward to our constructive discussions today. Thank you very much.

FOREIGN MINISTER FREELAND: Well, thank you very much, Minister Kang, for those inspiring remarks. And as you said, I think all of our countries were proud to support your country 70 years ago, and one of the reasons that we’re out here today is to show our solidarity with you and with South Korea.

Many of us have alluded to and all of us are working to support the UN Security Council resolutions, and for that reason as well as many others, I would like to invite our friend, ally, and partner, the United Kingdom, and its foreign secretary, Boris Johnson, to make a few remarks.

FOREIGN SECRETARY JOHNSON: Thank you. Thank you very much, Chrystia, and it’s great to be here in Vancouver and thank you to you and to Canada for hosting this extremely important gathering of people who obviously share a perspective, an instinct for peace and stability in that region. And when we look at what’s happening at the moment, there can be no doubt that the crisis is intensifying. We’ve had 20 tests in the last year, 20 missiles – two of which flew over Japan, one testing of a nuclear device. And everybody can see that this is not only going – the risk is not only proliferation within the region, but also, of course, of transmission of nuclear weaponry to non-state actors, to terrorist groups, with unthinkable consequences for the world.

And so it’s very important and encouraging that the world has not been intimidated or divided by the threat from Pyongyang. And actually, we have come together, and in Resolution 2397, there was an unprecedented measure of global consensus about what to do and to intensify the political and economic pressure on the regime. And I pay tribute, by the way, to others who are not in this room who are indispensable to making sure that that process succeeds.

Now, as Kyung-wha and Taro have said, it’s great that conversations are taking place now between North Korea and the Republic of Korea, and it’s great that there is an Olympic truce, as it were. This is a very ancient idea, the Olympic truce. It goes back to the ancient Olympic Games, I might say. But what always happened in those – in the case of those Olympic truces is they were – as soon as the Games were over, I’m afraid things reverted pretty much to the status (inaudible).

And so I hope very much that people will recognize, as Taro Kono just said, that the program is continuing in North Korea. Kim Jong-un continues with his illegal program. He has not been deterred, I’m afraid. And so I think our job collectively now is to send out a very clear message that we want to intensify that pressure, and we need to sharpen the choice for him and for the people of North Korea. They can – he can continue on a path of provocation and equipping his country with nuclear weapons that will lead to further isolation, further economic pain and hardship for his people, or else he has the opportunity to go down a path that can lead to greater well-being for the people of North Korea and a chance to emulate the astonishing achievements of the republic.

And our job is to help him in any way that we can to make the right choice, and that will need common sense but it will also need a great deal of resolve and fortitude in the months ahead.

FOREIGN MINISTER FREELAND: Okay. Thank you very much, Boris, and I had a personal bet as to whether you’d work in a classical analogy, and you did.

So thank you very much, colleagues, for those opening remarks. I think we’ve set the table very well both for our deliberations today and also for our citizens and the world, which is watching and listening to the work that we’re doing. And with that, I would like to thank our fine colleagues from the international media. Thank you for being with us, and now we will bid you farewell.

DoS. January 16, 2018. Remarks With Canadian Foreign Minister Chrystia Freeland at a Press Availability. Rex W. Tillerson, Secretary of State. Vancouver, Canada

FOREIGN MINISTER FREELAND: Sorry to be a bit late. We had a lot we had to pack into the day. And thanks to everyone for joining us. I’d like to begin by acknowledging that the land on which we gather is the unceded territory of the Coast Salish peoples including the territories of Musqueam, the Squamish, and the Tsleil-Waututh Nations.
(In French.)

So first, I’d like to take this opportunity to thank the United States and specifically my colleague, counterpart, Secretary Rex Tillerson, for cohosting this Foreign Ministerial on Security and Stability in the Korean Peninsula.

For more than two decades the international community has advanced a range of initiatives to limit or dismantle North Korea’s nuclear and ballistic missile programs and related activities. In response and in direct contravention of its international obligations, North Korea has engaged in a deliberate and systematic effort to develop and enhance its capabilities. Nowhere else in the world do we see the proliferations of weapons and materials of mass destruction on the scale of North Korea’s program.

We cannot stand by as this threat persists and worsens. The UN Security Council has adopted 10 resolutions in response to North Korea’s destabilizing actions in addition to convening successive emergency meetings following ballistic missile tests. Just last month Japan convened an extraordinary session of the UN Security Council at the foreign ministerial level to take stock of North Korea’s continued proliferation activities.

The 20 nations represented here in Vancouver have agreed that we must work together to ensure that sanctions imposed on North Korea are strictly enforced. We also agreed that we must take significant steps to keep North Korea from evading sanctions and to sever financial lifelines for the country’s weapons of mass destruction.

I do want to say clearly that we as a group harbor no hostility whatsoever towards North Korea or its people. We seek neither a regime change nor a collapse. What we do want is to resolve this crisis peacefully to achieve what is in our collective best interests, and that is security and stability on the Korean Peninsula. A North Korea that commits to the complete, verifiable, and irreversible dismantling of its nuclear program will have a secure place in the international community. Until and unless that goal is reached, the international community will continue to take the necessary steps to stop North Korea’s nuclearization and aggression.

Thank you very much. Secretary Tillerson.

SECRETARY TILLERSON: Well, thank you also, Foreign Minister Freeland, and good evening to all. On behalf of the United States, I do want to thank Foreign Minister Freeland and the government and people of Canada for cohosting this important meeting of nations who are committed to peacefully resolving the North Korean issue. The United States is grateful as always that we can rely on our friend and neighbor, Canada, as a partner on North Korea along with a host of many other security issues where we have shared interest.

I also want to thank the other participating nations, representatives of the UN Command sending states along with our trilateral partners – the Republic of Korea and Japan – that took part in this ministerial as well. This group of sending states nations who fought to ensure freedom and democracy will not just survive but ultimately thrive on the Korean Peninsula have maintained that same commitment in confronting the serious threat not just to freedom on the peninsula but a threat to the global community of nations.

The steps they and indeed the broader international community have taken and will take to implement the maximum pressure campaign are essential to resolving this situation through diplomatic means, as the United States hopes to do. Our nations repeated a unified message that we have sent the regime before: We will not accept a nuclear-armed North Korea. All of us share one policy and one goal, and that is the complete, verifiable, and irreversible denuclearization of the Korean Peninsula.

Our unity and our common cause with others in the region, most particularly China and Russia, will remain intact despite North Korea’s frequent attempts to divide us and sow dissension. Today we discussed ways to further increase pressure on North Korea through more effective sanctions implementation and compliance, and countries came forward with proposals on how they intend to do that. We agreed that the need for UN member-states, especially China and Russia, to fully implement agreed-upon sanctions is essential to their success.

We discussed the importance of working together to counter sanctions evasion and smuggling. And we also issued a call to action to strengthen global maritime interdiction operations to foil the illicit ship-to-ship transfers. In doing so, let me be clear: We do not seek to interfere with legitimate maritime activities. Our diplomats in New York will continue to press for tighter sanctions on the DPRK should there be subsequent provocations.

The goal of the maximum pressure campaign is and always has been to move North Korea towards credible negotiations on denuclearization. And our diplomatic talks have always been backed up by a strong and resolute military option. Today, however, we had constructive discussions about how to push our diplomatic efforts forward and prepare for the prospects of talks.

But productive negotiations require a credible negotiating partner. North Korea has not yet shown themselves to be that credible partner. The United States has always been open to clear messages that North Korea – and we have sent clear messages to North Korea that we are ready for serious negotiations. North Koreans know our channels are open, and they know where to find us. But a sustained cessation of North Korea’s threatening behavior is necessary – is a necessary indicator of whether the regime is truly ready to pursue a peaceful, diplomatic resolution to the security threat that it has created.

Our nations must remain united on sustaining pressure until North Korea takes concrete steps toward and ultimately reaches denuclearization. Again, I thank Foreign Minister Freeland for Canada’s resolve and determination in finding a diplomatic solution for denuclearizing the North Korean situation. The same goes for all other nations that were here with us today as well. And I thank our allies, Japan and the Republic of Korea. And finally, the United States extends our best wishes for a very successful Winter Olympic Games in Pyeongchang, South Korea. Thank you.

MODERATOR: So we’ll do questions starting with Canadian Glen McGregor from CTV. One question; no follow-up, please.

QUESTION: Minister Freeland, is there a role for Canada in enforcing those sanctions specifically in maritime interdiction? And Secretary Tillerson, have you asked Canada and Canada’s military to play a role in this important part of enforcing these sanctions?

FOREIGN MINISTER FREELAND: Well, nice to see you here, Glen. Thanks for coming. As Secretary Tillerson said, we had an extensive discussion of countersmuggling, sanctions evasion, and maritime interdiction. And one of the points that we discussed at length – and I think it would be fair to say the group of 20 nations agreed on – is not only are sanctions starting to bite, are they starting to have a positive effect, but the best next step for us to take is to be sure that those sanctions already in place with UN approval actually are fully implemented. So that was an issue we discussed at some length.

And certainly, Canada has a strong role to play. We are working together on a number of different fronts. We’ve joined together with our American partners in capacity building for countries. There are a lot of countries we have found in the world who have the political will to implement sanctions but lack the technical capacity. And Canada is contributing $3.25 million to a joint effort with the United States to work on that capacity building.

All of us collectively also agreed that in our bilateral interactions with countries around the world and in our interactions with regional groups that we are part of – for example, Canada, as you know, is a member of the Lima Group and I’ll be in Santiago at a Lima Group meeting next week – we’re going to continue to raise the issue of smuggling, of sanctions evasion, and continue to do everything we can at a diplomatic, at a technical level, to make sure that the sanctions that we have all agreed on, that the international community has agreed on, really are enforced.

SECRETARY TILLERSON: So with respect to any request for Canadian military assistance or joint activities, there’s been none. And you asked it relative to the sanctions, because I think as you heard Foreign Minister Freeland describe, the sanctions by and large begin with voluntary compliance, and then we check to see if people if are complying or not, and there are subsequent actions that can be taken to ensure their compliance.

In moving to the issue of maritime interdiction, this is subject to standard laws, international laws for maritime interdiction. And most of the actions that have been taken thus far have been taken actually in ports of call when vessels have been believed to have violated sanctions, then they have been detained in a port of call where the country is complying with the sanctions. So at this point it’s required very little military activity to enforce the sanctions other than we do share – we have information sharing so that we all understand what are the proper procedures to implement the sanctions and stay fully compliant with international laws, norms, and standards.

MODERATOR: The next question, John Hudson, Buzzfeed.

QUESTION: Hi, Mr. Secretary. What’s your message to African nations that are outraged and angry about the President’s alleged remarks about their countries? And more importantly, what are you doing to try to ensure that U.S. relations with an entire continent aren’t jeopardized?

And Minister Freeland, many people are genuinely worried about the escalating rhetoric between Kim Jung-un and Donald Trump and worried that it can turn into a nuclear catastrophe. Do you share this fear?

SECRETARY TILLERSON: With respect to U.S. relations with the African continent and African nations, the U.S. continues to be one of the most generous nations on the entire planet in terms of aid, assistance, mutual defense assistance, and economic development. And we had a very successful hosting of a conference of African nations and the African Union at the State Department here just late last year where we explored both economic issues, but we explored shared security issues. As you know, African nations, one of their greatest concerns is counterterrorism, and they are exposed to the effects of terrorist activities as well.

So we have a very positive relationship with African nations. We share a number of security issues. We share a number of economic development issues. And I think those leaders know that the United States wants that relationship to continue to be strong. We know they want that relationship to be strong as well. So at this stage nothing has changed with respect to our relationship with African nations, and we’ve continued to see them wanting to strengthen our relationship in that regard as well.

FOREIGN MINISTER FREELAND: So as I said my opening remarks, and I think it’s important for us to all be very clear on this, the source of the threat to the international community, the source of the illegal actions, the source of the nuclearization, is North Korea. It is North Korea’s actions which are making us all less safe and to which we all need to respond as allies and as an international community.

We have been really delighted to cohost this important meeting with the United States. This is something that Rex and I have been talking about for a few months, and I think we all agreed together with our partners here that the timing has turned out to be really fortuitous because we are seeing – we want to be clearheaded, we don’t want to be in any way Pollyannas about this, but I think we collectively believe that the peaceful pressure is beginning to have an impact. All of us did welcome the talks between the two Koreas, and we see North Korea’s participation in the Olympics as a hopeful sign.

And the really important thing about this meeting, I feel, is the fact that we worked together to show the solidarity of the international community and to show our belief that a diplomatic solution is both possible and essential. That’s what today has been about.

MODERATOR: The next question, Sophie Jackman, Kyodo News.

QUESTION: Good evening. For Secretary Tillerson, Japan and South Korea are currently at odds over the comfort women issue, particularly the 2015 bilateral agreement in which the United States played a large role. How do you think this issue will impact the unified response to North Korea? And as an ally of both countries, how will the United States try to help improve Japan-South Korea relations?

And for Minister Freeland, given the existing tensions in the East and South China Seas, how will you make sure that the maritime interdiction doesn’t contribute to further heightening tensions? Thank you.

SECRETARY TILLERSON: Well, first let me address the U.S. trilateral relationship with Japan and the Republic of Korea. And that is a relationship that’s grounded in shared security interest, and the commitments among all three of us to that – to that trilateral arrangement is ironclad. It’s – it is in no way changed from what it historically has been.

The issue of the comfort women is one that – it’s a very emotional issue for both sides, and it’s one that only they can resolve. And our role has been simply to encourage them to deal with the issue, do not let that issue stand in the way of the greater security threats that are common to all of us. And we know that there’s more that needs to be done. I think there have been helpful statements actually made by both sides recognizing that it is a difficult issue for both countries to deal with, and we hope ultimately they can move beyond that. We know it’s not easy for them.

In terms of how it impacts our ability to strengthen the trilateral relationship, it’s not been an obstacle in that relationship around our shared security interests.

FOREIGN MINISTER FREELAND: And as to the countersmuggling and the sanctions evasion, as we’ve already discussed, that issue was a subject of quite important focus and conversation today. And again, as we’ve already discussed this evening, a big part of the issue is being sure that we are all doing our own jobs at home, and a lot of the countries around the table talked about efforts that they are making at home to be sure that sanctions are not being evaded by their own nationals. So we devoted a lot of time to that.

And I think the point about capacity building around the world is a really important one. What we are finding in all of our bilateral and regional interactions is this is a threat that has united the world. The world really appreciates that all of us are made less safe by North Korea’s actions. And part of what we need to do now is build on that political consensus to be sure that the enforcement actually follows, and that’s something that we talked at quite a technical level about doing, and I think we all left the room committed to doing our part.

QUESTION: (In French.)

FOREIGN MINISTER FREELAND: (In French.)

MODERATOR: Next question, Barbara Plett Usher, BBC.

QUESTION: Mr. Tillerson, you’ve made quite clear that you want this issue solved through diplomacy backed up by strong resolute options, as you just said. There are many reports of talk in the White House about the option of a limited military strike, a so-called “bloody nose” that would send a message to North Korea rather than start a war. Do you think that’s a bad idea?

And in a related question, if I may, sir, the question that’s in the minds of many Americans especially after the false missile alert at the weekend, do Americans need to be worried about a possible war with Korea?

And sorry, one more: Could you just clarify briefly the confusion over the past week, or the question, I should say, of whether the President has communicated through a direct channel to the North Korean leader? Thank you.

SECRETARY TILLERSON: Well, I’m not going to comment on issues that have yet to be decided among the National Security Council or the President, so I have no comment on the, quote, “bloody nose,” as you named it.

With respect to whether Americans should be concerned about a war with North Korea, I think it’s – we all need to be very sober and clear-eyed about the current situation. As North Korea has continued to make significant advances in both its nuclear weapons, the lethality of those weapons as demonstrated by their last thermonuclear test as well as the continued progress they’ve made in their intercontinental ballistic missile systems, we have to recognize that that threat is growing. And if North Korea is not – does not choose the pathway of engagement, discussion, negotiation, then they themselves will trigger an option.

I think our approach is, in terms of having North Korea choose the correct step, is to present them with that is the best option, that talks are the best option, that when they look at the – a military situation, that’s not a good outcome for them. When they look at the economic impact of ever-growing sanctions and the pressure campaign, there is no – there is no end to that. And I think for North Korea and the regime, what we hope they are able to realize is the situation only gets worse. It gets worse with each step they take, it gets worse with time. And that is not working to their objectives of wanting to be secure. They are not more secure. They are becoming less secure. They certainly are not more economically prosperous. They’re becoming less prosperous.

And we do think that that message is beginning to – I don’t want to say resonate with them, but there is a realization with them that the rest of the world is quite resolute in this stand we’re taking that we will never accept them as a nuclear power. And so it’s time to talk, but they have to take the step that says they want to talk.

And your last question was around?

QUESTION: Whether or not the President has direct communications with the North --

SECRETARY TILLERSON: Well, again, there’s just certain elements of this situation that I’m not going to comment upon. I don’t think it’s useful to comment because we’re at – relative to your prior question, we’re at a very tenuous stage in terms of how far North Korea has taken their program and what we can do to convince them to take an alternative path. And so I – when we get into who’s talking to who and what was said, if we want that to be made known or made public, we will announce it. Thank you.

QUESTION: Yeah, my name is (inaudible) from Chosun Ilbo in the Republic of Korea. And I want to ask to the Secretary of the – Tillerson about the strategy on the North Korea. In the process of the pressuring the denuclearization and the pressure the Korean Peninsula, the strategy of the South – the Republic of Korea and the United States seems to be quite different. Although Korean Government pressure two-track strategy – both talking with North Korea and sanction – but the United States – State Government stay to the maximizing pressure and the sanction.

So I want to know, why is the – why the differences of the policy between Korea and the United States on North Korea have occurred? And what direction do you think we should go to the forward to the peace and stability of the Korean Peninsula?

And I also have a question to the Minister Freeland. I also want to know what we need to develop inter-Korean dialogue about Olympic and to develop debate on the peace and the denuclearization in the future. Thank you.

SECRETARY TILLERSON: Well, with respect to any differences or any daylight between the approach of the United States and the Republic of Korea, there is none. I think Foreign Minister Kang on multiple occasions in our discussions today reiterated the strong alignment with the international community’s approach of the maximum pressure campaign. And indeed, the Republic of Korea has gone beyond the UN Security Council resolutions and has imposed unilateral sanctions of their own in support of this maximum pressure campaign. And in fact, the Republic of Korea is the country that has detained two vessels for violating sanctions through ship-to-ship transfers.

So I think everything that we discussed from President Trump to President Moon at the ministry of foreign affairs level as well as ministry of defense levels, we are completely aligned that the maximum pressure campaign is the correct strategy and that everyone must stick to that.

Again, just as I said in my remarks, what is the purpose of the maximum pressure campaign? It is intended to cause North Korea to engage as a credible negotiating partner in addressing a pathway to a denuclearization of the peninsula. That is the purpose of the maximum pressure campaign. So we all are working towards the same goal with the same set of tactics.

FOREIGN MINISTER FREELAND: Okay. And let me first of all thank you very much for being here together with the entire South Korean delegation. There is no country more deeply touched by North Korea’s actions and more knowledgeable about North Korea than South Korea. And one of the things that all of us acknowledged today was the tremendous stake that South Korea has in this issue. And I think a very important outcome of our conversation today was that it allowed all of us to show very strong solidarity with the people of South Korea, with the Government of South Korea, with Minister Kang in your country’s efforts. That’s very important to all of us.

We had an opportunity to all congratulate South Korea on the inter-Korean dialogue, which has begun this month. I think we all need to be quite modest in our assessment of the progress thus far, but talking is a good thing and it’s a good thing that that’s happening. As Rex said, we are looking forward to peaceful and successful Olympics and Paralympics, and we’re pleased that North Korea will be participating.

As to what it will take for that little beginning of a conversation to move into the conversation that the whole world needs, which is a conversation about denuclearization, what it’s going to take is for North Korea to make that choice.

MODERATOR: Thank you.

FOREIGN MINISTER FREELAND: And I just want to say one final thing: As your host, thank you to everyone for coming, for – particularly to our foreign visitors. We really appreciate it. This is an issue which matters very much to the world, and to Canadians, and we’re delighted that you are all here to pay attention to it. As a former journalist, I know how important your work is in sharing with all the people of the world the conversations that we’re having, and I hope you’ve had a great time in Vancouver, our Pacific city that we’re so proud of. Thank you very much. Merci.

DoS. January 16, 2018. Department Press Briefing. Heather Nauert, Spokesperson. Washington, DC

MS NAUERT: Hi, everybody.

...

MS NAUERT: But I knew it was time to come back to work when my son was, “Mommy, go back to Washington.” So thanks again to all of you.

Let’s start out today with a little bit about the Secretary’s travel. As many of you know, the Secretary is in Vancouver today as cohost of the Vancouver Foreign Ministers Meeting on Security and Stability in the Korean Peninsula with the Canadian Foreign Minister Chrystia Freeland. The meeting is to bring together nations from across the globe to demonstrate international solidarity against North Korea’s dangerous and illegal nuclear and ballistic missile programs. Discussions will focus on advancing and strengthening diplomatic efforts towards a secure, prosperous, and denuclearized Korean Peninsula. U.S. Secretary of Defense James Mattis was also at the ministerial welcome dinner last evening. Secretary Tillerson will hold a press conference later today. I believe it’ll be about 8:00 p.m. Eastern time, so we will be sure to bring you information on that, but you can certainly watch it as well.

In addition to that, today is Religious Freedom Day. Today marks 232 years since the enactment of the Virginia Statute for Religious Freedom, which served as the model for protecting religious liberty that was later enshrined in our First Amendment to the Constitution. The religious freedom we take for granted here at home is under serious attack throughout the world. In Burma, Rohingya have been the victims of ethnic cleansing at the hands of Burmese security forces and also local vigilantes. Across South Asia, members of religious minorities experience societal discrimination and violence which is exacerbated by laws and policies that punish speech, restrict religious conversions, or ban certain beliefs.

Protecting and promoting religious freedom is a priority of this Trump administration. In the Middle East, we’re taking firm steps to defeat ISIS while we work with members of affected religious minorities to restore their communities, their religious freedom, and their way of life. We’ve enhanced our cooperation with likeminded governments around the world to combat the actions of abusive regimes and promote respect and understanding across religious lines in divided societies. Together with our partners both at home and abroad, we will strive for a world where we can all enjoy the freedoms of thought, freedoms of conscience, and freedoms of religion.

And finally, I want to note something that happened yesterday in Baghdad. Laurie, I know this is something that you’re watching very carefully. And I want to just make it clear that we condemn in the strongest possible terms Monday’s barbaric attack in Tayran Square in Baghdad. The brutal attacks on innocent civilians demonstrates once again the savagery of the enemy that we face there. We want to extend our deepest condolences to the family of the victims and hope for a speedy recovery of those wounded. Those attacks are an awful reminder that despite having liberated Iraqi territory from ISIS, terrorism remains a threat there. The U.S. Government reaffirms its commitment to support the government and the people of Iraq in their efforts to ensure an enduring defeat of ISIS and also its ideology.

With that, I’d be happy to take your questions today.

QUESTION: Thanks.

MS NAUERT: Matt, where would you like to start?

QUESTION: And welcome back. Happy New Year.

MS NAUERT: Thank you. You too.

...

QUESTION: Madam?

MS NAUERT: Where do we want to go next?

QUESTION: Heather?

MS NAUERT: Yes. Hi, Janne. How are you?

QUESTION: Hi. Thank you. Nice to see you. On North Korea, recently North Korean Government said that nuclear issue will not put negotiation on the table, negotiating table, so do you – what do you – I mean, what do U.S. expect to talk with North Korea without negotiation about nuclear issues?

MS NAUERT: Well, we don’t have any conversations that are ongoing with North Korea, so I’m not exactly sure what you mean. Now is the not the time. Our policy hasn’t changed. Now is not the time to sit down and have talks with North Korea. At some point when they – if and when they are willing to be serious about the issue of denuclearization, we would be happy to entertain that. But they are – we are nowhere near that point yet.

QUESTION: But I think it seems like they just talk – talked for the talks but not putting – any nuclear issues put on the table.

MS NAUERT: Well, look, I think it’s pretty fresh that the Republic of Korea and also the DPRK are having conversations. We just saw the second one take place yesterday pertaining to the Olympics, and I think that’s a good sign. I think that’s a good sign. And it’s an excellent sign that the United States with 20-plus countries are up in Vancouver right now where we are exploring additional ways to enhance our maximum pressure campaign. We’ve seen that campaign be successful. We know – and as has the Republic of Korea’s Mr. Moon has indicated this as well – without that maximum pressure campaign that so many countries have been involved with, North Korea would not be having talks with South Korea – granted, limited to the issue of the Olympics, but that is a start.

So today, one of the things that the Secretary is doing is having a lot of conversations with those countries about how we can better enhance the maximum pressure campaign to get North Korea to denuclearize – an important thing for us, and I think it’s an important sign that so many countries were present to show up to see what they can do to better help.

Okay. Hey, Nicole.

QUESTION: Thanks.

QUESTION: (Off-mike.)

MS NAUERT: Are we – let’s stay on DPRK for now. Yeah.

QUESTION: I want to stay on Korea generally.

MS NAUERT: Okay.

QUESTION: So we’re almost a year into President Trump’s tenure and arguably the most pressing foreign policy challenge he’s had has been North Korea, and yet we still don’t have an ambassador in South Korea. Why not, and what can you say about that?

MS NAUERT: Yeah. This is something that we’ve covered before. We have a charge d’affaires in South Korea, Marc Knapper. Marc is a longtime Foreign Service officer. He is beloved by many people in this administration and also at the State Department. He has been to North Korea numerous times. He speaks quite a few of the languages of South – of that part of the world. And so it is – we are confident that our embassy there is in good hands.

It is ultimately up to the White House to determine the nominations for any post. You all know that. I know that the Secretary and the White House are working hard to determine more people, more qualified candidates to take those positions. I can’t get ahead of the White House and announce anything, but I can tell you we are in good hands. When I talk to any of my colleagues here, because certainly I’ve asked the same question, “Why don’t we have this – why don’t we have somebody there?” And folks love Marc Knapper. I’ve spoken to him myself or at least have emailed with him, and I’m confident he is doing a great job.

Okay. Anything else related to Asia?

QUESTION: Yes, DPRK.

MS NAUERT: Okay. Yeah.

QUESTION: Just on the format of today’s talks, obviously the Chinese and the Russians have denounced this body, this meeting in Vancouver, as a Cold War throwback, that based on the countries that fought China as well as North Korea between ’50 and ’53. If you’re trying to maintain an international front, total solidarity for the maximum pressure campaign, is it not only just a mistake image-wise to meet with the people who went to war against China?

MS NAUERT: I think Russia and China can call it whatever they want to call it. It is clear in the bottom line what that is. Both of those nations sign on to three unanimous UN Security Council resolutions. Both China and Russia share our objectives, and that is the denuclearization of the Korean Peninsula. They do not want to see Kim Jong-un develop a nuclear weapon any more than the United States or any other country does for that matter.

So we are all on the same page. They’re not at the meeting, and that’s okay. They can call it whatever they want. Okay.

QUESTION: Can I go back to the Palestinians just for one second, not UNRWA?

QUESTION: Also --

MS NAUERT: Let – wait. Let’s come back to – let’s finish up Asia, and then we can come back to the Palestinian thing.

QUESTION: South Asia?

MS NAUERT: Okay.

QUESTION: It’s not that. It’s different.

MS NAUERT: Okay. Go ahead, sir. Hi.

QUESTION: Thank you. Nice to have you back.

MS NAUERT: Thank you.

QUESTION: So last week, Steve said that the United States has been in touch with China and Russia regarding the Vancouver meeting. Is President Trump’s phone call with President Xi Jinping yesterday a part of this touch considering the timing of the phone call?

MS NAUERT: Yeah, I think that would certainly be considered part of it. Among the things that the President spoke with – with President Xi about was talking about the hope that they might prompt a change in the behavior of the DPRK. We consider it to be destructive behavior. They consider it to be destructive behavior.

President Trump committed to sustain the United States-led global campaign of maximum pressure to compel North Korea to commit to denuclearization. So I think that that is a part of our ongoing conversations.

QUESTION: And did they talk about this Vancouver meeting specifically?

MS NAUERT: The White House provided a readout of that phone call, so I’d just have to refer you to the White House for that readout. Okay?

QUESTION: On South Asia?

MS NAUERT: Okay. Anything else related to DPRK, Japan?

QUESTION: Syria?

QUESTION: Iran.

MS NAUERT: Okay, go right ahead. Hi.

QUESTION: India.

QUESTION: Hi. Nice to have you back.

MS NAUERT: Thank you.

QUESTION: Just about Iran. I think President Trump’s announcement last Friday didn’t make it quite clear that – did President Trump again decertified about Iran’s compliance with the treaty? (Inaudible.)

MS NAUERT: Okay, so we’re now – we’re moving onto Iran. Did anybody else have any other questions related to DPRK, anything related to that?

QUESTION: South Asia.

MS NAUERT: Okay, okay. We’ll come back to that then, sir.

QUESTION: Thank you.

...

The Globe and Mail. 17 Jan 2018. North Korea must cease threats for ‘sustained’ period before talks, U.S. says
ROBERT FIFE
IAN BAILEY, VANCOUVER

We cannot stand by as this threat persists and worsens.

FOREIGN AFFAIRS MINISTER CHRYSTIA FREELAND

U.S. Secretary of State Rex Tillerson says it is “time to talk” with North Korea about defusing tensions, but that Pyongyang must first stop its threatening behaviour for a sustained period of time.

At the conclusion of a one-day summit on Tuesday in Vancouver, Mr. Tillerson warned that the threat from North Korea is growing, and urged leader Kim Jung-un to sit down for serious negotiations. “We will never accept them as a nuclear power. It’s time to talk,” Mr. Tillerson said. “The North Koreans know our channels are open and they know where to find us but a sustained cessation of North Korea’s threatening behaviour is necessary.”

Foreign ministers, led by Canada and the United States, promised to keep squeezing North Korea economically and diplomatically until Pyongyang abandons its nuclear and ballistic weapons.

The ministers issued a declaration saying the international community must never accept a nuclear-armed North Korea, and called on Mr. Kim to begin serious denuclearization negotiations.

“We cannot stand by as this threat persists and worsens,” Foreign Affairs Minister Chrystia Freeland told a wrap-up news conference alongside Mr. Tillerson. “We must work together to ensure that sanctions imposed on North Korea are strictly enforced.”

The Vancouver summit of 20 countries that were involved in the 1950-1953 Korean War was called to explore ways to tighten economic sanctions against North Korea and discuss maritime interdiction of ships carrying material to and from the country.

But Mr. Tillerson said Washington will not ask Canada or any of other nations to block ships carrying embargoed goods. The focus should be on preventing ships from leaving ports of call with smuggled goods and illicit ship-to-ship transfers, he said. Mr. Tillerson declined to comment on whether the United States is considering a preemptive attack on North Korea, the so-called “bloody nose” option, saying he would not make any remarks on issues on which President Donald Trump has not decided. The secretary declined comment on whether Mr. Trump has communicated directly with Mr. Kim.

Ms. Freeland brushed aside a question about Mr. Trump’s angry tweets at North Korea’s dictator, in which he called Mr. Kim “rocket man” and bragged he has a bigger nuclear button.

“It is North Korea’s actions that are making us all less safe,” she said. “We don’t want to be, in any way, Pollyannas about this.” Ms. Freeland said she believes sanctions on North Korea are having an impact, citing the country’s decision to participate in the Winter Olympics in South Korea next month.

Ms. Freeland announced $3.2million to help countries more effectively implement UN sanctions against North Korea.

China and Russia, which sit on the UN Security Council and are North Korea’s neighbours, have backed successive rounds of UN sanctions, but called the Vancouver meeting an example of “Cold War” thinking.

China’s state-run Global Times newspaper said the Vancouver meeting reflected Washington’s desire to “highlight its dominant role in resolving the North Korean nuclear issue and cripple the clout of China and Russia.”

Mr. Trump and Chinese President Xi Jinping spoke by telephone on Monday and both expressed hope that recent talks between North and South Korea could open the door to denuclearization talks.

But the White House said in a statement that Mr. Trump made it clear that the United States is determined to tighten sanctions enforcement on North Korea until it agrees to comprehensive negotiations.

“President Trump committed to sustain the United States-led global campaign of maximum pressure to compel North Korea to commit to denuclearization,” the White House said.

China’s special envoy for North Korea, Kong Xuanyou, urged the United States to seize the opportunity to seek direct talks with North Korea.

South Korean Foreign Minister Kang Kyung-wha said the high-level talks between the North and South have “been productive and positive” at lowering tensions, which she attributed to UN sanctions.

But Ms. Kang cautioned the Korean talks have not lead to a change in Mr. Kim’s ambitions to make his country a global nuclear threat.

“Despite these overtures to improve relations with the South, North Korea has yet to show any intention to fulfill its international obligations regarding denuclearization,” Ms. Kang said. “And [it] now boasts that its ballistic missiles, tipped with nuclear warheads, can strike anywhere in the United States.”

Japan’s Foreign Minister Taro Kono said the North Koreans can’t be trusted and it would be wrong to let up on sanctions.

“I am aware that some people argue that now that North Korea is engaging in inter-Korea dialogue, we should reward them by lifting up sanctions or by providing some sort of assistance,” Mr. Kono told the opening session. “Frankly, I think this view is just too naive. I believe North Korea wants to buy some time to continue their nuclear program.”

Ms. Freeland stressed the West does not want regime change or the collapse of the North Korean regime. She offered the prospect of greater prosperity for North Koreans if Mr. Kim gave up his weapons program.

The Globe and Mail. 17 Jan 2018. Aid groups suffering under North Korea sanctions. Expert says punitive measures aren’t hurting business, but are instead threatening humanitarian work
NATHAN VANDERKLIPPE

Thomas Fisler, who spent four years working in North Korea, says humanitarian organizations have been hit hard by sanctions to the country, facing difficulties importing crucial supplies and keeping afloat financially.

Over the four years he spent living and working in North Korea, Thomas Fisler grew accustomed to two realities. One, from outside the country, showed harsh new international measures meant to choke the North Korean economy. The other, visible in Pyongyang’s stores and across the countryside, showed almost no discernible evidence that sanctions were having any effect.

Shops remained stocked with fridges and electric bikes. Mr. Fisler could glimpse large foreign currency bills in the wallets of middle-class people in Pyongyang, some of them making daily use of taxis that, at $3 (U.S.) a ride, would have been unaffordable a decade ago. The price of rice has gone unchanged. Rural farmers continue their business largely unaffected.

Now, amid the tensions provoked by North Korea’s tests of nuclear devices and intercontinental ballistic missiles, the international community has retaliated with increasingly strict new sanctions.

Foreign ministers of many Western countries are meeting in Vancouver this week to discuss North Korea. The summit – cohosted by Canada and the United States – pointedly excluded China and Russia, which have both strongly criticized the talks, saying they are too focused on sanctions and not enough on the need for meaningful dialogue.

“Outside Pyongyang, these people are living on subsistence, anyhow – there is literally no trade,” Mr. Fisler said. “And in Pyongyang, the shopping malls are as full as ever.”

There was just one major exception: humanitarian work, which has come under severe pressure in North Korea, Mr. Fisler and the United Nations are warning.

It’s not clear where the goods stocking Pyongyang stores are coming from, although roughly 90 per cent of North Korea’s foreign trade comes from China, which has said it is enforcing sanctions but does not have a formal presence at the Vancouver summit this week.

The high profile of restrictions against North Korea has caused some companies to cease all trade with the isolated country, for fear of accidentally coming in contact with some sanctioned item that could have them fall afoul of authorities and harm their business elsewhere, Mr. Fisler said.

Inside North Korea, fuel prices have nearly doubled, but those prices seem to apply largely to international organizations, Mr. Fisler said: private cars remain rare, while military and government fleets appeared to have the right to buy at a lower price.

International agencies, meanwhile, have also been hit hard by the closing of banking channels to North Korea. Mr. Fisler had little choice but to enter the country with as much as $300,000 in cash stuffed into his carry-on luggage.

Larger organizations are in worse shape, he said, in particular United Nations agencies with larger budgets. In the current climate, “they have severe difficulties to keep operational. There’s no doubt,” Mr. Fisler said. UN agencies have also experienced trouble bringing vaccines and powdered milk into North Korea, Mr. Fisler said – despite clear exemptions for such materials. Representatives of the UN have begged the committee in charge of sanctions to emphasize that humanitarian goods should not be affected by international measures.

A UN official confirmed Mr. Fisler’s account, speaking on condition of anonymity because of the sensitivity of the matter. Crucial relief items have been held up for months despite having correct paperwork, the official said, and financial issues have significantly threatened the UN’s ability to continue humanitarian operations in North Korea. The UN has tried to compensate by buying goods and paying salaries outside the country, the official said.

Private charities have struggled against similar roadblocks. This week, First Steps, a Canadian charity that provides nutritional supplements to North Korean women and children, released a video appeal.

“Increasingly severe sanctions are increasing suffering,” the video says. “Shouldn’t we create a space to fast-track humanitarian aid?”

Mr. Fisler believes sanctioning nations must pay more attention to humanitarian needs in North Korea.

He supports trade measures, as long as they are used as a tool toward reviving talks, and believes they will eventually have an effect in North Korea, perhaps by forcing “the government to put infrastructure improvements on hold, be it transport systems, railroads or power lines.”

But, he said, the North Korean government has used sanctions to rally support at home, by “telling everyone the evil U.S. imperialists are responsible for what happens, and so we’ve got to sit together closer and go through tougher times,” Mr. Fisler said. “And that’s what they do. They are fairly stoic in saying, ‘we’ve had sanctions over many years – let them be tougher. It doesn’t bother us.’ ”

He warns, however, that placing North Korea in a vise that becomes too tight could press the country into more “illegal actions, like the drug trade. Methamphetamine – they can make billions with that, easy – or fake currency,” he said.

“If they are pushed to the edge with these sanctions, it will backfire.”

With a file from reporter Robert Fife.

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The Globe and Mail. 17 Jan 2018. ARTICLE. To be a trade leader, Canada needs to fix up its Pacific relations
JOHN IBBITSON, Columnist

Mr. Trudeau also lacks allies in the Pacific, although he has only himself to blame for that. Relations between Canada and Japan are tense, thanks to Mr. Trudeau’s bungling refusal to endorse the revised, 11-country Trans-Pacific Partnership agreement late last year.

The Canadian government, in concert with what is left of the U.S. State Department, brought the old allies from the Korean War together in Vancouver on Tuesday, for no particularly good reason other than to remind North Korea that it has more to fear than the tweets of Donald Trump, and to remind the world that Canada remains among the last true defenders of the old global order.

There is no way to disguise how much things have gone downhill in the past 12 months. A year ago, Prime Minister Justin Trudeau had powerful allies in the quest to preserve the Western alliance despite the arrival of a rogue U.S. president. Today, those allies are much weakened.

Four months after the German elections, Angela Merkel appears to finally have found a formula for cobbling together a new coalition. But a working government could still be weeks or even months away, and a recent poll has a majority of German voters hoping the veteran chancellor steps down before the next election.

Ms. Merkel hasn’t confirmed whether she will be attending the World Economic Forum in Davos, Switzerland, next week. Mr. Trump will be there, as will Mr. Trudeau and French President Emmanuel Macron, who is expected to promote European social solidarity over the isolationist tendencies of the administration in Washington. Mr. Macron may be emerging as a new leader in the fight to defend a united Europe.

But he is also an isolated leader. Germany is currently MIA, and so is Britain, which is tearing itself apart over the decision to leave the European Union, and where Prime Minister Theresa May is distracted and unpopular. Mr. Trump’s abrupt decision to cancel a planned visit to Britain has further strained what used to be called the Special Relationship.

Meanwhile, Eastern Europe continues its sad descent. Authoritarian, xenophobic tendencies are on display in Poland and Hungary, and the far right is on the rise in Austria and the Czech Republic. Europe has not been this disunited, angry and unfree since the Berlin Wall fell.

Mr. Trudeau also lacks allies in the Pacific, although he has only himself to blame for that. Relations between Canada and Japan are tense, thanks to Mr. Trudeau’s bungling refusal to endorse the revised, 11-country Trans-Pacific Partnership agreement late last year. (Mr. Trump pulled the United States out of the original agreement.)

The Japanese aren’t the only ones. The newspaper The Australian reported on Tuesday that Canberra’s complaint to the World Trade Organization over alleged Canadian restrictions on wine imports “follows a souring in relations after Mr. Trudeau was accused of derailing the rejuvenated TPP11 at the Asia-Pacific Economic Co-operation summit in Vietnam.”

Perhaps Tuesday’s meeting on North Korea will help heal these rifts. Either way, the Trudeau government needs to repair its Pacific relations.

But the biggest WTO challenge comes from Canada itself, launched last week against the United States – almost 200 examples of alleged U.S. bad behaviour against Canada and other countries.

“Even if Canada succeeded on these groundless claims, other countries would primarily benefit, not Canada,” U.S. Trade Representative Robert Lighthizer protested.

But that’s part of the point. Among the other motivations for the complaint – impatience with one punitive U.S. action (softwood lumber) after another (Bombardier); setting up a WTO backstop in case the North American free-trade agreement negotiations fail – is the desire to present Canada as a leader in the struggle to preserve the global trading order.

The implication is clear: Mr. Trump, too, shall pass. The West is not in twilight; this President’s disruptive power is already being contained, at least partially, by forces within the United States. Eventually he will leave, and the United States will return to its leadership role.

Until that time, Canada will continue defending the postwar status quo, hosting meetings and urging solidarity in the face of global threats and, yes, annoying other leaders when our Prime Minister’s sanctimonious rhetoric is not matched by real commitments.


Canadian prime ministers have been doing this sort of thing for decades. It’s just a particularly lonely job right now.

The Globe and Mail. 17 Jan 2018. EDITORIAL. Canada, and the need to stop a missile

How do you put a price on dodging nuclear winter? The question gets less absurd by the day, with North Korea and the United States locked in a standoff full of wild provocations, and global foreign ministers having gathered in Vancouver on Tuesday to discuss sanctions on the Hermit Kingdom.

Hawaii knows the subject isn’t academic; a false alarm there on Saturday convinced many of the islands’ residents that they were about to be killed by a ballistic missile. The accounts of mass panic that emerged from the usually laidback Pacific state made vivid how cataclysmically awful such an attack would be, even before the bombs touched down.

And so, all of a sudden, an old, vexed debate has new currency: whether or not Canada should join the U.S. missiledefense shield. The Trudeau government has repeatedly flirted with the possibility. Now’s the time for a decision.

On both sides of the 49th parallel, the shield is more opined on than understood. For one thing, it’s not really a shield. More like a bulletproof vest, in that you still really don’t want to get shot while wearing it.

The program Canada would be joining is called the Ground-Based Midcourse Defense system. It can track incoming missiles with radar and, in theory, shoot them down with a cluster of “interceptors” – rocket launchers, basically – mostly located in Alaska.

The system is far from foolproof. In testing since 1999, under conditions more or less choreographed for success, it has shot down 10 of 18 targets. That’s not a great ratio, and it’s a frighteningly small sample size.

So, on a good day, Canada would be getting a 60-per-cent chance of knocking a ballistic missile out of the air if it joined the U.S. shield. That’s an awful lot better than no chance at all – but only if you think we’re at risk.

Some people don’t think we are; that a Canadian city being hit with a missile from North Korea is too unlikely to worry about. But there are scenarios in which it’s imaginable.

Kim Jong Un and his military claque might want to show they can reach North America without hitting the United States directly, and aim for somewhere remote in Canada. The people who study these things call us a possible “demonstration target.” Think of it as a shot across the Bow River.

Or imagine a missile bound for Seattle that goes off course towards Vancouver. It’s not hard to, given the Kim regime’s record in target practice.

We may well hope the United States would protect us from an ICBM, but that’s not its policy, Canada’s Lt. Gen. Pierre StAmand told a Commons committee in September.

If it came down to it, the United States might be feeling generous. But the officers on duty would have to make up their minds quickly. An ICBM arrives terrifyingly fast – likely between 25 and 35 minutes from Pyongyang to Vancouver, with radar only determining the target well into the missile’s journey. U.S. officers would have very little time to decide whether or not Toronto was worth saving.

Then again, if safety was the only concern, the case for joining the U.S. system would be straightforward. Cost is a factor, though, and the prospective price tag makes some balk. This is one reason the NDP opposes the scheme.

The trouble is, we don’t know exactly what joining would cost. On the high end, if we wanted our own interceptors, the Canadian academic James Fergusson, citing U.S. defence officials, says the bill could run as high as $10-billion. Then again, it might be possible to strike a much cheaper deal, in which Canada provides radar capability in exchange for a U.S. promise to have our back.

Spending billions to defend against a remote contingency may seem wasteful. On the other hand, conventional costbenefit thinking wobbles here: In the event that Pyongyang did target Canada, it would be worth roughly all the money in the world to have a chance of protecting ourselves.

That’s why the Canadian government should find out what’s on the table, and open discussions about joining the missile-defense program. For years, the Conservatives have been too gung-ho about this limited backup plan, and the NDP too squeamish. The Liberals, who have refused to stake out a coherent position either way, have a chance to be the party of sober, reasoned leadership on this issue.

Of course, we must keep trying for a diplomatic solution to the North Korean crisis. But sometimes you have to conduct diplomacy while wearing a bulletproof vest.

The Globe and Mail. 17 Jan 2018. ARTICLE. Donald Trump and Kim Jong-un’s game of chicken shows why the world would be better off without both leaders. Why the Vancouver summit on North Korea was futile
GARY MASON

Before Donald Trump would be given the power to start a nuclear war, his predecessor, Barack Obama, warned him of what he considered to be the greatest threat facing the United States – the erratic, unstable leadership of North Korea’s Kim Jong-un.


JONATHAN HAYWARD/ THE CANADIAN PRESS
South Korean Foreign Affairs Minister Kang Kyung-wha, left, and Canadian Foreign Affairs Minister Chrystia Freeland listen as U.S. Secretary of State Rex Tillerson speaks at an international meeting on North Korea in Vancouver on Tuesday.

What Mr. Obama couldn’t have imagined at the time, however, was that his successor would turn out to be every bit as unpredictable and volatile as Mr. Kim – every bit as capable of choosing war over detente. With a single, ad lib tweet. Mr. Trump’s inability to follow even the simplest of scripts was always going to be a problem that threatened to undermine the value of anything accomplished at the international summit on North Korea in Vancouver on Tuesday, hosted by Canada and the United States. You have to be able to count on your partners in order to have a plan. Yet, Rex Tillerson, the U.S. Secretary of State, doesn’t know from one day to the next what fresh global tempest his boss is going to touch off.

But that was only one of the issues that was going to plague the Vancouver confab. Another was the list of invitees.

Inexplicably, the event didn’t include global powers Russia or China, North Korea’s most influential neighbours. Instead, countries such as Greece, Belgium, Colombia and Luxembourg were asked to attend – as if any of them have the clout to help resolve the Korean conflict. The absence of China was particularly perplexing.

This is a superpower the United States has been urging to apply more sanction pressure on North Korea in an effort to get Mr. Kim to abandon his nuclear ambitions. Instead, the summit hosts gave China more reason to maintain the status quo, even to harbour grievances and promulgate a storyline that the gathering was creating divisions in the international community more than it was building alliances.

Not surprisingly, Russia felt equally offended, with the country’s foreign-affairs ministry denouncing the meeting as “destructive” and a “relapse of the Cold War mentality.”

So much for establishing a common front against the North Korean menace.

In some ways, the summit was also undermined and overtaken by events.

Early in the New Year, Mr. Kim and South Korean President Moon Jae-in surprised the world by announcing the resumption of military-to-military talks. Mr. Kim also agreed to send a team to compete in next month’s Winter Olympics in South Korea.

If nothing else, it temporarily eased some of the tensions that were building between North Korea and the United States, and their seemingly trigger-happy leaders.

Who knows what Mr. Kim is up to in making the overture he has with the South. He could be trying to weaken the willpower of the alliance of nations coalescing against him. He could be trying to buy some time while his scientists improve the odds of getting a nuclear warhead to hit the United States with pinpoint accuracy. He could be trying to charm South Korea into dropping its guard.

No one knows. And that is the biggest dilemma in dealing with North Korea – the uncertainty of what Mr. Kim has in store next. Maybe he doesn’t even know.

We are positive of one thing, however, and that’s that he has zero intention of dropping his goal of becoming a major nuclear player. (If he hasn’t achieved his objective already). That is not on the table in the talks with the South and never will be. And any sanctions imposed by a coalition of the willing – one that includes countries such as Greece, Belgium, Canada and Luxembourg anyway – is certainly not going to dissuade the man from threatening to blow things up real good.

China is the one country that has the muscle to make North Korea feel real pain when it comes to sanctions. It has so far been reluctant to ratchet up the economic heat on Mr. Kim, and the Vancouver summit only helped ensure it continues along this path.

The fact is, the world is a much more dangerous place than it was a year ago. Much of that is on Mr. Kim and his provocative actions, and some of it is on Mr. Trump and his own provocative statements. There is a testosterone-fuelled game of chicken going on with potentially catastrophic consequences.

The planet’s best shot for survival is that we all live until Mr. Trump is out of the White House and a saner person takes over. And that Mr. Kim steps off a curb at the wrong time, too. Meantime, we can hope the United States makes inroads in developing a cyberwarfare strategy or ballistic-missile-defence system that neutralizes the danger North Korea poses.

If not, the next missile warning the people in Hawaii get may not be a false alarm.

THE GLOBE AND MAIL. JANUARY 16, 2018. Canada stands alone on the international stage
JOHN IBBITSON, OTTAWA

The Canadian government, in concert with what is left of the U.S. State Department, brought the old allies from the Korean War together in Vancouver on Tuesday, for no particularly good reason other than to remind North Korea that it has more to fear than the tweets of Donald Trump, and to remind the world that Canada remains among the last true defenders of the old global order.

There is no way to disguise how much things have gone downhill in the past 12 months. A year ago, Prime Minister Justin Trudeau had powerful allies in the quest to preserve the Western alliance despite the arrival of a rogue U.S. president. Today, those allies are much weakened.

Four months after the German elections, Angela Merkel appears to finally have found a formula for cobbling together a new coalition. But a working government could still be weeks or even months away, and a recent poll has a majority of German voters hoping the veteran chancellor steps down before the next election.

Ms. Merkel hasn't confirmed whether she will be attending the World Economic Forum in Davos, Switzerland, next week. Mr. Trump will be there, as will Mr. Trudeau and French President Emmanuel Macron, who is expected to promote European social solidarity over the isolationist tendencies of the administration in Washington. Mr. Macron may be emerging as a new leader in the fight to defend a united Europe.

But he is also an isolated leader. Germany is currently MIA, and so is Britain, which is tearing itself apart over the decision to leave the European Union, and where Prime Minister Theresa May is distracted and unpopular. Mr. Trump's abrupt decision to cancel a planned visit to Britain has further strained what used to be called the Special Relationship.

Meanwhile, Eastern Europe continues its sad descent. Authoritarian, xenophobic tendencies are on display in Poland and Hungary, and the far right is on the rise in Austria and the Czech Republic. Europe has not been this disunited, angry and unfree since the Berlin Wall fell.

Mr. Trudeau also lacks allies in the Pacific, although he has only himself to blame for that. Relations between Canada and Japan are tense, thanks to Mr. Trudeau's bungling refusal to endorse the revised, 11-country Trans-Pacific Partnership agreement late last year. (Mr. Trump pulled the United States out of the original agreement.)

The Japanese aren't the only ones. The newspaper The Australian reported on Tuesday that Canberra's complaint to the World Trade Organization over alleged Canadian restrictions on wine imports "follows a souring in relations after Mr. Trudeau was accused of derailing the rejuvenated TPP11 at the Asia-Pacific Economic Co-operation summit in Vietnam."

Perhaps Tuesday's meeting on North Korea will help heal these rifts. Either way, the Trudeau government needs to repair its Pacific relations.

But the biggest WTO challenge comes from Canada itself, launched last week against the United States – almost 200 examples of alleged U.S. bad behaviour against Canada and other countries.

"Even if Canada succeeded on these groundless claims, other countries would primarily benefit, not Canada," U.S. Trade Representative Robert Lighthizer protested.

But that's part of the point. Among the other motivations for the complaint – impatience with one punitive U.S. action (softwood lumber) after another (Bombardier); setting up a WTO backstop in case the North American free-trade agreement negotiations fail – is the desire to present Canada as a leader in the struggle to preserve the global trading order.

The implication is clear: Mr. Trump, too, shall pass. The West is not in twilight; this President's disruptive power is already being contained, at least partially, by forces within the United States. Eventually he will leave, and the United States will return to its leadership role.

Until that time, Canada will continue defending the postwar status quo, hosting meetings and urging solidarity in the face of global threats and, yes, annoying other leaders when our Prime Minister's sanctimonious rhetoric is not matched by real commitments.

Canadian prime ministers have been doing this sort of thing for decades. It's just a particularly lonely job right now.

INVESTIMENT - CHINA - CONSTRUCTION

The Globe and Mail. 17 Jan 2018. Aecon rivals urge Ottawa to block foreign takeover. Chinese state-controlled entity set to become significant player in construction
ANDREW WILLIS, TORONTO
JEFFREY JONES, CALGARY
STEVEN CHASE, OTTAWA

Canada’s largest construction companies are urging the federal government to block the proposed $1.5-billion acquisition of Aecon Group Inc., a major domestic rival, by a state-controlled Chinese firm.

Aecon’s competitors are asking Ottawa to block the takeover on the grounds that China Communications Construction Co. Ltd. (CCCC) – which is one of the world’s largest infrastructure companies – has a poor track record when it comes to safety and corruption, and that a state-controlled Chinese entity is not suited to work on projects with security concerns, such as the refurbishment of Ontario nuclear power stations and building military facilities.

In the past, Aecon, which is based in Toronto, helped to build domestic power plants, along with prominent projects such as the CN Tower and Vancouver’s SkyTrain. A delegation from domestic construction heavyweights PCL Constructors Inc., Ledcor Group and P.W. Graham & Sons Construction met last Thursday in Ottawa with senior civil servants in the federal Department of Innovation, Science and Economic Development, which must approve the Aecon takeover, according to sources who took part in the meeting.

The session was part of a last-ditch campaign to stop a deal that would make CCCC a significant player in a booming domestic construction market. Spokespersons for PCL, Ledcor, Graham and the federal government declined to comment on the Ottawa meeting.

Aecon’s board of directors put the 140year-old company up for sale in the summer, in part to find an international partner and compete for larger projects and also in response to pressure from an activist shareholder who wanted to see the stock price rise, and announced a deal with Beijing-based CCCC in October. Aecon shareholders voted overwhelmingly in favour of the takeover in December. The deal received the blessing of Canada’s competition watchdog and Chinese regulators last month.

The final regulatory hurdle is approval from the federal government under the Investment Canada Act. The government review is expected to be completed by Jan. 26, although Ottawa can extend it. Innovation Minister Navdeep Bains’s department on Tuesday declined to comment on the Aecon takeover, including the length of the review, whether it was being extended and whether it is subject to an official national security review, the most stringent available process for assessing threats from a foreign takeover, and one that China has called a protectionist manoeuvre.

Many industries are wary of takeovers by state-owned entities, which do not have to focus on profit and can undercut competition and distort the market.

CCCC is 63-per-cent owned by the Chinese government. National security agencies in Canada and the United States have warned that companies owned or partly owned by the Chinese government are not merely commercial operations; they are also prone to passing on information or technology to Beijing and making business decisions that could conflict with Canadian interests but serve the agenda of the Communist Party of China. In recent years, the construction company, which has 118,000 employees, helped China assert sovereignty over the disputed South China Sea by building artificial islands, and CCCC was barred until recently from bidding on World Bank projects because of an acquisition’s “fraudulent practices.”

On Tuesday, Aecon chief executive John Beck said the sale to CCCC “will make Aecon a much stronger company that will continue to be managed by Canadians according to our existing values and with thousands of Canadian employees working in communities across the country. This is good news for our customers, employees, partners, taxpayers and other stakeholders.”

A spokesperson for CCCC said the company remains committed to acquiring Aecon and repeated what its president, Lu Jianzhong, said at the time of the announcement: “Aecon … will now gain access to significant capital, complementary infrastructure expertise and an international network to support its growth ambitions.”

Bob Blakely, Canadian operating officer for Canada’s Building Trades Unions, said his organization supports the deal because a better capitalized Aecon means more work for the members. “As a general rule, businesses get acquired all the time by national and international firms, and, generally speaking, the result isn’t fire, famine and plague,” he said.

Bay Street bankers widely expect the Aecon acquisition to receive government approval. In a report on the transaction published on Monday, CIBC World Markets Inc. analyst Jacob Bout said: “We expect the deal to pass the Investment Canada review.”

CCCC acquired a major Australian construction firm more than two years ago and expanded it using local management, a track record that Mr. Bout said will help the Chinese company “pass the net-benefit test” in Canada. The CIBC analyst wrote: “Another factor to consider is that while the NAFTA negotiations continue, thinking global (including talks for a potential free-trade deal) will be important to the federal government.”

Prime Minister Justin Trudeau visited China in early December as part of an initiative to launch formal trade talks.

The three rival construction firms are attempting to freeze out CCCC at a time when Canadian governments are planning massive infrastructure spending. The federal government alone is expected to spend $185-billion on infrastructure projects over the next decade, according to a report on Thursday from AltaCorp Capital. Globally, the construction industry is consolidating around its largest players, and even the biggest firms are struggling. Over the weekend, Britain-based Carillion PLC, which has 6,000 Canadian employees, collapsed after running into financial difficulties.



The Trudeau government did not immediately respond when asked to comment on concerns raised by the construction companies.

________________

LGCJ.: