WEBVTT - N. Korea Has Potential, OECD Sec.-General Says 0:00:06.320 --> 0:00:12.960 Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 0:00:13.480 --> 0:00:17.560 Jay Leye. We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:32.960 Bloomberg dot Com, and of course, on the Bloomberg. The 0:00:32.960 --> 0:00:35.440 main event then the United States and North Korea agreeing 0:00:35.440 --> 0:00:39.120 to seek complete denuclearization of the Korean peninsula following a 0:00:39.280 --> 0:00:42.760 historic summit between President Donald Trump and Kim John arn 0:00:42.880 --> 0:00:45.560 Yet the accord set no deadline and left the path 0:00:45.720 --> 0:00:50.640 to disarm and undefined. The details are light, the headlines impressive. 0:00:50.640 --> 0:00:54.680 Bloomberg Managing editor Dan ten k George's now from Singapore. Dan. 0:00:54.920 --> 0:00:58.560 The theatrics, the pictures, the photographs, the videos, they're all 0:00:59.400 --> 0:01:02.480 theatric called it's what you expected. The details thought, what 0:01:02.600 --> 0:01:06.040 is the detail of this agreement down, Well, there's there's 0:01:06.080 --> 0:01:09.560 not much in terms of substance in this agreement. Most 0:01:09.640 --> 0:01:12.679 of what we saw today we've seen before, and in 0:01:12.760 --> 0:01:15.840 fact it was a lot lighter than even skeptics we're 0:01:15.880 --> 0:01:19.520 hoping for. Um. Complete denuclearization is a term that North 0:01:19.600 --> 0:01:23.360 Korea uses to suggest not only the removal of its 0:01:23.360 --> 0:01:26.480 own nuclear weapons, but also the nuclear weapons that the 0:01:26.520 --> 0:01:30.000 United States has in the region to protect allies South 0:01:30.080 --> 0:01:34.920 Korea and Japan. UM, so that alone, um to just 0:01:35.080 --> 0:01:38.479 that Trump didn't get too much going into it. They 0:01:38.560 --> 0:01:44.319 kept talking about complete, verifiable, irreversible denuclearization, which is considered 0:01:44.319 --> 0:01:47.880 the gold standard among arms control experts, and that did 0:01:47.880 --> 0:01:50.560 not appear in the document that was signed. Do we 0:01:50.640 --> 0:01:54.120 have an accepted definition of what the complete denuclearization of 0:01:54.120 --> 0:01:57.280 the Korean Peninsula means for the Koreans and for what 0:01:57.360 --> 0:01:59.280 it ultimately means for the United States as well? Because 0:01:59.280 --> 0:02:02.160 coming against the sum there were two different definitions of 0:02:02.200 --> 0:02:04.640 that phrase. If we have got have we got in 0:02:04.680 --> 0:02:08.120 a great definition of that phrase now? And uh no, 0:02:08.240 --> 0:02:11.399 we don't. We just have that vague term. So really, um, 0:02:11.880 --> 0:02:14.280 what's going to happen in the next few weeks is 0:02:14.280 --> 0:02:18.080 Suctoria State, Mike Pompeo is going to continue these negotiations 0:02:18.520 --> 0:02:21.200 and um, you know, it's it's that where they're apparently 0:02:21.200 --> 0:02:23.960 going to have to figure out what exactly is this 0:02:24.000 --> 0:02:28.000 process where you're gonna have inspectors go in and dismantle 0:02:28.160 --> 0:02:31.519 this nuclear program. Right now, we still have no visibility 0:02:31.560 --> 0:02:35.680 on that based on what we saw today within the ballet, 0:02:35.760 --> 0:02:40.080 what did you observe in Singapore, I mean media, all 0:02:40.120 --> 0:02:42.880 of it choreographed. It was amazing how the handshake came 0:02:42.880 --> 0:02:45.560 off so smoothly and all. Oh, then the day to 0:02:45.639 --> 0:02:48.560 day grind of your Singapore. How did this summit go? 0:02:50.480 --> 0:02:52.839 It was very smooth. I mean they didn't do much 0:02:52.880 --> 0:02:55.360 at all on Monday. And and the big surprise event 0:02:55.440 --> 0:02:59.040 was really Kim Jongoon taking an evening stroll around the 0:02:59.080 --> 0:03:01.760 harbor front and sing before going to the rooftop of 0:03:01.760 --> 0:03:04.960 the Marina based and um, there were crowds of onlookers 0:03:05.000 --> 0:03:08.120 taking photos with them. This was all very spontaneous and 0:03:08.160 --> 0:03:12.079 it made him He's taking selfies with the Singapore Foreign Minister. Um. 0:03:12.200 --> 0:03:14.519 You know, this makes him look like a normal leader 0:03:14.560 --> 0:03:17.920 who received applause. He received a warm welcome all around. 0:03:17.960 --> 0:03:20.840 So from that perspective, this was a big win for 0:03:20.960 --> 0:03:25.560 Kim managing. It's a dan ten kg jointing us from Singapore. 0:03:25.600 --> 0:03:27.959 I'm Tommy. You'd have to say, now, compared to where 0:03:27.960 --> 0:03:30.320 we were a year ago, whether the President gave up 0:03:30.400 --> 0:03:32.720 too much, received very little, we're in a much better 0:03:32.720 --> 0:03:34.920 place than we were about six or twelve months ago. 0:03:34.960 --> 0:03:37.640 And that's for sure. There's no question about that. I 0:03:37.640 --> 0:03:40.560 will state is he is on Air Force one at 0:03:40.600 --> 0:03:44.680 heading the Guam and across to Hawaii and then back 0:03:44.720 --> 0:03:48.720 on home, that it appears he will be greeted John 0:03:48.760 --> 0:03:54.680 Farrell by a firestorm of discussion over these military exercises. 0:03:54.840 --> 0:03:58.840 He treated them is quote unquote war games. But we 0:03:58.960 --> 0:04:03.520 have heard on this program in this studio, among others, 0:04:03.600 --> 0:04:09.440 Admirald James Travitis go over the importance, the tactical physical 0:04:09.600 --> 0:04:14.680 importance of these military has to some too happy parties 0:04:14.720 --> 0:04:17.280 about the ending of those military exercises. One of them 0:04:17.279 --> 0:04:20.120 things the North Korea, the other thing the Chinese. This 0:04:20.240 --> 0:04:22.320 is probably exactly what the Chinese would have liked to 0:04:22.320 --> 0:04:24.680 have seen, and they're getting it. Um. You know, I 0:04:24.720 --> 0:04:27.360 mentioned the going out of television, the tweet just by 0:04:27.400 --> 0:04:32.520 Overland's Richard Hass where Ambassador Hass was gracious about the moment, 0:04:33.360 --> 0:04:38.119 but then really centered in again on these military exercises. Again, 0:04:38.160 --> 0:04:41.320 if you're just joining us and you saw the handshake 0:04:41.400 --> 0:04:46.239 last night about nine pm, John beautifully choreographed, I thought, uh, 0:04:46.680 --> 0:04:51.320 the the idea of um of just stating in a 0:04:51.440 --> 0:04:55.000 seventy minute press conference that the war games will end. 0:04:55.920 --> 0:04:58.239 That that pretty much John came out of the blue 0:04:58.440 --> 0:05:02.280 from what I could do. Okay, there, what do you want? 0:05:02.279 --> 0:05:06.200 I'm good? Are you are? Are you are working on 0:05:06.240 --> 0:05:10.719 your World Cup? Feed over there? No no. Lisa Collins 0:05:10.839 --> 0:05:16.240 joining us NOW Center for Strategic and International Studies Career Chair, UM. Lisa, 0:05:16.400 --> 0:05:19.360 Welcome to the program. Let's begin with this historic summit 0:05:19.440 --> 0:05:22.839 that we've had overnight. How much is the president given 0:05:22.920 --> 0:05:26.040 up and how significant is it? Well, I think it's 0:05:26.040 --> 0:05:29.000 a very significant concession that he's given up by agreeing 0:05:29.040 --> 0:05:32.320 to suspend the US South Korean military exercises. That's something 0:05:32.320 --> 0:05:34.800 that the South the North Koreans have been asking for 0:05:34.800 --> 0:05:39.080 for decades, something they consistently raised in previous negotiations like 0:05:39.120 --> 0:05:42.320 at the Six Party talks or even a great framework 0:05:42.440 --> 0:05:45.440 factor in Clinton era. UM, and I think that this 0:05:45.720 --> 0:05:48.919 is something that previous US administrations have known is not 0:05:49.040 --> 0:05:52.320 something that should be bargained away or should be used 0:05:52.360 --> 0:05:54.960 as a political tool for you know, for bargaining with 0:05:55.000 --> 0:05:59.280 the North Koreans. The military exercises are um and necessary 0:05:59.400 --> 0:06:02.960 part of maintaining military readiness for our forces in the 0:06:03.040 --> 0:06:06.360 region and for protecting our South Korean allies and Japanese 0:06:06.360 --> 0:06:08.599 allies in the region, and so I think this is 0:06:08.600 --> 0:06:11.279 a huge concession that maybe Trump didn't even realize he 0:06:11.320 --> 0:06:13.680 was getting up. Lisa Collins with us, and we will 0:06:13.720 --> 0:06:16.440 continue thrilled to have her with us through the morning 0:06:16.440 --> 0:06:20.080 with the Center for Strategic and International Studies in uh 0:06:20.120 --> 0:06:39.239 in Washington. We're enjoying shop jolliness with us with Credit 0:06:39.279 --> 0:06:43.600 Suite is. Yes, we have international relations of politics of Singapore. 0:06:43.640 --> 0:06:45.920 Thank you Lisa Collins for joining us there with terse 0:06:46.600 --> 0:06:49.960 comments off of what we heard from President Trump. But 0:06:50.160 --> 0:06:52.840 also the backdrop is a LIPUS paper of the system, 0:06:52.839 --> 0:06:56.039 which is foreign Exchange Shop. Is that still true that 0:06:56.279 --> 0:06:58.760 you know I learned in my textbooks at Foreign Exchange 0:06:59.360 --> 0:07:01.760 is the is the chemistry is a litmus paper of 0:07:01.760 --> 0:07:04.840 the global financial system. Is that as true today as 0:07:04.920 --> 0:07:08.480 it was years ago? I think it's it's still true. 0:07:09.040 --> 0:07:11.920 What's different now maybe is that we have so much 0:07:12.360 --> 0:07:16.280 constant news flow that the market can react and pricing 0:07:16.920 --> 0:07:20.200 events very efficiently, perhaps more efficiently than it could back then, 0:07:20.920 --> 0:07:24.000 And therefore the reaction to events like for example, this 0:07:24.160 --> 0:07:28.360 summit in Singapore can sometimes be somewhat muted because we've 0:07:28.360 --> 0:07:31.280 had so much time to think about it and understand 0:07:31.320 --> 0:07:33.920 all the different implications that could arise, and when nothing 0:07:33.960 --> 0:07:37.120 particularly surprising happens, you don't get much of a reaction. 0:07:37.520 --> 0:07:39.440 So I think that's that's why you get this type 0:07:39.480 --> 0:07:42.160 of price action compared to me. I mean, John, it's 0:07:42.200 --> 0:07:45.360 almost like there's almost no news out there now. Yeah, 0:07:45.400 --> 0:07:48.640 so dollar drifts is drifted. We just we just focus 0:07:48.760 --> 0:07:51.440 on the theatrics all the time of foreign policy, and 0:07:51.480 --> 0:07:53.720 sometimes we missed the data point. I would say more 0:07:53.760 --> 0:07:56.400 important this morning for investors was just to look at 0:07:56.400 --> 0:07:58.720 the small business Optimism survey here in the United State, 0:07:59.560 --> 0:08:02.160 the set can hirest index reading and it's forty five 0:08:02.240 --> 0:08:06.200 year history. Does that sound like American businesses worried. No, 0:08:06.320 --> 0:08:08.200 but we've heard that. I mean Drew Marters yesterday, I 0:08:08.280 --> 0:08:11.000 got a huge response. But the fact of the matter is, 0:08:11.040 --> 0:08:13.760 whatever you think about these international events right now, schaha. 0:08:13.840 --> 0:08:15.600 But it just seems to me that here in the 0:08:15.680 --> 0:08:18.440 United States, domestically speaking, which is why we're talking about 0:08:18.480 --> 0:08:21.360 small companies, not big caps, exposed to the international story, 0:08:21.640 --> 0:08:25.160 but domestically speaking, it looks like the United States is 0:08:25.200 --> 0:08:27.400 the best house on the street. That's still the case. 0:08:27.640 --> 0:08:31.680 And you know, even the political risk in the US, 0:08:31.760 --> 0:08:35.680 despite President Trump apparing to some to be a liability 0:08:35.679 --> 0:08:38.600 on that front, it's still muted compared to most other 0:08:38.760 --> 0:08:41.720 major economies out there. So for example, the UK you 0:08:41.720 --> 0:08:44.920 have the Brexit debate. Europe just delivered the Italy story, 0:08:44.960 --> 0:08:48.600 which was a surprise for many actually um and you 0:08:48.640 --> 0:08:51.360 know clearly in emerging markets, you've got all kinds of 0:08:51.360 --> 0:08:54.600 different political uncertainties out there right now, which which do 0:08:54.679 --> 0:08:57.000 spill over into the economy. So that's why I think 0:08:57.000 --> 0:08:58.960 the US at this point looks looks better than the rest. 0:08:59.000 --> 0:09:01.280 Banks for America, Mary Lynch come out with that monthly 0:09:01.360 --> 0:09:03.160 survey that a lot of people look at the fund 0:09:03.160 --> 0:09:06.480 manager survey, and in that survey this month, the theme 0:09:06.559 --> 0:09:10.600 is pretty clear. It's decoupling once again the United States. 0:09:10.840 --> 0:09:13.720 People get an exposure to the US and trimming exposure 0:09:13.720 --> 0:09:16.599 to Europe and emerging markets. Are we decoupling here in 0:09:16.600 --> 0:09:18.120 the United States from the rest of the world, and 0:09:18.160 --> 0:09:21.280 we're moving from global synchronized growth to a world that's 0:09:21.320 --> 0:09:23.960 quite familiar several years ago, which is the US doing 0:09:24.000 --> 0:09:27.440 great with struggles our swhere. It doesn't have to be that. 0:09:27.880 --> 0:09:30.160 If you go back just a couple of months. In fact, 0:09:30.640 --> 0:09:34.960 many market participants expected a synchronized global recovery. In fact, 0:09:34.960 --> 0:09:38.800 they expected, for example, Europe to perform so well that 0:09:38.880 --> 0:09:41.839 the euros should go higher against the US dollar even 0:09:41.880 --> 0:09:45.040 with the US is yield differential advantage that it has 0:09:45.080 --> 0:09:47.680 at this point in time. So there was a surprise 0:09:47.720 --> 0:09:51.120 factor there where suddenly the numbers came off in places 0:09:51.160 --> 0:09:53.760 like Europe and other parts of the world. And actually, 0:09:53.840 --> 0:09:56.360 I think many economists still expect to bounce back in 0:09:56.360 --> 0:10:00.280 those numbers. So this desynchronized growth outlooked at we have 0:10:00.440 --> 0:10:02.960 at this point in time need not necessarily persisted. But 0:10:03.040 --> 0:10:07.679 the heart of all of this analysis is gaming central banks. 0:10:08.280 --> 0:10:12.360 And the central banks are gaming inflation and the vector, 0:10:12.559 --> 0:10:15.720 the first and second derivatives of inflation. What are they 0:10:15.840 --> 0:10:19.160 right now? I mean, what what is Mr Powell's summary. 0:10:19.400 --> 0:10:21.559 He's sitting at his desk, He's got his Bloomberg next 0:10:21.600 --> 0:10:25.040 to him. We know that John Sherman pulse constantly on 0:10:25.080 --> 0:10:28.199 his Bloomberg looking at the dots, But what is a 0:10:28.280 --> 0:10:32.240 single sheet of paper on his desk about inflation? Actually say, well, look, 0:10:32.280 --> 0:10:34.680 I think I think the bigger issue there is that 0:10:34.840 --> 0:10:38.560 although the inflation level is at an acceptable level, and 0:10:38.559 --> 0:10:41.640 certainly much higher than let's say europe A Japan's inflation level. 0:10:41.920 --> 0:10:44.840 The flattening yield curve is sending a different message, which 0:10:44.880 --> 0:10:48.560 is that the level of rates is that's priced in 0:10:48.640 --> 0:10:50.319 right now, so let's send next to the end of 0:10:50.400 --> 0:10:54.000 next year, is already high enough, you know, given the 0:10:54.040 --> 0:10:58.440 longer term decline in potentially you know, potential growth and 0:10:58.480 --> 0:11:00.360 other factors of the market is concerned about. So I 0:11:00.400 --> 0:11:02.920 think that's that's the issue here. It's not really where 0:11:02.960 --> 0:11:05.880 is inflation right now? It's what level of rates can 0:11:05.880 --> 0:11:08.800 the market tolerate before it starts to worry about more 0:11:08.800 --> 0:11:12.520 disinflation in the future. That's we're doing central bank analysis 0:11:12.600 --> 0:11:16.000 by gas by forecast right well. I think even the 0:11:16.040 --> 0:11:18.280 Central Bank Franction is doing that. If you think about 0:11:18.280 --> 0:11:20.880 the debate that's ongoing at this point around what is 0:11:20.920 --> 0:11:23.800 the real neutral rate at this point in time, how 0:11:23.880 --> 0:11:26.400 much has that changed, how high above it can you 0:11:26.480 --> 0:11:29.920 go before you risk a de leveraging concern in the 0:11:29.920 --> 0:11:35.680 global economy. These are all things that being debated constantly, 0:11:35.920 --> 0:11:37.640 and I don't think it's gonna be an answer to 0:11:37.640 --> 0:11:40.040 that quick. We're talking about Panama yesterday in the world 0:11:40.040 --> 0:11:42.480 Cup as it Rain got a chance, I think so. 0:11:42.520 --> 0:11:46.120 I think, you know it's based on the very low 0:11:46.120 --> 0:11:49.600 pal is that that the market is subscribing first game Friday, 0:11:49.640 --> 0:11:51.800 if less the city can win the Premier League. I 0:11:51.840 --> 0:11:56.320 think there's what's the first game Friday? Morocco? Yes, Morocco 0:11:56.360 --> 0:11:58.839 exactly came on Friday. So what happens does you have 0:11:59.000 --> 0:12:02.959 when when kickoffs? What eleven eleven am on Friday? Yeah, 0:12:02.760 --> 0:12:05.719 you know I've got this credit dis credit space to 0:12:05.760 --> 0:12:09.160 lose their effort. I've also got to watch England on Monday's. 0:12:09.280 --> 0:12:12.640 It's the problem with your foot in multiple you mentioned 0:12:12.640 --> 0:12:14.520 earlier Spain is going to do better. I mean you 0:12:14.559 --> 0:12:16.760 know that that's just the gut feel. To be honest 0:12:16.800 --> 0:12:19.000 with you, Why is Spain gonna do better? We're gonna 0:12:19.040 --> 0:12:22.679 cover this in detail, full team coverage in about seven minutes, folks. Yeah, 0:12:22.679 --> 0:12:25.400 I actually don't think any particular country has a standout 0:12:25.440 --> 0:12:28.600 strong team this time. Yeah, I would go with that. Yeah, 0:12:28.760 --> 0:12:31.480 So that's why I'm just going with my gut feel, 0:12:31.520 --> 0:12:33.840 which is Spain. I can't there's no analysis involved there. 0:12:33.920 --> 0:12:36.520 My gut feel is the United States of America's not 0:12:36.640 --> 0:12:39.160 in it. And I thought it's Nigeria. I thought that 0:12:39.440 --> 0:12:41.560 was your No. I'm supporting Nigeria because I have a 0:12:41.600 --> 0:12:43.920 memory from eight or twelve years ago that it was 0:12:44.000 --> 0:12:47.440 fun watching them, you know, for an America now because 0:12:47.440 --> 0:12:49.280 it is fun watching but come on there, like the 0:12:49.320 --> 0:12:52.080 Washington Capitals to come down the ice and they shoot 0:12:52.120 --> 0:12:54.760 the puck. Nigeria, there's none of this pussy footing around. 0:12:55.760 --> 0:12:57.800 Nigeria comes down the field and they kicked the ball. 0:12:58.400 --> 0:13:01.320 That's what Americans want right to see this summer. So 0:13:01.360 --> 0:13:04.439 I'm gonna get you the excuse me to get it's 0:13:04.440 --> 0:13:05.920 a kid. Well, I just say, I'm speaking in your 0:13:05.960 --> 0:13:09.199 land a kid, but I'm going to get you the shirt. Okay, 0:13:09.400 --> 0:13:11.680 call it the shirt. I'm going to get the Nigeria shirt. 0:13:12.440 --> 0:13:14.400 I can't see you fully kidded out with the socks, 0:13:14.440 --> 0:13:32.440 shorts and jersey as well. We have had some terrific 0:13:32.600 --> 0:13:38.200 guests that we hope are giving you perspective away from 0:13:38.320 --> 0:13:41.080 the basics of Korea, and one of them is Catherine 0:13:41.080 --> 0:13:45.439 interest Moon uh Senior Fellow for Foreign Policy the Center 0:13:45.480 --> 0:13:49.800 for East Asia Policy Studies as well. Catherine, thank you 0:13:49.880 --> 0:13:52.760 so much for being with us on a busy day. 0:13:53.040 --> 0:13:56.079 Let me begin with what we've seen through the morning 0:13:56.120 --> 0:13:58.640 and what our audience has heard through the morning. With 0:13:58.840 --> 0:14:02.679 what this moment means for South Korea, we've heard too 0:14:02.760 --> 0:14:08.120 little about it. How does Soul respond to what we've seen? Well? 0:14:08.360 --> 0:14:12.480 President Muon Jayne of South Korea has declared that he's very, 0:14:12.600 --> 0:14:17.439 very happy and and considers the summit so far a success. 0:14:18.160 --> 0:14:20.640 Um I think the South Korean public will feel good 0:14:20.640 --> 0:14:26.280 about it, accept there's a problems. President Trump offered to 0:14:26.480 --> 0:14:31.000 see joint military exercises, training exercises that are held regularly 0:14:31.000 --> 0:14:34.000 throughout the year with South Korea as part of the alliance. 0:14:34.520 --> 0:14:39.360 This was a unilaterally yeah made statement and this has 0:14:39.400 --> 0:14:42.200 surprised the d D in the US as well as 0:14:42.200 --> 0:14:45.000 South Korea. The government is basically saying they're going to 0:14:45.040 --> 0:14:48.520 have to get clarity from the US about the statement. 0:14:48.560 --> 0:14:52.880 So that is really unexpected and um way too much. 0:14:53.400 --> 0:14:56.160 Written to Mr Kim, I mean, you came out of 0:14:56.240 --> 0:14:59.400 the Smith College, Princeton, Combine, you're teaching up at Wellesley. 0:14:59.440 --> 0:15:02.320 Now you're going to walk into your class tomorrow and 0:15:02.440 --> 0:15:06.560 within your international relations you have to bring in the 0:15:06.600 --> 0:15:09.520 military of the United States of America. How will the 0:15:09.560 --> 0:15:13.720 Pentagon respond to what the president, it seems almost ad 0:15:13.800 --> 0:15:17.720 hoc said within his press conference, Well, I have a 0:15:17.760 --> 0:15:20.680 simple answer to that, which is that the Pentagon, as 0:15:20.720 --> 0:15:23.720 far as the US Military Command in South Korea goes, 0:15:23.800 --> 0:15:27.000 the spokesperson already said very very clearly and early on 0:15:27.520 --> 0:15:30.960 that day, will proceed as usually, have gotten no command 0:15:31.160 --> 0:15:33.720 and so they're training to get ready for the August 0:15:33.760 --> 0:15:36.960 military exercise. I mean, this is a professor bon. This 0:15:37.040 --> 0:15:39.840 is absolutely critical in that we have heard this from 0:15:39.840 --> 0:15:42.960 Admirals Torvinis and others over he's at the school north 0:15:43.120 --> 0:15:47.640 northeast of Wellesley called tufts Um and Admiral Stevidis has 0:15:47.680 --> 0:15:51.760 said very simply, uh that this these are command orders, 0:15:51.840 --> 0:15:55.120 aren't they right? Right now? This is this is um. 0:15:55.320 --> 0:15:58.480 It's a bit commity. This is a little nuts frankly 0:15:59.200 --> 0:16:03.600 um and uh, the Defense Minister Matis on a Monday, 0:16:03.840 --> 0:16:07.480 the eve of the summit, had already said the military 0:16:07.520 --> 0:16:10.720 exercises are not on the table for negotiations, and then 0:16:10.920 --> 0:16:14.040 President Trump just offered it up, Kathy, are we in 0:16:14.040 --> 0:16:16.000 a beneposition now on the peninsula And then we were 0:16:16.040 --> 0:16:21.880 twolve months ago, Uh, well yes, if we don't want war. 0:16:22.240 --> 0:16:26.720 This is a very very good development relative to war 0:16:27.160 --> 0:16:30.160 or fire and fury and other kind of rhetorics like that. 0:16:30.320 --> 0:16:35.040 So the big pictures death. However, Uh, there isn't much 0:16:35.080 --> 0:16:40.040 there there in the joint statement. And for example, the 0:16:40.120 --> 0:16:45.320 US promises um to goose North Korea security assurances and etcetera. 0:16:45.440 --> 0:16:49.040 But North Korea promises to proceed with the declared de 0:16:49.160 --> 0:16:54.560 nuclearization intention of April when Kim meant with Moon. However, 0:16:56.040 --> 0:17:01.520 North Koreans have not even presented a recommitment to continuing 0:17:02.520 --> 0:17:05.520 cruise on nuclear testing and missile testing. I mean, we 0:17:05.560 --> 0:17:07.879 could have a minimum gotten that. Would you say the 0:17:07.880 --> 0:17:12.199 world is more secure now than twelve months ago? I 0:17:12.240 --> 0:17:14.800 would say we are not on a road to war, 0:17:14.920 --> 0:17:18.359 so therefore secure but quite insecure. In terms of what 0:17:18.520 --> 0:17:21.960 is to come after this meeting, Well, what's what's the 0:17:22.000 --> 0:17:24.200 greeting the president is going to get back in Washington? 0:17:24.240 --> 0:17:27.359 I mean, we mentioned Pentagon earlier, but you know, you 0:17:27.400 --> 0:17:31.040 see the back and forth between any executive branch officer 0:17:31.119 --> 0:17:34.760 in the legislative branch. How will this be received in Washington? 0:17:36.280 --> 0:17:39.720 I think the members of Congress will want to get clarification, 0:17:39.840 --> 0:17:43.600 like many people around the world, because it's so vague. 0:17:43.600 --> 0:17:46.639 What happened is so vague, and the U s seems 0:17:46.680 --> 0:17:51.280 to have offered more, at least verbally. Um. The other reality, though, 0:17:51.400 --> 0:17:54.439 is that the joint statement is not a bagally binding statement, 0:17:54.480 --> 0:17:56.160 so it comes up and have to abide by any 0:17:56.200 --> 0:17:58.959 of it, and neither does Kim. You know one thing 0:17:58.960 --> 0:18:00.840 I want to bring up as China. I found it 0:18:00.880 --> 0:18:06.200 really striking that when Trump was taking questions from the media, Um, 0:18:06.280 --> 0:18:09.199 he sanks Presidents She and all the other dignitaries of 0:18:09.240 --> 0:18:13.119 East Asian countries are relevant there. But he said that 0:18:13.280 --> 0:18:16.600 he is grateful to President She for having enforced so 0:18:16.680 --> 0:18:19.520 tightly the sanctions, and then he says, but not so 0:18:19.640 --> 0:18:22.480 much in the last two months, But that's okay, that's 0:18:22.520 --> 0:18:25.840 what he says. But that's okay. So I was stunned 0:18:25.840 --> 0:18:29.320 that he is signaling to China and other countries that 0:18:29.440 --> 0:18:34.240 loosening up sanctions that not abiding by them uh is okay, 0:18:34.320 --> 0:18:37.760 and that the US doesn't have much leverage m accept 0:18:37.800 --> 0:18:41.200 the sanctions that the Chinese can employ. Well, Kathy, let's 0:18:41.200 --> 0:18:43.119 talk about the Chinese role in all of this. Do 0:18:43.160 --> 0:18:45.199 you think the Chinese and President changing thing will be 0:18:45.240 --> 0:18:48.919 happy with the outcome of the summit Oh yeah, I 0:18:48.920 --> 0:18:54.280 think for now, because the Chinese wanted exactly what Trump offered, 0:18:54.400 --> 0:18:59.240 which is too ceased US military exercises in South Korea 0:18:59.440 --> 0:19:06.880 in return for a freeze of nuclear and missile testing, etcetera. Um. 0:19:06.960 --> 0:19:09.919 But in some ways China got what it wanted. The 0:19:09.960 --> 0:19:14.439 North Korean's got so much just meeting Trump, getting the 0:19:14.560 --> 0:19:18.720 coverage worldwide and not having to commit to anything specific. 0:19:18.880 --> 0:19:21.080 Canthey has been incredibly difficult to make a judgment cool 0:19:21.160 --> 0:19:23.480 after once summit, with a lot of theatrics. This is 0:19:23.520 --> 0:19:26.600 going to take months, maybe even years for this to 0:19:26.680 --> 0:19:28.600 play out. But as you see things at the moment, 0:19:28.760 --> 0:19:32.200 your base case, the swear of influence that the North 0:19:32.280 --> 0:19:35.119 Koreans fall into, is it towards the South, towards the 0:19:35.200 --> 0:19:38.960 United States, or is it towards China. Oh, I think 0:19:38.960 --> 0:19:41.600 it's none of the above. North Korea does not dance 0:19:41.640 --> 0:19:44.639 to other countries, tune it's dances to its song. So 0:19:44.760 --> 0:19:47.240 right now, I think North Korea Kim is doing a 0:19:47.480 --> 0:19:52.879 really superb job doing the diplomacy politics with the South Koreans, 0:19:52.880 --> 0:19:55.879 with the Chinese, with the Americans. Uh, He's willing to 0:19:55.960 --> 0:19:58.720 dance with everybody right now, and with the Russians, and 0:19:58.760 --> 0:20:01.480 I'm sure he's going to extend that dance card to 0:20:01.640 --> 0:20:05.840 the Japanese as well. Kathy, really thoughtful stuff, and we 0:20:05.880 --> 0:20:08.480 really appreciate your time on this program from the Brookings 0:20:08.480 --> 0:20:12.800 Institution Center for East Asia Policy Studies. Um, Kathy Moon, 0:20:28.280 --> 0:20:30.600 We've got a fantastic interview coming to us from Berlin. 0:20:30.880 --> 0:20:35.080 Tom Keene unexpected and Gal Guria, the o ECG Secretary General, 0:20:35.160 --> 0:20:37.119 just popping into the Berlin studio and he joined us 0:20:37.119 --> 0:20:40.120 from Berlin, Germany. And good morning to your sir, Good 0:20:40.160 --> 0:20:42.119 afternoon to you over there, and thank you very much 0:20:42.119 --> 0:20:44.679 for joining us. Let's just talk about your meeting with 0:20:44.720 --> 0:20:49.600 a Chancellor Merkel in Berlin. Huge reversal seemingly in US 0:20:49.680 --> 0:20:52.439 German relations over the last year. Just what kind of 0:20:52.480 --> 0:20:55.560 position is Chancellor Merkel in and what had she told you? Well, 0:20:56.160 --> 0:21:02.959 Chancellor Merkel is always at VISTIQ and she's always pragmatic, 0:21:03.040 --> 0:21:08.359 and she's always working towards a greater cooperation. So I 0:21:08.400 --> 0:21:10.760 think we what we did together with the heads of 0:21:10.760 --> 0:21:12.720 the i m F, together with the head of the 0:21:12.720 --> 0:21:17.879 World Bank, of the International Labor Organization and the World 0:21:17.880 --> 0:21:22.800 Trade Organization myself, we all talked about UH in each 0:21:22.880 --> 0:21:27.959 of our domains, how we could work with multilateralism and 0:21:28.000 --> 0:21:30.800 how we could promote globalization. And at the same time 0:21:30.960 --> 0:21:33.040 we had the head of the African Development Bank, so 0:21:33.119 --> 0:21:36.960 we focused a lot on cooperation with Africa. The domain 0:21:37.440 --> 0:21:40.600 of Mexico is something that you have grown up with 0:21:41.320 --> 0:21:43.720 and you have now seen the tests by the domain 0:21:43.920 --> 0:21:48.000 of Trump, whether it's NAFTA, Mexico, what we've seen with 0:21:48.080 --> 0:21:50.280 Canada coming out of Quebec and a course with your 0:21:50.320 --> 0:21:55.560 conversation with Chancellor Miracle today, these domains are under attack 0:21:56.280 --> 0:22:02.120 from a unique president. How should they respond to Donald Trump? Well, 0:22:02.160 --> 0:22:06.160 I think that these are different circumstances. In the case 0:22:06.280 --> 0:22:09.480 of Mexico, which you mentioned, what we're going to have 0:22:09.520 --> 0:22:13.520 an election on the first of July UH and there's 0:22:13.560 --> 0:22:16.600 still so there's still you know, three weeks of campaigning 0:22:16.640 --> 0:22:21.240 to do um and the questions in Visa v. The 0:22:21.320 --> 0:22:26.200 United States depend a lot on UH NAFTA, How will 0:22:26.240 --> 0:22:30.480 NAFTA uh it developed, How will NAFTA end up in 0:22:30.600 --> 0:22:34.720 terms of the negotiations, But they also issues of security, 0:22:34.800 --> 0:22:39.359 issues of migration, there are issues of you know, the 0:22:39.680 --> 0:22:43.280 not not not just a trade but also the dealing 0:22:43.400 --> 0:22:46.720 of drugs and arms that come from the South and 0:22:46.800 --> 0:22:49.800 go into consumption in the United States, and then the 0:22:49.920 --> 0:22:53.479 arms flow coming from the United States into Mexico. So 0:22:53.520 --> 0:22:57.720 there are a number of issues that the bilateral relationship 0:22:57.760 --> 0:23:01.439 requires when it comes to well, for example, the G 0:23:01.560 --> 0:23:07.280 seven meeting, of course, that was mostly a an issue 0:23:07.320 --> 0:23:10.160 that was brought up in terms of the communicate. At 0:23:10.160 --> 0:23:13.439 the end, it was mostly about trade to some extent 0:23:13.480 --> 0:23:17.840 climate and then and then last but not least in 0:23:17.880 --> 0:23:22.200 the case in the particular case about Canada, well, it 0:23:22.280 --> 0:23:26.800 was about whatever this encounter happened because of the communicate, 0:23:27.000 --> 0:23:29.440 And in some ways in Europe there is a protectionist 0:23:29.440 --> 0:23:32.199 wall creating barriers to entry for for many people to 0:23:32.200 --> 0:23:35.320 get into the European market, the auto market being one 0:23:35.320 --> 0:23:38.280 of them. The Europeans realizing that they need to remove 0:23:38.440 --> 0:23:41.080 some of those tariffs on on auto imports in order 0:23:41.119 --> 0:23:43.760 to appease the president Here in the United States, I 0:23:43.800 --> 0:23:47.879 don't think that anybody is doing anything to appease anybody else. 0:23:48.400 --> 0:23:53.040 But I think the question is that you realize that 0:23:53.280 --> 0:23:56.640 more and more the barriers of trade have to come 0:23:56.680 --> 0:24:01.360 down in order for everybody to capture the ifits of trade. Yeah, 0:24:01.400 --> 0:24:03.000 and I think it's an important question I got, But 0:24:03.040 --> 0:24:05.719 I just wonder whether the Europeans themselves are aware that 0:24:05.720 --> 0:24:08.200