Foreign Affairs Minister Peter MacKay says Canada is willing to resume aid shipments to North Korea if Pyongyang honours its pledge to begin nuclear disarmament.

MacKay, who toured a village inside the demilitarized zone between North and South Korea on Wednesday during a two-day visit, said Canada's help hinges on whether Pyongyang begins the disarmament process.

"We are certainly going to re-examine all our future aid in conjunction with the successful completion" of negotiations aimed at ending the North's nuclear weapons program, MacKay said.

In February, the North committed to shutting down its main nuclear reactor by mid-April on the condition that aid and other political concessions resume.

The commitment appeared to mark an end to a tense standoff that has existed since the North tested missiles and nuclear weapons last year -- a move that was condemned by much of the world.

However, a dispute over millions of dollars held in a Macau bank has held up the actual implementation of the agreement.

The deal called for the North to withdraw US$25 million in funds that had been held due to allegations of money-laundering and counterfeiting of $100 bills.

In exchange, the North would begin to dismantle its nuclear program.

However, neither step has been taken and officials have no explanation as to why Pyongyang hasn't acted on the agreement.

Patience waning

The United States and Japan have both said they expect the North to immediately meet its initial obligations under the six-nation pact, U.S. Secretary of State Condoleezza Rice said on Tuesday.

"We don't have endless patience. We do recognize that North Korea has continued to publicly affirm its obligation under the Feb. 13 agreement and to affirm its intention to carry through. We expect them to do so," Rice said.

Since the 1990s, when natural disasters and mismanagement crippled the economy and famine left roughly two million people dead, the North has relied heavily on foreign assistance.

MacKay said Canada's resumption of assistance to North Korea could include help on issues such as malnutrition and education, but it hinges on whether the nuclear disarmament agreement is upheld.

"If the situation improves and if the North Korean government takes certain actions, we are prepared to resume our aid program," he said.

MacKay gave no specific details, but said Canada has given tens of millions of dollars in aid to Pyongyang.

Panmunjom, the bleak cluster of blue huts in the demilitarized zone that MacKay toured on Wednesday, is jointly administered by the U.S.-led United Nations Command and North Korea, and has been since the Korean War in the early 1950s.

Almost 27,000 Canadian soldiers defended South Korea in that conflict - with more than 500 losing their lives before the war ended in 1953 with a ceasefire that still stands.

While visiting Seoul, MacKay praised China's role in helping end the nuclear standoff and said Canada is eagerly anticipating Pyongyang's compliance in honouring the agreement.

"China is prepared to work with the international community to push North Korea in the right direction,'' MacKay said at a news conference, after having met with Chinese officials Tuesday in Beijing.

MacKay also met the South Korean foreign affairs minister Song Min-soon on Tuesday after a diplomatic visit to China, and was scheduled to fly home to Canada on Wednesday.

While in China, MacKay said he will investigate reports this week that nearly half the foreign spies operating in Canada are working for China, but said he did not bring the issue up with Chinese officials this week, The Globe and Mail reported.

Canada 'harping' about human rights concerns

One of the issues MacKay did bring up while in China was Canada's concern over the treatment of Huseyin Celil, a Canadian Muslim activist who is serving a life sentence in China and claims he has been turtured while in custody.

Canada wants diplomatic access to Celil, but China has so far refused because it considers Celil a Chinese citizen.

MacKay said he is confident his meetings with Chinese officials have resulted in a new understanding of Canada's position.

However, the Chinese government's response Wednesday in the state-run China Daily newspaper was less positive.

"They see Canada as harping on human rights," said CTV's Beijing Bureau Chief Steve Chao.

"They use the words that Canada is aggressively lobbying for the release of an alleged terrorist, speaking directly about Huseyin Celil, the Canadian citizen who is in jail in Canada, serving a life sentence for crimes related to terrorism."

Chao said the Chinese position runs contrary to MacKay's earlier statements,

"All this to say that MacKay's trip is not being looked at as highly positive or highly successful in improving relations between the two countries," Chao said.

Celil, who belongs to the Uighur Muslim minority of far western China, holds Canadian citizenship. The Chinese-born man came to Canada via Uzbekistan and Turkey after escaping from a Chinese jail in 2000.

He was arrested in Uzbekistan in March of last year while visiting his wife's family, and was handed over to China under a prisoner exchange agreement.

With files from The Associated Press