Canadian Future Forces 2005: An Executive Roundtable

The Future Forces Roundtable provides a forum for leaders in the Canadian food and consumer products industries to discuss the major issues of the day and their future impact—what the issues mean to them as individuals and industry leaders, as well as for their organizations.

In the eighth annual Future
Forces Roundtable, Insights and Innovations Regarding Consumers, Leadership, Industry and Politics, CEOs from Canada’s most influential retailers, manufacturers and distributors were on hand to address critical issues and trends that will affect the grocery industry over the medium and long term. Participants joined with prominent thought leaders and policymakers to engage in candid discussions.

The event centered on three major themes: industry, consumer and personal insights. The discussion topics included:

• Winning in the World: Economic and Political Growth for Canada and all Nations
• Asia: The Rising Dragon and Canadian Imperatives and Opportunities
• Great Leadership: Exceeding your Potential
• Canada and the International Socio-Political Landscape
• CEO Hopes and Fears: Future Forces 2005 in Perspective

The Future Forces Roundtable is sponsored by A.T. Kearney, the Canadian Council of Grocery Distributors (CCGD), and Food and Consumer Products of Canada (FCPC).

Distinguished Speakers

Dr. Michael Walker
Senior Fellow at the Fraser Institute and President of the Fraser Institute Foundation
Dr. Michael Walker, former executive director of the Fraser Institute, is an economist, journalist, broadcaster, consultant, university lecturer and public speaker. Born in Newfoundland in 1945, he received his B.A. (summa) from St. Francis Xavier University in 1966 and completed his Ph.D. in Economics at the University of Western Ontario in 1969. Dr. Walker writes regularly for daily newspapers and financial periodicals. His articles have also appeared in technical journals in Canada, the United States and Europe, including The American Economic Review, the Canadian Journal of Economics, Canadian Public Policy, Health Affairs, and the Canadian Tax Journal. He has written or edited 40 books on economic matters. The Fraser Institute is an independent public policy organization with offices in Vancouver, Calgary and Toronto.

Joseph Caron
Canadian Ambassador to Japan and Former Canadian Ambassador to China
Ambassador Joseph Caron joined the Trade Commissioner Service in 1972, and was assigned to Saigon and Ankara. In 1975, he began Japanese language studies, and was subsequently posted three times to the Canadian Embassy in Tokyo, including as Minister and Head of Chancery. During the 1980s he undertook private-sector assignments involving China, Hong Kong, Korea and Taiwan. In Ottawa, he has held several positions related to Asian and international economic affairs, including G8 Summitry. He became Assistant Deputy Minister for Asia Pacific and Africa in 1998. Concurrently, Mr. Caron served as Canada’s Senior Official for APEC. In 2001, he was Ambassador to the People’s Republic of China with dual accreditation to the Democratic People’s Republic of Korea and to Mongolia. In 2005, Mr. Caron was appointed as Ambassador to Japan.

Simon Bell
Principal, Global Business Policy Council, A.T. Kearney
Simon Bell is a principal in A.T. Kearney’s Global Business Policy Council, a unique strategic service designed to help corporations and governments anticipate and capitalize on global geopolitical, socio-economic and technological change. A specialist in emerging markets strategy and global management, Mr. Bell has worked extensively over the past 15 years as a consultant to major organizations in the private and public sectors throughout Europe, Asia and the Americas. He is the principal author of the A.T. Kearney Offshore Location Attractiveness Index, and a frequent adviser on offshore location strategy to the world’s leading corporations. Born in Sri Lanka and raised in Thailand, India, Brazil, Ethiopia and Jordan, he earned a Bachelors degree from Oxford Uuniversity in the United Kingdom and a Masters degree from the University of Pennsylvania in the United States.

Dr. Jay Conger
A BusinessWeek Top Five Leadership Guru and Professor of Leadership Studies at Claremont McKenna College
Dr. Jay Conger is the Kravis Research Professor of Leadership Studies at Claremont McKenna College, Professor of Organizational Behaviour at the London Business School and a Senior Research Scientist at the Centre for Effective Organizations at the University of Southern California in Los Angeles. He was selected by BusinessWeek as one of the top five management gurus in the world, and the best business school professor to teach leadership to executives. He has authored or coauthored 11 books, including Corporate Boards and Growing Your Company’s Leaders: How Great Organizations Use Succession Management to Sustain Competitive Advantage. He lives in Manhattan Beach, California, and London, England.

Stephen Lewis
Secretary to the United Nations and UN Special Envoy
Stephen Lewis is the UN Secretary-General’s special envoy for HIV/AIDS in Africa, a commissioner on the World Health Organization’s Commission on Social Determinants of Health, and director of the Stephen Lewis Foundation. His extensive experience as a politician, diplomat and humanitarian includes tenures as Canadian ambassador to the UN, special advisor on Africa to the UN Secretary-General, and deputy executive director of UNICEF. He was named Maclean’s magazine’s “Canadian of the Year” in 2003 and was listed by Time magazine as one of the 100 most influential people in the world in 2005. He lives in Toronto, Canada.

Participants

Heather Allen
General Manager
Reckitt Benckiser Canada Inc.

Alain Brisebois
Senior Executive Vice President
A&P Canada

Fred Bunney
National Sales and Marketing Manager
Wallace & Carey Inc.

Michael Burrows
President and CEO
E.D. Smith and Sons, Limited

Nancy Croitoru
President and CEO
Food and Consumer Products of Canada

Frank Geier
President
GFS Canada Company Inc.

Petraea Heynike
President and CEO
Nestlé Canada Inc.

Nick Jennery
President and CEO
Canadian Ccouncil of Grocery Distributors

Ron Kovitz
Chairman
Centennial Foods

Ed MacLellan
President
Energizer Canada Inc.

Bob Millar
President and COO
CKF Inc.

Tim Penner
President
Procter & Gamble Inc.

John Scott
President
Canadian Federation of Independent Grocers

David Sculthorpe
President
Cadbury Adams Canada Inc.

Art Smith
Chief Executive Officer
GS1 Canada

Mark Smucker
Managing Director
Smucker Foods of Canada Co.

Christi Strauss
President
General Mills Canada Corporation

Geoffrey Wilson
Senior Vice President, Industry and Investor Relations
Loblaw Companies Limited

Design Team

Dean Hillier
Vice President
A.T. Kearney

Michelle Noble
Vice President, Marketing and Communications
Food and Consumer Products of Canada

Tracey Sanderson
Marketing Manager
A.T. Kearney

Elaine Smith
Senior Vice President, Industry Affairs
Food and Consumer Products of Canada

Inge van den Berg
Principal
A.T. Kearney

David Wilkes
Senior Vice President, Trade and Business Development
Canadian Council of Grocery Distributors

Winning in the World: Economic and Political Growth for Canada and All Nations
Dr. Michael Walker
Senior Fellow at the Fraser Institute, and President of the Fraser Institute Foundation

The Fraser Institute publishes its annual report, Economic Freedom of the World, in conjunction with institutions and 70 countries. It is increasingly relied upon by organizations around the world to document the institutional impact of government. The report includes an index that measures the degree to which the policies and institutions of countries support economic freedom. The cornerstones of economic freedom include personal choice, voluntary exchange, freedom to compete, and security of privately owned property. There are 38 components and sub-components used to construct a summary index and to measure the degree of economic freedom in five areas: size of government; rule of law, including legal structure and protection of property rights; access to sound money; trade with foreigners; and regulation.

The good news is that economic freedom is improving around the world. One result of this is increased affluence. If a country has more economic freedom, it has more income and growth. When we look at 127 countries that vary in their characteristics, there is one variable—economic freedom—that explains about 54 percent of the total income variation among those countries. This is a powerful finding that explains much of what is happening to income levels in various countries.

Real Wage and Sector Shift
At the turn of the 20th century, nearly 50 percent of Canadians were employed in agriculture. To achieve today’s standard of living (higher income levels), we had to get 46 percent of the total labour force out of farming and into other sectors. But people didn’t wake up one morning and say, “I think I’ll leave the farm now.” The reason they left the farm was because real incomes were higher elsewhere. People first went into the service industries, not into manufacturing as some believe, and then moved gradually into manufacturing. (Canada’s manufacturing boom began in 1951.)

Today, something similar is happening in other countries and for the same economic reasons. Countries are moving away from agriculture to manufacturing. For example, 59 percent of people in China are involved in agriculture, versus Singapore, which has very few people in agriculture. What in effect happens over time is that countries trade across the time warp. When a country moves from its agrarian base to manufacturing, people first move into the service sector and then into manufacturing. China, however, is different. People are not being enticed into the service sector because of the Communist prohibition on service employment: They didn’t think it produced any wealth. Instead, the Chinese are moving directly into manufacturing, and away from agriculture.

China is trading with Canada, which is gradually moving out of manufacturing and into the service sector where there are more employment opportunities. Indeed, the service sector is alive and well in Canada. Kids would rather be assistants on a production site for a movie than work on a factory assembly line. Parents don’t generally want their children to do the job they did if it wasn’t very pleasant. So you have this generational bias against manufacturing as an occupation, which means Canada’s manufacturing sector will continue to shrink.

How Canada Is Doing in this Global Interface
Let’s look at the competition among nations. Canada is now engaged in a global process of economic freedom. The future changes that we have to worry about are around several themes—how good is the garbage collection, and how good the government is at being a utilities provider, tax collector, public services provider and regulator? How does it compare to other countries? Canada is doing quite well. We ranked 7th overall in the world and with countries such as United Arab Emirates and Estonia, which have just moved into the top ranking. Hong Kong and Singapore have been perennially the most free in terms of economic freedom. Canada has made progress in reducing the size of government, which is one reason our score has gone up. We’ve also reduced taxes, so our government performance compared to 1985 is actually quite good.

Although Canada has been reducing the size of government, the gap between the United States and Canada is still very large. We still have more government ownership and higher tax rates, and we use more of our spendable resources in the national sector. The United States also outperforms Canada in terms of sound money. This isn’t surprising since the United States has a reserve currency, which is preferred in most countries of the world.

Canada’s biggest public policy problem is health care. It is also our greatest lost opportunity because Canada offers a socialized medical alternative, which is financed through the public sector. This means access does not depend on income.

The Canadian health-care sector is now the largest and fastest growing business in Canada—but it’s a government monopoly. So consider the opportunity: If we abandon the public monopoly in this area, we can become suppliers of health care to the world. In fact, by keeping costs down we actually lose this opportunity. We cannot increase employment in our largest, fastest growing business and thus capture the economic benefits. We need to stop this nonsense about controlling the amount of money spent on health care. It is like trying to control the amount of money spent on housing or on holidays. We need a paradigm shift to take advantage of economic freedom.

Asia: The Rising Dragon and Canadian Imperatives and Opportunities
Joseph Caron
Canadian Ambassador to Japan and Former Canadian Ambassador to China

My role as an ambassador is to translate Canada’s objectives bilaterally. Ambassadors should spend time in Canada to listen and share information about the various countries they represent. My discussion today will be about the principal trends that define Asia, specifically Northeast Asia, with the focus on business risk in China and Japan.

Three billion people have joined the global economy—two billion in Russia and Eastern Europe and one billion in China. The outlook is largely positive, though less certain in areas where adjustments are not allowed to take place, such as parts of India.

China’s rise need not be a threat to its neighbours. The Chinese need two more generations to attain national wealth to match those of mid-level developing countries. It will take one generation for China to reach Malaysia’s level of development. A peaceful economic environment will encourage China’s growth.

Opportunities to do business with China will increase. Exports will continue to rise as there is no substitute for low-tech manufactured goods. Continued reform of the domestic economy is the key to overall growth. This process is ongoing and is driven by the addition of foreign investments, World Trade Organization obligations, a sustained high level of foreign investment and low labour rates. This situation will continue with a reliable social safety net. Gross domestic investment was almost 42 percent of GDP. North American and EU markets will increase trade with China despite its guerilla actions in textiles. China’s policies will drive growth, despite environmental risks.

Legal systems in China are not reliable, especially with regard to intellectual property. Western countries will have to work around frequent threats to their intellectual property and find partners that will align with their own ideals.

The other risk in China encompasses political issues. The Communist party is deemed to represent all Chinese. Opposition to the regime is not a threat to the party, but no country has achieved high levels of modernization without some accountability. Means have to be institutionalized to rid the system of corruption. Your shareholders and customers may question your company’s involvement with China due to human rights violations. The Communist party wages its own internal debate on reforms that contradict the need to have absolute control. This battle will have disastrous consequences if a cultural revolution results in the removal of thousands of officials who support reform.

Japan is a different story. I lived in Japan for almost 15 years, but the Japan I recently returned to is not the one I left in 1988. Along with political evolution, microevolution is the largest reform. There has been significant deregulation in telecom, energy, finance and retail, as well as major changes to antitrust laws. Regulating financial services has significantly reduced corporate debt to less than 7.6 million yen, and lending has increased for the first time since 1988. Also, there has been more extensive M&A activity and, beginning next year, foreign firms can use their shares for acquisitions in Japan.

In 2005, we saw a combination of growing consumption and rising incomes. Now, much depends upon the economies of the other world players.

Asia: The Rising Dragon and Canadian Imperatives and Opportunities
Simon Bell
Principal, Global Business Policy Council, A.T. Kearney

A.T. Kearney’s Global Business Policy recently published, World Out of Balance, a book that discusses both the fears in a complex world and the immense optimism. Our generation, for the first time, fears that our children will not be as well off as we have been. Yet, since the beginning of the Industrial Revolution, the effects of globalization have been overwhelmingly positive. In the past 30 to 40 years, we have achieved success in North America as has the whole world: The environmental situation, income growth, gender equality and poverty have all improved.

My discussion focuses on China and India: what these two countries mean to business and what Canadian companies are doing to address them.

China and India will cause a fundamental shift in locus of consumer demands, in demand for our products, and in sources of skilled talent. By 2020, 2.3 billion consumers will be in the middle- to upper-income category, with 600 million of them in China.

Based on A.T. Kearney’s annual study, the Foreign Direct Investment Confidence Index, which surveys the three-year investment intentions of CXOs, global executives are more eager to invest in China, India and countries in Eastern Europe than at any time since 1998, while investor confidence in Brazil and Mexico has rebounded. For the fourth consecutive year, China is the most preferred foreign direct investment (FDI) location worldwide, while India rose from third to become the second most likely FDI destination for the first time. The United States dropped from second to third position while the United Kingdom maintained its fourth place position.

China dominates the world’s attention because of its growing market and population. On the market side, regardless of category—from cars to cell phones to PCs—there is more than 20 percent growth. This is important to Canada, because of China’s demand for natural resources, grains and petroleum. In terms of Chinese per capita consumption, if the Chinese consume at our rate of consumption, the world will quickly run out of resources. This presents both a challenge and an opportunity. The Chinese government recognizes the need to innovate and they are investing in R&D, while our own model of consumption is unsustainable.

You cannot afford not to be in China, whether as a market or a source of goods. The major categories of imported consumer goods are automotive and parts, electric and electronic goods, footwear and apparel, and household goods and furniture. On the market and sourcing side, the infrastructure in China is remarkable. In fact, the power grid added every year is larger than Canada’s entire grid—with risk increasing along with demand.

While China has held the top spot in the index since 2002, investor interest in India is a more recent development. Despite India’s successful positioning as a hub for business processing and information technology outsourcing, these activities often translate into third-party transactions rather than FDI. Last year, Indian FDI inflows were just $5.3 billion, compared with China’s $60.6 billion. India has yet to build a critical mass in FDI, mostly because it did not initiate investment-attracting reforms until 1991, while China's pro-FDI regime has been in place since 1979. India’s technology and IT-oriented economy has received fewer capital-intensive FDI flows compared to China. Indeed, China’s entire manufacturing base has been largely established by foreign multinational companies.

Still, India is on the cusp of an FDI takeoff. But for India to harness interest from manufacturing investors and evolve into an FDI capital-intensive hub, the government must maintain its focus on reforms, overcome narrow business interests, and continue to address the country’s infrastructure, logistics and regulatory barriers.

The biggest opportunity in India is that the country is at the bottom of the pyramid. The secret to success in India is learning how to tailor your products’ price points and distribution to serve the enormous bottom of the pyramid—something you’re not used to doing but that has enormous potential. The majority of R&D will come from developing countries rather than developed countries.

We cannot afford to be complacent. Although our Chinese competitors may never catch up with us, our competition will come from Asia and we need to address this new reality.

Great Leadership: Exceeding Your Potential
Dr. Jay Conger
Professor of Leadership Studies, Claremont McKenna College, and a BusinessWeek Top Five Leadership Guru

We’re swimming in advice about how to be good leaders. Bookstores hold remarkable portraits of Donald Trump, Martha Stewart, Jack Welsh and others. They all have advice for us. But how many people can “play” Donald Trump? It’s hard to imitate these characters. And if you try, it is usually a disaster. The last person who tried to imitate Jack Welsh was Jacques Nasser at Ford, which is one reason why Ford ended up on the brink of disaster. It’s better to be yourself; beware of who you wish to become.

The nice thing about life is when you think you’ve figured it out, there is always a new surprise, a new lesson to learn. One lesson is that you never reach your potential as a leader. Even exceptional leaders, such as Winston Churchill, can lose their leadership edge if they do not keep learning. Churchill played the old music when a new score was required and was dethroned for it.

The fact is, as senior leaders, you sit in an enormous spotlight. Certain days you may want to be in the spotlight and other days you wish you were not. This is the platform for senior leadership. Your staff members are like children with a magnifying glass—scrutinizing every action. Just a raised eyebrow at a meeting will allow someone to act on an idea. Your musings at a meeting will turn into someone’s serious dinner conversation.

Today’s discussion focuses on the three aspects of a good leader: authenticity, branding and “followership.”

Authenticity
Why is authenticity important? We live in a world of political and business cynicism and we’ve lost trust with our establishments and leaders. Authenticity is crucial to gaining the mantle of leadership because it is used to retain talent. Authenticity requires:

• Maintaining consistency between words and deeds
• Communicating a consistent underlying theme
• Being comfortable with yourself
• Revealing an allowable weakness

Stephen Lewis (our next speaker) exudes authenticity. He is passionate, which shows in his convictions and he’s empathetic, which opens him up to people who are more vulnerable. Leadership is not a place in the hierarchy, it is a relationship, and empathy is essential to relationships.

It takes a long time to develop your own authenticity. The challenge is to develop your own sense of conviction, and life experiences can either reinforce or demolish those convictions. I will describe two individuals and ask you to determine who is and isn’t authentic.

First, Frank Bormon, the former astronaut and CEO of Eastern Airlines. Under his leadership, the airline had considerable labour troubles and was bleeding red ink. Frank had to go to the union and ask for a wage cut. How critical is authenticity when you ask for self-sacrifice? If you lead an organization through major changes, authenticity is key to getting a favourable response.

In Frank’s speech to his employees (per the video clip) he began with the word “we,” we are a family. But it quickly turned to “I.” “I told you so.” “I was right when I said….” And, “As I predicted to you last fall….” He said, “We had a special board meeting last Monday and presented three courses of action: first to shut the airline down, second to file for Chapter 11, and third to reduce the basic cost structure of the airline. I want you understand the importance of the decision that you will inevitably be forced to make. In my best judgment, this is the most important decision you will make. I urge you to select the proposal that we have offered. I want you to understand, in all honesty, that you will be voting for your jobs….”

How does Frank stack up on the authenticity scale? Not so well. It seemed like he lied. He started with “we” and then went to “I”—essentially saying, “I knew all the answers and you were clueless.”

Let me contrast this example with another. Robert Kennedy. During his campaign for the U.S. presidency he was on his way to Indiana to make a speech to the black community. On the flight, he learned that Martin Luther King had been assassinated. The Chief of Police in Indianapolis suggested he change his plans and not come into the city given its proclivity for violence. But he went anyway.

If you were in his shoes, what would you do? You should tear up your prepared speech and empathize with your audience. The audience is feeling angry, which could lead to violence. Do you want to keep them there in anger or take them somewhere else? You want to reach the audience, acknowledge their anger, but also preempt the anger. Kennedy did just this, using King’s message of non-violence. He didn’t use notes, but used King’s phrases, which showed he had close ties to King. He addressed the audience, saying, “I have very sad news—Martin Luther King was killed tonight.” He talked about his brother’s death, expressed his own anger, used a poet’s quote and talked about God. He said, “What we need is not division, is not hatred, what we need is love and wisdom and compassion. The vast majority of white and black people want to live together, want to improve, want justice for all human beings…. Say a prayer for our country and our people.”

How did Kennedy score on authenticity? He was off the charts. He won the audience over using facts and optimism. Kennedy shared his pain and was empathetic, personalizing his experience by talking about his brother who was murdered by a white man. He had the ability to change behaviour, which if successful, can lead to structural changes. Frank Bormon, by comparison, didn’t change behaviour. He lacked credibility as a leader and a sound strategy as he led the airline into bankruptcy.

There has to be consistency between words and deeds. A leader’s actions must move the organization toward a consistent underlying theme. You have to know who you are and what the organization stands for. Never admit to a weakness that is fundamental to your job. For example, Bill Clinton played around a little, but this did not impinge upon his performance. George Bush’s weaknesses—his non-eruditeness and his stumbling over words—is okay with voters because it makes him like everyman. Trudeau was arrogant, but because he was also charismatic, people could put up with it.

What weakness should you reveal? What kinds of weaknesses are permissible?

Branding
Branding is critical to senior leaders. Who you are as a leader is your brand. Because you can’t be everywhere, the brand will carry your message. Branding requires:

• Having identity differences that are meaningful for your followers
• Projecting these differences
• Highlighting your differences in stories, decisions, dress and actions

What is Bill Gates’ brand? He is totally aligned with his business model, which means that if you’re a geek, you want to work for him. Richard Branson’s brand is risk taking, outrageous ideas and adventure. Your brand has to personify your business so followers can easily identify it.

Herb Kelleher, founder and former head of Southwest Airlines, is a good example of branding. As head of this unconventional airline, Herb was very dynamic, and his brand was both “fun” and “playfulness.” This is a little strange, because we don’t usually associate fun with an airline. Yet fun and playfulness work because they are the antithesis of the industry. It’s positive to make fun of yourself.

Followership
Why should anyone be led by you? As president and CEO, what are the one or two qualities that make people want to follow you? In Kelleher’s case, it was his playfulness and willingness to go into the field. When Kelleher flies he sits in coach and welcomes customers aboard. Where does the CEO of Air Canada sit on a flight? How many of you have been greeted by the CEO of Air Canada while on a flight?

What your followers want:

• Significance
• Community
• Excitement
• Authenticity

A good example of followership is illustrated by Gloria Mayfield Banks, a national sales director at Mary Kay Cosmetics. Mayfield Banks earned her MBA from Harvard, where she stayed to work in the Admissions Office. One day, she bought some Mary Kay cosmetics and loved the product so much that she quit her job at Harvard to become a Mary Kay representative. In a video of Mayfield Banks addressing her sales team, she demonstrates what followers want from their leaders: She mentions freedom, flexibility of travel and financial success. She asks people what they need and helps them make a plan to meet those needs. We should all follow in Mayfield Banks’ footsteps—she gives lots of hugs, cheers, gifts, recognizes success, and offers people an opportunity to be in the spotlight. Mayfield Banks personifies leadership. Her followers have a sense of community, excitement and significance. People want to know they’re working for an organization that is challenging, innovative and important to society.

You sit in a powerful spotlight that can be used to energize people, align the actions of the people who work for you, and promote change. Do your actions mirror authenticity, a clear brand and build followership? Moments when you’ve been your best, yield the greatest transformation.

Canada and the International Socio-Political Landscape
Stephen Lewis
Secretary for the United Nations and UN Special Envoy

I want to talk about Canada’s role in the world. But first, I’ve been in the multilateral system for a little more than 20 years, courtesy, ironically, of Brian Mulroney. I mention him only because I’m the only person you’ll ever meet who is indebted to Brian Mulroney. He has changed my life. In these years, I have learned of Canada’s unusually strong standing in the world, and it is unusually strong.

There is an ever-present sense that we’re a moderate country, a thoughtful country and a relatively principled country. We belong to the Commonwealth, to the Francophonie and to the G8. We are the only country in the world that belongs to all three. We are seen as a country against which useful objectives can be measured. Indeed, in the Millennium Assembly in the United Nations, where there was a level of pessimism and futility, Canada carried off the one, significant positive thing that happened there. It was the Principal of the Right to Protect, an agreement that was eventually entered into the final document.

When you have genocide, crimes against humanity, mass murder, and the inability of states to defend their citizens against insensate violations of human rights, then the world has to have a new principle at work. The Right to Protect gives the world the right to intervene in those situations that cross the normal boundaries of sovereignty and rescue populations that are set upon by their own governments or by external factors.

Now whether or not that would actually happen, I don’t know. For example, one might think it should happen in Darfur. But, both China and Russia would exercise a veto, because of their interest in the Sudan. So whether the Right to Protect will have practical interest is anyone’s guess. But the fact that the world endorsed a Right to Protect, thinking that maybe Rwanda would not have happened if the Right to Protect had been in place, is fascinating.

And the fact that it was a Canadian initiative is even more fascinating, because I dare say, another country would not have enough credibility internationally to have driven that concept through. It was largely Canada and the work of Alan Rock, the Canadian Ambassador to the United Nations, who did a remarkable job on this issue.

Second, as Canadians, one of the things that gives us our centrality—our esteem—is our distance from the United States on a number of issues. People like to see Canada distinct from the United States. They understand the border, they understand the proximity, but they also want to believe that the Canadian character is defined separate from the United States. We’re not the world’s bully as the United States has come to be seen. And whether that view is accentuated by the present Bush regime or whether it is just a natural phenomenon that will always be true of the United States, the world loves to see Canada as an independent, autonomous state.

That we didn’t join the war in Iraq has added luster to Canada's reputation, as has promoting and signing the international campaign to ban land mines. Our support for the International Criminal Court (a Lloyd Axworthy initiative) has added legitimacy to Canada's position. And taking on contentious issues such as Mad Cow disease and softwood lumber is further recognition of Canada’s role in the world and shows that we won’t be shoved around by our largest trading partner. It is also, I think, that we’re prepared to stand up for a fair, international trading regimen. Canada insists that the various arbitration proceedings of the WTO and NAFTA must be applied fairly, and will not simply accept the American discarding of the issue. Even countries that you wouldn’t think know us, because they are beset by so much other phenomena, such as many in Africa, like the spasms of autonomy that we occasionally exhibit. Third, the international trading regimen—an international community—has to be fixed. This is a role for Canada to play and many countries are waiting for us to play it. The clear areas of contention are:

1. The level of agricultural subsidies, from the European Union and the United States, which are now approximately $350 billion a year. Every cow in the European Union is subsidized at a level of $2 a day, while 600 to 700 million Africans live on less than $1 a day. That juxtaposition gives you a sense of the injustice in the developing world.
2. The application of international property rights, particularly regarding patents and pharmaceuticals, given the prevalence of communicable diseases in the world.

Canada’s voice on both issues would be heard. In terms of agriculture, we are essentially an agricultural country and producer. Both Prime Ministers Chrétien and Martin have spoken out on the question of agricultural subsidies. Canada’s voice must be heard in a consistent and unabridged nature, saying to the European Union and the United States to stop this rhetorical jockeying and do something substantial on reducing, over time, agricultural subsidies. It must start at the Hong Kong WTO talks or we’re going to have tremendous international problems.

Even more interesting is Canada's role in the application of intellectual property rights and adherence to patents. In the face of desperate human need for low-cost generic drugs or equivalents, Canada is the only country that has taken advantage of the WTO loophole that permits industrial countries to manufacture and export generic drugs to developing countries.

Also, in Canada, Bill C-9 (to amend the Patent Act and the Food and Drugs Act) is being tested to create a fixed-dose rate anti-retroviral drug to fight HIV and AIDS in Africa. The effort is spearheaded by Apotex, a generic drug company, in conjunction with Doctors Without Borders-Médecins Sans Frontières. If the drug relationship works and the manufacturer is successful, we may be able to sell the drug to the Indian generic companies—Cipla and Ranbaxy. Canada could yet again emerge, if not as the saviour, at least as a good world citizen.

Given Canada’s credentials on both fronts—agricultural and intellectual property—we can stand up to the pharmaceutical companies. In effect, we have said as much to the pharmaceutical companies in Canada: We recognize your need for patent protection, we recognize your need for profits, we recognize that research and development comes from a robust balance sheet but, by god, when you’re losing tens of millions of people, there comes a point when you have a right to issue a compulsory license and to have generic drugs produced.

To their credit, brand-name pharmaceutical companies in Canada did not disagree. Although they resisted on some tough features of the legislation, which worried the generic companies, on balance, the brand-name companies in Canada, despite pressures from headquarters in Washington and Geneva, behaved with a sense of corporate social responsibility.

The need for these drugs to fight these diseases is now at a level of keeping countries alive. I gather that Michael Walker has identified a couple of African countries, which could move forward on the issues of economic growth. In 2001, Dr. Jeffrey Sachs, one of the world’s best-known economists and author of The End of Poverty, wrote a monograph for the World Health Organization (WHO) called, “Macroeconomics and Health.” He argued that talking about economic growth in most of these African countries is an exercise in absurd self-delusion. You cannot deal with economic growth while disease is taking the economic heart out of these countries. It may not be widely recognized, even in a sophisticated crowd, but life expectancy in a country like Zambia has dropped to age 30. In many of the Southern African countries life expectancy has dropped to between 38 and 40 years, whereas without AIDS it would be in the high 50s or low 60s. In a period of 10 to 15 years, these countries have had the heart taken out of their existence. They have lost their doctors, nurses, farmers, teachers and community health workers.

In particular, they have lost the women of their country. There is a disproportionate number of women dying because of gender inequality. They are dying in hallucinatory numbers, with parts of the continent effectively being denuded of its women. There are seven to eight million people living with the virus in sub-Saharan Africa and 76 percent are young women and girls. Of the total number of people living with the virus (26 to 30 million), 60 percent are women. There has never been such a ferocious assault on one sex by a communicable disease.

In 2000, at the Millennium General Assembly, there was a tremendous debate about the validity and application of globalization. Conceptually, globalization was first rate in terms of providing interlocking cultural ethos internationally, which would help reduce levels of social inequality. But globalization was disappointing in its inability to deal with poverty, disease, conflict and the environment. We decided to set a series of goals for the year 2015, which if reached, would make social equality more valid for the world. The goals are to:

1. Cut poverty and hunger in half.
2. Reduce infant mortality rates.
3. Reduce maternal mortality rates. For the past 20 years, between 500,000 and 600,000 women have died in childbirth.
4. Get every child of school age into school. More than 100 million school-age children are not in school, and 70 percent are girls.
5. Improve gender equality.
6. Defeat the communicable diseases of AIDS, tuberculosis and malaria.
7. Achieve a certain level of environmental health and sustainability.
8. Forge a pact between the developed and developing world, such that the developed world would honour its promises, rather than forever betray them.

What has happened in the ensuing years, between 2000 and 2005, is that everyone now understands that this virus in vulnerable parts of the world puts all of these goals at risk. This is true for Africa, and increasingly so for India, Russia, Ukraine and the Caribbean.

Canada, by virtue of a number of initiatives, is again exemplary. What I don’t understand about Canadian political leadership is the inability to convey the good things we do in a way that would inspire trust and win admiration. For example, Canada has given $100 million to the WHO to initiate its “3 by 5 campaign" —to put 3 million people into treatment by the end of 2005. No other country came close to doing that and the 3 by 5 campaign has introduced a measure of hope across the world, where there was only despair before. Also, Canada made the largest single contribution to the AIDS vaccine initiative, and made a major contribution, second only to the United Kingdom, to the quest for a microbicide to prevent transmission of the AIDS virus during sexual activity. Canada has almost doubled its donation to the global fund on AIDS, tuberculosis and malaria and we’re the only country that has legislation for the production of generic drugs for export. Who in Canada knows about that? Who understands it? I sat down with the Prime Minister and told him I would be glad to talk about the very good things the country is doing. It’s a curious deficiency in leadership, not to be able to craft a sense of purpose.

The one thing we haven’t done, which unfortunately in the world’s eyes undermines everything we have done, is to reach the target of 0.7 percent for foreign aid. Not only haven’t we reached it, we refuse to set a timetable. The United Kingdom plans to reach its target in 2013. France says it will reach its target in 2012, and Italy and Germany will reach their targets in 2015. The three countries that will not take a position are Canada, Japan and the United States, which won’t reach its target at all. Canada baffles the world as to why we won’t reach our target. It prejudices the other good things we do.

This leads me to my fifth point. In the wake of the avian flu and other menacing prospects, there must be a sense of corporate social responsibility, particularly by multinational corporations. There is a global business coalition on HIV and AIDS, driven by Richard Holbrooke the former American Ambassador. Major corporations should consider contributing 0.7 percent of pre-tax profits to the diseases I’ve discussed today. To my amazement, the CEO of DeBeers, said it was an idea he’d like to pursue./p>

Finally, I want to talk about our own economic solvency, which I assume preoccupies people in your positions. The obvious areas of concentration are Europe and China. The prospects for China are obviously thrilling and the promise of economic growth are quite astonishing. The juxtaposition of China and India as areas to be cultivated are undoubtedly part of your conversations. Europe will, as it always does, pull itself together. I suspect once Tony Blair has stepped down and given the staff to Gordon Brown, once Germany starts functioning again with a government, once Chirac and Berlusconi have moved on, the European Union will be a force and yet another economic powerhouse will come into its own.

In shuffling his cabinet, the leader of Japan has put talented people in finance, foreign affairs and foreign trade, which means Japan is building an economy.

The collaboration of Brazil, Venezuela, Chile and Argentina portends an emerging power block in Latin America. Brazil is flexing its muscles, so much so that it is practically saying to the United States, “Keep your offer of $40 million for such and such project, because we don’t like the conditions that you’re attaching to it.” This is the somewhat feisty and pugnacious position taken by growing Latin American economies. It’s clear that China, the European Union, a more confident Japan and emerging Latin America are very real markets.

Unfortunately, Africa, with the exception of South Africa, is still struggling. Until it has an international fair trading regimen, and the burden of disease diminishes, it’s hard to see that continent in an appropriate place.

I spend my life visiting hospitals, where every bed is occupied by two patients and in many cases someone is lying on the concrete floor under the bed. They wheel in aluminum coffins in this Kafkaesque fashion to wheel out the person who has most recently died. And 60 to 80 percent of the admissions are AIDS related.

There is incredible determination on the part of these societies to overcome the carnage. The President of Botswana has used the word, “extermination” to describe what his country is facing. The Prime Minister of Lesotho talks about “annihilation.” For the President of Zambia “it’s a holocaust.” The Deputy Prime Minister of Namibia says, “our country is on its knees.”

This is an unparalleled fight to survive and our country has a significant contribution to make. But only if we can provide the leadership. Leadership requires speaking with principle in an uncompromising way, and with clarity on the issues. I rather like Paul Martin. He’s a decent person whom I think can provide Canada with the leadership it needs and the world expects. There’s something dreadfully out of whack with the world. This is the first year since the end of the Cold War that we will spend more than $1 trillion on arms, yet we can’t summon a smidgeon of that to respond to the human condition.

CEO Hopes and Fears: Future Forces 2005 in Perspective
Dean Hillier
Vice President, A.T. Kearney

Government leadership, future leaders, societal attitudes, and changing environment and demands are reasons for concern as companies prepare for the future. Yet there is “guarded optimism” based on the next generation’s potential and increasing collaboration within Canada. We asked our roundtable participants what keeps them awake at night. Their answers, as follows, provide a perspective on Canada’s prospects:

Government leadership (both in Canada and internationally)

• No plan to make Canada competitive
• Lack of strong leadership
• No broad picture view
• Self interest at a country level
• Best leaders are not working in the public sector
• Restrictive or untimely intervention

Future leaders

• New generation of leaders not excited or enticed to participate

Societal attitudes

• Deterioration of consumer confidence and trust in business
• Canada is moving to an “enduring” mindset
• Large event could further deteriorate consumer confidence and cause panic

Changing environment and demands

• Softness in economy could lead to recession
• More fragmentation of media is changing communication to the customer
• Ability to harness new forms of emerging media
• Degree of escalation of some changes (obesity, for example)
• Rising demand for energy and increasing environmental issues
• Relevance of Canadian market in the global environment

Hope for the Future
Despite the fears, there are still significant reasons for optimism. Most roundtable participants consider collaboration and the next generation as key to Canada's success and believe that Canada will not only survive, it will thrive. Some of their remarks include:

Collaboration

• Collaboration of our industry in Canada is a competitive advantage
• Global businesses is taking the initiative to define business rules (outside of countries)

Potential of the future generation

• Courage and intellect of the next generation of leaders
• Advances in medicine in Canada and the world demonstrate what directed, dedicated people are capable of
• Harness new forms of media to achieve targeted communications
• Next generation has marvelous resources

Canada will survive and thrive

• Two-tiered health-care system can support future demand
• Canadian industry has the ability to be creative to meet future challenges
• Common sense is coming back
• Our “thriving” mindset is returning