September 4, 2007
In Washington, D.C. today an organization which represents Hollywood film workers filed a petition with the Office of the U.S. Trade Representative requesting that the U.S. file suit in the World Trade Organization (WTO) against Canada and other countries that provide subsidies to U.S. film studios as inducement to shoot their films in those countries.
According to Professor Claire Wright, of Thomas Jefferson School of Law in San Diego, these subsidies, which typically amount to a significant percentage of a film’s budget, “are making Hollywood producers rich and at the same time are decimating the U.S. film industry as a whole.”
In an article she wrote titled Hollywood’s Disappearing Act: International Trade Remedies to Bring Hollywood Home and published in 2006 in the prestigious Akron Law Review, Professor Wright says that “Hollywood has a dirty little secret, which is that more than half of “American” feature films” are no longer even “Made in the U.S.A.”
The Film and Television Action Committee (FTAC) represents workers in the film industry who say they have been put out of work by the practice of Hollywood studios increasingly moving their productions to other countries because of the financial advantages the subsidies create, a practice which the FTAC action claims is illegal under the action it filed, which is called a 301 (a) petition.
As examples of movies made outside the U.S., Professor Wright cites movies such as Brokeback Mountain, Independence Day and Good Will Hunting, all filmed in Canada and Cold Mountain – which was filmed in Romania.
Professor Wright says “this case promises to test the international trade system itself, as it is really a fight between U.S. film producers, who are getting rich off the foreign subsidies, and the below-the-line film workers – such as cinematographers, special effects experts, and set designers - who are all losing their jobs. The WTO laws are intended to protect ‘domestic industries’ and ‘domestic production,’ rather than ‘domestic profits,” she points out. “Given this, the U.S. Government shouldn’t hesitate to file suit in the WTO against those countries that are providing the trade-distorting subsidies, and the U.S. should prevail in such a suit.”
According to Professor Wright, “This isn’t the same as U.S. jobs moving to foreign countries on account of the lower wages or favorable exchange rates available in those countries. The WTO trade rules actually encourage the production of any particular product in that country which can manufacture it for the lowest possible price. Rather, what is happening in this case is that foreign countries are artificially lowering the cost of film production in their countries by pulling out their checkbooks and paying enormous bribes to lure U.S. film producers to their locales. Films are certainly not naturally migrating to these countries because they have a “comparative advantage” in film production. ”
“The data on this alarming trend of film production moving abroad is very clear and very ominous,” Professor Wright reports. An important adjunct to Professor Wright’s thorough legal review of Canada’s film incentives is a recently released report from the Hollywood-based Center for Entertainment Industry Data and Research (CEIDR, www.ceidr.org), "The Global Success of Production Tax Incentives and the Migration of Feature Film Production from the U.S. to the World, Year 2005 Production Report." According to CEIDR, U.S. economic losses from just “runaway” feature film production alone are a staggering $23 billion and 47,000 jobs annually. In comparison, the Monitor Report, the first real study of the phenomenon, stated in 1999 that the economic cost to the U.S. from all runaway production for 1998, the first year Canada's subsidies were in effect, was $10.3 billion and 25,000 jobs.
Professor Wright fully expects the Motion Picture Association of America to oppose the film workers’ petition, because its members benefit from the subsidies. She says that she has been countering their opposition to the filing of such a petition for a couple of years now. In order to help the film workers raise the funds necessary to hire legal counsel in Washington, D.C., Professor Wright has spoken to numerous entertainment unions about the Section 301(a) filing and soliciting contributions to cover the legal fees.
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