Free Trade, American Style and the Canadian Film Industry
Two companion legislative acts have recently been introduced in the American Senate and the House of Representatives, targeting what is being described as unfair Canadian trade practices. Senator Blanche Lincoln introduced the U.S. Independent Film and Television Production Incentive Act of 2001 (S.B. 1278) in July and three members of Congress introduced the United States Independent Film and Television Production Incentive of 2001 (H.R. 3131).
Indeed, at an October 14th reception for Senator Lincoln, hosted by the Directors' Guild of America (DGA), a link was made between the September 11th terrorist attacks against the U.S. and the need to lure film and television production back to the U.S.
"After the terrible evil acts we saw on September 11th , we have seen our government stop and think about who we are and where we are going," Senator Lincoln told the crowd. "We are beginning to recognize that there are many things we can do to make this nation stronger and greater. S.B. 1278 is one of the bills that is going to make our nation better. The reason it does is because you have a good, clean industry, an industry that should be kept in America. You have an industry that brings an enormous amount of pride to the American people." Both acts are aimed at reducing so-called runaway productions - movie and television filming and production for American films that take place in other countries, mainly Canada. The two acts, which are expected to pass this year, would provide a wage-based tax credit for film and television productions in the United States.
The introduction of both acts follows an intensive lobbying effort on the part of the American film and television industry. According to Jack Shea, President of the Directors' Guild of America, runaway production "poses a grave threat to the future of film and television production in the United States." (This is despite an increase in U.S. domestic feature film production of 8.2 percent between 1990 and 1998 and of television production growth of 2.6 percent during the same period). Shea says out-of-country production has cost the U.S. the equivalent of 60,000 jobs, most of which have gone to Canada. "The DGA," he said, "is committed to doing whatever it takes to ensure that these jobs return to our members who helped build this industry."
While it is easy to get sidetracked by the description of American film and T.V. as good and clean, the main point is that once again the Americans are applying a double standard when it comes to free trade. When American branch plants in Canada close up and move to the United States because of massive state and federal tax subsidies, Canadians are supposed to accept this as the hard reality of increasing competition and globalization.
However, when American companies come to Canada to take advantage of the low dollar, and in the case of the film and television industry, provincial and federal government subsidies, it is described as unfair trade practices.
The reality is that in 1998, 27 per cent of U.S.-developed film and television productions were produced out-of-country, with 80 per cent produced in Canada. However, according to figures from the Motion Picture Association of America, over 40 per cent of the profits that flow into Hollywood on motion pictures are from markets external to the U.S., and that percentage is steadily increasing. As well, many American film productions that post financial losses in the U.S. are redeemed through international sales. American film and television dominates most world markets, including Canada's, where American motion pictures account for over 85 per cent of Canadian box office takes. And the American motion picture industry in particular is extremely active in lobbying against any country that takes measures to protect its cultural sovereignty by limiting the import of American films.
The DGA has retained the services of a prominent Washington lobbying and tax consulting firm, and is planning a challenge to Canada's film and television production incentives, despite the fact that they recognize they are NAFTA-exempted. If the Americans' position during the softwood lumber dispute with Canada is any indication, no matter what the ruling of any international tribunal, legislation imposing fines on out-of-country film and television production can be expected soon.