February 21, 2012
Chinese audiences will have access to significantly more U.S. films under a new agreement between the governments of China and the United States.
The agreement, announced by Vice President Biden’s office February 17, is intended to resolve outstanding issues related to films after the World Trade Organization (WTO) ruled in favor of a U.S. complaint in 2011.
“This agreement with China will make it easier than ever before for U.S. studios and independent filmmakers to reach the fast-growing Chinese audience, supporting thousands of American jobs in and around the film industry,” said Vice President Biden, who spent February 17 in the Los Angeles area with Vice President Xi Jinping of China. “At the same time, Chinese audiences will have access to more of the finest films made anywhere in the world.”
U.S. Trade Representative Ron Kirk, in the announcement on the White House website, said U.S. filmmakers view China as one of their most important world markets, “but barriers imposed by China and challenged by the United States in the WTO have artificially reduced the revenue U.S. film producers received from their movies in the Chinese market.”
The Chinese film market is large and growing quickly. In 2011, the White House said, Chinese box office revenue was up to $2.1 billion. Much of this revenue came from 3-D titles, which are a rapidly growing sector of the film industry.
The new agreement allows more American exports to China of 3-D, IMAX and similar enhanced format movies on favorable commercial terms, strengthens the opportunities to distribute films through private enterprises rather than the state film monopoly and ensures fairer compensation levels for U.S. blockbuster films distributed by Chinese state-owned enterprises, the White House said. The agreement will be reviewed after five years to ensure that it is working as envisioned.
AGREEMENT STEMS FROM APRIL 2007 DISPUTE
The United States initiated the underlying WTO dispute in April 2007. In the dispute, the United States sought to address significant market access concerns relating to China’s treatment of films for theatrical release, as well as other cultural products.
On films, a WTO panel found in a report issued in August 2009 that key Chinese film import restrictions were inconsistent with China’s WTO obligations. In December 2009, after China appealed, the WTO Appellate Body rejected China’s claims and upheld the panel’s findings. China promised to come into compliance by March 2011, but informed the United States at the deadline that this would not be possible. The two sides have been making efforts to resolve their differences since then, the White House said.
The head of the major trade group representing U.S. film industry interests, the Motion Picture Association of America (MPAA), called the agreement “a major step forward in spurring the growth of U.S. exports to China.”
MPAA Chairman Christopher Dodd, who previously served as a U.S. senator from Connecticut, said on the group’s website that the agreement will return a better share of box office revenue to U.S. studios, allow more than 50 percent more U.S. films into the Chinese market and protect intellectual property and jobs in both countries.
“By promoting the growth of a legitimate marketplace for U.S. movies in China, this agreement will also complement efforts to fight movie piracy and help protect the jobs of workers in both countries, whose livelihoods are dependent on a healthy entertainment industry,” he said.
Dodd also praised U.S. and Chinese government officials for the work leading to the agreement. “We thank Presidents Obama and Hu, as well as Vice Presidents Biden and Xi for their leadership on this issue, along with the negotiators from both countries who worked so tirelessly to reach an agreement, especially U.S. Trade Representative Ambassador Ron Kirk and his team for their enormous commitment to this effort,” Dodd said.