Tonight’s State of the Union speech by US President Barack Obama was the final one before the 2012 elections in November. The President touched upon a very big issue effecting the US VFX industry: Subsidies.
The President has ordered the creation of a Trade Enforcement Unit tasked to essentially pick up the pace on trade violations by countries competing with the US:
It’s not fair when foreign manufacturers have a leg up on ours only because they’re heavily subsidized.
You can read the whole speech here.
If you read my blog often, I regularly argue that most VFX work goes to places where US Studios can obtain rebates from state and international governments.
Generally speaking, let’s say if a group of VFX facilities based in London, Canada, and California competitively bid about the same price for a project, you can expect the US Studio to choose London or Canada because their government offers money directly as a percentage of the amount of work done in their location.
If it sounds like a bribe well it actually is and it’s illegal under rules set forth by the WTO. Global free trade agreements between countries are meant to liberalize economies toward market capitalism. These subsidies are driven by command economics and it is up to each country to challenge violations through the WTO.
Cynically speaking, this speech by The President could all be rhetoric however given that it is an election year and the jobless rate is high, now might be the most prudent time to challenge such subsidies.
So what should be done now? Well I’d pay attention to how this Trade Enforcement Unit develops and see what new mechanism they place to resolve trade issues. This is an issue that unites VFX workers and facility owners so perhaps this might be a good spearhead to start something much larger. Scott Ross has been trying to lobby for a creation of a trade association and perhaps this might be a worthy endeavor for those motivated in making California more evenly matched when it comes to fair pricing.
The worst thing that could happen is nothing and the status quo continues. However what if something did happen? Well then a potential challenge could eliminate the subsidies and return California VFX to a more competitive position.