The North American Film Subsidy Trade War

Film Works LA Campaign Manager and lawyer Adrian McDonald published a superb 81-page case against state film subsidies. It’s a great weekend read for anyone interested on educating themselves on the whole matter. It’s available here:

http://www.stop-runaway-production.com/wp-content/uploads/2009/07/McDonald_To-Send-to-Author.pdf

Essentially what is happening in the USA and provinces of Canada is a trade war. Various locations are engaged in protectionism against market economics by offering artificial prices to producers through film subsidies.

This is a race to the bottom and I’ve always said on this blog “In a race to the bottom, the last one left standing is the biggest loser.”

That notion is surprisingly mentioned by Canadian officials in comments on their own subsidies as Mr. McDonald points out. Here is the Toronto Film Office:

There is a race to the bottom going on worldwide to establish Booniewoods around the globe. This is a race Toronto doesn’t want to win.

Within North America our success has been successfully copied. Even though the provincial government raised the Ontario tax credit in 2005 to try and fend off the competition, the competition simply raised its credits higher. The race to the higher tax credit is another one we can’t win.

and British Columbia:

At some point, British Columbia may be either unable or unwilling to match another region’s incentives, which could leave BC’s film production industry with a shortage of foreign productions wanting to film in the province.

Adrian also covers the failed 2007 attempt to get the US Trade Representative to petition the WTO to stop the subsidies. I feel he writes the effort off too easily.

It is the sole discretion of the US Trade Representative to approach the WTO with a dispute. As Adrian points out, we still to this day do not know the exact reason for the denial. The freedom of information act request was redacted.

According to some sources involved, I was told the petitioners actually withdrew their complaint. Who knows what was going on there. Also its important to note that this complaint was filed during the Bush administration and relatively low unemployment. The Obama administration certainly sounds interested in combating subsidies and unemployment levels are troubling.

Tomorrow I’ll post another piece of info Adrian McDonald pointed to in one of the comments of my post: The European Subsidy Trade War.

Soldier On.

12 Responses to The North American Film Subsidy Trade War

  1. Pssst says:

    Maybe you are right and VFX should be treated differently to other industries because it employs so many Californian middle class workers. Do you know that there’s massive teams working in Mexican sweat shops building computer games?
    http://www.zcommunications.org/nafta-and-political-economy-of-immigration-by-collin-harris
    http://en.wikipedia.org/wiki/North_American_Free_Trade_Agreement
    http://en.wikipedia.org/wiki/North_American_currency_union

  2. Thanks for the kind words. I am starting to rethink my position on another USTR filing. As I said in the article, I think letting Europe adjudicate the matter first would be useful. It sounds like they will come down hard against them. As I have told you on several occasions, I just want the problem to end. I am sick of seeing people fight for jobs and lobbying cash-strapped state & local governments waste good money. Anyways, glad you liked the piece. Soldier on. 🙂

  3. Adrian says:

    I sent you an email, but if you did not get it, my email is adrianmcdonald at hotmail.

  4. Gary Watts says:

    Mayor Antonio Villaraigosa Supports Tax credits

    Newsmakers: Villaraigosa talks Oscars (Pt.1)

    Adrienne Alpert talks with Los Angeles Mayor Antonio Villaraigosa about the Academy Awards. (Pt. 1)

    http://abclocal.go.com/kabc/video?id=8558591

    Supporting Tax credits only justifies “The Tax Credit Ponzi scheme” and will only justifies and supports the other states Tax Credits and the city of Los Angeles will lose more work when the other states increase their credits to off-set the city of Los Angeles and California’s tax Credits. Does the state of California have a PLA “Project Labor Agreement” with the entertainment unions?…NO….then why not?

    Then maybe the union leaders should do a better job of protecting the union memberhips interest.

    Power nodes creates UN-employment, displaces an generator operator, Noisy generators…I think not.

  5. […] week I touched upon what essentially is a trade war occurring in various states and provinces in the US and Canada. The same phenomenon is occurring in […]

  6. billyshakes1492 says:

    we need to educate the membership of the law.. the issue at hand.. how they can change things.. unite … start the revolution… one voice… pass it on…

  7. […] was this occurring? Well as I have pointed out, there is a film subsidy war in North America and Europe. Even regions like New Mexico and Sask. which offer generous subsidies find productions […]

  8. city break says:

    city break…

    […]The North American Film Subsidy Trade War « VFX Soldier[…]…

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