Daily Variety

Unions Split On Runaway Production Plan: MPAA, DGA say plan will ignite trade war

by Dave McNary, Pamela McClintock

Something of a civil war is breaking out in Hollywood over a proposal to battle runaway production by forcing

U.S. producers

to give up Canadian government subsidies. In other words, if a studio gets a million subsidy to shoot in

Canada, the studio

would then be required to turn around and fork over that money to the U.S. government. The countervailing tariff

would be a

condition for clearing the pic for distribution in the United States.

The Motion Picture Association of America and the Directors Guild of America are among the heavyweights

opposing the tariff plan, saying it will ignite a trade war instead of solving the problem of runaway production.

The Film & Television Action Coalition [FTAC] plans next week to take the formal step toward implementing

tariffs by petitioning the Department of Commerce to investigate whether tariffs are an appropriate remedy

against producers using Canadian subsidies. Backed by the Screen Actors Guild and the Made in USA

Foundation, FTAC will hold a Tuesday morning news conference in Washington on the steps of the Commerce

Department.

"We've lost the right to compete for jobs ever since the Canadian government started to use Canadian

taxpayers' money to subsidize American productions," said FTAC chairman Brent Swift.

Pressing the prez

Upping the stakes, the MPAA and other opponents are busy contacting Bush administration officials and

Capitol Hill pols,

urging their case. The group also includes the American Film Marketing Association and Film US, a coalition of

film

commissions.

The Commerce Dept. has 25 days to accept or reject the petition calling for countervailing tariffs. If it's accepted,

the International Trade Commission would then launch an investigation into the claim and would have 190

days to reach a decision.

Joel Joseph, general counsel for Made in USA, said the petitioners' legal position is simple: Industry-specific

subsidies are illegal under the General Agreement of Tariffs and Trade. MPAA and DGA insiders warn of

immediate retaliation if Washington endorsed a countervailing tariff, with foreign countries viewing it as an

intrusion. Canada and other governments could, for instance, impose a tax on box office tickets, or on American

TV equipment. "This is a dangerous issue and would restrict trade," one industryite said. "It inflames cultural

sensitivities."

But Joseph asserts that Canada started the trade war in the mid-1990s by luring producers with subsidies.

"The Canadians

fired the first shot," he added. "The United States has lost 25,000 jobs because of their illegal practices."

Sunday rally

FTAC has also set a Sunday rally at the Hollywood Bowl, with SAG recording secretary Elliott Gould, SAG

treasurer Kent McCord, cinematographer Haskell Wexler and former state legislator Scott Wildman slated to

speak. Besides SAG, Teamsters Locals 391, 399 and 592, and Studio Utility Employees Local 724have signed

on as co-petitioners in the

campaign.

SAG's support of the petition on a 48-29 national board vote in August -- representing an official endorsement

by 118,000 actors -- has strained relationships with other Hollywood unions, most of which have lined up

behind federal legislation for wage-based tax credits for films with budgets of less than million, rather than

a tariff.

Countervailing plan

Supporters of the wage-based tax credit include the DGA, the International Alliance of Theatrical Stage

Employees, AFMA,

AFTRA, the Film US coalition of film commissions, the Producers Guild of America, the Writers Guild and SAG.

SAG's board

supported the tax-credit legislation several weeks before backing the countervailing tariff.

The issue arose in SAG's election campaign, with prexy Melissa Gilbert and 1st VP Mike Farrell contending that

SAG's dual

endorsement on the issue was misguided and arguing that wage-based tax credits needed full backing from

SAG in order to

succeed on the legislative front. Gilbert asked last week that SAG's legislative committee reverse its support of

countervailing tariffs, but the panel took no action on her request. SAG's national board does not meet until Dec.

6.

Date in print: Wed., Nov. 28, 2001