EU and Canada at loggerheads over film rights

Date: 03/04/1997

By Chris Johnstone

THE EU and Canada have moved closer to a celluloid trade dispute over film distribution rights.

Pressure on the European Commission to act is mounting in the wake of Ottawa's decision to stand by its rules which force Union companies to distribute their films through local firms if, as is frequently the case, they have not retained the world-wide rights to sell and reap the box office profits from their productions.

Dutch film company PolyGram had appealed to the Canadians for permission to distribute most of its productions itself, but was turned down. Now it is looking to the EU to launch trade dispute procedures through the World Trade Organisation.

Ottawa justifies its policy on the grounds that it is aiding its local film industry. However, Hollywood giants have been excluded from the scope of the rules, even though they are the biggest sellers of films in Canada.

EU trade officials have been meeting to discuss the next move. If they decide to go down the WTO route, that would involve a two-month compulsory consultation period after which the Union could formally ask for a trade panel to rule on the issue.

However, that option could be put on ice if, as widely expected, Canada's federal government calls elections within the next month. Ottawa's cultural rules have already climbed up the agenda as a political issue and there are hopes that a change could be on the cards after the voters have delivered their verdict at the polls.

Canada has already been forced to focus on its cultural policy after losing a separate WTO trade case over protection for its magazine publishing sector.

A provisional ruling from Geneva found against Canada for operating a discriminatory regime on tax deductions for magazine advertising. Under the rules, firms placing adverts with Canadian magazines were allowed to write off the costs against tax whereas the vast number of US and other foreign magazines on sale in Canada were not.

Sports Illustrated, which produced a separate Canadian edition in the US that was beamed into Canada for printing, brought the case after it fell victim to the rules.

Politicians from the ruling Liberal Party have been calling for a shake-up in Canada's cultural protection rules, many of which date back almost 30 years.

International Trade Minister Art Eggleton questioned whether old rules limiting foreign investment and control of Canadian culture were appropriate with film, television and music exports now flourishing and traditional restrictions being bypassed by new technologies. “It is worth asking whether these instruments continue to be useful, particularly if they are having an adverse side effect,” he said.

However, his trade ministry is at odds with its culture counterpart on an issue which has divided the federal government.