Union plans action over Ottawa’s film distribution rules

Date: 30/04/1998

By Peter Chapman

THE EU is on the brink of launching full-scale trade action against Canada over its failure to reverse its 'unfair' film distribution regime.

Formal talks between officials from both sides at the World Trade Organisation broke down earlier this week following Canada's refusal to change its film policy, which severely limits the range of films which newly-established non-Canadian distributors are allowed to offer.

"The outcome is that there was no outcome. The Canadians did not offer any way of settling the issue," said one trade source.

EU governments could take the decision to push for a formal WTO panel to settle the dispute as early as next Wednesday (6 May) at a meeting of member state trade diplomats and Commission officials.

"The Union now has to decide what the next step is. If member states are consistent with the view they have expressed in the past over the Canadian regime, then they will decide to go for a WTO panel," said the source.

This leaves Canada with less than a week to decide whether to cave in to the WTO threat or stand firm.

The Canadian rules, introduced in 1997, are aimed at limiting the dominance of major Hollywood studios which control more than 84% of the market, by stipulating that foreign film companies can only distribute films for which they have provided more than 50% of the funding.

But the EU's PolyGram Filmed Entertainment (PFE) argues that the Canadian rules fail to touch big US distributors which were established in the country before the law came into force, as it cannot be applied retroactively to withdraw rights they previously enjoyed.

PolyGram, which was responsible for hit films such as Trainspotting and Bean but has just 2% of the Canadian market, complains that it has been hit hardest by the law, which forces it to enter joint production ventures with local firms to ensure its products are shown in Canada.