WASHINGTON — Last week, lawmakers on Capitol Hill were raking Hollywood over the coals for subverting rating systems and turning kids on to violence. Tuesday, the Senate normalized trade relations with China, and the industry stands to benefit from the landmark legislation.
Motion Picture Assn. of America prexy Jack Valenti commended the Senate for approving the measure in a 83-15 vote. He and movie industry execs have lobbied Washington leaders for months on the issue, saying the bill is a crucial step in tapping China’s vast consumer market.
“Today’s vote brings us a step closer to a dynamic new era in global trade. I applaud all those members who supported this legislation that will bring great benefits to citizens of both China and the United States,” Valenti said.
Valenti has cautioned that the new trade status may not prove an immediate bonanza, though China’s consumer population is more than a billion strong.
Total U.S. entertainment revenues from China are a mere $20 million a year, and that figure probably won’t change much as low wages may prevent consumers from going to movies or buying videos.
But some changes will be immediately felt. China’s current import quota of 10 foreign films brought in on a 50-50 revenue sharing basis will be doubled. The new limit of 20 will be part of an overall quota of 40 foreign films that can be imported on a revenue-sharing or flat-fee basis. That overall quota will expand to 50 films by the third year.
In recent years, about seven or eight of the 10 imported films have been U.S. product.
Other proposals included in China’s agreement with the WTO include allowing foreign firms to invest in joint ventures to build, own and operate cinemas. Similar ventures can also be established in video and sound recording distribution.
Tariffs touched on
Also, import tariffs will no longer be based on the value of a film or homevideo (currently 9% on films and 15% on videos), even though China will be able to set some sort of specific duty. Under the new scheme, import tariffs are expected to drop significantly.
Hollywood’s relationship with China has been tense for many years, strained most recently with the release of American movies critical of China’s communist regime, such as Sony’s “Seven Years in Tibet” or MGM’s “Red Corner.”
The Walt Disney Co. said that stiff taxes have made China a difficult market from which to extract any profits, pointing out that only two pictures in China — whether or imported or Chinese — have grossed more than $10 million at the box office since 1994.
Passed by the House of Representatives in May, the U.S. measure now awaits the signature of President Clinton, who has made it one of the top priorities of his final days in office. The legislation is necessary for China to proceed with plans to join the Geneva-based World Trade Organization (WTO) later this year.
As approved by Congress, the legislation would end 20 years of annual reviews of China’s trade status. In exchange, China will loosen trade restrictions as dictated by the agreement.
Opposition on Capitol Hill to passage of the measure came from those arguing that China is not to be trusted, particularly in the human rights arena.
Coincidentally, a group of actors including Alec Baldwin, Julia Louis-Dreyfus, Giancarlo Esposito, Kevin Kline, John Malkovich, Rita Moreno, Sigourney Weaver and Alfre Woodard were scheduled to portray human rights defenders — including Tibet’s exiled religious leader, the Dalai Lama — at a special performance Tuesday night at the Kennedy Center. The gala, which Clinton was expected to attend, is part of a weeklong human rights campaign celebrating “Speak Truth to Power,” written by advocate Kerry Kennedy Cuomo.