WASHINGTON — China’s entry into the World Trade Organization will allow studios to double the number of films that unspool beyond the Great Wall to 20 per year, and reduces the threat of copyright piracy, industry officials said Monday.
United States Trade Representative Charlene Barshefsky agreed to a revenue-sharing plan for foreign films in China that will allow the Communist government to keep up to 75% of the box office proceeds, according to a source familiar with the deal.
Nonetheless, studios are enthused about the new agreement, despite the low volume of product they will be allowed to sell in China and the limited short-term profits. Deal does bring the U.S. one step closer to tapping China’s huge market.
As a condition for China’s entry in to the WTO, it must also reduce barriers to U.S. investment, including movie theaters. The deal will also allow foreigners to own up to 50% of a Chinese Internet or telephone company.
Motion Picture Assn. of America prexy Jack Valenti called the development “heartening.” “We are joyful that our friends in China have recognized the worth of American films in their country,” he said.
Penetrating China’s market, with its population of over 1.2 billion people, has been a high priority for Valenti during the past few years, during which he has made four trips to meet with Chinese officials. In a gesture of good will, the MPAA has sponsored exhibitions of Chinese films in Los Angeles and New York this year.
Sino-Hollywood relations have been touchy over the last several years as Communist officials have tried to pressure studios over controversial films on subjects such as the Chinese occupation of Tibet (“Seven Years in Tibet” and “Kundun”) and the country’s judicial system (“Red Corner”).
The deal was also applauded by Recording Industry Assn. of America prexy Hilary Rosen, who said it should lead to drastic reductions in copyright piracy in China. “For the record industry, this can only be good news as we look to China to immediately begin to address rampant piracy within its borders,” Rosen said.
Rosen also hailed other aspects of the agreement that will make it easier to distribute music in China. “By liberalizing the rules for investment in the development of the infrastructure for digital communications, including the Internet, this deal will help to build the distribution framework for future generations of Chinese society,” Rosen said.