The great squall of China

Trade good for showbiz, Senate told

WASHINGTON — Jack Valenti took Hollywood’s case for normalizing trade relations with China to Capitol Hill on Tuesday.

The Motion Picture Assn. of America prexy testified before the Senate Commerce Committee that the benefits to the film biz of a vote to grant permanent trade status to China would be considerable:

  • China will double its quota of “revenue sharing” films from 10 to 20 per year (and allow an additional 20 per year on flat-fee licensing);

  • China will permit foreign investment in video distribution joint ventures;

  • China’s lifting of its ban on cinema ownership means U.S. investors can own up to 49% of companies that build, own and operate cinemas;

  • China will reduce tariffs of films from 9% of the film’s value to 5%, while homevideo tariffs will drop from 15% to 10%.

  • China will assume full obligations to protect intellectual property.

On the other hand, Valenti said, a no vote “equals tragedy on a grand scale.”

Such a vote, Valenti said, would cause China to “revise its purchasing plans, so that every American enterprise now doing business in China and those who hope to export to China would find the gates closed to them, but wide open to all other nations. And if that is so, then American companies residing in this country would feel the pain of reduced revenues, developing into lost American jobs.”

Valenti said that he was confident the Chinese would make reliable trading partners.

Promises kept

“I can testify from first-hand experience that when China made pledges and promises to the MPAA, they redeemed their pledges and kept their promises, particularly in the area of piracy of intellectual property.”

After entering into agreements with the U.S. in 1992 and 1995, Valenti said “China established task forces to better respond to the pirate threat, promulgated customs regulations to help control the import of optical media production equipment, instituted controls over the output of pirate CD plants and conducted raids against retail pirate operations. To date, a total of 79 pirate plants have been closed down.”

While China is not yet a large market for American filmmakers, Valenti said “the Chinese people love American movies. We believe over time it will become a most alluring and expanded marketplace.”

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