EU regulators reveal new subsidy plan

Gov'ts can only require 50% of a film be made locally

BRUSSELS — EU regulators have sent shockwaves through Europe’s film establishment by revealing that they plan to clamp down on the extent to which European governments can link film industry subsidies to domestic production.

Under the current system, filmmakers seeking to benefit from state aid in any EU member state have to spend a specific amount of a film budget within the country if they are to gain access to the full amount offered in a subsidy.

Under Brussels’ plans, however, governments will only be able to demand that up to 50% of any subsidized film is made at home rather than the current limit of 80%. The EU executive arm has sent a draft version of the rules to all member governments and to national film industry organizations, representatives of which are due in Brussels very soon to discuss the changes.

Officials hope to be able to unveil a formal proposal in June this year, and once adopted, the new system will be in force from 2005 to 2009. Influential film org EFCA, which represents European film producers like CLT-Ufa, Pathe and Nordiskfilm, has already objected to the proposed review, arguing that national governments will have no incentive to set up tax breaks or other support mechanisms if they will not benefit the local industry.

Claiming that Brussels wanted to “impose handcuffs” on EU governments, EFCA secretary general Philippe Kern said: “The aim of the European Commission seems to be gradually to dismantle the system of national support mechanisms that encourage local productions. Such mechanisms enable local European cinema to exist. What is the policy objective in a market dominated by Hollywood? To make the European industry less competitive?”

The plan would be especially galling for France, whose helmers are regularly required to spend 80% of their budget within the country. A change in the rules would likely force movie makers into more co-productions with partners from Europe and elsewhere.

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