×
You will be redirected back to your article in seconds

VFX Industry Rescue Could Come From WTO Rules

U.S. f/x industry could benefit from existing anti-subsidy duties

Foreign subsidies on visual-effects work may be enough to trigger World Trade Organization “anti-subsidy duty” rules that would impose a tariff on those vfx when they’re imported into the U.S., according to a panel presentation at the Siggraph conference on Thursday.

Lawyer David A. Yocis of  Picard Kentz & Rowe of Washington, D.C., presented the findings of a feasibility study looking at the idea of using WTO rules to end or limit the foreign subsidies that have decimated the visual effects business in California and turned its much of its workforce into global nomads. Yocis said that if the domestic vfx industry chooses to pursue such a remedy, the best route is the use of “countervailing duties,” or CVDs.

WTO rules permit member governments to impose those duties when they find that foreign governments have subsidized their own producers and caused injury or threaten to injure domestic producers. Such injury can include loss of jobs.

Subsidies for vfx work have built up f/x companies in the U.K., Canada, Australia and New Zealand, among other territories, while their U.S. counterparts have struggled. The dutiess would counteract the benefit of those subsidies for producers, reducing their incentive to take work outside the U.S.

However, Yocis warned the law “was not designed for a digital world” and would be hard to use. It would cost the industry hundreds of thousands of dollars, perhaps millions, in legal fees, he said, and would not provide a long-term, comprehensive solution to the problem of subsidies.

But, he said, “We think that if you want to try to take a trade law approach, this is the way to do it. This could change the incentives … and could really open the door to working out some more comprehensive arrangement going forward.”

“The most important question is ‘Does the law even apply? Does it apply to digital products made overseas, where the value is not in the digital file but to the copyright attached to it?’ That’s something that has never come up before,” Yocis said. “We think the answer is yes.”

The advantage of the CVD approach, he said, is that if the government conducts an investigation and finds that the foreign subsidies injure the domestic vfx industry, the duties are triggered automatically. The  laws and treaties for the duties are already in place; no new act of Congress would be needed. Collecting the duty might prove difficult, he said, “But the thing to remember is that if you get to that point, you’ve succeeded. The goal isn’t to have a tax to be collected, it’s to change behavior.”

The American vfx industry would have to present a united front to the government in favor of an investigation and countervailing duties. However, such a duty would almost surely increase the cost of production, since studios and producers would lose the benefit of those vfx subsidies. Therefore the AMPTP and its member companies would likely lobby against such an effort.

Moreover, two major American vfx companies are owned by studios: Sony Pictures Imageworks and Industrial Light & Magic (Disney). That wouldn’t doom the effort, however, Yocis noted. ” If someone in the U.S. industry is opposing it because they’re getting the subsidy and benefiting from it in some way, the government has the option to disregard that.”

And those corporations might find some dissension in their own ranks if they oppose a CVD investigation. An exec from one of those studio-owned vfx companies told Variety after the meeting “I wouldn’t oppose that.”

Read the full feasibility study here.

More Biz

  • Nicholas Sparks

    Nicholas Sparks Apologizes, Explains Opposition to LGBT Club

    Romance writer Nicholas Sparks issued an apology on Monday for remarks he made in 2013 opposing the formation of an LGBT club at his Christian school. In an email published last week by the Daily Beast, Sparks faulted Saul Benjamin, who was then the headmaster of the Epiphany School of Global Studies, for pushing an [...]

  • Game of Thrones Season 8 Production

    'Game of Thrones,' Netflix VFX Among Those to Be Featured in SIGGRAPH Production Talks

    VFX pros behind the final season of “Game of Thrones,” the blockbuster film “Avengers: Endgame,” Pixar’s upcoming “Toy Story 4,” last year’s Oscar-winning “Spider-Man: Into the Spider-Verse,” Netflix series, including “Stranger Things,” and more will give SIGGRAPH 2019 attendees a behind-the-scenes look at their work during the conference’s Production Sessions. There will even be a [...]

  • welcome home Apple Ad

    Cannes Lions Takes Place in Time of Change for Ad World

    The ad industry gathers June 17-21 for its annual celebration of commercials, marketing and creativity, the Cannes Lions in the French Riviera. It does so against a backdrop of ongoing and profound upheaval within the world of advertising. The share prices of all the major ad groups, such as WPP, Publicis and Omnicom, are down [...]

  • R&B Singer Ann Marie Signs With

    R&B Singer Ann Marie Signs With Interscope Records (EXCLUSIVE)

    Chicago-based R&B singer-songwriter Ann Marie, known for her hit “Secret” with YK Osiris, has signed with Interscope Records, the company announced exclusively to Variety today. “Ann Marie is the prototype for today’s artist,” says Nicole Wyskoarko, the label’s EVP of urban operations. “She’s developed and cultivated a dedicated fan base using the tools of today [...]

  • Gay Chorus Deep South

    Branded Content Campaigns Help Ads Cut Through Clutter

    The business of advertising has changed from the days when an expensive 30-second spot was the be-all and end-all of a campaign, leading many commercials production companies and their directors to diversify. In an era of content overload, when it’s easier than ever for consumers to skip an ad or avoid it altogether, many advertisers [...]

  • Gloria Vanderbilt Dead at 95

    Gloria Vanderbilt Dies at 95

    Gloria Vanderbilt, a famous model and socialite who was often a subject of fascination in the worlds of fashion and media, has died at 95, according to a report on CNN, where her son, anchor Anderson Cooper, has worked for several years. From a young age, Vanderbilt led a tumultuous life, one marked by a [...]

  • Patrick Drahi

    Altice's Patrick Drahi to Acquire Sotheby's Auction House for $3.7 Billion

    Patrick Drahi, the owner of the telecom group Altice, is on track to purchase Sotheby’s, the high-profile auction house, for $3.7 billion. The acquisition would turn Sotheby’s into a privately owned concern after 31 years as a publicly listed company on the New York Stock Exchange. Drahi said the acquisition had “no capital link with Altice [...]

More From Our Brands

Access exclusive content