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U.S.-China Film Talks Now Hostage to Trade War (Report)

The ongoing film industry discussions between the U.S. and China may now have become hostage to the wider and more fractious trade negotiations between the world’s two largest economies. Until recently the film talks had been proceeding largely independently.

The Reuters news agency reported on Sunday that the film talks, spanning such issues as China’s import quotas and the share of revenues paid to Hollywood studios, are now being discussed “within the broader framework of a U.S-China trade stand-off.”

If correct, this would represent a recent turn of events. Variety understands that film was not discussed in any major way during the recent visit to Beijing (May 3-4) by U.S. Treasury Secretary Steve Mnuchin, U.S. Trade Representative Robert Lighthizer, and economic advisors Peter Navarro and Larry Kudlow.

Other sources, have said that much of the framework of a new bilateral film deal has now been agreed, and that one of the biggest stumbling blocks was internal to China. Earlier this year China shifted its film industry regulatory body to become part of the Communist Party propaganda department. But it has not yet appointed the new head of the body that succeeds SAPPRFT.

If the film talks have become swept into the wider trade fight the film talks may not be completed any time soon. In itself, that would not be a disaster for either Chinese or U.S. film industries, as an existing and functioning agreement negotiated in 2012 remains operational until it is replaced.

The current agreement sees a quota for film imports set at 34 films which can enjoy revenue sharing releases, and a further quota for films which can receive flat-fee releases. The current deal also specifies the share of the revenue to be earned by rights holders, and that Chinese state-owned entities will be the local distributors of revenue-sharing movies.

Another scenario, however, is more worrying. If the shape of the film talks is reshaped by the current talk of tariff and sanctions, the outcome could be far from what the film industry negotiators thought they could agree to.

The wider trade negotiations between China and the U.S. are now a fast-moving tussle, that stretches from commodities such as steel and soy beans, to intellectual property and airplanes. In recent days, Kudlow announced that China had agreed to cut its trade surplus by buying some $200 billion more American goods and services. Over the weekend, however, that agreement seemed to have been dashed. A two-day meeting of Chinese and U.S. negotiators in Washington saw China refuse to sign up for a specific target.

Until recently, the film talks had looked set to see an increase in quota import movies, greater revenue sharing, more transparency of film releasing and dating, and a possible mechanism that allows more Chinese distributors to handle Hollywood studio movies.

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