IFTA Says U.S. Should Punish China for Cheating on Film Trade Deal

China Trade War Illustration Variety
Cheyne Gateley/Variety

The Independent Film & Television Alliance has filed a complaint to the U.S. Trade Representative, calling for the U.S. government to keep China on its Priority Watch List and to monitor China under Section 306 of the Trade Act.

The IFTA lobby group, which represents American and international independent film companies, argues that China is making it harder than ever for U.S. independents to secure meaningful release for their films in the Middle Kingdom. That is despite China now being a $9 billion theatrical market.

Contacted by Variety, IFTA offered no additional comment.

IFTA data shows that only 13 US indie films were released in China last year, and that they grossed an aggregate $115 million last year. It said that was “an all-time low,” representing just 1.3% of Chinese box office, and down from 5.6% in 2010.

China joined the World Trade Organization in 2001, agreeing a system of open markets and specified exceptions to that principle. IFTA argues that China is in breach of the bilateral Film Agreement signed in 2012 between the U.S. and China, defining how the movie industry would operate outside the general WTO rules.

The USTR, on behalf of the film industry, had reopened the 2012 Film Agreement on its fifth anniversary. While many sources suggest that China and the U.S. had reached a broad agreement in 2018 or early 2019, further progress was held up by the bilateral U.S.-China trade war. But now, exactly three years on, the Feb. 6 IFTA complaint suggests that the distance between the two sides may now be growing again.

In a stunning allegation, IFTA says that China has cheated by simply cutting down on the number of “flat fee” film imports in order to make way for the increase in revenue-sharing quota titles, which mostly go to Hollywood studio movies, agreed in 2012.

“Unknown to the U.S., which had negotiated successfully an increase in the quota films, China subtracted the increase from the number of non-quota (flat fee) films that it allowed into its market,” the filing says.

In the same vein, IFTA alleges that China has failed to honor the commitment to enable a private sector distribution industry. It says that private companies are not properly licensed, are still beholden to state owned entities for import permits, distribution dates, and digital keys. In addition to censorship controls, film imports are subject to unreasonable document checks which are hugely costly and increase the delays in getting into cinemas.

It accuses China of introducing “informal or nontransparent policies which result in the inability of private Chinese distributors to secure censorship or release date for U.S. origin films from the Chinese government, and prevent payment of minimum guarantees for license fees to U.S. producers.”

IFTA points to another ambush in the streaming sector. “Beginning mid-2019, without any formal announcement, the Chinese government agencies and distribution platforms first halted the distribution of new U.S. content on Chinese online streaming platforms, in what is being called a “soft ban.” This market disruption continues today with most U.S. content held up in censorship.”

IFTA’s filing gives more ammunition to the Trump government, which signed a so-called Phase One trade deal with China in January, but left most of the difficult issues to future negotiations, and without a date for resolution.