China Accused of Failing to Fully Implement Film Agreement

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The International Intellectual Property Alliance says China’s market for music, software, films and more is stunted by piracy and access

China, after signing a widely publicized agreement to significantly raise its number of foreign films and drop distribution barriers, has failed to fully follow through on all its promises, the International Intellectual Property Alliance charged Friday.

The Alliance — whose members include the Motion Picture Association of America, the Independent Film and Television Alliance, and the associations for recording industry publishers and software publishers — made the accusation in a filing with the United States Trade Representative.

The IIPA pointed to the agreement, hammered out in February 2012 and announced by Vice President Biden, that was supposed to increase the number of foreign films in China by 50 percent and improve distribution terms.

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“The market in China for music, software, publications, films, and video games remains stunted by a combination of piracy and stifling market access and discriminatory barriers,” the group said in urging US Trade Representative Michael Froman to hold China accountable.

The U.S.-China Film Agreement, besides increasing the number of American films to be distributed in China, was supposed to ensure that the film studios would get a fairer distribution of box office revenues and have additional choices in Chinese distributors. There had been accusations that the two biggest state-run distributors of films had demanded onerous terms from studios to distribute films from the United States.

Biden announcing the deal said, “This agreement with China will make it easier than ever before for U.S. studios and independent filmmakers to reach the fast-growing Chinese audience, supporting thousands of American jobs in and around the film industry.”

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The Alliance said the agreement has had some favorable effects and that it still regards the agreement and several other recent moves by the Chinese to open its market to more U.S. films and music as “positive developments.”

“The Agreement has had the positive result in increasing revenue sharing participation to 25 percent of box office revenue for up to 34 films (14 of which enter the Chinese market in enhanced formats). This change has already resulted in increased revenues for films that are able to secure the increased quota slots and share in box office revenue,” the group said.

At the same time it expressed concern that there hasn’t been enough progress.

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“Many commitments made by China remain unfulfilled and full market opening remains elusive,” the Alliance said in the filing. “Progress is tempered by the fact that so few imported films are able to secure quota slots, and films that do not share in the box office revenue still meet insurmountable boundaries.”

The IIPA pointed especially to the difficulty studios have in working with smaller Chinese film distributors because of the two big ones — China Film Group and Huaxia.

“Until the U.S.-China Film Agreement is robustly and fully implemented, and national distribution can be conducted by private Chinese enterprises in competition with the dominant incumbents, the majority of film producers will have very limited export opportunities in China,” the filing said.