SAG Says Canada Film Policies Illegal, Seeks Federal Inquiry

In a move that has alarmed some of its partners in the fight to keep film production in the United States, the Screen Actors Guild is calling for a federal investigation into alleged unfair trade practices by the Canadian government.

The petition, which the group plans to file this month in Washington, maintains that Canada’s film subsidies are illegal and have caused “substantial injury to tens of thousands of workers in California and in other states.”

The pursuit of a formal inquiry into Canada’s use of rebates and subsidies to bolster its movie industry marks the latest in a snowballing effort to stem so-called runaway film production. Since a government report issued earlier this year estimated that the U.S. was losing $10 billion in annual revenue to film production in cheaper foreign locales, efforts to get federal and state governments to intervene have increased.

Most significantly, a bipartisan bill was introduced last month in the Senate that would grant substantial wage credits to producers of small and mid-size films who shoot the majority of the film’s work in the U.S.--mimicking measures already in place in Canada and other countries.

Canadian officials have disputed allegations of runaway production as overblown. They question the $10 billion in annual losses cited in the U.S. government report.

Mark DesRoches, the film commissioner in British Columbia, said Tuesday that the American outcry about runaway production seemed disingenuous for a country that still dominates virtually every aspect of movie making.

“I really think this is a little like the Chicken Little scenario,”DesRoches said. He pointed out that British Columbia did $1.2 billion in total film business last year compared with $28 billion in Southern California alone. “That’s not even apples and oranges. It’s watermelons and limes.”

SAG officials say their decision to ask for an investigation into whether countervailing tariffs are needed against Canada to keep the U.S. competitive will only help build the case for the wage-incentive bill, which they say remains their No. 1 priority.

“This is not an either-or situation,” said Lance Simmens, SAG’s director of governmental relations. “We think if some sort of impropriety has been alleged on the part of Canada there should be an effort to get to the bottom of it.”

But other alliance members--ranging from film commissioners to producers to skilled laborers--expressed serious concerns about an approach that could be interpreted as bashing Canada. Far from the parallel track SAG officials say they are pursuing, many coalition members called the move a detour that might hurt the legislative strategy they’ve been crafting for more than two years.

“The alliance is not in support of this,” said Dawn Keezer, Pittsburgh’s film commissioner and head of Film U.S.--a nationwide group of nearly 200 film commissioners. “We see it as a protectionist move. We see it as something that will cost us jobs.”

The president of the International Alliance of Theatrical Stage Employees, Thomas Short, also expressed concern that tariffs would mean jobs lost for his 50,000 members--a worry that led his union to reject a similar call for a trade investigation when the matter came up at their triennial convention last month.

The petition, which was approved by SAG’s board last week, should be filed by the end of the month, said Joel D. Joseph, general counsel for the Made in the USA Foundation, who drafted the measure.

Once it is submitted, Commerce Department officials said, they have 20 days to make a preliminary determination of whether the petition meets requirements for launching an investigation. If accepted, investigators have 25 days to decide whether a “reasonable indication” exists that a domestic industry is injured or threatened by unfairly traded imports.

A spokesman for the International Trade Administration said allegations of subsidies causing economic damage--as opposed to more clear-cut cases of “dumping” of under-priced products--can be difficult to prove.

Jack Valenti, president of the powerful Motion Picture Assn. of America, has long cautioned against trade barriers. Although Valenti pledged his support for the wage incentive bill, he has vowed that the major studios would vigorously fight tariffs.

“We can’t afford a trade policy that is overly protectionist,” said MPAA spokesman Rich Taylor. “Our industry is in danger of muddying our message that we’ve said for so long: We are in favor of a free market for our films.”

Those in support of a trade investigation said the U.S. already has lingered too long while other countries have jump-started their movie industries with American-created films.

The practice of American producers crossing the northern border for promised incentives has increasingly angered Hollywood’s rank and file. Why, if not for financial enticements, they ask, should shows such as Fox’s new drama “Pasadena” and a movie underway about the Texas Rangers lawmen get filmed in Canada?

Brent Swift, chairman of the Film and Television Action Committee, which with SAG is calling for the trade investigation, said his group is considering filing a class-action lawsuit against Canada.

“The loss of features is getting worse and worse and worse,” said Swift, who doubts that the wage-incentive legislation will ever be come law. “My fear is Los Angeles could turn into the Rust Belt as far as film production is concerned.”