Valenti Says He’s Against Tariffs

Motion Picture Assn. of America Chief Executive Jack Valenti told Canadian film and television producers Thursday that he opposes American tariffs to combat a surge in Canadian film productions because of generous tax credits and lower labor costs.

But Valenti added that he and others are lobbying Congress to pass tax credit legislation to encourage film and TV productions to stay in the U.S.

“Tariffs, duties, quotas and other artificial trade barriers which interfere with marketplace competition are wrong,” Valenti told members of the Canadian Film and Television Production Assn. in Ottawa. “They cause fiscal mischief to no one’s gain.”

Valenti represents Hollywood’s largest studios, and his remarks were designed to mollify Canadians who have been anxious about efforts by Hollywood groups to get the U.S. government to investigate whether Canada’s film tax credits violate free-trade treaties. Such a lobbying effort, which has lost steam in recent weeks, could lead to taxes on films and TV shows shot in Canada and then released in the U.S.

“It looks like [Valenti] is up there promoting a trade war by calling for U.S. subsidies for his clients. Under his plan, the studios get more money,” said Brent Swift, president of the Film and Television Action Committee, a group of mostly displaced industry workers that last month withdrew its request for a U.S. Commerce Department investigation of the Canadian subsidies.

Swift’s group has hired a lawyer and plans to resubmit its petition, he said.

Runaway production has been a growing concern among the working class of Hollywood. Last month, Gov. Gray Davis proposed a tax credit on wages to dissuade film and TV productions from moving out of state. Davis proposed a 15% tax credit on the first $25,000 earned by workers on lower-budget productions, but his proposal does not have widespread support in the Legislature.

In 2001, more than $3.3 billion was spent on film and television production in Canada, an increase of 9% from the previous year, according to a new report by the Canadian Film and Television Production Assn.

Of that, nearly $1.4 billion were foreign productions, largely from Hollywood. Though the Canadian industry has experienced a dip in the number of feature films, television dramas and children’s programs by Canadians, U.S. producers have more than picked up the slack.

The Canadian industry is moving into a period of uncertainty, the report said, because of a slowing economy and retrenchment in the aftermath of the Sept. 11 terrorist attacks in the U.S. The Canadian government is phasing out lucrative tax shelters that allowed producers to save millions on production costs.