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Claire Wright

Abstract

This article addresses whether the film incentives offered by other countries are consistent with those countries’ obligations under international law and can be countered with countervailing duties under U.S. domestic law. In particular, this article discusses in some detail whether the foreign film incentives are consistent with these countries’ obligations under the World Trade Organization (WTO) Agreement on Subsidies and Countervailing Measures (the SCM Agreement)...The question addressed in this article is whether, under U.S. and WTO law, a foreign government can artificially lower the costs of production in an industry to such an extent that a number of U.S. companies choose to establish local production companies in that country and forego production in the U.S., thereby decimating the industry in the U.S. Specifically, as a case study, this article focuses on the Production Services Tax Credit (PSTC) film incentives that Canada offers to domestic and foreign film companies alike to produce films that need not possess any Canadian content...The article concludes that the above-described foreign film incentives, and the PSTC film incentives in Canada in particular, most likely are inconsistent with those WTO Members’ obligations under WTO law, as they adversely affect the U.S. feature film production industry. The U.S. Government could therefore pursue a dispute settlement case on this issue in the WTO, requesting that Canada (and other countries with similar film incentive programs) be ordered to abolish those incentives. In the U.S., the U.S. Government could also initiate an action to impose countervailing duties on the subsidized films when they are imported into the U.S. After providing an analysis supporting this conclusion, this article discusses the advantages and disadvantages of the various remedies that could be pursued, considers the obstacles to a legal challenge to the film incentive programs, and provides recommendations for how interested parties in the U.S. might proceed.

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