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United States Achieves Breakthrough on Movies in Dispute with China

Washington, D.C. – Vice President Joe Biden announced today that China has agreed to significantly increase market access for U.S. movies in order to resolve outstanding issues related to films after the United States’ victory in a World Trade Organization (WTO) dispute last year. The agreement announced today will allow significantly more job-supporting U.S. film exports to China and provide fairer compensation to U.S. film producers for the movies being shown there.

“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,” said Vice President Biden, who spent the day in the Los Angeles area with Vice President Xi Jinping of China. “At the same time, Chinese audiences will have access to more of the finest films made anywhere in the world.”

“U.S. studios and independent filmmakers cite China as one of their most important world markets, but barriers imposed by China and challenged by the United States in the WTO have artificially reduced the revenue U.S. film producers received from their movies in the Chinese market,” said United States Trade Representative Ron Kirk. “This agreement will help to change that, boosting one of America’s strongest export sectors in one of our largest export markets.”

The Chinese film market is large and growing quickly; last year, Chinese box office revenue was up to $2.1 billion.  Much of this revenue came from 3D titles, which are a rapidly growing sector of the film industry.

The agreement allows more American exports to China of 3D, IMAX, and similar enhanced format movies on favorable commercial terms, strengthens the opportunities to distribute films through private enterprises rather than the state film monopoly, and ensures fairer compensation levels for U.S. blockbuster films distributed by Chinese state-owned enterprises.  The agreement will be reviewed after 5 years to ensure that it is working as envisioned.  If necessary, the United States can return to the WTO to seek relief.

BACKGROUND

The United States initiated the underlying WTO dispute in April 2007. In the dispute, the United States sought to address significant market access concerns relating to China’s treatment of films for theatrical release, as well as other cultural products.

With regard to films, a WTO panel found in a report issued in August 2009 that key Chinese film import restrictions were inconsistent with China’s WTO obligations. In December 2009, after China appealed, the WTO Appellate Body rejected China's claims and upheld the panel's findings. China promised to come into compliance by March 2011, but informed the United States at the deadline that this would not be possible. The two sides have been making efforts to resolve their differences since that time.

On a global basis, films and other audiovisual services are a key export sector in which the United States enjoys a $12 billion trade surplus.  U.S. cross-border exports of audiovisual services, including films, have consistently exceeded U.S. cross-border imports over the last decade.

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