‘Runaway’ Productions Petition to Be Withdrawn

WASHINGTON —  A petition asking the federal government to impose countervailing tariffs on U.S. films produced in Canada with Canadian government subsidies will be withdrawn today, backers of the effort said Thursday.

Film and Television Action Committee President Brent Swift said his group needed more time to produce documentation to support the petition submitted to the Commerce Department early last month. Swift said the decision to temporarily withdraw the petition “in no way” indicated a “weakening of our resolve to level the playing field.”

Canadian officials said they were not surprised that the petition was being withdrawn.

“This confirms what we’ve been saying from the beginning, that the footing wasn’t very solid to support this action,” said Mia Chen, a spokeswoman for Canada’s Department of Foreign Affairs and International Trade.

The withdrawal of the petition is supported by the Screen Actors Guild, which has come under fire from other unions for backing a trade tariff inquiry.

Swift says they planned to refile within the next two months. “We fully support FTAC’s decision to temporarily withdraw the petition,” said SAG spokeswoman Ilyanne Kichaven, who declined to comment further.

Commerce Department guidelines require that the majority of an affected industry support a tariff inquiry--a calculation difficult to determine in the loosely defined entertainment industry.

The petition alleged that Canada was engaged in unfair trade practices by illegally enticing U.S. productions with tax credits that give substantial cost breaks to productions that film in Canada and use Canadian workers.

The proposed remedy was to fine companies an amount equal to the subsidies before the film could be released in the U.S.

The major studios, independent producers and many trade unions have opposed any such tariffs and called the effort shortsighted and potentially dangerous for an industry that makes billions of dollars a year selling American films elsewhere.

“Runaway” production has been estimated to cost $10 billion a year in lost revenue.

Canadian officials have called that figure inflated and argue that other factors, including a favorable exchange rate, government investment in the film industry’s infrastructure and diverse locales have played major roles in Canada’s entertainment industry boom.

Legislation to provide tax-based wage incentives that would mimic those in Canada has been introduced in Congress. The bills would mimic some tax incentives in place in Canada, providing a 25% wage tax credit for employers on U.S.-based productions with labor costs between $200,000 and $10 million.

Lawmakers pushing the bills have warned that a trade tariff inquiry could derail that effort. This week, Swift said, he asked the U.S. trade representative to begin negotiating with the Canadians for a voluntary removal of subsidies. A spokesman for the U.S. Trade Representative’s office said such a request had not been made by close of business Thursday.

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Times staff writer James Bates in Los Angeles contributed to this report.