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China misses WTO deadline

China misses WTO deadline

By Patrick Frater

Wed, 23 March 2011, 22:27 PM (HKT)

Industry News

China appears to have missed the deadline to comply with a World Trade Organisation (WTO) decision that it must loosen controls on the film industry. But US officials, for the moment at least, seem unwilling to play up the problem.

In a ruling last year the WTO said that China had until 19 Mar 2011 to announce its restrictions on the distribution of foreign films. So far China has not made any filing to the trade body, of which it became a member in 2001. That opens it to potential penalties.

The US Trade Representative, which filed the original complaint about media access, said it was disappointed.

"The US government is disappointed that China has not yet fully complied with the WTO ruling in this case, a lack of compliance which China has acknowledged," said Nkenge Harmon, a US Trade Representative spokeswoman was quoted as saying. "The U.S. government has communicated its concerns to China, and is working to ensure that China promptly brings its measures into full compliance."

The Hollywood studios, through the Motion Picture Association of America, said that a move by China may be close a hand.

"China made a commitment to comply with the WTO decision by March 19. We are disappointed China did not fulfil that commitment," said Greg Frazier, MPAA executive vice president and chief policy officer in a statement. "We understand, however, that the Chinese authorities are working to comply with the WTO's ruling and that the US government is actively engaged with the Chinese government to ensure that China meets its commitment."

In its decision in August 2009 the WTO ruled that, by requiring imported media products to be distributed through Chinese state-owned enterprises, China breaks the commitments to free trade that it signed up to when joining the WTO. The ruling did not overturn China's quotas on film imports.

China appealed against the ruling, but in December 2009 a WTO panel rejected China's appeal and set the 19 March 2011 deadline for compliance. At the time, US Trade Representative Ron Kirk characterised the ruling as "a big win" for American companies.

The right to distribute the imported films, including Hollywood blockbusters, remains with the two [state-owned] players China Film Group (中國電影集團公司) and Huaxia Film Distribution (華夏電影發行公司).

In a regular status report to the WTO from last week (15 March), China said it had disagreed with the ruling but was working to comply.

In a conference call with financial analysts and journalists earlier this month, Chinese distributor Bona Group (博納影業集團) said that its conversations with government led it to believe that the government might increase the import quota on revenue sharing films from its current 20 to perhaps 30 per year.

An opportunity for China to make an announcement could come later this week. It is scheduled to make a an appearance at a regular meeting of the WTO's dispute settlement body.

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