Race to resolve film rights row

Date: 25/09/1997

By Peter Chapman

EUROPEAN Commission trade officials are in a race to end a trade row with Canada over the distribution rights of a leading Anglo-Dutch film company before the UK and Netherlands take matters into their own hands.

Aides to Trade Commissioner Sir Leon Brittan will warn officials from Canada Investment “in the next two to three weeks” that the film arm of entertainment company PolyGram Filmed Entertainment (PFE) is being treated unfairly in its bid to distribute films for which it does not enjoy world-wide distribution rights or which it has not majority-funded.

If the Commission cannot resolve the dispute swiftly, it threatens to provoke a damaging split within the EU's ranks.

Despite opposition from France, a Canadian ally on cultural issues, both the UK and the Netherlands are ready to step in to defend their company at World Trade Organisation level if Union pressure fails to persuade Canada to overturn its rulebook. This would result in a messy breakaway situation which the European Commission is anxious to avoid.

“The Netherlands and UK are being very proactive on this. They are saying that if Canada does not move, they will, so there is enormous pressure for us to solve this as soon as possible at EU level,” said one official.

The dispute stems from Ottawa's refusal to grant PFE the same distribution rights in Canada as those given to US companies, which are untouched by the rules because they set up their operations in Canada before the regulations came into force. Unlike PFE, they are allowed to distribute any films for which they have the local rights.

The restriction imposed on PolyGram are seen as a belated attempt by Canada to protect its own film industry from foreign competition.

Ottawa has so far shown no sign of backing down over the issue, despite a March 1997 pledge from PFE to invest 25&percent; of its Canadian revenue in local production.

Union trade officials say the decision to hold the EU-Canada film showdown follows close collaboration between PFE and the Commission over the issue.

“PFE seems to have exhausted the relevant avenues in Canada to solve this problem,” said one, who added that the restrictions imposed by the Canadian government would effectively mean that no EU company would qualify to distribute films there.

The forthcoming 'informal' talks are likely to take place in Ottawa and follow an initial ice-breaking meeting in Brussels last week between the EU and Canadian Heritage officials. Informal talks are seen as the best way to solve the problem short of a formal WTO complaint.