MPAA getting involved in Hollywood’s dispute with China

For months, the Motion Picture Assn. of America has been a quiet player caught between the Hollywood studios it represents and the world’s second-largest movie market China.

Now for the first time, Hollywood’s trade organization in Washington is speaking out about the growing tensions from China Film Group’s recent moves to limit the box- office revenue of U.S. movies. The state-owned company has blocked imported movies from the country for most of the summer in an attempt to drive down ticket sales for imported films, opened the animated movies “The Lorax” and “Ice Age: Continental Drift” and the superhero pictures “The Dark Knight Rises” and “The Amazing Spider-Man” on the same dates.

In February, China relaxed the rules for importing films, allowing not only more movies under its trade quota but also giving the Hollywood studios (which make almost all of China’s imported productions) a bigger cut of box-office revenue.

But the American films, including “Titanic 3D” and “Mission: Impossible -- Ghost Protocol,” might have performed a bit too well, crushing Chinese movies at the box office during the first six months of 2012. In a bid to boost the percentage of box office generated by local productions, China Film responded with a pair of monthlong “blackouts” on American movies and the so-called double-dating of pictures it did import.

On Wednesday, Greg Frazier, the MPAA’s chief policy officer, revealed that the Chinese problem has become so worrisome that he has been in touch with the Obama administration.

Following is an edited and condensed transcript of his discussion with the Los Angeles Times:

What has the MPAA been doing in response to China’s new policy of releasing similar American movies on the same date?

We consulted with [our member] companies. We have had pretty regular communications with the U.S. government about this whole case from the beginning. We think what’s going on is highly unusual, not just the double-dating but the extended blackout periods this summer. And there appears to be another period this month with few, if any, U.S. releases. We expect some blackout periods. That’s part of doing business in China. People know that. But it has been rather prolonged this year.That in and of itself is cause for concern from our perspective. When you look at it in conjunction with the agreement earlier this year, you have to ask: Is it just coincidence or is there some relation between the two?

Which U.S. agency have you been in contact with? And are you communicating with the Chinese government?

We have been talking to the U.S. trade representative. And we are talking to folks here in D.C. in the Chinese Embassy about it too.

Have you gotten any explanation from China?

No. They say, “Thank you for bringing that up. We know how important this issue is to you. I’ll relay your concerns back to the authorities.”

Do you think China is violating any international agreements, such as a World Trade Organization pact?

Well, it’s not very sporting.

It challenges something that has some sensitivity. Negotiations went on for years and culminated at the very highest levels of the two governments [in February.]. That is unusual and significant.

Are they violating WTO obligations? It’s not clear. Probably not.

But is this a violation of the agreement done last February? I think the jury is still out on that. But it does raise concerns because there is a provision in the agreement that China won’t manipulate its market to undermine the agreement.

The studio sources we have spoken to seem very frustrated at the lack of transparency in the process this summer. Is that something you can help to fix?

It’s not the most transparent process in the world, and the appeals are limited. But that’s nothing new. It’s always that way when doing business with China.

Are there actions the MPAA is prepared to take in response, or to urge the U.S. government to take?

We have to see how things play out for the rest of the year.

China’s agreement with respect to entry of films is on a yearly basis. I can tell you from conversations with various folks that this is not just pinching the U.S. side, it’s pinching the Chinese side too. Because what has been filling seats for the last several months? American films.

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