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Canada-U.S. trade in film production services

Canada - U.S. trade in film production services is mutually beneficial.

The United States leads the world in film and television production.

In 2000:

• 581 feature film projects were produced in the Los Angeles area¹. In the same time frame, only 42 U.S.-developed films were shot in Canada².
• In the Los Angeles area alone, direct expenditures by the film and television production industry were estimated to be US$31.2 billion³. In comparison, total foreign location shooting in Canada amounted to about US$1.2 billion⁴.

Even when a U.S.-developed feature film is shot in Canada, typically 60% of the total budget is spent in the United States⁵.

From 1980 to 2001, the cost to U.S. studios of making a feature film rose by 408%; marketing costs increased 616%⁶. By filming in Canada, U.S. producers can undertake productions that might otherwise not be financially viable. These productions generate well-paying jobs in the United States.

Film and television production is an internationally collaborative enterprise that is neither confined to the United States nor entirely financed by American dollars. Foreign pre-sales often contribute up to a third of a production's budget.

As world demand for audiovisual products increases, it is natural that some are produced in the countries, including Canada, that buy them.

The U.S. film industry enjoys an unparalleled trade advantage compared to all other U.S. industries.

"The U.S. movie industry alone has a surplus balance of trade with every single country in the world. No other American enterprise can make that statement."
Jack Valenti, testimony before the US Senate, February 28, 2002

In 2001, revenues generated from foreign sales of U.S. motion pictures, television and video programming were estimated at US$14.69 billion. Exports have increased 109% since 1991⁷.

Canadians are major consumers of U.S. film and television productions: U.S. feature films account for 85% of box office receipts in Canada⁸.

In 2000, Canadian broadcasters spent US$312 million acquiring rights to foreign, mostly U.S., television programming⁹.

There are solid, market-based reasons why producers choose to film in Canada.

Canada has a high quality production services industry, a pool of skilled and experienced talent, and varied filming locations.

The 2002 KPMG study, Competitive Alternatives: Comparing Business Costs in North America, Europe and Japan, ranks Canada as the most cost-competitive industrial country.

U.S. producers choosing to film in Canada find the favourable exchange rate to be a significant advantage.

Canada provides a variety of tax incentives for the production services industry. Similar support is offered by many jurisdictions, including 41 U.S. states, around the world. The California Assembly has approved a bill to provide wage-based tax incentives for film projects worth less than $10 million and shot in California, as of 2004. Legislation proposing similar incentives is currently before both Houses of Congress.

Canadian incentive programs, federal and provincial, fully comply with international trade rules.

SOURCES

1 Entertainment Industry Development Corporation: Annual Report 2000-01

2 Canadian Audio Visual Certification Office

3 Entertainment Industry Development Corporation: Annual Report 2000-01

4 Canadian Film and Television Production Association & Association des Producteurs de Films et de Télévision du Québec. The Canadian Film and Television Production Industry Profile, 2002

5 Canadian Audio Visual Certification Office

6 Motion Picture Association of America: 2001 U.S. Economic Review

7 International Intellectual Property Alliance: Copyright Industries in the U.S. Economy: The 2002 Report

8 Department of Canadian Heritage

9 Statistics Canada