The U.S. film industry is poised to gain a significant amount of business in China as a result of China's recent decision to eliminate measures restricting imports of foreign films. China previously limited imports of films to companies approved by its government, excluding many U.S. films from the market in China. Last week's agreement reportedly will increase U.S. access to China's film market by roughly 50 percent.
The market access gains are the result of a focused effort by the U.S. film industry to confront China's practices that constrained the import of foreign films. In 2007, at the industry's urging, the United States filed a World Trade Organization (WTO) complaint against China's restrictions. In late 2009, the WTO Appellate Body agreed with the United States, finding that China's film restrictions violated WTO agreements and could not be justified as necessary to protect China's public morals. Since then, the United States and China have been negotiating toward the settlement that was just announced.
According to negotiators for the United States, the agreement will ensure that U.S. films receive favorable commercial terms in sales to China and create new opportunities for distribution of films through private enterprises rather than China's state film monopoly. The agreement is a striking example of how the U.S. trade policy apparatus can be used to obtain new business opportunities.