The Government of the People’s Republic of China (“China”) and the Government of the Republic of Korea (“Korea”) have entered into a co-production treaty that became effective September 1, 2014. The treaty entitles films that are co-produced by one or more nationals of one country in cooperation with one or more nationals of the other country and made in accordance with the treaty to all the benefits which are or may be accorded to national films by each Party (that is, China or Korea) under its national laws. A key benefit of national treatment in China for qualifying co-production films is that China’s import quota on foreign films is not applicable to such films.
The treaty also takes practical steps to facilitate China-Korea co-productions, including providing entry into each country by the other country’s nationals to facilitate production and promotion of qualifying co-production films, and facilitating movement of technical equipment and filming materials between China and Korea on a temporary admission basis and free of import duties and taxes.
The treaty designates a “competent authority” for each country that is responsible for approvals of projects. The competent authority for China is the Film Bureau of the State Administration of Press, Publication, Radio, Film and Television (“SARFT”). The competent authority for Korea is the Korean Film Council (“KOFIC”). The treaty also designates the China Film Co-production Corporation as the Chinese handling organization through which co-production films are assessed for co-production status.
Each co-production film must be granted provisional approval by both competent authorities before being put into production (in China, referred to as “Project Establishment” status; in Korea, indicated by written notification for provisional approval). A co-production film must be made in accordance with the provisional approvals in order to qualify under the treaty. A completed co-production film must receive final approval (in China, referred to as “Film Public Screening Permit”; in Korea, indicated by written notification for final approval). Each competent authority conducts its approval process based on its own policies and guidelines. Final approval of a film as a co-production film is not permission to publicly exhibit the film.
Performing, technical and craft contributions for a qualifying co-production film from the co-producer in each country must be at least 20% and not more than 80%. Financial contributions (which may also be in-kind contribution) from the co-producer in each country must also be at least 20% and not more than 80%.
The competent authorities may approve a co-production film made with a third-party co-producer from a third country if the third country has a co-production treaty with either China or Korea. However, the contribution of the third-country co-producer cannot be greater than the lesser of the individual contributions of the China co-producer and the Korea co-producer. As a practical matter, complying with the requirements of multiple co-production treaties in a single multi-party co-production may prove challenging.
The treaty has an initial three-year term, and will automatically renew for successive three-year terms unless either China or Korea terminates the treaty upon six months’ notice before expiration of the treaty.