Siggraph: Could a WTO Rule Be Used to Impose Duties on VFX Shots?

ANAHEIM, Calif. -- Visual effects leaders are discussing a proposed plan that could potentially be a big step toward addressing the industry's troubled business model. On Thursday, they took their message to CG conference Siggraph for a session that included a Skype conversation with David Yocis?, an attorney at Washington, D.C.'s Picard Kentz & Rowe.

One of the factors hurting the VFX industry is film incentives, and PKR recently completed a study of international trade law regarding subsidies, commissioned by the anonymously run “VFX Soldier” blog.

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The findings suggest, according to Yocis, that while not a certainty, the best potential approach is a World Trade Organization rule that could be used to impose Countervailing Duties (CVD), which effectively means that if a foreign government unfairly subsidizes goods or services (such as rice, semiconductors, cotton or, perhaps, VFX shots), then the U.S. could slap a duty (i.e., an import tax) on the goods in a countervailing amount (i.e., an equal and opposite amount), so that the buyer in the U.S. ends up paying market price, rather than the subsidized price.

One generally thinks of CVD in the context of commodities. Does the rule even apply to VFX? “We think the answer is yes,” Yocis said, adding that the law is about taxing subsidies that cause injury, and the loss of jobs could apply as injury.

A law firm such as PKR could file the petition on behalf of an organization representing the industry. Putting the petition together will take time and require “organization and input” from the community.

The filed petition would require an investigation of the situation, which Yocis said could take more than a year. Further, there could be delays should there be appeals. Yocis said an advantage to CVD law is that “once the conditions are met, it applies automatically.”

Asked what it would cost the community for such an initiative, a colleague of Yocis said the community is looking at “hundreds of thousands” of dollars. “It’s not cheap; it's a complicated legal process,” he said.

Added Yocis: “It’s not a perfect solution, but we think it is something that has some potential to change the dynamic [of the business].”

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While it might not perfect, is it the best possible approach—and is it even achievable? “It's a difficult mountain to climb, but right now it looks like it’s the only mountain,” said panelist Scott Ross, who spoke with The Hollywood Reporter following the session. Ross is a co-founder and former CEO of Digital Domain and served as the general manager of Industrial Light + Magic and as senior vp of LucasArts.

Ross related that “VFX Soldier” wants to move forward and has started to ask individuals to sit on the board of an entity that would hire the law firm. For the board, “VFX Soldier” has already reached out to Ross and VFX artist Dave Rand, they told THR in separate conversations. (Rand is the VFX artist who on Wednesday published an open letter to the DGA, asking its members for help.) 

Ross said that should this move forward, a fundraising effort would need to begin soon, potentially a Kickstarter campaign.

Twitter: @CGinLA