Will Hollywood Survive Donald Trump's "Tweaks" to NAFTA?
The president's promise to renegotiate the 23-year-old trade agreement could affect everything from foreign digital talent working in L.A. to the cost of popcorn in Mexican movie theaters.
U.S. President Donald Trump has made no secret of his distaste for the North American Free Trade Agreement, or NAFTA.
After repeatedly criticizing the pact, which was ratified in 1994 in an attempt to free up trade between the U.S., Canada and Mexico, Trump recently softened his stance somewhat, saying during a press conference with Canadian Prime Minister Justin Trudeau that he intends to “tweak” the agreement.
But with the entertainment sectors in all three countries entwined – especially Canada, which benefits from lucrative Hollywood film and TV productions lured north of the border by generous tax credits and incentives — a renegotiated NAFTA could mean serious consequences.
The problem is that no one really knows what Trump will do, because he has been short on specifics. "Trump is 'America first,' and I think he will try to push through whatever he thinks will improve the U.S. situation. We have a lot to lose if NAFTA is seriously damaged," says Bernie Wolf, a professor of economics and international business at the Schulich School of Business in Toronto.
One source of concern is the free movement of labor. if Trumps listens to Los Angeles unions crying foul over American jobs lost to Canadian soundstages and VFX houses in Vancouver and Toronto, the door could be slammed shut on NAFTA-sanctioned TN (Treaty NAFTA) work visas.
NAFTA created the TN professional visa so Canadians and Mexicans could enter the U.S. upon receiving a job offer from an American employer. The TN visa is generally valid for one to three years, so it is basically a temporary work permit, a valuable asset for foreign talent looking for work in the tech and VFX industries.
"If Trump gets his wish of tossing out NAFTA for good — or at least is able to make dramatic changes to the agreement — the TN would effectively cease to exist, closing off one of the key avenues used by Canadian workers to accept opportunities in the U.S., at least temporarily," warns immigration lawyer Lorraine D'Alessio of D’Alessio Law Group.
Others see the status of foreign digital artists in any reopened NAFTA talks as unchartered territory, as the trade pact was negotiated when digital technologies like CGI were in their infancy. "At present, digital professionals qualify for the TN visa, but because that industry didn't exist in 1994, they don't fit easily into existing categories," says Mark Warner, an international trade lawyer with Toronto-based firm MAAW Law.
Mexico's thriving exhibition sector, which ranks No. 10 worldwide in terms of box-office sales, will face more prosaic challenges in the event of a trade war. Cinepolis, Mexico's top theater chain, not only buys screens and projectors from the U.S. but also purchases nacho cheese sauce and popcorn kernels stateside.
Yes, you read that right — Mexico, the cradle of maize, imports its kernels from the U.S., because it doesn't produce enough of the corn used to make popcorn. Cinepolis has said that any significant tax increase on U.S. popcorn kernels might force the cinema giant to turn to Argentina as an alternative supplier.
But even if Trump did at one time talk about ripping up NAFTA, few see him picking a fight with Hollywood and its cross-border trade in media production during the upcoming renegotiations. Says Ariel Katz, an associate professor of law at the University of Toronto: "If Canada plays its hand wisely, it might be able to preserve the status quo."
Jonathan Handel and John Hecht contributed to this report.