Blame Canada: U.S. visual-effects artists want reforms under NAFTA
WASHINGTON, D.C. -- Hollywood digital animation and effects artists say they can’t compete against aggressive Canadian subsidies and are fighting back at NAFTA public hearings.
California-based 3D artist Eric Rosenthal has worked on movies, commercials, and video games. But he's now working to change the long-standing U.S.-Canada trade agreement he calls unfair.
Rosenthal recently made the trip from L.A. to Washington to participate in public hearings organized by the United States Trade Representative ahead of NAFTA renegotiations.
He blamed Canadian federal, provincial and territorial government rebates of up to 60 per cent of eligible costs, saying the subsidies are pushing Hollywood studios to move productions north, destroying animation jobs in the U.S.
“The U.S. studios demanded (the) visual-effects industry move to places like Vancouver so they could reap subsidized government rebates,” he recently told a committee examining the role of Canadian incentives on U.S. animation jobs. “This caused many of my colleagues to lose their jobs, homes, mortgages as they had to keep moving north to keep working.”
U.S. animation groups say animosity towards Canadian incentives started four years ago, when Canadian-written film “Life of Pi” won several Oscars, including one for Best Achievement in Visual Effects. A subsequent documentary titled “Life After Pi” blamed the closure of the Los Angeles animation studio weeks later on the lure of Canadian tax breaks.
“You would think winning an award would bring more work in, but doesn’t mean anything,” said visual artist Rachel Kent, who lost her job after the film was released. “You could easily point the blame at Canada.”
The head of The Alliance of Canadian Cinema, Television and Radio Artists has said Canada’s incentives are by “no means one-sided” and “part of a highly competitive global industry.”
U.S. President Donald Trump’s trade czar Robert Lighthizer delivered a letter to congressional leaders in May, triggering the required 90-day notification to open new trade negotiations, which could begin as soon as August. It’s more than enough time for Canada to get drawn into yet another animated cross-border dispute.
“These subsidies are creating a huge imbalance in an industry that’s taking advantage of all of these workers,” Kent said.
A 2015 report from PricewaterhouseCoopers outlines a bevy of tax credits that make video, film and digital media production in Canada more attractive.
The Canadian Film or Video Production Tax Credit and the Canadian Film or Video Production Services Tax Credit offer rebates of 25 per cent and 16 per cent, respectively, on eligible labour costs. Provincial credits can cover as much as 45 per cent of eligible local wages, as is the case under the Manitoba Film and Video Production Tax Credit. Only a few of these credits require Canadian content.
With files from Jeff Lagerquist