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It is worth remembering fi lm is only able to bene- fi t from state aid at all in Europe through the ‘cultural exception’. In the language of the EC, “audiovisual works, particularly fi lms, play an important role in shaping European identities. They refl ect the cul- tural diversity of the different traditions and histories of the EU member states and regions.”

The EC has shown a particular interest in whether certain European territories have put in place incentive schemes primarily driven by the desire to grab portable productions, particularly those coming from the US studios. The UK, Ger- many, Hungary and the Czech Republic all have tax-based schemes which successfully attract Hol- lywood productions to spend money on goods and services in their territory.

“Does a subsidy race to attract major US produc- tions undermine the effectiveness of aid to support smaller European fi lms?” asked Joaquin Almunia, EC vice-president in charge of competition policy, when the consultation began last summer.

Both the British Film Institute and German funding leaders have robustly disputed the notion of a subsidy race.

But how likely are the proposals to be adopted? At the moment it is only a consultation process and the EC is at pains to point out that it remains “fully open to suggestions by member states or interested parties”. Its aim is to achieve “a broad consensus”.

Territories defend schemes

There is already widespread agreement across Europe’s major fi lm-making territories. The offi cial French response argues forcefully “territorial con- ditions are indispensable for the sustainability of public aid schemes”, while the Irish Film Board agrees that if territorialisation were diluted, “gov- ernments will no longer see a value to providing support systems”.

The EC itself says, according to the general prin-

ciples of taxation, member states are not obliged to grant any tax incentive to expenditure not directly linked to activities that generate income taxable in their territory. Therefore, the proposed change in the Communication should not require changes in many fi lm support schemes. “The European Commission may not want com-

petition in the market but it certainly doesn’t want to damage the fi lm and creative industries,” suggests Adrian Wootton, chief executive of Film London and the British Film Commission. Wootton talks of the “complementary collabora-

tion” when a big international production comes to Europe. “[The UK] is the principal gateway for US large-scale investment into Europe and then col- laboration fl ows out of that.” The competition, he adds, is not between EU

member states but between Europe and South Africa, Australia, Canada and the individual US states offering incentives to footloose Hollywood productions. It is quite likely the wariness over the new guide

to EU state aid rules will prove misplaced. EC sources themselves say, “The Commission does not think that the draft new rules departed considerably from the 2001 Communication. The only major change is that we put more emphasis on the respect of internal market principles, which is [due] to clari- fi cations on that matter by the Court of Justice and shouldn’t be too surprising, as these principles are applicable since several decades and this adjustment has been announced [for] several years.” At the very least, there appears to be a breakdown

in communication between the EC and the countries with these schemes in place. The two parties seem to

■ 48 Screen International at Cannes May 16, 2012


■ The EC’s consultation on aid for fi lm and audiovisual works is open until June 14.

■ Submissions are invited from citizens, organisations and public authorities.

■ Results are due in the second half of 2012.

■ Visit: consultations/2012_state_aid_fi lms/index_ en.html

be coming at the same subject from very different starting points. EC staff members are hardly to be blamed if they are not versed in the minutiae of every European state’s film policy. They are trying to ensure state aid schemes do not break rules relating to the European Treaty. Their primary concern is with ensuring that competition within the Euro- pean internal market is not distorted.

However, for those territories which

have spent years putting their fi lm incen- tive programmes in place, the consultation is prov- ing deeply unsettling. The consultation ends in June and the new Cin-

ema Communication is expected to be adopted in the latter half of 2012, before the current state aid criteria expire on January 31, 2013. By then, the member states and the commission hope to have come up with a blueprint with which both are happy. If not, the potential for turbulence is obvi- ous. In the short term, though, fi lm agencies are keen to point out they are doing business as normal. “Stuff goes on all the time below the radar,” says

the BFI’s Nevill. “We wouldn’t expect the studios or anybody doing business [in Europe] to worry about it. It is part of the ongoing negotiations and horse- trading that go on with Europe.” The European Audiovisual Observatory’s annual Cannes workshop, ‘Levelling the playing fi eld? Towards new European rules for fi lm funding’, will be held in the Salon des Ambassadeurs (Level 4, Palais des Festivals), May 19 from 11:00 to 13:00. 


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