While the Trump administration has sparked uproar in the European Union over the president’s aggressive new trade policy, it’s also fueled tensions between the U.S. and European film industries.
Jacques Audiard (“Emilia Perez”), Costa-Gavras (“Z”), Audrey Diwan (“Happening”) and Claude Lelouch (“A Man and a Woman”) are among the French filmmakers who have called out the the offensive led by the American film community against EU regulations, including the Audiovisual Media Services Directive (AVMS), which forces foreign streaming services to invest a portion of their revenues into local productions.
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In an open letter signed on behalf of France’s two main film orgs, ARP (Authors, Directors, Producers) and SRF (Society of French Directors), French filmmakers said they were “astonished” by the memorandum signed by the Directors Guild of America (DGA) and the International Alliance of Theatrical Stage Employees (IATSE).
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The message, which was sent in March to the United States Trade Representative (USTR), underlined the “disproportionate investment obligations” in European countries including France, Germany and Italy. The MPA also blamed these local content quotas and investment obligations for creating barriers, reducing residuals for their guild members, leading to job losses and runaway productions.
The filmmakers who signed the open letter — also including Cedric Klapisch and Stephane Demoustier, who have their latest movies playing at Cannes — argue that France’s “proactive cultural policy” and regulations are responsible for the country’s healthy theatrical market, which has Europe’s largest number of cinemas. They also pointed out that France’s unique system of a levy on every movie ticket sold is “highly beneficial to American films, which account for an average of 45% of our box-office, and for which France remains one of the leading markets.” In 2024, for instance, the French box office was largely bolstered by Disney tentpoles such as “Inside Out 2” and “Moana 2,” which sold 8.4 million and 6.7 million tickets, respectively, as well as “Despicable Me 4” and “Dune 2.”
Even independent American cinema also benefits from French regulations, the letter claimed, because U.S. indie movies tend to draw strong box office revenues in France.
That levy system was established in 1948 to support cultural diversity and has ultimately created a dynamic market where box office grosses are “often higher than in countries with lower taxes.”
The French filmmakers also countered the MPA’s argument suggesting that the recent decline in U.S. film production was caused by “foreign taxes or legislative policies.”
“Hollywood strikes, studio decisions to move productions abroad, majors opting to scale back investments, inflationary environment and a global post-COVID market contraction may also explain this decline,” the French guilds said. “Our policies should not serve as scapegoats for these strategic and industrial decisions, nor for the decline of the United States’ production.”
While the French filmmakers vowed to see France “remain a land of refuge and creation for stories in all their diversity,” they ended their letter suggesting their respective representatives meet at the Cannes Film Festival to “pursue this discussion and build a united front.”
Alongside the DGA and IATSE, the Motion Picture Association, which represents the interests of Disney, Netflix, Paramount, Amazon Prime/MGM, Sony Pictures, Universal and Warner Bros., also criticized European regulations in a memo to the United States Trade Representative, which in turn prompted an open letter signed by a group of European Parliament members, led by France’s Emma Rafowicz and addressed to the president of the European Commission, Ursula von der Leyen, as well as commissioners Henna Virkkunen and Glenn Micallef. That letter urges them to protect the AVMS directive, saying it is “currently under crossfire from American streaming platforms who would like unfettered access to the European market.”
In the backdrop of these tensions, Netflix has lodged an appeal with France’s Council of State about France’s windowing rules, which force the streamer to wait 15 months to access newly released films in spite of the fact that they invest 20% of their local turnover in French content.
Here’s the letter from the ARP and SRF in full:
Honorable Members of the DGA,
Dear Colleagues,
We read with great interest and some astonishment your letter to the United States Trade
Representative. We felt it was important to address some of your concerns and to reengage in a constructive dialogue about our respective sectors.
As a matter of facts, a film and audiovisual policy exists in France, within the European
Union, and in many countries around the world. Regarding France, it is thanks to our
model and its regulations that our market is so dynamic. Our proactive cultural policy has
enabled us to become the country with the highest number of movie theaters in Europe,
and to attract a significant number of moviegoers. Yet this regulation is highly beneficial
to American films, which account for an average of 45% of our box-office, and for which
France remains one of the leading markets. Our regulation also supports independent
American cinema, which very often finds its audience in France and which we will always
gladly welcome.
Thus, the good health of national markets is a sine qua non condition for maintaining a
dynamic market, not only in terms of audience but also in terms of infrastructure, and
ultimately in terms of box office revenue, TV and SVOD viewership, and so on, which
benefits non-national works, American ones included. We are convinced that our model
safeguards not only French creation but creation from all over the world.
To give you a concrete example: thanks to France’s cultural policy and to taxes collected
from all operators broadcasting films (both French and foreign), we have a youth
education program about films, nurturing today’s and tomorrow’s large audience of
moviegoers, and we can fund a wide range of actions promoting films creation and
distribution.
Our Film Admission Tax is a contribution collected on every ticket sold in French movie
theaters. Established in 1948, in the post Second World War context of cultural and
economic reconstruction, its purpose is to support the national film industry through its
redistribution mechanism. This earmarked tax system is relatively rare and is considered
as a model in Europe for supporting cultural diversity. While it primarily benefits French
films, international productions (including American ones) can also receive support under
certain conditions like co-producing with a French company, hiring French technicians or
artists, and meeting language, shooting, or local expenses quotas. Films like Midnight in
Paris by Woody Allen or Inglourious Basterds by Quentin Tarantino have therefore
received support from the CNC.
We create a more dynamic market, we achieve greater overall revenue thanks to our high
number of spectators, which makes the tax highly profitable. As a result, France’s total
gross is often higher than in countries with lower taxes, but fewer tickets sold.
We are also quite surprised that such policies could be considered as “unfair trade
practices,” especially since the United States are themselves very familiar with
protectionist policies: as early as 1918, the Webb-Pomerene Act created an exception to
antitrust laws for exports, in other words allowed cartels to form provided that they
operated outside the borders of the United States, thus enabling entertainment giants to
reach a commercial agreement to jointly manage the broadcast of their films abroad, up
until 2004. In 1946, the U.S. government agreed to cancel European debts in exchange for
the removal of quotas on French films in French movie theaters. And as recently as 2006,
South Korea agreed to reduce its screen quota under a trade deal with the United States.
You express concerns about the relocation of film shoots due, for example, to tax
credits or obligations to invest in creation.
First, it is important to note that our regulations are non-discriminatory, since
investment and broadcasting obligations have historically concerned local broadcasters
and now apply to all players operating in France and Europe, whatever their nationality.
Moreover, strategies adopted by studios and platforms to relocate film shoots predate the
introduction of obligations. This can be explained by tax credits, a practice implemented
in all filmmaking countries with no exception: many states in the United States are proof
of this. Lower production costs abroad are another factor, as seen in Canada, where many
American films have been shot for the past twenty years. It also results from the industrial
strategy of certain streamers to address local audiences with local content, in the local
language, to expand their market share in each country. More than half of MPA member
companies’ revenues is generated outside the United States, clear evidence that these
companies have a strong ability to expand their reach on international consumers.
Of course, we regret the decrease in production in the United States since 2022. We believe
it would be incorrect to attribute this solely to foreign taxes or legislative policies:
Hollywood strikes, studio decisions to move productions abroad, majors opting to scale
back investments, inflationary environment, and a global post-Covid market contraction
may also explain this decline. Our policies should not serve as scapegoats for these
strategic and industrial decisions, nor for the decline of the United States’ production.
At a time when the gap between the United States and the rest of the world is
widening, we believe it is more important than ever that we, European and American
filmmakers, remain united and supportive, continuing to foster mutually beneficial
exchanges in our respective sectors for economic, political, and cultural reasons.
Since the early days of cinema, filmmakers on both sides of the Atlantic have admired,
inspired, and collaborated continuously, driven by the same passion.
We also share many common battles, for better recognition and appreciation of our
professions, to ensure that AI, which is playing a growing role in our industry, respects
copyright, and that the territoriality of rights in Europe continues to be a source of better
distribution and circulation of works, and therefore of better revenue for your members
and ours.
You mention in your letter a “global exchange of free speech”: we are deeply committed to
protecting independence of creation and freedom of expression, values our model
upholds, to ensure we remain a land of refuge and creation for stories in all their diversity.
We propose organizing a meeting between our organizations to pursue this discussion
and build a united front. The Cannes Film Festival could be a great opportunity to
exchange views on these matters together.
Please accept, dear colleagues, our warmest regards,
ARP and SRF Filmmakers
Among our members: Costa-Gavras, Claude Lelouch, Jacques Audiard, Ce dric Klapisch,
Euzhan Palcy, Radu Mihaileanu, Audrey Diwan, Ste phane Demoustier, Zoe Wittock, and
others.
