David Steinberg is a partner in the entertainment group at Heenan Blaikie, advising producers, financiers and distributors in all aspects of the film and television industries. A version of this article appeared in the December issue of Emmy Magazine in the U.S. and is reprinted with permission.

Hollywood must get used to the fact that motion pictures are produced in other countries. Obviously, the North American film industry is centralized in Hollywood. However, Hollywood does not have a monopoly on film production.

It’s rather strange that Canada is always mentioned in the same breath together with the phrase ‘runaway production.’ There are currently a host of countries around the world that offer incentives to the film industry, including Australia, New Zealand, Mexico, the U.K.

In some cases, the incentives offered by these other countries are more attractive than those offered in Canada. Not only that – certain American states such as Louisiana and New Mexico have introduced incentives to attract local production. Interestingly enough, if production started to routinely go to the State of Louisiana, the issue of runaway production would start to become an issue of competition among American states, not foreign countries.

Despite the depth of incentives available around the world and in certain American states, Canada appears to have earned the wrath of Hollywood in a way that no other jurisdiction has. Why? Let’s face it; it’s easy to blame Canada. We are so physically and culturally close to the U.S., it’s like blaming your baby sister for stealing your diapers.

As it was so eloquently put in the South Park movie: ‘Blame Canada! We need to form a full assault! It’s Canada’s fault!’

For those who regularly refer to production in Canada as runaway production, they might pause to consider exactly what Hollywood producers may be running away from. How about generally inflated production costs, inflexible unions and exploitative location costs, to name a few?

The dirty little secret in the film industry that many U.S. guilds and unions don’t want to talk about is that certain pictures can and will only be produced at budget levels that can be achieved in other countries such as Canada. In other words, were it not for the incentives and other savings that are available outside Hollywood, certain films would not be made.

Sure, many of the ‘below-the-line’ personnel on such films will normally come from the jurisdiction where the film is being produced. However, most – if not all – of the ‘above-the-line’ personnel (such as the producers, principal cast, director and writer) will be American. They are fortunate to be working on projects that may otherwise not be produced in Hollywood.

There is no denying that production in Hollywood is more expensive than in Canada and other jurisdictions (especially after applying the financial incentives). American producers producing in Canada tend to fall into two distinct categories: independent U.S. producers of lower-budget productions looking for any available funding to finance their budgets, and U.S. studios (both majors and mini-majors). What do they have in common? They are both looking for the best economic deal for their projects.

Last time I checked, Hollywood was not the People’s Republic of China. In a capitalist society, everyone is entitled to lower their costs and maximize profits as long as they are not breaking the law. Many products available in the U.S. are manufactured outside its borders: automobiles, food, furniture, etc.

Look for yourself – you probably won’t find many Fords and Buicks in the CAA parking lot… Why should the film industry differ?

The fact is many U.S. producers and studios will look for the best economic deal for their productions. They will often crunch numbers and prepare budgets for several jurisdictions, allowing the financial benefits to determine the location of the shoot. They have a right to do this. It’s not against the law. This does not mean that all producers of motion pictures will consistently turn their backs on the domestic production community. There is, and will continue to be, a wealth of motion picture production in Los Angeles.

Canada has worked very hard to develop its film industry. It has developed capable crews and production facilities. The Canadian industry will not lie down and die to appease some cranky people in Hollywood. The Canadian government and its provincial counterparts have consistently recognized that incentives, such as federal and provincial tax credits, are important in terms of the support and development of the Canadian film industry. There has generally been no indication that current incentives will be withdrawn or decreased. In fact, production services tax credits have recently been increased for foreign companies producing in Canada.

The list of prominent Canadian film industry personalities working in Hollywood is quite incredible. Among them: Jim Carrey, Mike Myers, Pamela Anderson, Neve Campbell, James Cameron, Keanu Reeves and Matthew Perry.

It hurts somewhat to admit that, to make it big, these people had to leave their native land and take up residence in the U.S. Nonetheless, Canadians don’t whine about this. We recognize it as a reality. For many people in the film industry, the dream is still Hollywood. Should these accomplished individuals apologize to Americans for taking their jobs? Should Canadians curse them as runaway performers? Like it or not, the film business is an international industry.

Hollywood should relax. Neither Canada nor any other country will be able to detract from its dominance in the industry. Film production is a multibillion-dollar industry, only a small fraction of which is spent in Canada.

-www.heenanblaikie.com