Montreal: Following widespread speculation last month, the European Commission will appeal Industry Canada’s March ruling denying PolyGram Filmed Entertainment exempted status in the Canadian distribution market.

A statement from John Beck, head of the European Commission Delegation office in Ottawa, says the ec will proceed with the appeal and the matter is currently under review by ec trade commissioner Sir Leon Brittan.

Beck’s office says it d’es not know when Sir Leon will present the case to the ec, but Roy Christensen, an official with the ec office in Ottawa, says, ‘I don’t think there will be any problem getting it passed by the commission.’

Procedurally, Sir Leon must present the case to fellow ec commissioners, after which an appeal to the World Trade Organization in Geneva would need the full approbation of the Council of Ministers representing the European Union’s 15 member states. Then, the ec, on behalf of the eu, would have a mandate to go to the wto.

Asked if the Industry Canada ruling on PolyGram is seen as counter to the interests of other eu entertainment companies, Christensen says, ‘There is a principle hereŠand the problem is that we see it as discrimination.’

Peter Caskey, director, investment review, Industry Canada, says consultations are likely to be held at the eu and Canadian government level prior to any formal appeal action.

Caskey says it’s up to the eu to contact Canadian officials: ‘The onus lies with them frankly.’

Caskey says the hope is ‘the eu will see the reasonableness’ of Canada’s position, adding Industry Minister John Manley ‘is confident that we’ve been acting well within our obligations in making these decisions. That’s all I can say.’

gatt and wto rulings prohibit countries from adopting discriminatory policies unless restrictive policies are deemed fair and applied equally across the board.

‘Canadian legislation that protects Canadian industry vis-a-vis foreign companies must be applied to all foreign companies,’ says Christensen.

PolyGram says the Industry ruling creates an unlevel playing field in favor of the American majors who are exempted from the 1988 policy.

In an interview with Playback, PolyGram’s Canadian president Darryl Iwai says PolyGram’s position is clear: the Canadian craft and professional associations ignored the wider industry’s best interests in opposing its distribution application, and he says the application did not receive a fair hearing in the Canadian trade press.

Any appeal to wto is a matter for the European trade authorities, not the company, says Iwai.

‘We are aware that PolyGram as an international film distribution company would like to have no restriction on the kind of product they could distribute into Canada and they feel that it is not a level playing field for them compared with other major competitors, typically the major American-based companies,’ says Caskey, adding:

‘From the point of view of the Government of Canada our policy was decided by Cabinet and announced back in 1988, and that has been the policy that has guided all reviews.’

Caskey says the policy and subsequent department reviews ‘have been implemented in an evenhanded and non-discriminatory fashion, and from that point of view it is our sense that [the decision] is fair and d’es not conflict with any of our international obligations.’

On the issue of PolyGram’s $20 million or 20% of revenue commitment to Canadian film activity, Iwai says PolyGram is only interested in commercially viable movies.

Iwai says the investment obligation includes the production equity and distribution rights costs on primetime tv series such as Atlantis Films’ Gene Roddenberry’s Earth: Final Conflict and Cinar Films’ Lassie.

According to Caskey, all foreign operators in Canada are asked to ‘at least have some sensitivity to doing things which would be seen as helping to build the Canadian industry.’

He says Industry d’es not ask for specific commitments, but historically this has meant financial assistance to items like the major film festivals in Toronto, Montreal, Vancouver and Banff, or professional development programs including the Canadian Film Centre.

Caskey notes PolyGram sponsored an event at the 1996 Toronto International Film Festival.