TREATIES AND OTHER INTERNATIONAL ACTS SERIES 12-425 

________________________________________________________________________ 

TRADE 

Films for Theatrical Release 

 Memorandum of Understanding 

 Between the 

UNITED STATES OF AMERICA 

and CHINA 

Signed at Geneva April 25, 2012 

with 

Annex 
 NOTE BY THE DEPARTMENT OF STATE 

 Pursuant to Public Law 89—497, approved July 8, 1966 

(80 Stat. 271; 1 U.S.C. 113)—

“. . .the Treaties and Other International Acts Series issued 

under the authority of the Secretary of State shall be competent 

 evidence . . . of the treaties, international agreements other than 

treaties, and proclamations by the President of such treaties and 

international agreements other than treaties, as the case may be, 

therein contained, in all the courts of law and equity and of maritime 

jurisdiction, and in all the tribunals and public offices of the 

United States, and of the several States, without any further proof 

or authentication thereof.” 
CHINA 

 Trade: Films for Theatrical Release 

 Memorandum of understanding 

 signed at Geneva April 25, 2012; 

 Entered into force April 25, 2012. 

 With annex. 

 
Memorandum of Understanding between the People's Republic of China and

the United States of America Regarding Films for Theatrical Release

Whereas the United States of America ("United States") requested consultations with the

People's Republic of China ("China") in the World Trade Organization ("WTO") on April 10,

2007 regarding measures affecting trading rights and distribution services for certain publications

and audiovisual entertainment products (DS363);

Whereas the WTO's Dispute Settlement Body ("DSB") adopted its recommendations and rulings

in DS363 on January 19, 2010; and

Whereas China and the United States signed "Agreed Procedures under Articles 21 and 22 of the

Dispute Settlement Understanding" on April 8, 2011 ("Sequencing Agreement") (WT/DS363/18

and WT/DS363/18/Corr.1);

China and the United States have agreed to the following provisions, including the provisions in

the Annex hereto, which are part of this Memorandum of Understanding:

Revenue-Sharing Films

1. China confirms that enhanced format films are not subject to the 20-film commitment set

forth in the Additional Commitments under Sector 2.D. of its GATS Schedule ("RevenueSharing Film Commitment"). China further agrees that it will allow the importation of at least

14 enhanced format revenue-sharing films per calendar year beginning in 2012.

2. In any contract for the distribution of a revenue-sharing film between a U.S. enterprise

and a Chinese state enterprise, the U.S. enterprise will be allocated 25 percent of gross box office

receipts, and the Chinese state enterprise shall be responsible for the payment of all taxes, duties

and expenses. The term "gross box office receipts" means all monies or other things of value

received by the theaters exhibiting the film in exchange for admission.

Films Other Than Revenue-Sharing Films

3. In any contract for the distribution of a film other than a revenue-sharing film between a

U.S. enterprise and a Chinese state enterprise, the contract will be based on commercial terms,

consistent with the terms prevailing in countries whose markets are comparable to China's

market based on annual box office revenue, number of screens, annual admissions and

admissions per screen.

4. China confirms that any Chinese enterprise is eligible to apply for and be granted a

license to distribute imported films and that nothing in China's laws, regulations or government

rules prevents any eligible Chinese enterprise from applying for and receiving a license to

distribute, and operating as a distributor of, these films.

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,( Distribution
5. China will promote reform in the distribution of imported films and will actively

encourage more Chinese enterprises, including private enterprises, to obtain licenses and to

participate in the distribution of these films.

6. China will approve any application for a license received from a Chinese enterprise if the

Chinese enterprise fulfills valid requirements established by China. For the purpose of a license

to distribute imported films, valid requirements are limited to requirements that are applied in a

non-discretionary and non-discriminatory manner.

7. China confirms that there are no barriers to U.S. enterprises contracting directly with any

licensed Chinese enterprise for the distribution of imported films, subject to the understanding

that China currently requires certain Chinese state enterprises to distribute imported revenuesharing films subject to the Revenue-Sharing Film Commitment.

8. China will ensure that no Chinese government entity or Chinese state enterprise,

including the film importer, directly or indirectly influences the negotiation, terms, amount of

compensation or execution of any distribution contract involving a licensed Chinese private

enterprise.

Other Provisions

9. For any imported film, in accordance with relevant provisions of the Administrative

Approval Law, China will ensure that the content review process is administered in a transparent

manner, is completed in less than 30 days, and will not undermine the provisions of this

Memorandum of Understanding. If a film is rejected for importation as a result of the content

review process, China will ensure that the responsible regulatory agency promptly provides

notice and the reasons for the rejection to the U.S. enterprise or any Chinese enterprise

representing it.

10. China will ensure that Chinese policies and practices relating to film exhibition will not

undermine the provisions of this Memorandum of Understanding.

11. China and the United States will periodically consult about the implementation of the

commitments set forth in this Memorandum of Understanding.

12. In calendar year 2017, China and the United States will engage in consultations. Through

this consultation process, China and the United States will provide for further meaningful

compensation to the United States in terms of the number of enhanced format films to be

imported each year and the share of gross box office receipts received by U.S. enterprises.

China and the United States also will discuss the matter of China implementing the DSB's

recommendations and rulings with regard to films in DS363.

C/C 13. The following definitions apply to this Memorandum of Understanding:

a. "Chinese state enterprise" means any Chinese state-owned or state-controlled

enterprise.

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For the Government

of the Unit States of Ameriea:

b. "Chinese enterprise" includes any Chinese state-owned or state-controlled

enterprise or private Chinese-invested enterprise.

c. "U.S. enterprise" means any U.S. enterprise, as well as any affiliate of a U.S.

enterprise, regardless of its ownership or location; it also includes any enterprise

authorized by a U.S. enterprise to contract with a Chinese enterprise for the

importation and distribution of the U.S. enterprise's films.

d. "Films" means films for theatrical release (also known as motion pictures) in

China.

e. "Revenue-sharing films" means films licensed for distribution on the basis of a

sharing of the box office revenue in China as described in paragraph 2.

f. An "enhanced format" film includes any film that is to be exhibited in China in a

large screen format such as IMAX, in 3D format and/or in any other enhanced

format, whether or not currently in existence, and encompasses the film's other

formatted versions, if any, that are to be exhibited in China during the same

release period.

g. The "WTO Agreement" means the Marrakesh Agreement Establishing the World

Trade Organization, done on April 15, 1994.

14. This Memorandum of Understanding is without prejudice to the rights and obligations of

China and the United States under the WTO Agreement, the DSB recommendations and rulings

in DS363, and the Sequencing Agreement.

15. Notwithstanding paragraph 14, the United States confirms that, with regard to issues

related to films in DS363, it will neither request initiation of procedures pursuant to Article 21.5

of the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes

("DSU") nor request suspension of concessions or other obligations pursuant to DSU Article

22.6 prior to January 1, 2018, as long as the United States considers that China is in compliance

with all of its obligations under this Memorandum of Understanding.

16. In the event that China and the United States agree that China has implemented the DSB's

recommendations and rulings with regard to films in DS363, this Memorandum of

Understanding shall terminate on the date of that agreement.

17. Nothing in this Memorandum of Understanding shall require changes to be made to a

contract for the distribution of a particular imported film if the film has been accepted for release

in China and the contract was signed prior to 18 February 2012.

Done in Geneva, Switzerland, 2$ April 2012, in two original versions in Chinese and English,

respectively, each text being equally authentic.

cA For the Government

of the People's Republic of China:

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Annex to

Memorandum of Understanding between the People's Republic of China and

the United States of America Regarding Films for Theatrical Release

In any contract relating to the distribution of imported films involving a Chinese state

enterprise, the following terms shall apply:

a. The U.S. enterprise shall be advised and consulted with respect to any marketing and

advertising plans by the Chinese distributor in connection with the distribution of the

film. The U.S. enterprise shall have the right to conduct at its discretion supplemental

marketing and advertising activities.

b. Any contract entered into by the Chinese distributor with a sub-distributor in China

must be negotiated in good faith, with the participation of the U.S. enterprise, and

must be pre-approved in writing by the U.S. enterprise.

c. The Chinese distributor is obligated to require any sub-distributor to comply with all

of the terms of the contract between the U.S. enterprise and the Chinese distributor.

d. Content review approval shall be the sole obligation of the Chinese distributor and

shall be completed in a timely manner.

e. The Chinese distributor shall be obligated to demonstrate to the U.S. enterprise, in an

official writing, any content review rejection by the responsible Chinese regulatory

authority.

f. if the contract between the U.S. enterprise and the Chinese distributor has been

entered into prior to content review, in the event of content review rejection, the

contract shall provide first for the opportunity for substitution or re-editing of the

film, subject to good faith negotiation and agreement between the U.S. enterprise and

the Chinese distributor, and shall not make content review rejection an automatic

material breach of the contract that provides justification for any termination or

cancellation of the contract or refund of any payment paid under the contract.

g. The U.S. enterprise shall have the right to receive and to audit information (including

box office receipts, where relevant) regarding the implementation of the Chinese

distributor's obligations under the contract between the U.S. enterprise and the

Chinese distributor as well as the obligations of any sub-distributor under a contract

between the distributor and the sub-distributor.

h. The U.S. enterprise and the Chinese distributor shall agree to designate in writing the

country whose laws shall govern the interpretation of the contract between the U.S.

enterprise and the Chinese distributor as well as the jurisdiction and forum in which

any dispute related to the contract shall be resolved, including but not limited to

arbitration and arbitration rules in any jurisdiction and forum to which they agree.

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