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Seoul will cut protection for domestic film industry by 50%

International Herald Tribune

Seoul will cut protection for domestic film industry by 50%

The Associated Press

26 January 2006

SEOUL. Hollywood will get greater access to South Korea’s movie market after the government said Thursday that it would cut in half the quota of homegrown films that must be shown in the country’s cinemas.

The United States had denounced the quota system as an unfair trade practice as the two countries moved toward starting negotiations on a free trade agreement.

Under the system, introduced in 1966, local theaters were required to show South Korean movies for 146 days a year to protect the local film industry. As of July 1, the quota will be reduced to 73 days, the Finance Ministry announced.

But officials expressed confidence that South Korean movies can withstand more competition from Hollywood, pointing out that the market share for domestic films has grown to nearly 60 percent last year from 50 percent in 2001.

Cutting the quota lifts a significant roadblock to South Korea’s reaching a free trade agreement with the United States, one of its largest trading partners. A U.S. trade official said before the announcement that the two countries were close to starting formal talks.

"We have made a lot of progress" toward formal trade talks, said Christin Baker, a spokeswoman for the U.S. trade representative, Rob Portman. "We hope we can reach a deal."

South Korea would be the biggest economy to complete a trade accord with the United States since Mexico and Canada did so in the 1994 North American Free Trade Agreement.

The United States is also South Korea’s second-largest export market after China.

The United States could gain as much as $9 billion from a trade deal with South Korea, while the South Korean economy could benefit by about $11 billion, according to an analysis by the Institute for International Economics in Washington.

"South Korean movies have accounted for about 50 percent of the local market in the past five years and have acquired competitiveness," Finance Minister Han Duck Soo told journalists. "However, we can’t survive without participating in the global free trade trend as we have an economic structure that depends on other economies."

South Korean films account for 59 percent of the country’s annual 900 billion won, or $925 million, film market, according to the Korean Film Council, a government agency.

The top four grossing movies here last year were made in South Korea, with the most popular being "Welcome to Dongmakgol," a drama about the Korean War, according to the council.

Seven of the top 10 grossing movies were domestic figures show, with the other three being American films.

The most popular U.S. movie on Seoul screens last year was "The Island," a Warner Brothers release starring Ewan McGregor and Scarlett Johansson about human cloning.

The ministry said that while the quota system had played a role in helping the domestic film industry grow, the country’s dependence on overseas trade required some sacrifice.