Is the holiday over for digital offshoring?

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Remember the amazing special effects in The Life Of Pi? Remember how that production house won awards and adulation? Would it surprise you to know they’re bankrupt?

Life of Pi

The special effects business is ripe for offshoring. The film industry lives on it, and it’s easy to push digital content overseas, and bring home finished product. But special effects creators aren’t taking this lying down—and their legal response might have a serious, wide-ranging impact beyond the relatively narrow fight they’re fighting.

This Pando article talks about how they’re using US tarrif and trade law to treat digital product the same way we’d treat, say, lumber or wheat. From the Pando piece:

To effectuate Congressional intent to protect domestic industries, the Commission can and must construe the term “articles” to include imported electronic transmissions, consistent with its own precedent and decisions from other administrative agencies and courts.

…The need to regulate the burgeoning international trade in digital intellectual property is widely recognized by U.S. policymakers. The U.S. government has consistently recognized that international trade in digital forms of intellectual property is every bit as “real” as trade in traditional manufactured goods.

The use of electronic means to import into the United States infringing articles threatens important domestic industries such as the motion picture and software industries, as well as U.S. consumers and the government at all levels.

The precedent is being set around the offshoring of visual effects in movies. But it could affect a lot more than that. Much of the work of US companies is done offshore, and when the product of that work is digital, it flows freely across borders.

The Internet has long had a get-out-of-jail-free pass, in the form of tax breaks, but if this case convinces regulators to treat digital work product as other goods, the holiday could be over.