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U.S. probing film sales in Japan


WASHINGTON -- In a move that could open a new trade rift with Japan, the Clinton administration announced yesterday that would investigate charges by Eastman Kodak Co. that rival Fuji Photo Film had conspired to deny it fair access to the Japanese market over the last 20 years.

The American action, coming less than a week after the countries pulled back from the brink of sanctions and settled a bitter automotive trade dispute, was based on a 275-page complaint filed by Kodak in mid-May, contending that the Japanese government had helped Fuji create an anti-competitive market. Kodak said the conspiracy had cost it $5.6 billion in sales.

Mickey Kantor, the U.S. trade representative, said in a brief written statement announcing his decision to mount an investigation that "American manufacturers of photographic film and paper should be able to compete on a fair basis in the Japanese market, just as Japanese firms can here."

Kodak, which began selling its products in Japan more than 100 years ago, said in its complaint that it held less than 9 percent of the Japanese market last year, far below the nearly 45 percent it holds in other countries.

"All we're asking for is for the Japanese to enforce their own laws," said Alan W. Wolff, a former deputy U.S. trade representative. He directed the team that Kodak assembled at the Washington office of law firm Dewey Ballantine to conduct its study.

Fuji Photo Film U.S.A. responded that it regretted the American decision to initiate the action, rather than dealing with Kodak's charges "through more constructive channels" in Japan or at the new World Trade Organization in Geneva.

It called its American rival's complaint "a heavy-handed attempt to shift the blame for Kodak's own poor business decisions in Japan from Kodak to the Japanese photographic industry and the Japanese government." Fuji said Kodak's trade complaint "relied almost exclusively on statements from various publications which are taken out of context, mischaracterized or inaccurate."

The Clinton administration, which waited until the very end of the 45-day period within which to proceed with an investigation or deny the company government help, seemed eager to prolong the harmony that concluded the automotive negotiations.

Playing down the immediate effect of yesterday's decision, officials held no news briefing, and Mr. Kantor was unavailable to comment.

The United States now has up to one year to assess Kodak's charges and to seek a satisfactory market-access agreement with Japan. If this fails, the administration could impose tariffs or other sanctions, as it had threatened with automobiles and auto parts.

The Japanese Embassy in Washington offered no response yesterday to the American decision.

While the language of this new disagreement was subdued, specialists said it did not mean that the Kodak-Fuji dispute lacked the potential to become a full-scale trade battle with threats of high American tariffs.

Indeed, Washington might find the film dispute a handy enforcement weapon, should it find that Japan was not fully living up to its commitments on automotive trade.

The basic charge by Rochester, N.Y.-based Kodak, the American photographic industry leader, is that in the 1970s, when formal postwar restrictions were about to end, the Japanese government joined with Fuji to head off Kodak's possible domination of the market and to preserve the market for the Japanese company.

Kodak cited as "countermeasures" that had impeded it for two decades a system of exclusive distribution relationships, artificially high prices that subsidized Fuji's research, "a complex clandestine system of cash payments to financially strapped wholesalers and retailers."

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