Film World Comes to Town : Movies: Up to 5,000 people from 59 countries are expected to attend the industry’s biggest trade event in Santa Monica.

When downpours were predicted for the opening days of the American Film Market, executive vice president Tim Kittleson at first panicked. “I thought, what will we do? Should we erect temporary awnings at all our bus stops? Then I realized I was speaking in a Los Angeles mode. In the real world, you just open your umbrellas.”

Rain is a minor inconvenience compared to the bigger issues facing the AFM, the world’s largest motion-picture trade event that opened Thursday and continues through Friday at Loews Santa Monica Beach Hotel. (The market is not open to the public.)

As many as 5,000 people from 59 countries are expected to attend the 11th annual AFM event, which is devoted to the buying and selling of films from independent (non-studio) companies. The come-ons to buyers include lavish displays, handouts and continuous promotional reels of what the sellers feel are their hottest titles.

The AFM--which last year generated $362 million in film sales and services--is the most lucrative of the three major annual international trade markets, topping the Cannes International Festival held every May ($345 million) and Milan’s Mercato Internazionale del Film, del TV Film, e del Documentario (MIFED), held every October ($166 million).

The Persian Gulf War seems to have had minimal impact on international attendance this year (buyers from Saudi Arabia, Lebanon and the United Arab Emirates are on hand) and also has had little effect on the kinds of titles being hawked--there is no preponderance of topical military titles. The chief exception is 21st Century Film Corp.’s “Desert Shield,” starring Rob Lowe, which has a U.S. Navy commando squad out to thwart Iraqi missiles tipped with chemical warheads.

The importance of the AFM as a world showcase for prestige product has been amplified in recent years. As AFM participants like to point out, such best picture Oscar winners as 1986’s “Platoon” and 1989’s “Driving Miss Daisy” are examples of films that debuted during the marketplace. This year, the buzz centers around Morgan Creek International’s “Robin Hood: Prince of Thieves,” starring Kevin Costner. Other major titles being sold include “Misery” and the latest film “Hard Promises” (from Vision International).

Meanwhile, the economic woes facing the entire motion-picture industry are taking their toll on the AFM. The number of participating companies dropped from 226 last year to 208 this year. “It was the smaller companies that dropped off,” said Kittleson, adding: “Yes, it’s a sign of the times.”

The number of films being screened is down 5% over last year, from 307 to 297. Of this year’s titles, only 10% are action/adventure--compared to 34% the previous year. And the horror titles that were once a market staple continue to spiral downward--to only 2%, down from 4% the year before.

But by no means have the exploitation movies disappeared. This year’s crop includes the likes of “Chopper Chicks in Zombietown,” “A Nymphoid Barbarian in Dinosaur Hell” and “Flesh Gordon Meets the Cosmic Cheerleaders.”

By contrast, the demand for “A” and classy “B” product has been on the rise, which means the independents are faced with the challenge of competing head-on with the costlier, starrier studio fare.

One film sales veteran noted that the Japanese buyers who “used to want practically everything” have grown increasingly sophisticated. “Now, the first thing they want to know is, ‘Who’s your star?’ Then they ask, ‘Who’s your director?’ ”

And the Japanese, she adds, aren’t the only ones. “It’s tougher selling films everywhere.”

Beyond the current market is a growing controversy over the AFM’s plans to stage a second market in October in Santa Monica--directly in competition with Milan’s MIFED.

Jack Valenti, president of the Motion Picture Assn. of America--representing the major U.S. studios--is among those who oppose the plans.

In recent days, several major British sales concerns have announced they plan to shun the AFM in favor of Milan.

Nevertheless, the AFM’s Kittleson says that the sponsoring American Film Marketing Assn. will hold firm. “What it basically boils down to is economic reasons. Our members are being held economic hostages in Milan--paying as much as $500 a night for hotel rooms.

“Besides, L.A. is where movies are made, and most of the major film buyers come here twice a year, anyway.”

As Kittleson notes, the AFM also continues to draw from new corners of the world. The Soviet Union, which attended last year for the first time, has returned with an even bigger delegation this year. Askin, a Soviet theatrical distribution agency with 168 branch offices, sent a contingent of 68 representatives. (When Kittleson learned they were on a $20-a-day per diem, he set to work making special arrangements with two local restaurants to provide special breakfasts and dinners to meet their budgets.)

And, making their AFM debut this year: the Soviet Republic of Latvia, represented by the Baltic American Film Corp.

According to Rihards Piks, director-general of the Latvian Film Corp., Latvia is here in hopes of encouraging film production in its country. (Through an interpreter, Piks detailed the capital city of Riga’s varied architecture, which ranges from Renaissance to Baroque to Romanesque). Latvia is also seeking to be involved co-productions and to make other markets aware of its animation and puppeteering capabilities.