U.S. to Take Film Dispute to WTO, Sources Say

The Clinton administration has decided to avert a trade showdown with Japan over the issue of photographic film and instead take the matter to the World Trade Organization, administration officials said Wednesday.

The officials, who spoke on condition of anonymity, said the decision, to be announced soon, will eliminate any immediate threat of trade sanctions against Japan in the dispute.

The issue revolves around a complaint brought by Eastman Kodak Co. in July 1995 in which the company asserted that its access to the huge Japanese market was being unfairly restricted by rival Fuji Photo Film Co. of Japan and by the Japanese government. Kodak film was being kept off store shelves in Japan, the complaint said.

The administration’s decision could be formally announced as soon as today.

The administration had faced a deadline of July 2 on its decision regarding whether to threaten trade sanctions against Japan. That date is the one-year anniversary of Kodak’s complaint under Section 301 of U.S. trade law, which allows the administration to impose tariffs of 100% on goods from a country whose practices result in an unfair barring of U.S. products.

Charles Smith, a spokesman for Kodak, would not characterize the administration’s decision as a defeat for Kodak.

“We are working very closely with our government,” he said. “We anticipate a strong announcement that is supportive of the factual evidence in this case.”

But a decision not to go forward with sanctions after a year of study would represent at least an initial victory for Fuji and the Japanese government.

Fuji had been working to get the issue taken up by the WTO, where the matter would be heard by a panel composed of representatives of many countries.

The Japanese government has repeatedly refused to meet with U.S. trade officials on the matter, insisting that it will not accede to threats of unilateral U.S. sanctions under the part of U.S. trade law known as Section 301.

The film dispute would be the most high-profile one the United States has taken to the WTO for a decision. Last year, it refused Japan’s demands to settle a fight over automobiles and auto parts before the WTO.

The administration said that trade negotiators from both countries will meet next week on another issue, whether to extend a controversial agreement to open Japan’s market to foreign-made computer chips.

The office of the U.S. Trade Representative announced the meetings late Tuesday, saying working-level talks will take place in Tokyo on June 17 and 18, and high-level discussions later in the week in Washington.

Japan has said the 1991 semiconductor agreement should not be extended because the U.S. has achieved its goal of increasing the foreign share of the Japanese chip market to 20%. It reached nearly 30% in the first three months of the year.