U.S., Japan Can’t Agree in Film Spat

U.S. and Japanese trade negotiators said Wednesday that they had reached no agreement after four hours of talks on their dispute over access by U.S. firms to the Japanese photo film market.

But they said they would be meeting again today to discuss other aspects of the squabble, which centers on U.S. allegations that Japan rigs the sales and distribution network to favor domestic producers.

“We have had our consultations, but we have not reached any conclusions,” Japanese delegation chief Yun Yokota, deputy head of Tokyo’s Geneva mission, told reporters after the meeting at the World Trade Organization.

Andrew Stoler, No. 2 in the U.S. trade representative’s office in Geneva, said he agreed with Yokota but that neither wanted to reveal the positions they took.

They will now “have to reflect on how we proceed in the future,” Stoler said.

Before the session, Stoler and James Southwick, U.S. deputy trade representative, expressed confidence that the United States would win the case if it went to an independent WTO panel, as now seems certain.

But Yokota said he was surprised Washington was so certain of the strength of its case and insisted that Tokyo is on firm ground in rejecting the U.S. charges, brought initially by Eastman Kodak Co.

“Our market is open,” Yokota told reporters just before the meeting. “We import about $130 million of photographic goods and paper into Japan, and the United States has about 10% of the Japanese market.”

Stoler told a news conference that the U.S. decision to bring the consultations to the WTO “reflects the fact that we believe very strongly that we have a very strong case to make.”

Southwick said Washington was hoping for an accord to come out of this week’s discussions but was ready to pursue the dispute all the way through the WTO settlement procedure.

Asked whether the United States might declare unilateral sanctions against Japan if there was no agreement, both Southwick and Stoler indicated that Washington had opted for the WTO route alone, unlike the tactics it followed in last year’s car dispute with Tokyo.

Southwick said the case illustrated widespread problems for foreign companies operating in Japan and was “a good one to bring to the WTO.”

Washington says Kodak faces unfair barriers in the Japanese market for photo film and paper, and the company argues it has lost about $5.5 billion in potential sales over the years.

Japan says there are no barriers and counters that its own Fuji Photo Film Co. faces similar problems in the United States, where it has only 10% of the market.

The talks are the first step in the WTO’s dispute procedure, which after only 18 months of life is dealing with about 50 disputes--a far higher number than its predecessor, the General Agreement on Tariffs and Trade, handled in a decade, on average.

The United States is involved in many of these disputes, including three others it has brought against Japan.

Trade diplomats say the film spat could have been as serious as the squabble over access to Japan’s automobile market, settled last summer in talks in Geneva just before U.S. sanctions on Japanese imports were due to go into effect.

Kodak says measures taken by Japan before 1976, when formal barriers to foreign firms were removed, helped Fuji take an impregnable 70% share of the national photo film and paper market.