Originally created 01/31/98

Kodak's claim of protectionism in Japan rejected



ROCHESTER, N.Y. -- The World Trade Organization, in a final ruling Friday, rejected Eastman Kodak Co.'s claim that Japan rigged its market for photographic film to shield Tokyo-based Fuji from foreign competition.

The world trading body, based in Geneva, Switzerland, came down again on Fuji Photo Film Co.'s side in a decision by a three-member panel that upheld a preliminary ruling issued Dec. 5.

The U.S. government forcefully argued Kodak's claim that it has lost an estimated $8 billion in sales since 1975 because of Fuji's lock on Japan's major photographic distributors.

Fuji, with 70 percent of film sales in Japan, countered that Kodak's lackluster 10 percent share stems from bad marketing and inferior products, not unfair trade.

"As far as we know," said Fujifilm U.S.A. president, Osamu Inoue, "the WTO did not find even minimal evidence to support the U.S. case."

In Washington, U.S. Trade Representative Charlene Barshefsky said in a statement that "we are obviously extremely disappointed in the WTO panel decision."

"It is impossible to reconcile the realities of the marketplace with that decision," she said. "It is our intention to outline steps in the very near future to ensure that the Japanese market in this sector is indeed open and competitive."

Saying it would examine all options, the Clinton administration has even raised the possibility of retaliating with trade sanctions. Trade experts say resorting to unilateral sanctions would set a poor precedent.

Kodak, which could appeal the ruling on legal grounds, has not yet seen the final ruling but "our assumption is that it will be essentially old news," said spokesman Charlie Smith.

The $16 billion photo giant, which still edges Fuji out as the world's largest, accused the Japanese government of helping Fuji maintain a monopoly by denying Kodak fair access to two-thirds of the Japanese film market through anticompetitive practices.

After a year of investigation, and the Japanese government's refusal to negotiate, U.S. trade officials turned the case over to the WTO, which was established in January 1995 as a successor to the General Agreement on Tariffs and Trade.

Price cuts by Fuji in the United States last year were in large part to blame for Kodak's recent drastic moves to slash 16,600 jobs from its worldwide payroll of 95,000 by the end of 1999.