US to investigate Japanese film market

New York - The United States yesterday launched a formal investigation into claims that the American photographic giant, Kodak, has been unfairly frustrated in the Japanese market, David Usborne writes.

The move, confirmed by Mickey Kantor, the US Trade Representative, risks another damaging confrontation with Japan barely a week after the dispute over cars was resolved. Mr Kantor said: "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."

His decision was based on a 250-page complaint submitted by Kodak to the federal government in May detailing what it says are systematic efforts by the Fuji Photo Film Company to keep imported products at bay.

Among the tactics, which Kodak believes have been tolerated by the Japanese government, are special payments to retailers exclusively loyal to Fuji. The payments are believed to be big enough to provide the entire profit margin of some outlets.

Kodak points out that while it has spent some $750m (pounds 470m) on promotions in Japan over the past decade, it still has only about 7 per cent of the market, compared with 40 per cent in Europe. Fuji has over 12 per cent of the US market.

Unless Fuji and the Japanese government can disprove the allegations, the Clinton administration may move quickly to demand action to improve the environment for Kodak. If there is no response, it could either submit a complaint to the World Trade Organisation or threaten unilateral sanctions.