Wto Rejects Us Charges In Kodak Vs Fuji Case

A World Trade Organisation panel has comprehensively rejected US charges that Japan's photofilm market is rigged against foreign competitors, in a bitter dispute that has pitted Eastman Kodak of the US against its Japanese rival, Fuji Film.

The panel's interim report, still officially confidential, was last night denounced as ''totally unacceptable'' by George Fisher, Kodak's chairman.

He said the verdict ''ignores market reality''. He said: ''The US market is open and Japan's market is closed. The world's financial markets recognise this; it is too bad the WTO does not.''

Minoru Ohnishi, chairman of Fujifilm, praised the ruling and said: ''Imported film is widely available and competitively priced in Japan - a fact which the WTO have now confirmed, if the decision is as we understand it.''

The US argued that various laws and measures taken by the Japanese government over 30 years aimed to neutralise the effects of tariff cuts on photofilm imports by bolstering Fuji's position in the domestic market. Kodak has about 10 per cent of the Japanese market, much lower than its share in the world market.

The measures included: encouragement for exclusive wholesaling arrangements, now dominated by Fuji; restrictions on discount stores and supermarkets that the US said were more likely to sell foreign goods; and strict controls on price competition and premiums that have allegedly stopped Kodak from using price-cutting and promotions.

However, the three-person panel of trade experts said the US had not demonstrated that its WTO rights had been impaired. Fuji has argued that Kodak's problems in Japan are the result of poor marketing and says it faces barriers in the US, where it has some 12 per cent of film and paper sales.

The interim report went last night to the US and Japanese governments, and to the European Union, which is a third party in the case. It has still to be finalised, although this is unlikely to change the verdict. The US can appeal, a process which could last several months.

Charlene Barshefsky, US trade representative, said last night: ''The ruling sidesteps the real issues in this case and instead focuses on narrow technical issues. we will evaluate the broad range of options available to us,'' including direct unilateral action.