Kodak asks for tariffs on imports Japanese firms sell at lower prices

September 01, 1993|By New York Times News Service

WASHINGTON -- Eastman Kodak Co. asked the Commerce Department late yesterday to impose steep tariffs on imported paper and chemicals for color-film processing, a step that could result in higher film-processing prices in the United States.

The case is the first major one in which a U.S. company argues that a Japanese competitor should raise its prices here to reflect the steady rise of the Japanese yen against the dollar. Trade experts say that other U.S. companies, including automakers, are now deciding whether to file similar cases against their Japanese competitors.

Kodak charged yesterday that its rival, Fuji Photo Film Co. Ltd. of Japan, had violated a federal law prohibiting imports from being sold at unfairly low prices, a practice known as dumping.

HTC It argued that Fuji maintains a near monopoly in Japan, allowing it to cut prices for photographic supplies in America. Kodak further contended that Fuji used its profits to undermine the economic viability of foreign rivals.

Robert T. Hamilton, Kodak's vice president and general manager for imaging in the United States and Canada, stated last night that "dumping undermines healthy competition because companies cannot continue to compete profitably where unlawful competition is taking place."

Thomas H. Shay, a spokesman for Fuji Photo Film U.S.A., the U.S. subsidiary, said last night that the company had just learned of the filing and had no immediate reply.

The case involves materials used to turn exposed film into prints, not the film itself.

Its filing represents a remarkable shift by Kodak. Kay R. Whitmore, the company's departing chairman and chief executive, has long been an outspoken defender of free trade, winning praise from fellow corporate executives for a leading role in the push for a North American trade accord, even allowing an aide to run the corporate lobbying campaign for the pact, the North American Free Trade Agreement.

But Kodak's board, unhappy with Mr. Whitmore's managerial effectiveness, announced Aug. 6 that it would replace him as soon as a new executive could be found. Big investors have harshly criticized Mr. Whitmore for his reluctance to take unpopular steps, such as laying off thousands of workers, to reduce costs and increase the price of Kodak stock.

Kodak spokesman Paul C. Allen said the company remained committed to liberalized trade. "We don't see this action as being inconsistentwith our public stance on free trade," he said.

Mr. Allen pointed out that while yesterday was the first time Kodak had pursued a dumping case involving a photographic product, a Kodak subsidiary successfully sought dumping duties some Japanese computer disks in the late 1980s.

Kodak is seeking tariffs of 275 percent on imports of photo printing paper and on chemicals used in developing film both from Japan and from the Netherlands, where a Fuji subsidiary has a factory.

According to government statistics, the United States imported $487.7 million worth of the paper and chemicals from Japan last year and $26.6 million worth from the Netherlands. But Kodak contends that the official figures understate the imports, partly because some color-printing paper might be inaccurately classified as black-and-white paper.

Fuji accounts for virtually all of the imports, said Kimberly E. Ritrievi, a photo-industry analyst at Lehman Brothers. Kodak and Fuji dominate the U.S. market while the third-ranking company, Konica, has a factory in the United States, she said.

The rising yen makes it easier for U.S. companies to win dumping cases at the Commerce Department because retail prices in Japan increase in dollar terms. U.S. dumping law requires the department to calculate an imported product's average retail price in the United States and abroad, and to impose steep tariffs if the foreign price is higher.

The Japanese government and many foreign companies have complained that such calculations are heavily biased in favor of financially troubled American producers.

But the dumping law also requires domestic producers to prove to the International Trade Commission, an independent federal agency, that the low-priced imports are a material cause of the U.S. industry's problems.

In two highly visible cases this year and last, the ITC ruled that imported steel and imported minivans have not caused material injury to the U.S. manufacturers, throwing out yearlong cases on which the domestic industries had spent millions of dollars in legal fees.

U.S. companies do not have to win trade cases to be successful. Japanese carmakers raised their prices in the United States after the minivan case was filed last year and again after Detroit automakers prepared, but did not file, trade cases at the beginning of this year.

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