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ELMSFORD, NY, March 28, 1996 -- The following excerpts are taken from a statement given today by John Patrick, General Counsel of Fuji Photo Film, Inc., before a House Ways and Means Subcommittee on Trade hearing on U.S.-Japan trade relations:
"Let me begin by saying that one reason we are here today is to discuss a dispute between two companies. One of those companies has 70% of its home market; controls and excludes competitors from its distribution network; and pays premiums to retailers not to do business with its competitors. I am not talking about Fujifilm in Japan...I am talking about the Eastman Kodak Company in the United States."
"...[I]n the last 10 years Fujifilm's total U.S. investments were more than $1.5 billion. Meanwhile, we have increased our U.S. personnel to 5,000 employees; our sales have grown to exceed $1.5 billion per year; and our exports out of the United States this year will exceed $100 million. By 1997, our facilities in Greenwood, [South Carolina] alone will employ more than 1,200 workers and total investment there will exceed $700 million...Despite this enormous investment in the United States, our share of the U.S. consumer photographic film market continues to hover around 10 percent."
"We were therefore amazed when Kodak -- complaining of its 10 percent share of the Japanese market -- filed a Section 301 petition with USTR...With this case, we think Kodak has truly crossed the line. Kodak now seeks to use government intervention as a substitute for competition in the market place."
"Fact Number One: Kodak film is widely available in Japan...The facts... show that almost 80% of the retailers and dealers served by Fujifilm's distributors actually buy or have access to Kodak film. Sales to those customers account for almost 90% of the distributors' sales volume."
"Fact Number Two: Fujifilm cannot and does not control retail film prices in Japan...[I]f you compare the same film sold at the same type of retail outlet, prices throughout Japan are actually comparable to prices in the United States."
"Fact Number Three: The Japanese government has not had any role in the wholesale film market for a quarter century...The Government of Japan removed any restriction on foreign capital, ownership, prices or other actions decades ago."
"Fact Number Four: Kodak caused its own problems in Japan...we have provided USTR with evidence showing that Kodak's problems in Japan result not from Fujifilm's actions but from Kodak's own mistakes.
- Former Kodak officials...have stated that there were no barriers to competition in Japan's consumer photographic industry...
- Kodak has refused for over 10 years to compete on price in Japan...
- Kodak has not been innovative...Kodak lagged two years behind Fujifilm in the most important product innovations to hit the Japanese market in the past decade -- high resolution ISO 400 speed film and one-time use cameras."
"Fact Number Five: Kodak has tried to exclude Fuji film from the U.S. market...Section 301 requires USTR to investigate the U.S. market to ensure that the principle of reciprocity -- the basic principle that underlies Section 301 -- is upheld."
"These factual disputes need to be sorted out -- carefully and objectively. To that end, we have suggested alternative neutral fact-finding mechanisms to USTR...USTR is currently considering a mechanism under the auspices of the WTO."
"Unsurprisingly, however, Kodak objects to this approach. It appears that Kodak is the only party to the dispute that maintains such a position. In Kodak's perfect world, USTR would simply take Kodak's facts at face value and insist that Japan negotiate. But...it is not yet established that there is any problem to negotiate."
"...[A]ll we want in this case is an outcome based on the facts. If the facts control, they will prove that the Japanese film market is open, and that Fujifilm is a fair competitor."
"This is not a fight we sought and we don't enjoy it...We are ready to get back to the business of competing with Kodak, company-to-company. It is time to stop the fiery rhetoric, get the facts, settle the issues, and return to the marketplace that has made Fujifilm and Kodak great companies and competitors. We are looking forward to that day."
Thomas H. Shay
Fuji Photo Film U.S.A., Inc.
Edelman Public Relations