[Federal Register Volume 61, Number 118 (Tuesday, June 18, 1996)]
[Notices]
[Pages 30929-30930]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-15436]



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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
[Docket No. 301-99]


Section 304 Determinations: Barriers to Access to the Japanese 
Market for Consumer Photographic Film and Paper

agency: Office of the United States Trade Representative.

action: Notice of determinations.

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summary: On June 13, 1996, the Acting United States Trade 
Representative (USTR) determined, pursuant to section 304(a)(1)(A) of 
the Trade Act of 1974, 19 U.S.C. 2414, (the Trade Act) that certain 
acts, policies, and practices of the Government of Japan with respect 
to the sale and distribution of consumer photographic materials in 
Japan are unreasonable and burden or restrict U.S. commerce. 
Specifically, the USTR found that the Government of Japan established 
and tolerated a market structure that impedes U.S. exports of consumer 
photographic materials to Japan, and in which practices occur that also 
impede U.S. exports of these products to Japan, thereby denying fair 
and equitable market opportunities. The USTR also concluded that there 
is reason to believe based on strong evidence that certain Japanese 
Government liberalization countermeasures, including inter alia, 
distribution guidelines and related measures, the Law Pertaining to 
Adjustment of Business Activities of the Retail Industry for Large 
Scale Retail Stores (LSRS Law) and the Law Against Unjustifiable 
Premiums and Misleading Representations (Premiums Law) contravene 
Japan's obligations under the Multilateral Trade Agreements annexed to 
the Marrakesh Agreement Establishing the World Trade Organization 
(WTO), and nullify or impair benefits accruing to the United States 
under the WTO agreements. As provided by the Trade Act, the United 
States will invoke the dispute settlement procedures of the WTO with 
respect to these measures and their application. The United States also 
will request consultations with the Government of Japan under a WTO 
provision for consultations on restrictive business practices. As 
appropriate, the USTR will determine what further action under section 
301 is warranted.

effective date: June 13, 1996.

for further information contact: Barbara Weisel, Director of Policy 
Planning for Japan and China, (202) 395-5070; or, for legal issues, 
Joanna McIntosh, Associate General Counsel, (202) 395-7203, Office of 
the U.S. Trade Representative, 600 17th Street, N.W., Washington, D.C. 
20508.

supplementary information: In July 1995, the USTR initiated an 
investigation under section 302(a) of the Trade Act with respect to 
certain acts, policies, and practices of the Government of Japan 
affecting access to the Japanese market for consumer photographic film 
and paper. Upon initiating the investigation, the United States 
requested bilateral consultations with the Government of Japan. At an 
October 3, 1995 meeting in Tokyo, U.S. Government officials were 
prepared to discuss the substance of the issues involved in the 
investigation, and they solicited the views of and information from 
Japanese officials concerning those issues. However, at that meeting 
and throughout the course of the investigation, the Government of Japan 
unreasonably refused to consult on the substance of the matters under 
investigation, despite repeated U.S. attempts to engage in 
consultations.
    As a result of the investigation conducted by USTR and USTR's 
review of all of the information submitted by the petitioner and other 
parties, and in the absence of rebuttal from the Government of Japan, 
the USTR determined that, pursuant to section 304(a)(1)(A) of the Trade 
Act that certain acts, policies, and practices of the Government of 
Japan with respect to the sale and distribution of consumer 
photographic materials in Japan are unreasonable and burden or restrict 
U.S. commerce. Specifically, the USTR found that the Government of 
Japan established and tolerated a market structure that impedes U.S. 
exports of these products to Japan, and in which practices occur that 
also impede U.S. exports of these products to Japan, thereby denying 
fair and equitable market opportunities.
    The USTR found that when the Japanese Government gradually withdrew 
its formal restrictions on imports and inward investment following 
international pressure beginning in the late 1960s, it simultaneously 
implemented liberalization countermeasures designed to restrict access 
of foreign capital and goods to the Japanese market. The capital and 
import liberalization countermeasures implemented beginning in the 
1960s, included measures to block or limit foreign direct investment in 
both new and established enterprises with the intent and effect, inter 
alia, of limiting market access for imported products. Because of the 
perceived need to protect the Japanese photographic materials industry 
from foreign products, the consumer photographic materials sector was 
among the last to be liberalized. Restrictions on foreign investment in 
existing enterprises remained in effect until the early 1980s. During 
the period of capital and import liberalization countermeasures, the 
Government of Japan, in particular the Ministry of International Trade 
and Industry (MITI), took steps to restructure the distribution sector 
to prevent foreign products from making inroads into the Japanese 
market. For example, MITI promulgated distribution guidelines for 
photographic film, and the market structure and practices established 
under and promoted by these guidelines fostered a dependent and 
exclusionary relationship among Japan's major photographic materials 
manufacturer, the primary wholesalers (tokuyakuten), secondary 
wholesalers, and retailers. The distribution structure, retail sales 
environment, and business relationships in this sector that were 
established as a result of MITI's protection of the sector remain in 
place today.
    USTR also uncovered significant evidence of anticompetitive 
activities that warrants full and thorough examination.
    The USTR determined that these acts, policies and practices should 
be addressed comprehensively as follows.
    (1) Having concluded that there is reason to believe based on 
strong evidence that certain Japanese Government liberalization 
countermeasures, including inter alia, distribution guidelines and 
related measures, the LSRS Law, and the Premiums Law, violate Japan's 
obligations and commitments under the WTO agreements and nullify or 
impair benefits accruing to the United States under those agreements, 
the United States immediately will seek recourse to the dispute 
settlement procedures of the WTO to challenge these measures and their 
application, as provided by the Trade Act and in accordance with

[[Page 30930]]

Article 23 of the WTO Dispute Settlement Understanding (DSU). If, at 
the conclusion of dispute settlement proceedings, the WTO Dispute 
Settlement Body finds that Japanese government acts, policies or 
practices violate, or are inconsistent with, the provisions of, or 
otherwise deny benefits accruing to the United States under, any of the 
WTO agreements, and, unless Japan is taking satisfactory measures to 
grant the rights of the United States under the WTO agreements, has 
agreed to eliminate or phase out the affected act, policy or practice, 
or agreed to an imminent satisfactory solution to the burden or 
restriction on U.S. commerce, or provided satisfactory compensatory 
trade benefits, the United States shall take action under section 301 
in accordance with the DSU.
    (2)(a) The United States will request consultations immediately 
with the Government of Japan pursuant to arrangements for consultations 
on restrictive business practices adopted by the GATT Contracting 
Parties in 1960 and carried forward into the WTO; (b) in light of Prime 
Minister Hashimoto's statements of his personal commitment and the 
series of commitments made by the Government of Japan under the 
Structural Impediments Initiative and the Joint Statement on the U.S.-
Japan Framework for a New Economic Partnership to strengthen the Japan 
Fair Trade Commission (JFTC) and enforcement of Japan's competition 
laws, the United States (i) is requesting that Kodak provide 
information for submission to the JFTC concerning certain 
anticompetitive practices in the Japanese consumer photographic 
materials market, and (ii) will provide information to the JFTC to 
enforce competition laws in the consumer photographic materials 
markets; (c) the Department of Justice will seek to cooperate with the 
JFTC in its review of evidence of anticompetitive practices in the 
Japanese market and in consideration of remedial actions, as 
appropriate, and USTR will consult with the Department of Justice in 
assessing efforts of the JFTC to enforce competition laws in Japan's 
photographic materials market; and (d) the United States will study the 
extent to which Japan's market structure for consumer photographic 
materials distorts competition or causes economic harm in the United 
States and in third markets and consider any appropriate responses.
    At the appropriate time, based on developments in these 
consultations and proceedings, the USTR will consider what further 
action needs to be taken to ensure that barriers in the Japanese 
consumer photographic materials sector are eliminated.

Irving A. Williamson,
Chairman, Section 301 Committee.
[FR Doc. 96-15436 Filed 6-17-96; 8:45 am]
BILLING CODE 3190-01-M