It's testing time for the World Trade Organization. The U.S. is filing a high-profile complaint charging that Fuji Photo Film Co. conspired with the Japanese government to keep Eastman Kodak Co. film out of most stores in Japan. Tokyo is already claiming victory by getting Washington to deal through the WTO and not through bilateral negotiations that might have led to trade sanctions. But the real winner or loser in the Fuji-Kodak conflict will be the WTO. If the trade forum cannot resolve the dispute in a way perceived as fair and impartial like a court, American support for the institution, already low, may erode further. That would be dangerous.
The challenge before the WTO is whether it can handle "first world" trade disputes between advanced nations that have nothing to do with such traditional barriers as tariffs and quotas. In one of the most detailed cases ever gathered, Kodak is charging that collusion between Fuji and its government contributed to a business climate that prevented Kodak from freely selling its film. The WTO, built on the old General Agreement on Tariffs & Trade rules, may be capable of handling certain aspects of the case. But can the WTO resolve the fuzzier issues of government-corporate collusion and national competitiveness policies that are behind the Fuji-Kodak case?
Fuji argues, among other things, that Kodak has used similar tactics to keep Fuji film out of U.S. markets. Perhaps, but that's not the issue before the WTO. President Clinton, seeking reelection, doesn't want another trade dispute on his hands. Japan, feeling smug, believes it can simply say no to the U.S. It expects a favorable ruling. The WTO must show it can expand its charter and take on the pressing trade issues of the day. This is a test case of major proportions.