After negotiating a number of trade deals with Japan at the last minute under threat of harsh U.S. sanctions, the Clinton administration has suddenly decided to switch tactics.
Administration officials, who spoke on condition of anonymity, said the United States will take the latest contentious dispute, involving a complaint by Eastman Kodak Co., to the World Trade Organization.The decision represents a victory for the Japanese government, which has spent the past year refusing even to sit down with U.S. negotiators to talk about the dispute.
It is also a victory for Kodak's rival Fuji Photo Film Co., which has repeatedly insisted that it will win the case if it is heard by an impartial body like the WTO.
Jay Ziegler, an administration trade spokesman, said the administration was confident in the strength of its case against Japanese trade barriers.
"The real problem for the Japanese will be when their discriminatory practices are rolled out into the light of day. That will create quite an uncomfortable moment for them," he said.
However, the administration has embarked on a high-stakes gamble that the WTO hearing panel will side with the United States and Kodak.
A ruling that goes against the United States would provide ammunition to critics who had strongly opposed creation of the WTO contending it would allow international bureaucrats to infringe on U.S. sovereignty.
Sen. Bob Dole, President Clinton's presidential opponent, succeeded during congressional debate in 1994 in winning agreement from the administration that it would submit any adverse WTO rulings to a panel of U.S. experts to determine whether American interests were being improperly undermined.
As recently as March, Kodak President George Fisher was arguing that only a few issues in the complex case were suitable to WTO jurisdiction and that the broad thrust of the case should be settled under a portion of U.S. trade law known as Section 301.