Updating a file with a merge fails if the file is a UTF-16 file. <br>
This is what I get when I try to update and merge an UTF-16 file changed in two different checkouts:

MERGE
***** Cannot merge binary file

I guess it is the same for UTF-8, but I didn't test this.<br>
For developers outside of the USA it is very important to have full Unicode support for all operations concerning the versioned content of the repository.