The United States will begin imposing import duties on oil drilling platforms, but only after two multimillion-dollar rigs being built by an American firm's subsidiary in Malaysia have slipped through the duty-free door.
Under an order signed Wednesday by President Carter that covers hundreds of changes in tariffs for underdeveloped countries, oil drilling platforms will be subject to a 9 1/2 percent duty as of March 1, 1980.
The 1980 effective date means that two platforms under construction by the Malaysian subsidiary of Brown & Root Inc., a Houston-based construction company and one of the world's largest makers of oil platforms, will be admitted duty-free, according to administration trade officials.
A so-called Generalized System of Preferences (GSP) was get up in 1974 to help Third World countries by excluding many of their developing industries from U.S. import duties. The list of duty-free items has now grown to about 2,700, amounting to roughly $5 billion in trade annually.
When the government said last year that oil platforms qualified for GSP treatment, the International Association of Iron Workers filed a protest and was joined by other unions, several domestic steel companies and about 60 congressmen led by Rep. George Miller (D-Calif.).
Miller contended that Congress did not intend for "runaway U.S. corporations," seeking tax benefits and lower wages by moving production facilities abroad, to benefit from tariff exemptions.
Carter's order reflected an earlier decision by the Trade Policy Staff Committee, an interagency group, that oil platforms should be removed from the GSP list next year, after the Malaysian project was completed.
Trade officials said the duty would not be imposed on Brown & Root because construction contracts were based on an assumption that the platforms, which will be floated from Malaysia to the Santa Barbara Channel off California sometime during the Next 12 months, would be duty-free.
This assumption was challenged yesterday by Iron Workers President John H. Lyons, who said Brown & Root refused to say on the contract without the duty exemption. Lyons said he was pleased that future projects will be covered by duties but will continue to seek duties for the Brown & Root platforms.
Miller hailed the decision, saying it "may be the best news in several years for the West Coast steel industry," shielding them from lower-cost foreign competition.