President Reagan yesterday decided to lift licensing requirements for selling the Soviet Union heavy-duty equipment for laying oil and gas pipeline, informed sources reported last night.
Defense Secretary Caspar W. Weinberger had objected strongly to any relaxation of the licensing requirements, while Commerce Secretary Malcolm Baldrige and Secretary of State George P. Shultz had argued vigorously for the move.
The presidential decision in the bitter dispute between high administration officials over the United States' trade policy toward the Soviet Union is due to be announced today by the Commerce Department in Washington.
The president, who made his decision during his California vacation, reportedly was persuaded by arguments that the Soviets were boycotting an American manufacturer, Caterpillar Tractor Co. of Peoria, Ill., to purchase the same equipment from a Japanese firm.
National Security Adviser William P. Clark reportedly was called in to mediate the dispute among Cabinet members, and there was some speculation that the president leaned toward the Shultz-Baldrige view in an effort to ease the growing feeling that the secretary of state was losing influence in White House foreign policy decision-making.
Moreover, he was said to have determined that no high technology was involved in the sale of the pipelayers, which cost about half a million dollars each, and that they could not be converted to any military usage. Basically, they are heavy-duty tractors with special hoists that are used to place large-diameter pipes in previously dug trenches.
The issue of selling equipment to the Soviets for pipelines became a major element of East-West trade and of the United States' relations with its Western European allies last year when the Reagan administration tried to block construction of a natural-gas pipeline from Russia to supply European consumers.
But the initial restrictions on the sale of the pipelaying equipment came in 1978 when the Carter administration imposed export controls in response to the jailing of two Soviet dissidents, Anatoly B. Scharansky and Alexander Ginzburg.
Those controls were tightened in subsequent attempts to punish the Soviets over their invasion of Afghanistan in 1979 and their encouragement of the imposition of martial law in Poland.
Even though licenses to purchase the pipelaying equipment are issued by the Commerce Department in a fairly routine manner, Caterpillar Tractor officials said the Soviets have refused to buy from them until all restrictions were eliminated.
The Commerce Department, for example, approved licenses for the sale of 200 pipelayers in January, but the Soviets refused to complete the purchase. The loss of that sale cost the financially troubled company $90 million.
Instead, the Soviets bought the pipelaying equipment from Konatsu Co. of Japan, which places no export controls on sales to the Soviet Union. That company is a principal competitor of Caterpillar for the sale of heavy building equipment around the world.
The president is expected to emphasize in today's announcement that his administration remains committed to controls over the sale of high technology to the Soviet Union. This is a major issue between the United States and its European allies, and will be the subject of a battle next month when the Export Administration Act comes before Congress for renewal.
The administration bill attempts to bridge differences between the Commerce and Defense departments, but appears to have little chance of passage.