International Trade in Used Vehicles: The Environmental Consequences of NAFTA

Over the last two decades an unprecedented increase in private vehicle ownership has taken place in the developing world. The total number of registered vehicles in non-Organisation for Economic Co-operation Development (OECD) countries increased from 110 million to 210 million between 1990 and 2005, and, by some estimates, is forecast to increase to 1.2 billion by 2030. Rising income explains a large share of this growth. Another important, but rarely discussed, factor is international trade in used vehicles. High-income countries export large quantities of used vehicles to low-income countries. The scope for continued expansion of trade is enormous. For example, in 2007 there were 768 total vehicles per 1,000 people in the United States compared to 30 per 1,000 in China and only 12 per 1,000 in India. In this paper, we examine the environmental consequences of international trade in used vehicles. Vehicles play a central role in the production of local and global pollutants. Perhaps most importantly, vehicles are a major source of carbon dioxide, the principal greenhouse gas associated with climate change. Trade in used vehicles raises policy issues at the intersection of international free trade and global efforts to mitigate the production of greenhouse gas emissions. For example, between July and August 2009, consumers in the United States were able to trade in their old,