AMMAN — A 2019 UN report from the International
Environmental Protection Agency on the “Environmental Effects of Exporting Used
Vehicles to the Developing World,” has sparked some discussions among those in
the Jordanian car market.
اضافة اعلان
The report talked about the policies related to regulating
the import of used cars in Jordan, describing them as “weak”. The report
criticized “the lack of specific standards for emissions pollution by light
mobility vehicles, which contributes to air pollution and impedes efforts to control
the effects of climate change.” Furthermore, the report ranked Jordan fifth,
among 146 countries, in the number of used cars imported from the United
States.
Among the top 10 importers
of US used car
The report stated that Jordan “is among the top 10 markets
for exports of used passenger cars from the United States,” with exports valued
at about $447 million. In fact, this position
in the ranking has its reasons.
Traditionally, used cars have constituted the bulk of the
newly imported and registered cars in the Jordanian market. For every 10 new
cars imported, there are 7 used cars, which is a very high percentage compared
to neighboring markets.
It reflects a trend from importers, merchants, and consumers,
who all lean towards cheaper cars in general, and towards cars that benefit
more from customs laws and lower duties and taxes than others. This includes hybrid
and electric cars, which are more numerous in the US market, and benefit from
lower tariffs thanks to the government’s environmental policies.
US-made pickup trucks imported from the US market also
benefit from special treatment, in the form of tax exemptions that are due to
the free trade agreement between Jordan and the US.
The bulk of imported hybrid and electric cars has been predominantly
from the US market, and to a lesser extent, from the Korean and European markets,
due to lower customs duties on hybrids and electrics compared to traditional
gasoline-driven vehicles.
Previously, hybrid and electric cars were fully exempt from
duties, a privilege revoked by previous governments that imposed new duties on
environmentally friendly cars.
Protecting the environment: Good intentions are not
enough
The report criticizes Jordan’s lack of specific standards
for emission controls on light mobility vehicles, which contributes to air
pollution and hinders efforts to curb the effects of climate change.
The study’s statement is accurate, even though reducing
environmental pollution was the main idea and intent behind the government’s decision
to grant benefits and tax exemptions for hybrid and electric cars.
However, nearly 15 years after hybrid cars were first imported,
the current reality is that neither the environment nor public health benefited
greatly. Instead, it has been the importers, who were able to profit from
importing used hybrid cars, that have benefited.
And a large percentage of those cars had batteries and
systems that will soon expire, eventually creating a major problem for the
environment and health of Jordanians, because these batteries and parts are
hazardous and contain highly polluting waste.
According to the report, Jordan, like many developing
countries, does not have any clear national policy or effective mechanism to deal
with hazardous waste and recycling operations.
‘Weak’ used car
import policies
The report also touched in part on the reality of the
Jordanian car market and the policies that regulate it, although there has been
some progress and changes in regulations and laws recently, changes the experts
who drafted the report were not fully aware.
The changes include a decision taken by the government two
years ago to set a maximum age limit on cars allowed to enter the market. The
new age limit was set at five years.
The change allowed authorities to stop the 20 year flood of
old used cars that were entering the market, due to complete and unregulated
imports. Many of these tens of thousands of carshad been written off and
classified as totaled in their own countries, only to find their way to the
Jordanian market as cheap imports.
The cars provided cheap options for low-income citizens, but
in return harmed the environment, endangered public safety, and exacerbated traffic
congestion and put pressure on local infrastructure, which led to Jordan’s classification
as “weak” on regulations in the report.
Years of deregulation and the emergence of the parallel
market
The years of complete deregulation of the used cars market, in
which cars were imported regardless of their age and condition, caused the emergence
of a class of import traders and used car dealers.
These importers worked mainly on importing and selling cheap
used cars inside the Zarqa Free Zone. The free zones by definition are not supposed
to be a used car market that works parallel to the local market. A free zone aims to develop exports and re-exports,
but despite this contradiction, these small-time car dealers have developed
into an investment body, and a loud pressure group that defends its existence
and its purely commercial interests against any legal modification or
regulatory change that could alter the used car market situation away from
their business interests.
It would not fair to ignore
the efforts made by government agencies such as the General Customs Department
and the Department of Vehicle Licensing and Drivers to protect the Kingdom and
the people of Jordan from the dangers of unsafe used vehicles. Furthermore, a
customs’ decision to require vehicles coming from abroad to include a report documenting
the history of the vehicle based on the records of government licensing
departments, such as the US Department of Motor Vehicles, was a step in the
right direction.
These reports determine the status of the vehicle’s
registration immediately prior to its export, and are supported by photographs,
including for cars that have a history free of accidents, or cases that are
prohibited to enter by law and are classified as “junk”.
However, a “gray area” remains. Cars that are classified as
written off for the purposes of insurance compensation, otherwise known as “salvaged”,
are currently allowed to enter provided that they pass a technical examination.
But these “salvaged” cars constitute the lion’s share of used cars imported to
Jordan.
The ‘salvage’
story
The journey of salvaged cars begins in their country of
origin, especially in the United States, where auctions are held for “written
off” cars, and Jordanian used car dealers actively look for deals.
With the price of these wrecked and salvage-rated cars being
a fraction of the price for cars with clean titles, sometimes by more than 50 percent,
profitable business opportunities are there for import dealers.
Many of these imported cars arrive from auctions damaged and
unfit to pass the necessary technical examination. However, dealers are able to
get around this obstacle by fixing them inside the free zone before inspection,
creating demand for repair services inside the zones.
This has further led to the emergence of a mini-industrial
city containing repair workshops and used spare parts, which is a kind of
circumvention of the law that explicitly prohibits the entry of damaged cars
for sale.
The damage repaired in the free zone can be described as superficial
and inaccurate, and in no way can give a complete picture of the detailed
technical condition of the vehicle, which requires examinations with devices
that are not available in the free zone.
These inspections can only be done properly at service
centers in Amman, leaving major defects in some cars that are sold on the local
market, and unfortunately after it is too late, causing malfunctions that can
lead to serious and sometimes fatal accidents.
For example, many “salvaged” cars actually enter the market missing
airbags, which were used a result of the accident that caused the car to be
written off in its country of origin.
How can we move
from “very weak” to normal?
If
Jordan wants to improve on its “very weak”
categorization, the study suggests Jordan consider applying what neighboring
countries have done. However, to start, the government can tighten inspection procedures
to ensure the safety of cars classified as “salvaged”. The government can also take
a bold decision to completely ban the entry of any cars written off as salvaged.
If we want to keep pace with international policies to protect
the environment and combat climate change, we must rethink policies to
encourage citizens to choose cars that consume less fuel and are, therefore, less
polluting.
This can be done through the development of a clear and fair
policy that does not limit the financial and tax benefits of a certain category
of car or a specific technology, but rather gives consumers’ benefits linked to
reductions in emissions. There is nothing wrong with giving special treatment to
fully electric cars, due to their reduction of emissions and relatively higher
cost.
Good governance and prudent management of the car market also
suffers from some weaknesses, due to the absence of a single regulating body for
this important sector, which directly affects the economy, environment, and
public health of Jordan.
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