The fastest growing niche of the global smartphone business isn’t the latest, greatest upgrade. It’s used phones, and American companies are leaders in supplying them to consumers at home and abroad. It’s a commercial success story with environmental and social benefits. But thanks to a provision hidden in a sprawling legislative trade- and industrial-policy package recently passed by the U.S. House of Representatives, that trade is now in jeopardy.
A brisk global trade in used consumer electronics began shortly after World War II with U.S. exports of radios to emerging markets like Taiwan and Japan. Some of those radios weren’t in good working condition, but up-and-coming countries took them, anyway. Low wages and the high cost of new electronics made it worthwhile to repair and refurbish the ones that U.S. consumers discarded.
For decades, and through new generations of tech, from landline phones to cordless phones, appliances, video games and television, America’s relentless upgrade cycle has turned trash into treasured goods.
Nobody knows how many toasters, telephones, refrigerators, radios and televisions have been exported from U.S. shores over the decades. The trade isn’t tracked in the way that new goods are (via harmonized trade codes, for example).
But hints abound. In West Africa, vendors of used electronics far outnumber those of new gadgets on the city streets of Accra, Ghana, Lagos, Nigeria and Cotonou, Benin, and they always manage to have a steady stream of new inventory. A 2015 study of electricity use in West Africa determined that imported secondhand goods contributed to a significant boost in African energy consumption that couldn’t be explained by new goods sales.
In Dubai, the free-trade zones are filled with used-goods vendors who source their inventory from around the world. Need 500 iPhone 7 units, excellent condition, deliverable to Jakarta tomorrow? They’re in Dubai. Want a pallet of Samsung phones from the U.S. circa 2018, some of which don’t work but which can be repaired by the famously skilled phone mechanics of Mombasa, Kenya? Also available.
The benefits of this trade are many. According to Apple Inc., 81% of the carbon associated with an iPhone 13 is emitted during its production (only 18% is emitted as a result of use). The longer that phone can be kept in use, the less carbon will be emitted by the production of new phones. Low-income phone buyers, especially in emerging markets, are a key means of keeping older phones in use.
In rural India, a $15 smartphone is a splurge and that’s a key factor creating demand for imported secondhand handsets — especially older models, such as the iPhone 7, introduced in 2016 — that most Americans would consign to the recycling bin. Just as important, those cheap used phones are a key — and sometimes, only — means of providing digital access to low-income communities.
Nonetheless, environmentalists, journalists and some regulators began in the 1990s to raise concerns about the export of U.S. secondhand electronics to emerging markets. They worried that these devices wouldn’t really be reused, but instead would end up in environmentally destructive recycling facilities. The Senate Armed Services Committee also raised concerns that U.S. electronics exports were being repurposed into military equipment.
Both of these arguments contain elements of truth. China excepted, emerging market nations lack the ability to recycle waste electronics in a manner consistent with the expectations of U.S. environmentalists and regulators. But most used devices are worth far less as recoverable scrap in these regions than they are as used devices, even devices needing repair.
That hasn’t stopped some members of Congress from repeatedly introducing legislation that would severely restrict the export of used electronics. The latest example, the America Competes Act passed by the House in February, would ban the export of “non-working” electronics, even gadgets that can be repaired affordably, and would impose onerous requirements on exporters. Since 2010, similar legislation has been introduced five times, and Congress — wisely — has never advanced it beyond its introduction.
That might change soon. On Monday, the Senate passed its own competition-boosting legislation, without the provision, which had been inserted in the House bill without a hearing or other discussion. The two chambers are scheduled to reconcile the two bills in the next few weeks.
If Congress is serious about boosting U.S. competitiveness, it should preserve an already successful industry that protects the environment and boosts equality in the U.S. and abroad. Eliminating the e-waste provision from Congress’s rapidly advancing innovation and competition legislation is a good way to start.
More From Bloomberg Opinion:
• Apple Must Embrace This Word in Tackling Climate Change: Tim Culpan
• The Competes Act Is No Way to Help the U.S. Economy: Bloomberg Editorial Board
• Recycling Isn’t Dead. It’s Booming: Adam Minter
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Adam Minter is a Bloomberg Opinion columnist. He is the author of “Junkyard Planet: Travels in the Billion-Dollar Trash Trade” and “Secondhand: Travels in the New Global Garage Sale.”
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