Trade for an inclusive circular economy: A framework for collective action

AUTHORS: Jack Barrie (Chatham House) – Latifahaida Abdul Latif (ASEAN) – Manuel Albaladejo (UNIDO) – Ieva Barsauskaite (IISD) – Alexey Kravchenko (UNESCAP) – Amelia Kuch (Ellen Macarthur) – Nanno Mulder (UNESCLAC) – Melissa Murara – Antoine Oger – Patrick Schroder (Chatham House)

International trade is   a  key enabler of  a  global and inclusive transition to  a  circular economy. However, inequities in power relations, digital trade capabilities, trade infrastructure, access to finance, and industrial and innovation capabilities mean that countries in the Global North are better positioned to reap the benefits of international trade than those in the Global South. 

Critically, countries in the Global South are often the final destination for internationally traded low-value or illegal waste. Lack of capacity in these countries to properly manage and treat such waste brings greater environmental risks and social burdens. 

If the explicit goal to reduce inequality is not built into the global circular economy transition, gains to be made from circular trade are likely to be more unevenly distributed between the Global South and North. 

This paper sets out a framework for inclusive circular trade, intended to enable a pathway through which circular trade helps to promote fair, inclusive and circular societies. The framework was developed through the work of an alliance of organizations spanning Africa, Southeast Asia, Latin America and the Caribbean, and Europe. 

 Current trade policy intended to  promote coordination for trade in  circular goods, services and materials is  being constrained by  numerous barriers. An  integrated and collaborative approach to  overcoming these barriers is  needed if  the social, economic and environmental potential of  circular trade is  to be  fully realized. This can only be  achieved through commonly recognized outcomes and coordinated actions. The framework presented in  this paper is an attempt to  bridge trade, circular economy, sustainability and development policy areas to guide trade and trade-related policies, practices and agreements towards a shared goal of an inclusive circular economy.  

The framework is a  carefully considered effort to  guide progress and discussion on  a  complex topic that will evolve over time. It  is hoped that the framework will provide a  pathway forward in  an area where collective action is  needed. It  is not its purpose to  solve the more intractable challenges limiting the potential of  the circular economy to  contribute to  achieving necessary economic prosperity and human and environmental well-being. To  be truly sustainable, policymakers in  wealthy countries must critically explore the circumstances in  which circular trade can help definitively reduce consumption-related environmental impacts to  a level that is within the planetary boundaries and provide sufficient development space for low- and middle-income countries to  grow in  order to  provide essential goods and services to  their citizens. 

Photo by Nick Fewings on Unsplash 

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