International Trade and the Transition to a More Resource Efficient and Circular Economy: A Concept Paper

A transition towards a more resource efficient and circular economy is gaining political attention across the globe. Many countries are taking action to adopt circular economy policies by closing material loops through the promotion of reuse, recycling and new business models, extending material loops through eco-design, and narrowing loops through resource efficiency initiatives. While these policies are largely considered at the domestic level, there is increasing awareness that a transition towards a more resource efficient and circular economy has broad linkages with international trade. This for instance takes place through the emergence of global value chains as well as trade in second-hand goods, end-of-life products, secondary materials or non-hazardous waste, as well as trade in related services.

Despite of the potential linkages between trade and the circular economy, the existing research on this issue is limited to date. For this reason, this paper sets forth the potential interaction of international trade and the circular economy in order to guide further research areas to explore on this topic. The paper first briefly introduces the circular economy concept and how trade can come into play, second highlights the various ways in which trade and the circular economy can potentially interact with one another, and third briefly concludes with potential ways forward and next steps.