With growing supply-chain volatility and exposure to shocks – brought about by rising geopolitical tensions, the COVID-19 pandemic and extreme weather events – the circular economy is increasingly being seen (by governments, industry and multilateral organizations) as an approach that can deliver on environmental goals while reducing exposure to, and the impact of, supply-chain shocks. At the international level, the circular economy is incorporated in the UN’s Sustainable Development Goals (SDGs). For example, target 8.4 is to ensure ‘global resource efficiency in consumption and production and endeavour to decouple economic growth from environmental degradation’ and target 12.2 aims to achieve ‘the sustainable management and efficient use of natural resources’ by 2030. Additionally, the UNEA 5.2 resolution on ‘[e]nhancing circular economy as a contribution to achieving sustainable consumption and production’ recognizes the importance of inclusive multilateral and multi-stakeholder dialogues on sustainable consumption and production, resource efficiency and the circular economy to promote sustainable development. Governments are also increasingly including the circular economy in their nationally determined contributions strategies to meet commitments under the 2015 Paris Agreement on climate change.
More recently, multilateral and regional alliances have been established to accelerate the global circular transition. These include the African Circular Economy Alliance (ACEA), the Circular Economy Coalition for Latin American and Caribbean (CECLAC), the Global Alliance for Resource Efficiency and Circular Economy (GARECE) and the Platform for Accelerating the Circular Economy (PACE).
At the national or regional level, over 520 policies and regulations are linked directly to enabling a circular economy, with more than 33 national circular economy roadmaps being launched in Europe alone. The European Commission, for example, made the circular economy a key pillar in its European Green Deal with the launch of the Circular Economy Action Plan (CEAP) – a comprehensive body of legislative and non-legislative measures aimed at increasing supply-chain competitiveness and resilience.
At the national or regional level, over 520 policies and regulations are linked directly to enabling a circular economy.
Public and private circular economy policy agendas to date, both in the Global North and the Global South, have mainly focused on capturing the economic gains and environmental benefits, and have failed to adequately consider critical societal elements. As observed in the transition to renewable energy, if the circular transition is not inclusive (i.e. allowing all members of society participate and share in the benefits equally), then it will not deliver on important social goals such as decent working conditions, improved health or reduced inequality. A key objective should therefore be to mitigate the adverse impacts of the transition on the most vulnerable. Mitigation includes reducing the pollution burden of the poorest in society, especially communities affected by mismanaged waste and degraded environments in developing countries, and creating dignified sources of income and safe living conditions not predicated on waste generation or management.
2.2 Defining circular trade
The link between trade and the circular economy is increasingly being recognized as an important issue for further discussion and action within national and international policy forums, such as the recently established circular economy and trade informal working group within the WTO’s Trade and Environmental Sustainability Structured Discussions (TESSD). Nonetheless, understanding of the complex links between trade and the circular economy, and of the associated opportunities and risks, remains limited. Box 1 gives a preliminary working definition of circular trade. The remainder of this chapter provides a detailed overview of each circular trade flow as outlined in this definition.
