Fostering Inclusive Cooperation on Circular Economy, Trade, and Sustainable Development: Prospects and Sectorial Insights

The global economy’s reliance on a linear model of extraction, transformation, and disposal of natural resources is increasingly raising concerns among government and stakeholders from a sustainability and human health perspective, but also for economic resilience or supply chain security. In response, the past decade has seen a proliferating array of policies and initiatives from governments, intergovernmental organizations, businesses, and civil society organizations to promote a shift to a more circular economy. In today’s highly integrated global economy, trade and trade policy play a critical role in this transition to reduce, regulate, and manage trade flows that undermine circular economy approaches while harnessing those that support circular economy outcomes.

Trade is central to the functioning of key circular value chains —from trade in raw materials through final consumer products to trade in remanufactured goods, secondary raw materials, or waste. Yet, differences across jurisdictions in definitions of key concepts, product classifications, standards and regulations, are delaying the scaling up of circular solutions and increasing the transition costs particularly for SMEs. There are also a range of questions about how developing countries can leverage circular economy approaches in ways that support their sustainable development and their returns from trade, while guarding against approaches that undermine their environmental, social, and economic priori6es. Current geopolitical tensions crystalizing around trade, further exacerbate uncertain6es and existing policy fragmentation. In this context, there is an urgent need for collective approaches that send the right signals to companies and across international supply chains to shift investment, spur innovation, and generate new economic opportunities that support sustainability.

As a contribution to this ongoing discussion, the Forum on Trade, Environment and the SDGs (TESS) UN Trade and Development (UNCTAD), the Circular Innovation Lab and the Ellen MacArthur Foundation convened a roundtable on key aspects of the trade and circular economy interface in today’s increasingly fragmented world. This 90-minute session brought together government officials from both developed and developing countries with leading experts from think tanks and international organizations in an informal and off-the-record setting.

The dialogue took place in a “brainstorming mode” and provided an opportunity for in-depth discussions on key topics around the role of international cooperation on trade in fostering an equitable and sustainable circular economy transition. After our first session, looking at the current international context of geopolitical tensions and its implications for a circular economy transition, discussions focused on the role of trade cooperation in key sectors, including the shift to a circular and sustainable bioeconomy, reducing plastic pollution and promoting resilient and inclusive circular value chains in critical minerals.