A transition towards a more resource efficient and circular economy has broad interlinkages with international trade, through cross border supply chains, end-of-life value chains, and services trade. Trade can provide important opportunities to achieve economies of scale to use materials in a sustainable way and to drive resource efficiency and circular economy initiatives. At the same time, it is essential to ensure that these trade flows do not result in environmental degradation. Since 2018, the OECD has been working on this topic to secure the mutual supportiveness of international trade and circular economy policies and initiatives.
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International Trade and Circular Economy
On 25 March 2021, Shunta Yamaguchi and Rob Dellink of the OECD Environment Directorate presented the role of international trade in the transition to a resource efficient and circular economy. The presentation highlighted findings from a series of recent OECD reports, including: The Consequences of a more resource efficient and circular economy for international trade patterns and International trade and circular economy: Policy alignment.
A circular economy aims to transform the current linear economy into a circular model to reduce consumption of finite material resources by recovering materials from waste streams for recycling or reuse, using products longer, and exploiting the potential of the sharing and services economy. Circular economy policies and initiatives largely take place domestically at the national or regional level. However, they have important interlinkages with international trade.
International trade plays an important role in circular supply chains in materials and products, end-of-life value chains in waste and scrap, secondary raw materials and second-hand goods. In this light, how can trade contribute to a more resource efficient and circular economy? How would the circular economy transition have an impact on global trade patterns? And in what ways can we secure coherence in these two policy areas?
WORKING PAPERS ON TRADE, RESOURCE EFFICIENCY AND CIRCULAR ECONOMY
International trade and circular economy - Policy alignment | 10 March 2021
Circular economy policies and initiatives largely take place domestically, and yet they have important interlinkages with international trade. This report explores how to make circular economy policies and trade policies mutually supportive by mapping out potential misalignments and identifying opportunities to align and strengthen both policy areas. The report highlights the various interlinkages between international trade and circular economy, and examines the interactions between trade and circular economy at the policy level, focussing on the multilateral trade regime and regional trade agreements, as well as specific policies to promote the circular economy, such as extended producer responsibility and product stewardship schemes, taxes and subsidies, green public procurement, environmental labelling schemes, and standards.
The transition towards a more resource efficient and circular economy has broad linkages with international trade through the emergence of global value chains as well as trade in second-hand goods, end-of-life products, secondary materials and waste. 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 highlights the potential interaction of international trade and the circular economy in order to map out potential issues to address and 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.
The Consequences of a more resource efficient and circular economy for international trade patterns: A modelling assessment : This report investigates the effects of a resource efficiency and circular economy (RE-CE) transition on international trade flows, using the OECD’s ENV-Linkages model. A global RE-CE policy package will cause secondary materials to become cheaper, while primary materials become more expensive to produce. By 2040, primary non-ferrous metals are projected to decline by 35-50%, primary iron & steel by 15% and primary non-metallic minerals by around 10%. Regional shifts in production and trade-related effects (shifts in the regional sourcing of the primary materials by the materials processing sectors) account for roughly one-third of the total reduction in materials use. The other two thirds of materials use reduction come from scale effects (reduced economic activity) and efficiency effects (reduced materials use per unit of output of the processed commodities).
VIDEO: TRADE AND CIRCULAR ECONOMY - STRIKING BALANCE IN WASTE TRADE
This OECD workshop established a multi-stakeholder dialogue with governments, inter-governmental organisations, the private sector and the civil society, to discuss the interlinkages between international trade and the circular economy, and to explore a mutually supportive trade and circular economy agenda.
OECD WORK ON RESOURCE EFFICIENCY AND CIRCULAR ECONOMY