Options to Incorporate Circular Economy Provisions in Regional Trade Agreements

Many countries and economic blocs are beginning to embark on transforming their economies into a circular model. This transition entails a deep paradigm shift set to address the triple crises of climate change, nature and biodiversity loss, and the unsustainable use of natural resources. In today’s globally connected economy, international trade will play a critical role in this equation by exploiting comparative advantages and economies of scale. Cross-border exchanges of goods and services related to the circular economy already occur at all stages of the value chain, including upstream services related to circular design, goods for refurbishment and remanufacturing, and trade in waste and secondary materials.

Governments can use a range of trade-related policy measures, including tariff and non-tariff measures, to encourage the transition away from the take–make–waste economic model. Regional trade agreements, among other mechanisms, can be a vehicle for cooperation on the trade and circular economy interface between specific trading partners. The European Union, for example, has a Circular Economy Action Plan, which will require mainstreaming circular economy objectives in its free trade agreements. As a contribution to this emerging debate, this policy brief explores possible options to incorporate circular economy-related provisions in trade agreements based on existing precedents.