Leveraging Trade Agreements for an Inclusive Circular Economy Transition: Options under the WTO and EU Regional Trade Agreements

As the global shift toward a circular economy gathers pace, much of the policy debate has reflected the priorities of developed economies, which are often better positioned to capture the economic benefits of circularity. Without targeted action, this imbalance risks creating a “circular divide”. This report, commissioned by the GIZ, examines how the trade frameworks can help reduce material consumption while addressing structural inequalities between developed and developing countries.

The report focuses on three strategic entry points. First, it assesses the role of trade in facilitating a circular economy transition in developing countries. This entry point focuses on how a country can access goods, services, and technologies that are necessary to bring about a domestic circular economy transition through trade. Second, the report evaluates the role of trade in addressing the implications associated with reverse supply chains, focusing on challenges and opportunities associated with trade in secondary products (secondary raw materials, second-hand products, refurbished goods). Third, it examines the role of trade in helping developing countries navigate market access challenges and opportunities relevant to the circular economy. This entry point focuses on circular economy regulations and how they could serve as a barrier to impact market access.

For each of these entry points, this report sets out how WTO and Regional Trade Agreements (RTA) rules can be leveraged to advance an inclusive circular economy transition. It highlights whether and how WTO provisions impose limits on WTO Member’s policy space to adopt circular economy measures; how WTO Members can proactively use different rules to incentivize a circular transition, and provides recommendations on how to strengthen the link between WTO provisions and the circular economy with regards to specific WTO Agreements. This study also provides recommendations on how RTAs can be leveraged to advance an inclusive circular economy transition, while restricting provisions that advance the linear economy. While the focus of the RTA section is on developing countries negotiating with the EU, it draws upon examples from non-EU RTAs.