Sustainable Trade in Resources: Global Material Flows, Circularity and Trade

This policy report, published in November 2020 jointly by UNEP’s Environment and Trade Hub and the International Resource Panel (IRP) — a leading scientific body that provides independent assessments on the sustainable use of natural resources — aims to enhance understanding among trade and environment policymakers regarding trade flows of material resources, their environmental impacts, and trade’s potential to contribute to the transition to a greener, more circular economy. The report synthesises the IRP’s analysis of the upstream requirements of trade flows, drawing on a series of landmark IRP reports and updated data to 2017 from the IRP Global Material Flows Database, and builds on UNEP’s Environment and Trade Hub expertise to offer policy implications on the role of trade in moving production and consumption away from linear to more circular models.

The report shows that the transition to a circular economy fundamentally disrupts established trade patterns — historically characterised by developing countries exporting raw materials and importing manufactured goods — by reducing demand for virgin materials, creating new trade flows in secondary materials and refurbished goods, and introducing product standards that may function as market access barriers. It also analyses the opportunities that the circular economy can create for developing countries, including the development of local recycling and remanufacturing industries and growing markets for sustainably produced goods, while noting that realising these opportunities requires significant investments in infrastructure, technology, skills, and regulatory frameworks.

On trade policy, the report assesses how WTO rules and regional trade agreements can be used to facilitate or hinder the transition, and provides recommendations for reforms that would support a more inclusive circular economy — including the liberalisation of trade in environmental goods and services, the reform of waste classification and trade rules, and the incorporation of circular economy provisions into trade agreements. It concludes that without deliberate policy action attentive to the needs of developing countries, the circular economy transition risks exacerbating existing inequalities rather than contributing to a more sustainable and equitable development model.