TRADE AND THE TRANSITION TOWARDS CIRCULAR ECONOMY: A RESEARCH ON CURRENT GLOBAL PRACTICES AND RECOMMENDATIONS FOR VIETNAM

Viết thuê luận á, luận văn thạc sĩ, chuyên đề ,khóa luận, báo cáo thực tập
Sdt/zalo 0967538 624/ 0886 091 915 lamluanvan.net
MINISTRY OF EDUCATION AND TRAINING
FOREIGN TRADE UNIVERSITY
MASTER THESIS
TRADE AND THE TRANSITION TOWARDS
CIRCULAR ECONOMY:
A RESEARCH ON CURRENT GLOBAL PRACTICES
AND RECOMMENDATIONS FOR VIETNAM
Specialization: International Trade Policy and Law
NGUYEN THI HANG
Hanoi – 2020

MINISTRY OF EDUCATION AND TRAINING
FOREIGN TRADE UNIVERSITY
MASTER THESIS
TRADE AND THE TRANSITION TOWARDS
CIRCULAR ECONOMY:
A RESEARCH ON CURRENT GLOBAL PRACTICES
AND RECOMMENDATIONS FOR VIETNAM
Specialization: International Trade Policy and Law
Code: 8310106
Student: Nguyen Thi Hang
Supervisor: Dr. Vu Kim Ngan
Hanoi – 2020

i
STATEMENT OF ORIGINAL AUTHORSHIP
I, Nguyen Thi Hang, hereby declare that this Master's Thesis has been written
solely by the undersigned under the guidance of my supervisor, Dr. Vu Kim Ngan,
Foreign Trade University, Hanoi, Vietnam. The contents and results of this research
are completely honest. The information, data and documents which are collected
from various sources for analysis and evaluation have been fully cited in the main
content and in the references list of this master thesis as well.
I also state that said Master's Thesis has not been submitted elsewhere for the
fulfilment of any other qualification.
I make this statement in full knowledge of and understanding that, should it be
found to be false, I will not receive a grade and may face disciplinary proceedings.
Student
Nguyen Thi Hang

ii
ACKOWLEDGEMENT
In order to complete this master thesis, I have been received enthusiastic
guidance and support from my lectures, family, my friends and experts in the field.
From the bottom of my heart, I would like to express my thanks to them.
Firstly, I would like to express the sincerest thanks to my supervisor, Dr. Vu
Kim Ngan who has supported, guided and encouraged me during the completion of
this master thesis from choosing the topic, outlining the main ideas, turning those
ideas into this thesis to editing this paper. Without her enthusiastic and excellent
guidance and support, I could not have completed this master thesis.
Also, I would like to express my special thanks to all lecturers of the Master of
International Policy and Law program, Foreign Trade University as well as World
Trade Institute who gave me the chance to broaden my humble horizon in the field of
trade policy and law, especially Professor Claudio Dordi, who was also my former
supervisor at the European Trade Policy and Investment Support Project (EU –
MUTRAP), for the valuable knowledge and experiences that he’s shared with me.
Last but not least, I would like to express my warm thanks to my precious
family, my colleagues and my dear friends who never stop supporting, encouraging
and giving me the favorable conditions for my master journey.
Especially, I would like to dedicate this Master thesis to my beloved
Grandfather, who was once a brave soldier on the Dien Bien Phu battlefield, who raised
me and was my role model of hardworking spirit, positive attitude and morality. I
might not become who I am today without him. I am typing these lines in tears of grief
right after his funeral. I regret that I could not manage to let him see his grandchild
graduate before he left for the other side. Now my grandfather has long gone, I truly
hope he is still there beside me and knows that I miss him so much.
I love you, Grandpa!

iii
TABLE OF CONTENTS
STATEMENT OF ORIGINAL AUTHORSHIP .................................................................. i
ACKOWLEDGEMENT....................................................................................................................ii
LIST OF ABBREVIATIONS ......................................................................................................... v
LIST OF FIGURES AND TABLES......................................................................................... vii
ABSTRACT..........................................................................................................................................viii
INTRODUCTION................................................................................................................................. 1
CHAPTER 1: OVERVIEW AND THE SIGNIFICANCE OF CIRCULAR
ECONOMY............................................................................................................................................... 9
1.1. The need to promote circular economy ....................................................................... 9
1.1.1. Linear economy: the issue of resources efficiency & environmental
pollution.............................................................................................................................................. 9
1.1.2. The promotion of Circular Economy................................................................... 13
1.2. The impact of circular economy on trade flows................................................... 19
CHAPTER 2: OVERVIEW OF GLOBAL CIRCULAR ECONOMY
PRACTICES AND TRADE.......................................................................................................... 25
2.1. Overview of global circular economy practices ................................................... 25
2.1.1. WTO rules, domestic trade policies and circular economy....................... 25
2.1.2. Restrictive trade measures and circular economy......................................... 28
2.1.3. Circular economy initiatives in some countries.............................................. 30
2.2. Circular economy practices in China ........................................................................ 33
2.3. Circular economy practices in the EU ...................................................................... 37
2.3.1. Circular economy policy............................................................................................. 38
2.3.2. The EU’s trade policies in relation to circular economy............................ 40
2.3.3. The EU’s implementation of CE Action Plan ................................................. 46
2.4. Implications for Vietnam as a trade partner of the EU................................... 47
2.4.1. The EU – Vietnam Trade Relation........................................................................ 47
2.4.2. The EU’s transition towards circular economy and implications for
Vietnam............................................................................................................................................ 48
CHAPTER 3: TRADE AND CIRCULAR ECONOMY IN VIETNAM: LAWS,
REGULATIONS AND PRACTICES...................................................................................... 51

iv
3.1. Legal framework for the circular economy............................................................ 51
3.1.1. International commitments related to circular economy........................... 51
3.1.2. Domestic legal framework as a platform for circular economy
development................................................................................................................................... 53
3.2. Circular economy-based practices in Vietnam..................................................... 55
3.3. Vietnam in the supply chain of the global circular economy ....................... 59
3.3.1. Global recycling industry........................................................................................... 59
3.3.2. Vietnam’s trade in the transition towards circular economy................... 63
CHAPTER 4: RECOMMENDATIONS TO DEVELOP CIRCULAR
ECONOMY IN VIETNAM .......................................................................................................... 73
4.1. Future prospect and the need to develop circular economy in Vietnam 73
4.2. Evaluation of the feasibility to develop circular economy in Vietnam... 74
4.2.1. Advantages of Vietnam in developing circular economy........................... 74
4.2.2. Challenges for Vietnam’s transition towards circular economy............ 75
4.3. Recommendations for Vietnam to develop circular economy ..................... 78
4.3.1. Development of a legal framework for circular economy ......................... 78
4.3.2. Initiatives for enterprises............................................................................................ 80
4.3.3. International cooperation for circular economy............................................ 81
CONCLUSION .................................................................................................................................... 87
LIST OF REFERENCES............................................................................................................... 88
ANNEX 1: LIST OF SCRAPS ALLOWED TO BE IMPORTED FOR
PRODUCTION MATERIALS ....................................................................................................... i
ANNEX 2: LIST OF WASTES SUBJECT TO TEMPORARY SUSPENSION
FROM TEMPORARY IMPORT, RE-EXPORT OR MERCHANTING
BUSINESS ................................................................................................................................................iv
ANNEX 3: SUMMARY OF KEY LEGISLATION AND POLICIES
RELATED TO CIRCULAR ECONOMY IN VIETNAM .......................................... vii
ANNEX 4: ALL 54 ACTIONS PLANS INCLUDED IN THE EU CIRCULAR
ECONOMY ACTION PLAN (2015) .........................................................................................ix

v
LIST OF ABBREVIATIONS
Abbreviation Full version
AEC ASEAN Economic Community
AfDB African Development Bank
ASEAN Association of Southeast Asian Nations
CE Circular economy
CIEM Central Institute of Economic Management
COP Conference of the Parties
CPTPP Comprehensive and Progressive Agreement for Trans-Pacific
Partnership
CTE Committee on Trade and Environment
EBRD European Bank for Reconstruction and Development
EEU Eurasian Economic Union
EGS Environment Goods and Services
EIB European Investment Bank
EPR Extended Producer Responsibility
EU European Union
EVFTA EU-Vietnam Free Trade Agreement
FTA Free Trade Agreement
G7 Group of Seven
GATT General Agreement on Tariffs and Trade
GDP Gross Domestic Product
GFN Global Footprint Network
HS Harmonized System
IEEP Institute for European Environmental Policy
MFN Most Favored Nation
NDCs Nationally Determined Contributions
NT National Treatment
OECD The Organization for Economic Cooperation and Development

vi
RCEP The Regional Comprehensive Economic Partnership
SCM Agreement The Agreement on Subsidies and Countervailing Measures
SDGs Sustainable Development Goals
SIA Sustainability Impact Assessment
SMEs Small- and Medium-sized Enterprises
SPS Agreement The Agreement on Sanitary and Phytosanitary Measures
TBT Agreement The Agreement on Technical Barriers to Trade
TTIP Transatlantic Trade and Investment Partnership
UK The United Kingdom
UN United Nations
UNCTAD The United Nations Conference on Trade and Development
UNIDO The United Nations Industrial Development Organization
VBCSD Vietnam Business Council for Sustainable Development
VCCE Vietnam Centre for Circular Economy
VCCI Vietnam Chamber of Commerce and Industry
VRP Vietnam Recycling Platform
WCO World Customs Organization
WSR Waste Shipment Regulation
WTO World Trade Organization

vii
LIST OF FIGURES AND TABLES
FIGURES
Figure 1.1: Linear economy model ............................................................................................... 10
Figure 1.2: Principle of circular economy: Making things last......................................... 11
Figure 1.3: Circular Economy to tackle the overlooked emissions................................. 12
Figure 1.4: The circular economy – an industrial system that is restorative by
design.......................................................................................................................................................... 15
Figure 1.5: Opportunities for trade in waste and secondary materials........................... 24
Figure 2.1.The evolution of circular economy policy in China........................................ 35
Figure 2.2 Circular Economy development in China............................................................ 37
Figure 3.1: Global waste traded internationally, by value and weight .......................... 59
Figure 3.2: Major exporters of plastics waste to China in 2016....................................... 60
Figure 3.3: Imports of plastic scraps coming to Vietnam (in tons) showing the top
10 export partners.................................................................................................................................. 65
TABLES
Table 1.1: Impact of circular economy on trade flows......................................................... 20
Table 2.1: Resource Efficiency & Circular Economy National Policy/Strategy ...... 32
Table 2.2. Circular Economy Package 2015: Proposed amendments to four waste
management legal acts of the EU................................................................................................... 38
Table 2.3: The EU’s Circular Economy Actions and their trade implications........... 49
Table 3.1. Non-profit alliances/initiatives with the concept of circular economy... 57
Table 3.2: List of Vietnam’s regulatory documents for trade in waste and scraps as
recyclable materials for production............................................................................................... 67
Table 3.3: Used goods, waste and scrap banned from import to Vietnam................... 69
Table 3.4: List of scrap temporarily suspended from import into Vietnam ................ 70

viii
ABSTRACT
As a new approach in the way resources are treated, circular economy is
gaining attention worldwide for being the solution for the conflict between
economic development and environment protection. Research has shown that the
transition towards circular economy at both domestic and global level has close
linkage to international trade, i.e. the trade in second-hand goods, end-of-life
products, secondary materials and waste. The trade flows of such circular goods and
relevant services should be facilitated for the world to reach a global circular
economy.
This study aims to determine whether that ideal circular trade is facing any
restrictions and the research results indicate that these trade flows are indeed being
blocked by some barriers namely import bans (e.g. China’s National Sword Policy
& Basel Convention) by “waste” importing countries including Vietnam. Based on
a review of the literature on theories of circular economy and trade policy, it is
revealed that such barriers are resulted from the lack of international cooperation for
agreed common standards and regulations. Legal review also presents with
Vietnam’s existing laws regulating trade in waste and scrap and the restrictions in
place. On that basis, it is recommended that Vietnam should promote its domestic
circular economy, then engage in collaboration through dialogues, trade agreements,
and missions to lift unnecessary trade barriers to circular goods & services, and
participate in the development of a harmonized system of standards. Further
research is needed to identify how circular economy could be integrated into trade
policy and trade agreements.

1
INTRODUCTION
1. Research rationale
As a matter of fact, the excessive exploitation and consumption of the earth’s
limited natural resources plus poor waste management and treatment are shown to
lead human beings to the exhaustion of resources and serious environmental
pollution. Notably, signs of climate change which is originated from human
activities have become more and more obvious as “global warming reaches above 1
degree Celsius above preindustrial level”1
. Understanding the global challenges,
countries are now trying to settle the problems. 17 UN Sustainable Development
Goals (SDGs) by 2030 and the Paris Climate Agreement are among those efforts to
“save” humanity from disasters. Circular economy – a new economic model – was
later introduced and now has gained much attention globally for its promising
potential in achieving sustainability as set forth in the Paris Agreement and SDGs.
Circular economy could be simply understood as "where the value of products,
materials and resources is maintained in the economy for as long as possible, and
the generation of waste minimized”2
, which seeks to combat pollution and achieve
sustainable development. Leading the movement towards circular economy is the
EU, its member states, China, etc. who have started their efforts for years with the
implementation of national action plans, strategies, and promulgation of relevant
laws, etc. Vietnam, among the most vulnerable countries to the negative impacts of
climate change3
, has also recently made its first baby steps in the circular economy
shift by, among others, organizing workshops to educate and promote circular
economy to relevant entities including policy making bodies and enterprises.
1
UN report, 2018
2
Material Economics (2018): The Circular Economy: A powerful force for climate mitigation; Arno
Behrens (2016): Time to connect dots: What is the link between climate change policy and the circular
economy?, CEPS Policy Brief, Nr. 337.
3 IPPC (2019), Global Warming of 1.5o
C. Available at:
https://www.ipcc.ch/site/assets/uploads/sites/2/2019/06/SR15_Full_Report_High_Res.pdf

2
It is reported by Ellen MacArthur Foundation and UNCTAD in 2016 that
circular economy can have massive impact on nations, on giant economies such as
India and China as examples, the report estimates that India, by adopting circular
principles, could create approximately $624 billion in additional economic value,
44% reduction in greenhouse gas emissions, and a 38% reduction in the use of
virgin materials all by 20504
. Similarly, circular economy in China could reduce
emissions of fine particulate matter by 50%, emissions of greenhouse gases by 23%,
and traffic congestion by 47% - all by 20405
.
However, the Circularity Gap Report 20196
finds that only 9% of the global
economy is circular, which means, only an annual rate of 9% of total weight of
minerals, fossil fuels, metals, and biomass that enter the economy are re-used,
implying a huge room for the transition from the linear “take-make-waste“
economy to a circular economy.
From a trade perspective, the transition requires comprehensive efforts of
different sectors and actors of the economies, including trade sector. It is argued in
the most recent relevant working paper of OECD that “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“7
.
Indeed, in a circular economy “materials can be recycled and are injected back into
the economy as new raw materials.... These “secondary raw materials“ can be
traded and shipped just like primary raw materials“8
. According to modern trade
theory, these materials and products should flow into countries of relevant
competitive advantages (i.e. in waste sorting or recycling). Therefore, in order to
promote global circular economy, it is apparently essential to facilitate the cross-
border circulation of recyclable waste as inputs and recycled products as outputs of
4
https://www.ellenmacarthurfoundation.org/publications/india#buypubs-anchor
5https://www.weforum.org/agenda/2019/01/the-circular-economy-turns-waste-into-gold-so-lets-get-on-with-
it/
6https://docs.wixstatic.com/ugd/ad6e59_ba1e4d16c64f44fa94fbd8708eae8e34.pdf
7
OECD, 2018
8
European Commission, 2015

3
the circular economy. However, the other “competitive advantages“ of countries
namely low labor costs and lax environmental enforcement are being taken
advantage of, evidenced by the statistics that import of waste are concentrated in a
small number of countries.9
To control these huge inflows of waste, countries like
China and Vietnam start imposing waste and scrap import restrictions in the course
of environment and human health protection. In this spectrum, Vietnam, as well as
other countries, do have regulations governing the import and export of the
mentioned materials for production and recycled products.
Nevertheless, the question is whether such trade restrictions and other relevant
regulations in trade policy of countries hinder the transition towards circular
economy, and what could be done in terms of trade policy to promote circular
economy. Up to date, specialized policies and legal framework towards the
formation and development of circular economy, which is supposed to cover trade
sector, are not made available in Vietnam. As a follower in the circular economy
trend, it is necessary for Vietnam to recognize the significance of circular economy,
to learn from other countries‘ experiences to apply to its own transition; moreover,
as a part of the global supply chain, to understand its role in contributing to a global
circular economy to develop proper relevant trade policies.
2. Literature review
So far, quantitative data on the relationship between trade and circular
economy is rather limited. The number of qualitative researches on the potential
linkages between the two is not so considerable either.
Acknowledging that lack of research on the issue, OCED has published a
backbone concept paper on international trade and the transition towards an energy
efficient and circular economy in 2018, authored by Shunta Yamaguchi of the
OECD Secretariat, in order to map out potential issues to address and to guide
9 Doug Woodring (2019), Basel Convention Amendments on Plastics Could Hinder Efforts to Reduce
Pollution. Available at: https://www.linkedin.com/pulse/basel-convention-amendments-plastic-could-hinder-
efforts-woodring

4
further research areas to explore on the topic. The research introduces circular
economy concept and how trade can come into play; highlights the various ways in
which trade and the circular economy can potentially interact with one another i.e.
trade in waste and scrap, second-hand goods, secondary raw materials, goods for
refurbishment and remanufacturing; and proposes further work to answer the
ultimate question of how could circular economy policies and trade policies be
aligned to encourage the decoupling of resource consumption from economic
growth at the global level without creating unnecessary barriers to international
trade as well as undesirable environmental consequences.
The concept paper was then followed by a research by Preston F., Lehne J.,
and Wellesley L., in 2019 on circular economy priorities for developing countries.
The paper discussed the potential interrelation between domestic trade policies and
WTO rules and circular economy. A wide range of issues are brought to the table
for discussion namely the non-discrimination principle of the WTO which should
also be applied for circular goods and services, relevant protectionist trade
measures, product standards & classification, the integration of circular economy
into trade agreements, etc. It argued that domestic trade policies potentially provide
an important means through which national governments can encourage and
incentivize the transition towards circular economy.
The EU is one of the pioneers in the transition towards Circular Economy. The
block has even formulated a Circular Economy Action Plan to achieve the ultimate
goal. The effectiveness of the Action Plan and existing policies of the EU are then
evaluated by researchers including those of Institute for European Environmental
Policy. In their paper just published at the end of 2019, Kettunen M., Gionfra S.,
and Monteville M. examine the interface between the EU circular economy, trade
and sustainable development. The paper investigates the role of trade in either
incentivizing or hindering the process of shifting to circular economy and highlights
the need for better policy coherence among circular economy, trade and sustainable
development in the EU.

5
UNIDO (2019) has also studied this issue recently. According to the
organization, there are several trade-related barriers that hinder recycling industry
towards a circular economy. The first barrier is regulatory requirements: the
complexities and inconsistencies of the international legal and policy framework, as
well as the difference in national definitions of the materials in national legislation
and the absence of internationally agreed limits and tolerances of contaminants
create obstacles for international trade in recyclable materials. The second barrier is
import bans on recyclable materials, mostly for the purpose of protecting human
health and the environment from the negative effects of materials that are
considered hazardous. However, import bans reduce the availability of recyclable or
recycled material in a country. Last but not least, tariffs (border costs, customs
duties, etc.) and non-tariff barriers (permits, licenses, testing requirements and
emission controls) also contribute to the hindering of the cross-border movement of
recyclable materials. And to settle the issue, UNIDO recommends harmonization
of national regulations (definitions, codes and import/export requirements),
modification of import bans (for non-hazardous recyclables) and engagement
through global or regional trade agreements for the liberalization of trade in
secondary raw materials, machinery and equipment used by the recycling industry.
In Vietnam, Nguyen Hoang Nam (Institute of Strategy and Policy on Natural
Resources and Environment) appears to be the expert with most publications on
circular economy. In his researches, he and his colleagues have explained in details
the definition of circular economy, current circular economy practices, Vietnam’s
legal framework for circular economy implementation, and propose policy
recommendations for Vietnam. However, like other available researches in
Vietnam, his have not touched the trade dimension of circular economy. The
international experiences or recommendations discussed in his researches focus on
the general implementation of circular economy within the boundaries of nations
rather than at a global scale. Therefore, the role of trade has never been mentioned
in any researches of his or his Vietnamese colleagues.

6
3. Research objectives
The research aims at analyzing the new norm of “circular economy” and its
linkage to trade to provide an overall understanding of the norm and emphasize its
importance in facing global issues in general and in the sustainable development of
Vietnam in particular; conducting research on global practices of circular economy
promotion with a focus on the EU and China; studying Vietnam’s current circular
economy practices, and the status of trade in inputs and outputs of circular
economy, its domestic legal and policy framework, including trade-related
regulations and policies to evaluate the feasibility for Vietnam to develop circular
economy; and on such basis, providing general policy recommendations for
Vietnam to develop circular economy in general.
4. Research questions
• What is Circular Economy? Why it is needed? And how beneficial could it
be?
• How the transition towards circular economy takes place around the world in
general and in trade sector?
o What other countries have done? (Focus on the EU and China)
o What are the take-aways for Vietnam?
• What are the existing conditions for the formation of circular economy in
Vietnam, including but not limited to socio-economic conditions, trade in
inputs and outputs of circular economy, and legal and policy framework?
o From trade perspective, where is Vietnam in the global supply chain
of the global circular economy? (Global recycling sector)
o What are the potential enablers and barriers towards the transition to
circular economy of Vietnam?
• What are the policy recommendations for Vietnam to develop circular
economy in general and in circular trade promotion ?

7
5. Scope of research
In a circular economy, there are four main stages in the life circle of materials (as
illustrated below), starting from the processing of primary materials in production
(Stage 1), consumption of final products (Stage 2) until being thrown away as waste,
materials at this stage is treated as waste (Stage 3) and then moved to the final stage
(Stage 4) of turning them into materials again (Secondary materials).
To realize that stage of “material reborn” in order to create a circular economy,
there must exist a recycling industry (at stage 4) to turn waste to resources. If
recycling industry is considered a living body, it needs recyclable waste to use as its
food. However, waste generated in the economy could be hazardous or non-
hazardous; and in practice, both hazardous and non-hazardous waste could be
recyclable or non-recyclable. These categories of waste are subject to trade
regulations to be mentioned in this research. For example, hazardous waste is
regulated by the Basel Convention on the Control of Transboundary Movements of
Hazardous Wastes and Their Disposal and recyclable waste is subject to regulations
on import and export of waste and scrap for recycling.
The focus of this research is the input recyclable waste in the final stage “from
waste to resources”, which involves its cross-border movement in the global value
chain.
Life cycle of materials in circular economy Classification of waste within this research
Primary
Production materials Waste
4 1
From waste to
Consumption Hazardous
non-
resources hazardous
3 Waste 2 Recyclable
Non -
Recyclable
Management

8
For this is a vast topic, the research only conducts a brief investigation of
global circular economy practices then focus further on the policies of the EU,
China and Vietnam.
6. Research methodology
This research uses an overall and comprehensive approach to collect and
summarize the recent studies, reports, articles, etc. which are related to this topic, of
which desk research for literature review and policies review plays the key role.
Methods also include comparative legal analysis to identify, compare and contrast
relevant laws and regulations in different jurisdictions and Socio-legal research
methods.
All the data and figures are obtained based on the secondary data provided by
some public organizations like the Ministry of Natural resource and Environment,
Ministry of Industry and Trade, Vietnam’s Customs, UN COMTRADE, European
Commission, etc.
7. Research structure
This research is divided into four separate parts in corresponding chapters.
Chapter 1 explains the significance of a circular economy. Chapter 2 studies global
circular economy policy practices, including trade policy practices with a focus on
the practices in the EU. Chapter 3 provides insight on circular economy in Vietnam,
its legal framework, existing circular economy practices and its trade in recyclables.
Finally, chapter 4 gives recommendations for Vietnam to develop circular economy
from trade perspective.

9
CHAPTER 1: OVERVIEW AND THE SIGNIFICANCE OF CIRCULAR
ECONOMY
1.1. The need to promote circular economy
1.1.1. Linear economy: the issue of resources efficiency & environmental
pollution
The need for resources
With a growing population of more than 7 billion people living on earth, our
need for resources also increases consequently. According to estimation by GFN
(2018), we now need 1.7 earths to meet the world’s resource needs today.10
The UN
estimates that since 1970, the world's total amount of raw materials used has tripled
and could double by 2050 without intervention. This is beyond the supply of the
Earth’s natural resources. Resource supply and resource efficiency apparently
become the challenge that we need to handle.
Waste management
Statistics in World Bank 2018 report shows that global cities in 2016
generated about 2.01 billion tons of solid waste in urban areas with at least 33% of
that being managed in an environmentally unsafe way. With population growth and
urbanization, this figure could increase by 70% to 3.40 billion tons by 2050. By
2025, the value of the global waste management industry is expected to hit USD
$530 billion, from $330.6 billion in 2017. 11
As natural resources become increasingly more expensive and difficult to
source, the solution is to keep existing products and materials in circulation for as
long as possible, extracting the maximum value from them. However, looking at the
linear economy model (Figure 3) of extraction, transformation (production),
utilization (consumption) and disposal that has been in operation for more than 150
years since the Industrial Evolution, it appears to only cause resource depletion and
10 https://www.footprintnetwork.org/our-work/ecological-footprint/
11 https://www.amcsgroup.com/newsroom/blog/global-waste-and-recycling-market/

10
waste increase rather than to be a proper solution. This traditional model has shown
its drawback of a great pressure on the environment in the context of climate
change, environmental pollution due to the poor management of waste and the
exhaustion of natural resources plus the high price of resources in general. Taking
plastic waste as an example, by 2050, it is estimated that the volume of plastic waste
discharged into the sea will be more than the total volume of fishes. 12
Figure 1.1: Linear economy model
Source: Circular Tayside website13
In order to minimize harm to the quality of life, it is necessary to have
solutions to recycle waste, use recycled materials as input materials for production
to save natural resources. The rational management and use of natural resources
with the principle of "Closing the loop" through the efficient use of renewable raw
materials and waste management by recycling to minimize value optimization has
been embedded in the theory of circular economy, where products and materials are
kept flowing in the economy for the longest. This circular economy can be achieved
by designing products with their whole life cycle in mind, allowing them to be
maintained in use for longer, then reused and refurbished to extend their lifetime,
and, when their life is deemed over, recycled to create new products from old
without the need for virgin raw materials.14
12
Ellen MacArthur Foundation, 2016, P.17
13 Extracted from https://circulartayside.co.uk/what-is-the-circular-economy/
14 https://circulartayside.co.uk/what-is-the-circular-economy/, accessed on Feb 8, 2019

11
Figure 1.2: Principle of circular economy: Making things last
Source: Circulartayside.co.uk15
The efficient use of resources can enable economic growth while also ensuring
resource security and environmental sustainability. The promotion of business
models which reduce the extraction of primary raw materials, increase the use of
secondary materials, and generate less waste is central to achieving resource
efficiency and a circular economy.16
Climate change
According to a report on countries' efforts to combat climate change published
at the UN Conference on Climate Change (COP24) in 2018, although the world has
achieved certain results through actions to prevent global warming, but the
temperature increase is still very high. With current policies, the Earth's temperature
at the end of the 21st century will increase by 3.3 degrees Celsius compared to the
pre-industrial period. The UN, meanwhile, affirms that the goal of raising 1.5
degrees Celsius - a threshold considered safe for Earth - is still possible, but requires
urgent and unprecedented levels of action.
15 https://circulartayside.co.uk/what-is-the-circular-economy/
16 https://www.teriin.org/policy-brief/g20-enable-business-models-circular-economy

12
The Circularity Gap report shows that in response to climate change,
governments' policies must focus on developing renewable energy, improving
energy efficiency and ending deforestation.17
In order to reduce pollutant emissions
and waste, economies should pursue a "circular" model and reuse products and
scraps. The Ellen MacArthur Foundation reports that today’s efforts to combat
climate change have focused mainly on the critical role of renewable energy and
energy-efficiency measures. However, meeting climate targets will also require
tackling the remaining 45% of emissions associated with the making of products. A
circular economy offers a systemic and cost-effective approach to tackling this
challenge.18
The Foundation explains that when applied to four key industrial
materials (cement, steel, plastic and aluminum) circular economy strategies could
help reduce emissions by 40% in 2050. When applied to the food system the
reduction could amount to 49% in the same year. Overall such reductions could
bring emissions from these areas 45% closer to their net-zero emission targets19
.
Figure 1.3: Circular Economy to tackle the overlooked emissions
Source: Ellen McArthur Foundation, 2019
17
Circle Economy (2019), the Circularity Gap Report
18Ellen MacArthur Foundation (2019), Completing the picture how the circular economy tackles
climate change. Available at:
https://www.ellenmacarthurfoundation.org/assets/downloads/Climate_Executive_Summary.pdf
19
Ibid.

13
In a circular economy, waste is minimized, reused and recycled. In the face of
an increasing global population and expanding cities, the world's resources are
gradually exhausted with climate change being likely to be more serious. Therefore,
many experts believe that circular economy, which focuses on reusing materials and
waste, is considered a solution that can help countries adapt and move forward in an
environmentally friendly way. The efficient use of this material could support the
realization of the key goal in the Paris Agreement on combating climate change to
keep the temperature rise not more than 2 degrees Celsius above pre-industrial
levels. Circular economy could solve the math of human need for resources, waste
management and climate change, such an approach change from linear to circular
economy is inevitable.
1.1.2. The promotion of Circular Economy
1.1.2.1.Overview of Circular Economy
1.1.2.1.1. History of circular economy
As reported in the Summary of the Second World Circular Economy Forum,
held on 22 – 24 October, 201820
, the work on circular economy builds on
contemporary ideas developed by, namely, the Ellen MacArthur Foundation and
others such as Walter Stahel (performance economy), William McDonough and
Michael Braugart (cradle to-cradle design), Janine Benyus (biomimicry); and
Amory and Hunter Lovins and Paul Hawken (natural capitalism), and Gunter Pauli
(blue economy systems).
In 2018, Walker and his colleagues presented in their research that the notions
of a circularity and non-linear thinking are not new, the principle of early circular
economy strategies were initially designed to focus on waste management,
embedded in “3Rs theory: Reuse – Reduce – Recycle” but gradually evolved to
include more systematic approaches for the whole economy to include the 6Rs
(reuse, recycle, re- design, remanufacture, reduce, recover). Under current circular
20 WCEF, 2018, https://enb.iisd.org/download/pdf/sd/enbplus208num27.pdf

14
economy systems adopted by the Ellen MacArthur Foundation, products are
designed to be restorative and regenerative, where products are utilized at their
highest value. 21
In 2008, China became the pioneer in the transition towards circular economy
with its adoption of the first circular economy promotion law in the world. China
was then followed by other countries with a considerable number of both national
and multinational initiatives (See further in Section II). For example, in 2016,
Finland became the first country in the world to ever develop a national Roadmap
towards a circular economy named “Leading the Cycle – Finish Road Map to a
Circular Economy 2010 – 2025”, which was then included in the organization of the
first World Circular Economy Forum 2017.
1.1.2.1.2. Definition of circular economy
Lately, Kirchherr, Reike and Kekkert (2017) have discovered 114 different
definitions of circular economy. Their analysis’s findings indicate that circular
economy is frequently conceptualized as the combination of reduce, reuse and
recycle activities and the definitions show few explicit linkages of the circular
economy concept to sustainable development22
.
Circular economy emphasizes the management and regeneration of resources
in a closed loop to avoid waste generation. Resource utilization comes in many
ways, from redesigning, reducing, repair, reuse, recycling, material sharing or
leasing. Circular economy could be simply understood as one in which products are
recycled, repaired or reused rather than thrown away, and in which waste from one
process becomes an input into other processes23
. Ellen MacArthur Foundation, in
its 2012 report has defined circular economy as “an industrial system that is
restorative and regenerative by intention and design. It places the “end-of-life”
concept with restoration, shifts towards the use of renewable energy, eliminates the
21
Zhe Liu, Michelle Adams, Tony R. Walker (2018), Are exports of recyclables from developed
to developing countries waste pollution transfer or part of the global circular economy?
22 https://www.sciencedirect.com/science/article/pii/S0921344917302835. Access on 04.02.2020
23 https://logscale.fi/en/global-policy-and-funding-key-for-circular-economy/

15
use of toxic chemicals, which repair, reuse, and aims for the elimination of waste
through the superior design of materials, products, systems, and, within this,
business models”.
Figure 1.4: The circular economy – an industrial system that is restorative by
design
Source: Ellen MacArthur Foundation, Circular Economy systems diagram
(Feb, 2019), www.ellenmacarthurfoundation.org. Drawing based on Braungart
& MacDonough, Cradle to Cradle (C2C)
Circular Economy now has received much attention globally and there is still
no fixed definition for circular economy. The circular economy concept has been
applied differently due to diverse cultural, social and political systems globally. 24
For instance, the CE has been implemented as the national development strategy in
24
Geng et al., 2013

16
the U.K, or for waste management as in some European countries like Denmark,
Switzerland, and Portugal, or aimed at reducing land use for waste disposal by
focusing on solid waste avoidance and closed-loop recycling, solid waste
management in Japan, or to achieve the goal of profitable product development, and
improving industry management in China.
The research in 2018 of Walker et al. has found that current applications of the
CE follow three thematic categories including eco-industrial network establishment;
application to specific waste or recyclable resource streams, such as wood, paper,
plastics and metals; and system-wide technical innovation to redefine products and
services to design waste out, whilst minimizing negative environmental and economic
impacts. However, these three CE themes are generally accepted within an individual
developed country’s jurisdiction, yet is considered waste or pollution transfer once
waste circulation or reutilization is exported to a developing country.25
1.1.2.1.3. Benefits of circular economy
What we are facing now is the paradox caused by economic development and
environmental protection. Now, we seem to have the answer for circular economy
brings both economical and environmental benefits. Economically, the new
economic model named “circular economy” presents “the opportunity to gradually
decouple economic growth from virgin resource inputs, encourage innovation,
increase growth, and create more robust employment”.26
The potential benefits of
shifting to a circular economy also extends into the natural environment by
designing out waste and pollution, keeping products and materials in use, and
regenerating, rather than degrading, natural systems, by which we achieve the
global climate targets.
The 2016 report of the Ellen MacArthur Foundation and the United Nations
Conference on Trade and Development (UNCTAD) estimated that India could
generate economic value rising to US $ 218 billion in 2030 and US $ 624 billion in
25
Walker et al., 2018
26
https://www.ellenmacarthurfoundation.org/explore/the-circular-economy-in-detail

17
by 2050, by enforcing the principles of a circular economy in three areas:
construction activities in cities; agriculture and food; vehicle fabrication and motion
technology. The report also points out that the it could help the South Asian nation
reduce its greenhouse gas emissions by 23% by 2030 and 44% by 2050, while
significantly reducing material use. For China, the authors of the report point out
that the application of the principles of circular economy in cities can create more
affordable goods and services for urban residents, reducing greenhouse gas
emissions by 23% and traffic congestion by 47% by 2040. Statistics show that
during the period 1980-2010, China's economic size expanded 18 times, but energy
consumption increased by only 5 times thanks to the application of new circular
economy approach.
As Schoroeder has pointed out in 2018, circular economy can have a direct
impact on more than 10 of the total 17 UN sustainable development goals; 134 of
169 specific targets are closely related to circular economy27
. Therefore, circular
economy strategies could help lower-income countries ‘leapfrog’ to a more
sustainable development pathway that avoids locking in resource-intensive
economic practices of the dominant linear consumption and production system.28
In its research paper 'An Inclusive Circular Economy. Priorities for
Developing Countries’ (May 2019), Chatham House notes that, under the right
enabling conditions, the circular economy could provide new opportunities for
economic diversification, value creation and skills development – going beyond
waste management and recycling. With enough investment, developing countries
could leapfrog developed countries in digital and materials innovation aimed at
sustainable production and consumption patterns.
1.1.2.2. The so-far transition towards Circular Economy
Being potentially beneficial, the transition towards circular economy has
become a global trend today. Political interest in the transition to a more resource
27 Available at: https://onlinelibrary.wiley.com/doi/full/10.1111/jiec.12732. Accessed on Feb 04,
2020.
28
Patrick Schroeder, Paul Dewick, Simonove Kusi-Sarpong, Joerge S. Hofstetter (2018), Circular
Economy and power relations in global value chains: Tensions and trade-offs for lower income countries.

18
efficient and circular economy is emerging in various corners of the world. At the
international level, efforts towards a resource efficient economy began in the late
2000s and have achieved increased emphasis more recently in the framework of the
G7 Alliance on Resource Efficiency, UN Sustainable Development Goals, and the
European Union Circular Economy Action Plan. At the national level, policy action
has taken place for instance in China, Finland, France, and the Netherlands in
establishing circular economy roadmaps, Japan in implementing the Fundamental
Law for Sound Material-Cycle Society, and the United States in launching the
Sustainable Materials Management Action Plan (OECD, 2018).
A pioneer in promoting circular economy is Japan. The country enacted the
Basic Act for Establishing a Sound Material-Cycle Society in 2001 and the
Fundamental Plan for Establishing a Sound Material-Cycle Society in 2003,
showing its leadership through the G8/G7 process and the Region 3R Forum in Asia
and the Pacific. European Commission does not lag behind either. It adopted a
Circular Economy Package in 2015 to stimulate Europe’s transition towards a
circular economy. The Package was then followed by a Circular Economy Finance
Support Platform in 2016 and EU Strategy for Plastics. Joint actions are also seen
with the handshake of the EU and China with the signing of a joint Memorandum of
Understanding on Circular Economy Cooperation at the 20th
EU-China Summit in
2018.
In 2018, the World Economic Forum, the World Resources Institute, Philips,
the Ellen MacArthur Foundation, the United Nations Environment Program and
more than 40 partners launched the Circular Economy Promotion Forum to promote
initiatives to expand this economic model. So far, there have been about 34
countries with 118 typical models of implementation of this shift, starting from the
formulation of strategies, action plans, to the promulgation of economic policies and
laws in order to determine the responsibilities of manufacturers, citizens and the
state, promote the development of environmental industries, create a market to
provide waste treatment services to mobilize private resources and reduce
investment.

19
In Vietnam, some circular economy models were implemented with certain
effects, however, it has not been focused yet. Therefore, to promote the
development of the circular economy in Vietnam, it is necessary to institutionalize
and legalize the circular economy, aiming to implement the circular economy in all
activities.29
Regardless of the efforts put forward, our world is only 9% circular and the
trend is negative. 30
The Circularity Gap is not closing. In the 12 months since the
first Circularity Gap Report, the upward trend in resource extraction and greenhouse
gas emissions has continued.
1.2. The impact of circular economy on trade flows
Many countries are taking action to adopt circular economy policies by
closing material loops through the promotion of reuse, recycling and new business
models, extending material loops through eco-design, and narrowing loops through
resource efficiency initiatives. While these policies are largely considered at the
domestic level, they exist in the context of a global economy and international value
chains, therefore there is increasing awareness that a transition towards a more
resource efficient and circular economy has broad linkages with international trade.
This for instance takes place through the emergence of global value chains as well
as trade in second-hand goods, end-of-life products, secondary materials or non-
hazardous waste, as well as trade in related services.31
Trade will be a powerful tool for fostering engagement from both the public
and private sectors in regional and global circular value chains. Trade-focused
circular economy discussions have the potential to open up new perspectives on
opportunities for mutual gain, and to shape a global and inclusive vision that goes
29 https://baotainguyenmoitruong.vn/xem-xet-dua-kinh-te-tuan-hoan-vao-luat-293374.html
30 The Circularity Gap Report 2019, https://bfc732f7-80e9-4ba1-b429-
7f76cf51627b.filesusr.com/ugd/ad6e59_ba1e4d16c64f44fa94fbd8708eae8e34.pdf
31 OECD (2018) International Trade and the Transition to a More Resource Efficient and Circular
Economy: A Concept Paper. Available at: https://www.oecd-ilibrary.org/docserver/847feb24-
en.pdf?expires=1581173188&id=id&accname=guest&checksum=90374A4E6DCDD65A119B56C29012E7
84

20
beyond the zero-sum world implied by some circular economy strategies today.
This will be critical to expanding the markets for circular goods and services,
pooling innovation knowledge bases, optimizing circular value chains, attracting
cross-border investment and providing entrepreneurs with access to data while
delivering an inclusive approach32
.
International trade flows may shift according to structural changes induced
by a circular economy (See Figure 7). Circular economy may lead to the decrease in
import demand for primary and secondary materials and also decrease in exports of
wastes and scrap.33
Potential opportunities and challenges imposed by the transition
towards circular economy are identified by OECD as presented in the following
Table 1.
Table 1.1: Impact of circular economy on trade flows
Potential opportunities Potential challenges
Potential - New opportunities for - How resource dependent developing
impacts of trade in services countries may need to shift their
the CE - Additional trade economies in terms of infrastructure
transition on opportunities thanks to and labor force
trade flows circular procurement - Some policies and activities are
difficult to foresee (e.g. new biz
models)
Specific - Trade can help boost - Definition and classification of waste
issues for key global recycling rates and secondary materials
material by shipping waste to - Regulating transboundary movement
streams: countries with of waste (e.g. Basel Convention,
comparative advantage proximity principle, import and
32 Laura Wellesley, Felix Preston, Joahanna Lehne (2019), An Inclusive Circular Economy:
Priorities for Developing Countries. Available at https://reader.chathamhouse.org/inclusive-circular-
economy-priorities-developing-countries#
33
OECD, 2019

21
recycling – in sorting and export restrictions)
waste and processing - Waste flows to destinations with
secondary - Role for trade as insufficient waste management
materials primary & secondary capacity
materials are - Illegal waste trade/informal sector
geographically - Potential downcycling
concentrated - Fragmentation of eco-design, eco-
- Trade in environmental labelling and recyclability standards
goods and services for for material quality and phase out of
efficient waste hazardous content
management
Specific - Promoting re-use of - “leakage” from the official system
issues for key products through (e.g. EPR schemes)
material exports of second-hand - Second-hand good imports may
streams: goods (e.g. used cards, hinder the transition towards energy
Reuse, second-hand textiles) efficient and low carbon economies
remanufactu - Trade can provide due to slower market transformation
ring – second opportunities for or place additional pressures on the
hand goods refurbishment and management of end-of-life products
remanufacturing - Issues in recovering end-of-life
products across borders for
refurbishment and remanufacturing
as they are often legally classified as
waste
- No comprehensive data on second-
hand goods and goods for
refurbishment and remanufacturing
Source: Extracted from OECD’s presentation at Word Circular Economy Forum
2019

22
For Goods
As argued by Felix P., Johanna L., and Laura W., (2019), domestic trade policies
potentially provide an important means through which national governments can
encourage and incentivize a transition to more circular approaches. The adoption of
circular economy policies and measures will likely encourage trade in secondary
goods, including materials and waste for recycling and energy recovery, secondary
raw materials, second-hand goods, and goods for refurbishment and
remanufacturing34
. Products that reach the end of their operational life can be
exported to other countries as secondary goods for further consumption, as
secondary materials for production feedstock, or as materials and waste for further
processing.35
Energy-efficiency requirements for imported second-hand vehicles; minimum
percentage requirements for recyclable content in plastic waste; health and safety
standards for recycled or recyclable products and materials; and quality, health and
safety standards for remanufactured products36
– all could, depending on how they
are designed, either expand or restrict international trade in various categories of
desirable and undesirable secondary materials.
Import duties can have a substantial impact on access to affordable inputs for
circular economy activities in developing countries. The reduction or removal of
import duties on primary goods used for pollution management and resource
management – such as equipment used in recycling plants – or on secondary raw
materials can lower the capital costs of circular economy infrastructure and
feedstock in import-dependent countries and boost the competitiveness of
downstream circular economy activities.
34
OECD (2018), International Trade and the Transition Towards a Circular Economy.
35
Chatham House (2019), resourcetrade.earth database, https://resourcetrade.earth/
36 OECD (2018), International Trade and the Transition Towards a Circular Economy, Paris:
OECD, https://www.oecd.org/environment/waste/policy-highlights-international-trade-and-the-
transition-to-a-circular-economy.pdf

23
For Services
Increased demand for services related to the sharing economy and provided by
so-called ‘collaborative sectors’ could bring new opportunities for trade in
services37
. Countries with a large, young and digitally workforce may look to
export software services, for example, while countries with abundant manual labor
may see new market opportunities in providing remanufacturing services for
imported used goods. By the same token, architects overseeing the construction of
new building stock in developing countries may, for example, elect to employ
lighting services from overseas lighting companies rather than take ownership of the
lighting equipment itself and assume responsibility for its maintenance and
refurbishment38
. Trade opportunities and new trade flows could also emerge in
various environmental services related to recycling, waste management and waste-
to-energy generation.
For developing countries, the removal of restrictions on trade in services
relevant to the circular economy across various modes of delivery (such as measures
that restrict domestic businesses’ access to operating licenses overseas, or to foreign
services in IT and communications) will be critical to promoting a more inclusive
approach to the circular economy. Developed countries could benefit from repair
services, for appliances and other goods, based in developing countries. Developing
countries could benefit from the expertise of specialized companies in the sorting
and processing of e-waste.
37
UNCTAD (2018), Circular Economy: The New Normal?, Policy Brief No. 61, May 2018, Geneva:
UNCTAD, https://unctad.org/en/ PublicationsLibrary/presspb2017d10_en.pdf
38 Yamaguchi, S. (2018), International Trade and the Transition to a More Resource Efficient and
Circular Economy–Concept Paper, Paris: OECD, https://www.oecd-ilibrary.org/docserver/847feb24-
en.pdf?expires=1581923338&id=id&accname=guest&checksum=7852923D4DACEEF7EA36AFAAE4EEB
BC8; and McCarthy, Dellink and Bibas (2018), The Macroeconomics of the Circular Economy Transition: A
Critical Review of Modelling Approaches, https://www.oecd-ilibrary.org/docserver/af983f9a-
en.pdf?expires=1581923391&id=id&accname=guest&checksum=F53E9B17C16F42FC25BFBE51F3C0462
7

24
Figure 1.5: Opportunities for trade in waste and secondary materials
Source: Laura Wellesley, Felix Preston, Joahanna Lehne (2019)

25
CHAPTER 2: OVERVIEW OF GLOBAL CIRCULAR ECONOMY
PRACTICES AND TRADE
2.1. Overview of global circular economy practices
2.1.1. WTO rules, domestic trade policies and circular economy
The World Trade Organization (WTO) provides a useful platform where
members can discuss and explore issues at the interface of trade and environment,
including through the Committee on Trade and Environment (CTE). Circular
economy is one of the works of focus of the CTE and other WTO committees, such
as the Rules Committee, TBT (Technical Barriers to Trade) and SPS (Sanitary and
Phytosanitary) committees, Committee on Agriculture and Committee on
Development etc.39
To promote circular economy at global level, it is a must to
consider relevant WTO-related issues below:
2.1.1.1. Trade measures
With production and sales today being largely international, free trade is a
precondition for a successful transition towards circular economy. However, as
waste regulations are mostly still national, the free movement of material and
resources is hindered at every border. Lack of harmonization and standardization,
misdirected subsidies and lack of communication between actors and sectors are all
hindering businesses from shifting towards circularity.
The WTO’s Environmental Database shows that a broad range of trade
measures affect the key activities that underpin a circular economy, from reuse and
repair, to remanufacturing, recycling and eco-design. Of the 470 or so trade
measures related to these activities contained in the database, 44% consist of
government support measures, 28% of technical regulations and conformity
assessment procedures, and 22% of bans and licensing requirements, with other
measures making up the rest. As addressed by Deputy Director of the WTO –
39
European Commission (2020), COMMISSION STAFF WORKING DOCUMENT: Leading the way to
a global circular economy: state of play and outlook

26
General Alan Wolff, many of these measures actively support the circular economy
— for example by establishing eco-design or recycling standards, or by requiring
governments to purchase goods that meet environmental standards. But others may
inadvertently work against circular trade, reflecting the fact that trade policies have
traditionally been conceived with a linear, rather than a circular, economy in mind.
This can result in a mismatch between trade policies on the one hand, and circular
economy strategies on the other.40
2.1.1.2. MFN & NT for “Like products” and exceptions
As Preston F. et. al (2019) has also pointed out, the non-discrimination
principle enshrined in the World Trade Organization (WTO) agreements, centered
around the General Agreement on Tariffs and Trade (GATT), prohibits the use of
protectionist trade measures by member countries. Regulations or taxes must not
discriminate between imported and domestically produced ‘like products’, or
between imports from different WTO members. But certain exceptions to these
rules permit governments to impose unilateral trade restrictions in specified
circumstances, for example when ‘necessary to protect human, animal or plant life
or health’ (GATT Article XX(b)); or ‘relating to the conservation of exhaustible
natural resources if such measures are made effective in conjunction with
restrictions on domestic production or consumption’ (GATT Article XX(g)). The
WTO’s Agreement on Technical Barriers to Trade (TBT Agreement) also employs
the same concept of ‘likeness’ to ensure that domestically produced goods are not
treated more favorably than their imported equivalents. Under the TBT Agreement,
technical regulations must not be ‘prepared, adopted or applied with a view to, or
with the effect of, creating unnecessary obstacles to international trade’ and ‘shall
not be more trade-restrictive than necessary to fulfil a legitimate objective” of
protecting human health or safety and/or the health of animals, plants and the
environment. Therefore, products manufactured using circular economy practices
could, in theory, be afforded preferential treatment if their positive environmental
40 https://www.wto.org/english/news_e/news19_e/ddgaw_25nov19_e.htm

27
impact is easily demonstrable, and if the trade measures in question are clearly not
protectionist in effect.
However, the definition of ‘like products’ in the context of circular economy
policies, and the WTO treatment of trade measures based on them, is a largely
untested topic. The application of trade measures based on processes and production
methods rather than on product criteria is a controversial and contested topic.
Developing countries in particular often see such measures as a potential form of
protectionism, through which developed countries impose their environmental
standards (which are assumed to be higher and costlier) on poorer countries’
exports.
2.1.1.3. Subsidies/Preferential treatment
Subsidies could be used to support specific sectors of the economy. Given the
circular economy trend, countries may want to develop circular economy -based
industries such as product refurbishment and remanufacturing. However, the
provision of subsidies conditional on exports or the use of domestic goods (i.e. via
‘local content’ requirements) is automatically prohibited under the WTO’s
Agreement on Subsidies and Countervailing Measures (SCM Agreement). Such
measures are actionable under WTO law if proven to cause ‘adverse trade impacts’
and injury to trading partners.
2.1.1.4. Product classification (HS system)
Currently, the definition and classification of waste, scrap and secondary
materials differ from country to country; the distinction between end-of-life
products, non-hazardous waste and secondary raw materials is often not the same
across different jurisdictions. HS product descriptions are to a large extent based on
physical product attributes that are easily verifiable by customs officials, while
environmental regulatory frameworks and environmental inspectors focus on the
‘intention to discard’ in order to identify waste. This makes it difficult to distinguish
primary products from secondary products, to assign separate HS codes

28
on the basis of how products have been manufactured (e.g. using recycled
aluminum), or to determine that certain products are remanufactured.
Amendments proposed by the Basel Convention Secretariat to the WCO also
raise a number of issues, such as the difficulties in distinguishing and separating
hazardous waste from non-hazardous waste, or waste from second-hand goods. But
in the absence of any measure for differentiating between e-waste and functional
used electrical and electronics equipment under the Basel framework, there are
limits to implementing genuine CE-related trade for waste recovery and recycling
while ensuring that adequate standards, regulations, technology and management
practices are met.
This will require adopting harmonized approaches to data gathering at the
national level, as well as international efforts through the World Customs
Organization (WCO) to agree on Harmonized System (HS) customs codes
classifications that more accurately capture secondary goods (such as recycled
material) and identify waste types.
2.1.2. Restrictive trade measures and circular economy
Restrictive trade measures affect international trade system of complex web of
value chains of products and services crossing borders multiple times. Domestic
trade policies, if improperly designed or enforced, can have unintended and
negative consequences. For example, Rwandan government to raise import duties
on used clothing as a means of safeguarding the domestic textile industry. The move
has been criticized for having adverse impacts on Rwandans working in the used-
clothing sector, who have been unable to access an affordable supply to match
demand. Moreover, given limited domestic production capacity, the rise in duties
has simply prompted growth in imports of new but cheaper Chinese clothing.41
Members of the WTO may apply environmental protection measures, even trade-
41
Preston F., et al. (2019)

29
restrictive ones. But those measures must fulfil certain conditions to ensure that
they are fit for purpose rather than being adopted for protectionist reasons.42
The most common restrictive measure is import bans. Import bans reduce the
availability of recyclable or recycled material in a country, forcing recyclers or
manufacturers to find alternative materials. This may lead to price increases or
volatility of prices. It may also mean that the volume of recyclable material
available in a country does not allow economically viable recycling operations. This
happens particularly in small countries where the volumes of solid wastes generated
within the country, e.g. metals, inorganics and organics, are not high enough to
sustain a domestic recycling industry.
Trade restrictive measures could be a consequence of trade dispute which
could dampen trade in circular goods and services between countries. The trade
dispute between China and the US is an example. The two countries have enjoyed a
healthy symbiotic relationship through the trading of goods until now, particularly
the trade in secondary raw materials and waste products for re-processing and
recycling. However, the Trump administration’s newly planned tariffs on Chinese
goods and China’s retaliatory tariffs which cover multiple categories of scrap
metals, copper waste and other secondary materials including recovered fiber and
paper pulp from recycled paper and cardboard in the US – all relevant resources for
the circular economy, could risk undermining China’s efforts to support the growth
of a domestic circular economy. Initially, the loss of China as the principal export
market for American recycled paper has left many municipal recycling programs in
crisis, facing increasing costs and reduced revenues. In China, recycling operators
and urban mining pilot projects, which were already facing a shortfall of secondary
raw materials after China placed restrictions on foreign plastic waste imports at the
start of 2018, are now suffering from the new import tariffs.43
42
https://www.wto.org/english/news_e/news19_e/ddgaw_25nov19_e.htm
43Schroder P., (2019), The US-China Trade Dispute: What impact on the circular economy? Available
at: https://www.chathamhouse.org/expert/comment/us-china-trade-dispute-what-impact-circular-economy

30
2.1.3. Circular economy initiatives in some countries
CE may offer opportunities for bilateral investments and partnerships which
simultaneously contribute to the CE at home and overseas. The EU, China and
Japan have been proactive in seeking out cross-border opportunities for partnership
on the CE. The EU has dispatched CE missions to Japan, Indonesia and India
(2018), Columbia (2017), Chile, China (2016). The focus of these missions is to
communicate the opportunities from transitioning to a CE, as well as to support
European businesses in expanding their activities in these countries. In June 2018,
the EU and India signed a joint declaration of intent to foster resource-efficient
practices in India and support recommendations made in the Strategy on Resource
Efficiency. A number of joint initiatives will be undertaken, including support for
an eco-labelling scheme for secondary products; assistance in developing recycling
standards for e-waste, plastics, and construction and demolition waste; promotion of
R&D in resource efficiency; and development of a ‘Waste Exchange Platform’, a
marketplace for by-products and industrial waste.
In China, President Xi Jinping has stipulated that the Belt and Road Initiative
–centered on infrastructure building to connect China’s less developed border
regions with Southeast Asia, Central Asia and Europe – should promote a ‘green,
low-carbon, circular and sustainable’ form of development. One example is the
planned construction of a China-African Circular Economy Industrial Park in South
Africa.
Japan, meanwhile, has demonstrated regional leadership in the CE through its
inauguration of the Regional 3R Forum in Asia and the Pacific. This cooperative
platform enables governments from 39 countries in the region to promote the
piloting of CE projects. As G20 chair in 2019, Japan has an opportunity to take its
domestic and regional experience on to the international stage, building on the work
started by Germany two years ago, and to promote policy alignment and knowledge
exchange on resource efficiency and the CE among G20 countries and developing-
country partners.

31
Several other donors are discussing the CE as a potential new focus area for
development assistance. Few detailed strategies have yet emerged, but early
examples include Denmark’s strategic sector cooperation agreement with Indonesia
on ‘circular economy and waste management’; a similar agreement with Kenya on
‘circular economy, cleaner manufacturing, regulation and enforcement’; and the
Norwegian international development minister’s highlighting in April 2018 of the
CE as a priority in Norway’s international development policy, with a focus on
cooperation with developing countries to establish profitable value chains for waste.
Commitments to supporting CE initiatives in the developing world have also
emerged in other countries, in response to a surge in public awareness of the global
waste challenge. The Memorandum of Understanding on Circular Economy
Cooperation between the EU and China, signed in July 2018, could provide a
vehicle through which to broaden CE cooperation and leadership. Under the MoU,
the EU and China agree to cooperate on ‘dialogue on the design, planning and
implementation of strategies, legislation, policies, and research’, ‘strategic
exchanges on management systems and policy tools such as eco-design, eco-
labelling, extended producer responsibility and green supply chains’, ‘strategic
exchanges on best practices of circular economy’, and ‘exchanges on investments in
and financing of circular economy’. Such modes of cooperation could, in theory, be
extended to third countries, including in sub-Saharan Africa where both the EU and
China have significant investment interests and existing donor programs.

32
Table 2.1: Resource Efficiency & Circular Economy National Policy/Strategy
Country National policy/strategy Year
Resource The EU Resource Efficiency Europe 2012
Efficiency Austria The Resource Efficiency Action Plan 2012
Germany The Resource Efficiency Programme (Progress) 2012, 2016
Finland National Material efficiency programme – 2014
sustainable growth through material efficiency
Circular Japan Fundamental Plan for establishing a sound 2003, 2008,
Economy material-cycle society 2013, 2018
China Circular development leading plan 2016
National circular economy promotion Act 2008
Sweden From waste management to resource efficiency 2012
Sweden’s Waste Plan 2012 – 2017
Netherlands Waste to Resource Programme 2014
A Circular Economy in the Netherlands by
2050 – Government-wide Program for a 2016
Circular Economy
The EU Closing the loop – An EU Action Plan for the 2015
Circular Economy
France Circular Economy (Energy Transition for Green 2015
Growth Act) 2018
Let’s go into the loop: a roadmap for the 100%
circular economy
U.S Sustainable Material Management 2019, 2015
Finland Leading the cycle- Finish Road Map to a 2016
Circular Economy 2016 – 2025
Italy Towards a Circular Economy in Italy 2017
The U.K Increasing resource efficiency and reducing 2018
pollution and waste (Green Future: Our 25-year
Plan to Improve the Environment)

33
Cooperation between donors and multilateral agencies can provide a further
avenue through which to advance CE activities and strategies. The UK’s
Department for International Development, for example, has partnered with the UN
Conference on Trade and Development (UNCTAD) to develop the Sustainable
Manufacturing and Environmental Pollution programme.
For international financial institutions seeking to support the implementation
of the SDGs and the Paris Agreement, investments in CE innovations or value
chains could be used to reinforce and accelerate existing programmes of sustainable
development. Many multilateral development banks are scaling up their activities in
the CE space and are also setting aside specific funding pots for CE approaches.
Some examples of MDB activity include the following: European Investment Bank
(EIB); European Bank for Reconstruction and Development (EBRD); World Bank:
The bank’s technical assistance programme ‘China: Promoting a Circular Economy’
supported the development of national legislation on the CE in China in 2009;
African Development Bank (AfDB).
Among the countries that have formulated their circular economy national
policies and strategies, the EU and China are the most typical examples of
comprehensive circular economy packages. Being the frontrunners in the transition
towards circular economy, the EU’s and China’s experiences in both policy making
and actual implementation could become a benchmark for other countries. Besides,
from a trade perspective, the intra-EU trade in circular goods and services itself
could be valuable lessons for Vietnam in formulating its trade policies. Therefore, in
the following sections, the research will focus on circular economy practices in
China and the EU.
2.2. Circular economy practices in China
China’s rapid economic growth demands major supplies of all basic industrial
commodities. The country’s rapid industrialization in the last decades has
engendered serious problems of depletion of natural resources, degradation

34
of major ecosystems, and pollution extending far beyond its borders. China, then,
puts efforts to harmonise economic development and environmental protection. For
more than 15 years, China’s government has been a frontrunner on circular
economy policies, with a focus on addressing pollution, promoting resource
efficiency, and industrial ecology.44
If China can achieve its goal of increasing
efficiency of resource utilization, this will have global impact. For Vietnam, China
is the country’s neighbor and also among the biggest trading partners. The two
countries share many similarities in terms of economy, culture, society, politics, etc.
Given the above analysis, it will be useful for Vietnam to study the example of
China’s circular economy practices.
Since the 1980s, China has successively issued a series of laws and
regulations, comprehensive policies, industrial policies, economic policies, and
related environmental policies on circular economy.45
These include the Cleaner
Production Promotion Law, the Energy Conservation Law, the Circular Economy
Promotion Law, etc. (Figure 2.1).
44
Ellen MacArthur Foundation (2018), “The Circular Economy Opportunity for Urban & Industrial
Innovation in China.”
45
Li, W. and W. Lin (2016), ‘Circular Economy Policies in China’, in Anbumozhi, V. and J. Kim (eds.),
Towards a Circular Economy: Corporate Management and Policy Pathways. ERIA Research Project Report
2014-44, Jakarta: ERIA, pp.95-111.

35
Figure 2.1.The evolution of circular economy policy in China
Source: Ellen MacArthur Foundation, 2020
The Circular Economy Promotion Law of the People’s Republic of China,
which was adopted at the 4th session of the Standing Committee of the 11th
National People’s Congress of the People’s Republic of China on August 29, 2008,
came into force on January 1, 2009. The Law has 7 chapters including: Chapter I –
General Principles, Chapter II – Basic Management Rules, Chapter III – Reduction,
Chapter IV – Reusing and Recycling, Chapter V – Incentive Measures, Chapter VI
– Legal Liabilities and Chapter VII – Supplementary Provisions. It focuses on
development plans, extended producer responsibilities, supervision management
systems for key enterprises with high energy and water consumptions, circular
economy indices, statistics, and other management systems. In the Law, the
requirements for circular economy development are proposed, covering production
techniques, equipment, resource exploitation, recycling of waste materials,
comprehensive resource utilisation, reduction, and other aspects. As proposed in
Chapter V - Incentive Measures of the law, the government shall encourage circular
economy through special funds, technical support, tax incentives, investment,
finance, price, government procurement, and other aspects.

36
While laws and regulations are legal protection and play supporting role in the
development of circular economy, comprehensive policies play the general guiding role
and include action plans, programmes, and opinions. Developing circular economy,
China adopts both environmental, industrial and economic policies46
. One example of
environmental policy is that China’s Environmental Protection Ministry develops
pollutant emission standards for different industries so that enterprises must develop
strategies for low material consumption and low emissions. Economic policies could
include tax, fiscal, monetary and price policies to develop circular economy47
.
Preferential tax and financial incentives are also adopted to stimulate the development
of cleaner production in enterprises. Preferential tax rating is implemented in
enterprises dedicated to waste material recycling and comprehensive resource
utilisation. Price measures are adopted to regulate industries with high-energy
consumption for utilisation of resources and energy.
In a research by Ogunmakinde (2019), his finding is that China’s circular
economy practices are primarily implemented at the design, production,
consumption and waste management stages and at the enterprise, regional, and
social levels. As illustrated in Figure 2.2. below, eco design and environmentally
friendly designs are introduced at the design stage to protect the quality of the
environment. Cleaner production, eco industrial park, and low-carbon cities are
implemented to improve the circularity of products at the manufacturing/production
stage. For consumers play a vital role in ensuring that materials are continually
circulated at the end of their useful lives, minimizing pollution, Chinese consumers
are encouraged to live a love-carbon lifestyle through green purchase, sharing, and
renting services. With regards to waste management, China adopts reuse, recycling,
waste trade markets, and industrial urban symbiosis to allows waste products to
remain in circulation.
46
Ibid.
47
Ibid., p.101.

37
Figure 2.2 Circular Economy development in China
Source: Olabode Emmanuel Ogunmakinde (2019), A Review of Circular Economy
Development Models in China, Germany and Japan, MDPI.
China has also launched circular economy pilot projects in provinces and
cities, industries, fields, and industrial parks, which is considered one of the most
important practices of circular economy in China for policy makers to recognize the
characters of circular economy.48
2.3. Circular economy practices in the EU
The EU is another important trade partner of Vietnam (Details of the EU –
Vietnam trade relation to be presented the next session). With a Circular Action
Plan in place since 2015 and many other relevant regulatory & policy documents,
the EU’s practice of Circular Economy implementation is a good reference for other
countries to look at circular economy from the perspective of a developed block.
48
Ibid., p.110.

38
2.3.1. Circular economy policy
Promoting the transition towards a circular economy and protecting the
environment and human health in Europe have emerged as pillars of the EU policy
for sustainable development49
. Europe has adopted a comprehensive circular
economy package for that purpose in 2015 and becomes a frontrunner with its
circular economy approach. The CE package is expected to help European
businesses and consumers to make the transition to a stronger and more circular
economy where resources are used in a more sustainable way. The package
included 04 legislative proposals on waste, revising the following legal acts:
Table 2.2. Circular Economy Package 2015: Proposed
amendments to four waste management legal acts of the EU
Legal acts Proposed changes
The Waste Framework • Set targets regarding the share of municipal waste prepared
Directive for reuse and recycling to be met by 2025 and 2030
• Defines general requirements for EPR schemes
• Requires MSs to use economic instruments to implement
the waste hierarchy, to take measures to prevent waste
generation and to ensure the separate collection of bio-
waste where appropriate
The Landfill Directive • Introduces a landfilling ban for separately collected wasted
and limits the share of municipal waste landfilled to 10%
by 2030
The Packaging Directive • Set targets for the share of packaging waste prepared for
reuse and recycling to be met by 2025 and 2030, with
specific targets for various packaging materials (details
below)
Packaging material 2030 recycling target (%)
49

39
Plastic 55
Glass 75
Paper & cardboard 85
Ferrous metals 80
Aluminium 60
Wood 30
The Directives on end-of- • Review targets for the management of ELVs, batteries and
life vehicles (ELVs), accumulators and minimum rate for separate collection,
batteries and recovery and recycling/preparing for reuse.
accumulators, and waste
electrical and electronic
equipment (WEEE)
Source: European Commission, 2015
The Circular Economy Package also introduced a Circular Economy Action
Plan50
, a set of 54 actions to “close the loop” and support the achievement of the
UN Sustainable Development Goals, in particular SDG12 on sustainable production
and consumption. The list of actions is divided according to each stage of products’
life cycle – production, consumption, waste management, market for secondary raw
materials – and to five priority areas – plastics, food waste, critical raw materials,
construction and demolition, biomass and bio-based products. Other measures
relate to innovation, investment and monitoring processes (See details of the actions
in Annex 04).
Among the actions delivered through the action plan, it is worth noting the
introduction of a EU Strategy on Plastics51
as well as a Directive on Single-Use
50
European Commission (2015), COM(2015) 614 final. Closing the loop – An EU action plan for
the Circular Economy.
51
European Commission (2018), COM(2018)28 final. A European Strategy for Plastics in a
Circular Economy.

40
plastics52
, a Communication on the interface between waste, chemicals and
product legislation53
, a new Regulation on fertilising products54
– introducing
harmonised requirements for organic fertilisers manufactured from SRMs - and a
Monitoring Framework for the Circular Economy55
.
In 2019, the European Commission published a report on the implementation
of the action plan, stating that all 54 actions had been put in place at the EU level.
Actions to support the transition to a circular economy have been gaining increasing
political support also at the Member State level. Several member States have
introduced National Circular Economy Action Plans or Roadmaps.
With regards to the latest developments in the implementation of the EU
Circular Economy Action Plan, in January 2018 the European Commission adopted
a Europe-wide EU Strategy for Plastics in the Circular Economy. Accordingly, by
2030, all plastic packaging should be reusable or recyclable in a cost-effective
manner. Signed by over 250 businesses, governments and other organizations, it
commits signatories to eliminate unnecessary plastic items; innovate to ensure
plastics can be composted, recycled or reused; and circulate plastic items to prevent
their damaging the environment. The EU’s latest circular economy movement is the
Commission’s adoption of the New Circular Economy Action Plan – one of the
building block of the EU Green Deal – on March 11, 2020.
2.3.2. The EU’s trade policies in relation to circular economy
In today’s globalised world, raw materials, technologies, products,
components, waste, and services are produced, traded and consumed cross-border.
The circular economy transition of the EU therefore has the potential impact beyond
its geographical border.
52
European Commission (2019), DIRECTIVE(EU) 2019/904 on the reduction of certain plastic products
on the environment.
53
European Commission (2018), COM (2018) 32 final. Communication on the interface between waste,
chemicals and product legislation
54
European Commission (2019) Regulation of the European Parliament and of the Council laying down rules
on the making available on the market of EU fertilizing products.
55
Eurostat (2018) Monitoring Framework for the circular economy

41
2.3.2.1. The EU’s trade in recyclables
The EU is the world's largest exporter and a major importer of non-hazardous
waste destined for recovery (recycling). The value of the recyclable raw materials
imported from non-EU countries stood at €9.2 billion in 2018. On the other hand,
exports of recyclable raw materials from the EU to non-EU countries were worth
€14.0 billion in 2018. Turkey and China were the main destinations for the EU’s
exports of recyclable raw materials. The largest tonnage of recyclable raw materials
were imported from China, Norway, and the United States, Russia in 2018.56
When considering prices and quantities traded in the three major secondary
materials markets in the European Union alone, volumes are already very
substantial. Between 2002 and 2012, the combined markets for waste glass
(€2.6bn), paper (€56.2bn) and plastics (€26.4bn) in the EU alone amounted to €85.2
billion in current prices, with much potential still untapped. Electronic goods also
have a large untapped circularity potential. A study from the United Nations
University and UNCTAD assessed a potential of €48 billion of savings in metals
and plastics present in e-waste alone.57
Plastic and plastic waste are traded worldwide and a significant proportion of
plastic waste is traded, both inside the EU and between the EU and other parts of
the world. Exporting plastic waste from the EU to Asia is a means of dealing with
insufficient recycling capacities in the EU, plus profit can be made from export
activities. EU exports of plastic waste to countries outside the EU amounted to
around 150 000 tonnes per month at the start of 2019.58
Many of the countries to
which the EU exports its plastic waste are still in their infancies with respect to
developing waste management. For example, plastic products manufacturing and
56 Eurostat (2019), trade in recyclable raw materials. Available at
https://ec.europa.eu/eurostat/en/web/products-eurostat-news/-/DDN-20190304-2
57
UNTAD, 2016
https://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=1400&Sitemap_x0020_Taxonomy=UNCT
AD%20Blogs
58
European Environment Agency (2019), the plastic waste trade in the circular economy. Published on 28
Oct, 2019.

42
reprocessing plants in China have no standard operating procedures, no quality
standards and no inspections to investments in large manufacturing plants. Imported
waste is often not processed in accordance with European standards and might even
be dumped or burned in unregulated ways.59
Recent restrictions on imports of plastic waste in China, combined with some
types of plastic being added to the United Nations Basel Convention, the export of
plastic waste to other countries is becoming more difficult. The EU must find
circular and climate-friendly ways of managing its plastic waste e.g. by increasing
reuse and recycling. The same applies for other wastes in order to reach a
comprehensive circular economy.
2.3.2.2. Waste shipment legal framework
The EU’s waste trade is regulated under three legislations including the Basel
Convention, OECD Decision and the Waste Shipment Regulation (WSR).
The Waste Shipment Regulation prohibits exports of waste for disposal to
third countries, except EFTA countries parties to Basel Convention; prohibits
exports for recovery of hazardous waste and “other waste” under Annex II of the
Basel Convention to third countries, except those directed to countries specified in
OECD decision; and prohibits imports of waste for disposal or recovery from third
countries not a Party to the Basel Convention and not an OECD member and have
no bilateral agreement with the EU or MSs.
At the time of the adoption of the current Waste Shipments Regulations, the EU
legislators did not consider that it should pursue the objective of facilitating the
transition of the waste sector to a circular economy.60
Regardless of that fact, the EU
Commission’s evaluation of the Regulation on shipments of waste has pointed
out that a number of links with Circular Economy objectives such as administrative
procedures that hinder progress in innovation and do not support a well-functioning
market for secondary raw materials – a key component of circular economy; or the
59
Ibid.
60

TRADE AND THE TRANSITION TOWARDS CIRCULAR ECONOMY: A RESEARCH ON CURRENT GLOBAL PRACTICES AND RECOMMENDATIONS FOR VIETNAM

TRADE AND THE TRANSITION TOWARDS CIRCULAR ECONOMY: A RESEARCH ON CURRENT GLOBAL PRACTICES AND RECOMMENDATIONS FOR VIETNAM

Recommended

Recommended

More Related Content

Similar to TRADE AND THE TRANSITION TOWARDS CIRCULAR ECONOMY: A RESEARCH ON CURRENT GLOBAL PRACTICES AND RECOMMENDATIONS FOR VIETNAM

Similar to TRADE AND THE TRANSITION TOWARDS CIRCULAR ECONOMY: A RESEARCH ON CURRENT GLOBAL PRACTICES AND RECOMMENDATIONS FOR VIETNAM (20)

More from lamluanvan.net Viết thuê luận văn

More from lamluanvan.net Viết thuê luận văn (20)

Recently uploaded

Recently uploaded (20)

TRADE AND THE TRANSITION TOWARDS CIRCULAR ECONOMY: A RESEARCH ON CURRENT GLOBAL PRACTICES AND RECOMMENDATIONS FOR VIETNAM