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CIRCULAR ECONOMY AND TRADE
LINKAGES, CHALLENGES AND OPPORTUNITIES
Shardul Agrawala
Head, Environmental and Economy Integration Division
OECD Environment Directorate
Global Value Chains and Circular Trade
World Circular Economy Forum 2018
23 October 2018, Yokohama
Outline
• Conceptualising the linkages between circular economy and trade
• Three examples where trade already plays a key role
– Embedded materials in goods
– Waste and scrap
– Plastics
• Untangling potential impacts of CE transition on trade
• Specific issues with regard to key material streams
– Waste and secondary materials
– Reuse, remanufacturing and second-hand goods
• Towards a mutually supportive agenda 2
3
Broad Interlinkages –
Trade and Circular Economy
National boundary
Repair
Recycling
(secondary raw materials)
Eco-
design
policies
Refurbishment and Remanufacturing
Reuse
(second-hand goods)
Trade in second-hand goods
Trade in waste for recovery
Trade in goods for
refurbishment and remanufacturing
Trade in secondary raw materials
Product-service-systems
Trade flows:
1. CE impacts on trade
3. Policy alignment 2 Trade in waste, secondary material, second-hand goods
5. International co-operation
Trade in services
OECD 2018
-
10
20
30
40
50
60
70
80
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000
Gigatons
Global material extraction 1900-2009
Biomass Fossil energy carriers Ores and industrial minerals Construction minerals
Circular Economy and Trade - Example 1
Materials extraction and decoupling trends
Source: OECD (2015) based on SERI/WU (2014) material flows database.
Agrawala, WCEF Yokohama, CE and Trade, October 23, 2018
Source: OECD (2013), "Material resources", OECD Environment Statistics (database)
Trade
Circular Economy and Trade - Example 1
.. but hidden flows offer a different picture
Agrawala, WCEF Yokohama, CE and Trade, October 23, 2018
Circular Economy and Trade - Example 2
Trade in waste growing and interconnected
Global trade in waste and scrap (2003-2016)
G
Weight (Million tonnes) Value (Billion USD)
Source: OECD (forthcoming), Trade and Environment IndicatorsAgrawala, WCEF Yokohama, CE and Trade, October 23, 2018
Circular Economy and Trade - Example 3
Plastics and trade
How to have realistic accounting for the fate of exported secondary materials ?
Agrawala, WCEF Yokohama, CE and Trade, October 23, 2018
Potential impacts of the circular economy
transition on trade flows
• International trade flows may shift according to structural changes induced by a circular economy
– Decrease in import demand for primary and secondary materials
– Decrease in exports of waste and scrap
• Potential opportunities
– CE transition may provide new opportunities for trade in services
– Circular procurement may also provide additional trade opportunities
• Potential challenges
– How resource dependent developing countries may need to shift their economies in terms of
infrastructure and labour force.
– Some policies and activities are difficult to foresee (e.g. new business models)
8
Agrawala, WCEF Yokohama, CE and Trade, October 23, 2018
Specific issues for key material streams
Recycling – waste and secondary materials
• Potential opportunities
– Trade can help boost global recycling rates by shipping waste to countries with comparative advantage
in sorting and processing.
– Role for trade as primary & secondary materials are geographically concentrated.
– Trade in environmental goods and services for efficient waste management.
• Potential challenges
– Definition and classification of waste and secondary materials.
– Regulating transboundary movement of waste (e.g. Basel Convention, proximity principle, import and
export restrictions)
– Waste flows to destinations with insufficient waste management capacity
– Illegal waste trade / informal sector
– Potential downcycling
– Fragmentation of eco-design, eco-labelling and recyclability standards for material quality and phase out
of hazardous content
9
Agrawala, WCEF Yokohama, CE and Trade, October 23, 2018
Specific issues for key material streams
Reuse, remanufacturing – second hand goods
• Potential opportunities
– Promoting re-use of products through exports of second-hand goods (e.g. used cars, second-
hand textiles).
– Trade can provide opportunities for refurbishment and remanufacturing.
• Potential challenges
– “Leakage” from the official system (e.g. EPR schemes).
– Second-hand good imports may hinder the transition towards energy efficient and low carbon
economies due to slower market transformation or place additional pressures on the
management of end-of-life products.
– 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.
10
Agrawala, WCEF Yokohama, CE and Trade, October 23, 2018
Towards a mutually supportive
trade and circular economy agenda
▪ Trade can provide potential opportunities via comparative advantage
• Trade barriers should be avoided
• Benefits should not be at the expense of environmental consequences
▪ Circular economy transition is current taking place through a patchwork of
regulations and standards
▪ Possible need for international standards and mutual recognition
▪ Potential trade offs need to be considered – for example lock-in of importing
economies to inefficient secondary products
▪ Free flow circular economy related products and services needs attention
11
Agrawala, WCEF Yokohama, CE and Trade, October 23, 2018
12
oe.cd/recircle
www.oecd.org/environment/envtrade
shardul.agrawala@oecd.org
Thank you for your attention

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Agrawala Trade and circular economy wcef2018

  • 1. CIRCULAR ECONOMY AND TRADE LINKAGES, CHALLENGES AND OPPORTUNITIES Shardul Agrawala Head, Environmental and Economy Integration Division OECD Environment Directorate Global Value Chains and Circular Trade World Circular Economy Forum 2018 23 October 2018, Yokohama
  • 2. Outline • Conceptualising the linkages between circular economy and trade • Three examples where trade already plays a key role – Embedded materials in goods – Waste and scrap – Plastics • Untangling potential impacts of CE transition on trade • Specific issues with regard to key material streams – Waste and secondary materials – Reuse, remanufacturing and second-hand goods • Towards a mutually supportive agenda 2
  • 3. 3 Broad Interlinkages – Trade and Circular Economy National boundary Repair Recycling (secondary raw materials) Eco- design policies Refurbishment and Remanufacturing Reuse (second-hand goods) Trade in second-hand goods Trade in waste for recovery Trade in goods for refurbishment and remanufacturing Trade in secondary raw materials Product-service-systems Trade flows: 1. CE impacts on trade 3. Policy alignment 2 Trade in waste, secondary material, second-hand goods 5. International co-operation Trade in services OECD 2018
  • 4. - 10 20 30 40 50 60 70 80 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 Gigatons Global material extraction 1900-2009 Biomass Fossil energy carriers Ores and industrial minerals Construction minerals Circular Economy and Trade - Example 1 Materials extraction and decoupling trends Source: OECD (2015) based on SERI/WU (2014) material flows database. Agrawala, WCEF Yokohama, CE and Trade, October 23, 2018
  • 5. Source: OECD (2013), "Material resources", OECD Environment Statistics (database) Trade Circular Economy and Trade - Example 1 .. but hidden flows offer a different picture Agrawala, WCEF Yokohama, CE and Trade, October 23, 2018
  • 6. Circular Economy and Trade - Example 2 Trade in waste growing and interconnected Global trade in waste and scrap (2003-2016) G Weight (Million tonnes) Value (Billion USD) Source: OECD (forthcoming), Trade and Environment IndicatorsAgrawala, WCEF Yokohama, CE and Trade, October 23, 2018
  • 7. Circular Economy and Trade - Example 3 Plastics and trade How to have realistic accounting for the fate of exported secondary materials ? Agrawala, WCEF Yokohama, CE and Trade, October 23, 2018
  • 8. Potential impacts of the circular economy transition on trade flows • International trade flows may shift according to structural changes induced by a circular economy – Decrease in import demand for primary and secondary materials – Decrease in exports of waste and scrap • Potential opportunities – CE transition may provide new opportunities for trade in services – Circular procurement may also provide additional trade opportunities • Potential challenges – How resource dependent developing countries may need to shift their economies in terms of infrastructure and labour force. – Some policies and activities are difficult to foresee (e.g. new business models) 8 Agrawala, WCEF Yokohama, CE and Trade, October 23, 2018
  • 9. Specific issues for key material streams Recycling – waste and secondary materials • Potential opportunities – Trade can help boost global recycling rates by shipping waste to countries with comparative advantage in sorting and processing. – Role for trade as primary & secondary materials are geographically concentrated. – Trade in environmental goods and services for efficient waste management. • Potential challenges – Definition and classification of waste and secondary materials. – Regulating transboundary movement of waste (e.g. Basel Convention, proximity principle, import and export restrictions) – Waste flows to destinations with insufficient waste management capacity – Illegal waste trade / informal sector – Potential downcycling – Fragmentation of eco-design, eco-labelling and recyclability standards for material quality and phase out of hazardous content 9 Agrawala, WCEF Yokohama, CE and Trade, October 23, 2018
  • 10. Specific issues for key material streams Reuse, remanufacturing – second hand goods • Potential opportunities – Promoting re-use of products through exports of second-hand goods (e.g. used cars, second- hand textiles). – Trade can provide opportunities for refurbishment and remanufacturing. • Potential challenges – “Leakage” from the official system (e.g. EPR schemes). – Second-hand good imports may hinder the transition towards energy efficient and low carbon economies due to slower market transformation or place additional pressures on the management of end-of-life products. – 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. 10 Agrawala, WCEF Yokohama, CE and Trade, October 23, 2018
  • 11. Towards a mutually supportive trade and circular economy agenda ▪ Trade can provide potential opportunities via comparative advantage • Trade barriers should be avoided • Benefits should not be at the expense of environmental consequences ▪ Circular economy transition is current taking place through a patchwork of regulations and standards ▪ Possible need for international standards and mutual recognition ▪ Potential trade offs need to be considered – for example lock-in of importing economies to inefficient secondary products ▪ Free flow circular economy related products and services needs attention 11 Agrawala, WCEF Yokohama, CE and Trade, October 23, 2018