Presentation from the first panel of the World Circular Economy Forum 2021 Accelerator Session titled "Towards a mutually supportive trade and circular economy agenda"

1. THE INTERNATIONAL TRADING SYSTEM AND
THE CIRCULAR ECONOMY:
RECOMMENDATIONS FOR ACTION IN THE WTO
Christophe Bellmann, Visiting Fellow Institute for
International Trade

2. A joint project
International
Chamber of
Commerce (ICC)
Institute for
International Trade
(IIT), University of
Adelaide
The University of Adelaide
Slide 2
Support to the WTO trade and Environmental Sustainability Structured
Dialogue (TESSD) in the run up and after MC12:
• Guided by a Reference Group made of WTO delegates, business
representatives, IGOs, experts.
• Building on ICC large international network of companies.
• Review of literature.
• A series of short case studies highlighting experiences from
companies on the ground.
• Report + series of events in the run up to MC12.
The Circular Economy and International Trade:
Options for WTO Negotiations
• Articulating the Trade and CE interface
• Recommendations for action in the WTO

3. OVERVIEW OF THE TRADE AND
CIRCULAR ECONOMY INTERFACE

4. The University of Adelaide
Five circular business models
Source: Arponen, 2019 (Finnish Innovation Fund Sitra).
International trade is
likely to play a critical
role in facilitating a CE
transition, by exploiting
existing comparative
advantages and
allowing economies of
scale.
Slide 4

5. The University of Adelaide
Trade is happening at all stages of the value chain
Trade
in
circular
economy-related
goods
and
services
Trade in waste & scrap
Trade in secondary raw
material
Trade in secondhand goods
Trade in goods for
remanufacturing and
refurbishment
Trade in services
Source: Arponen, 2019 (Finnish Innovation Fund Sitra).
Slide 5

6. The University of Adelaide
• Roughly USD 95 billion in 2018 (OECD).
• Metallic scrap as the most traded types (27% of primary metals exports) and the
ones with the highest economic potential.
• Paper 12%, plastics 3%.
• Harmonized system (HS) at the six-digit level does not distinguish between
secondary raw materials and waste and scrap.
• Trade estimatd at USD 9.6 billion in 2019 (Chatham House).
• Data available at regional level: EU exports of recyclable raw material increased by
61 percent in volume between 2004 and 2019 to reach 25.5 million tons.
• In 2016, these exports represented 36% of total EU waste trade.
• Tracking trade flows as a main challenge.
• Difficult to distinguish these goods from new products or waste in HS
system.
• Special HS codes only for retreaded tyres, worn clothes and
secondhand construction materials.
• No reliable trade data.
• Most traded CE-related services include IT; professional, technical, and
business services; Leasing or rental; R&D; maintenance, repair, and
installation; sewage and waste collection; and professional services related
to construction.
Assessing trade flows as a challenge Slide 6

7. Trade Policy
obstacles
affecting a
circular
economy
transition
The University of Adelaide
Classification of end-of-life products, including waste, scrap, and secondary materials
• HS codes make no distinction between hazardous and non-hazardous wastes.
• Product classification may differ significantly from country to country.
Quantitative restrictions / bans
• Mostly on hazardous waste, plastic waste, unsorted paper waste, and certain
fractions of metal waste.
Tariff protection and rules of origin
• MFN tariffs average 5.4 percent with most goods tariffs ranging from 0 to 20%
and up to 50% (Steinfatt, 2020).
• Tariff escalation, lack of discrimination, RoO (e.g, EV batteries).
Export restrictions on waste and scrap
• 40% of copper waste and scrap, 30% of aluminum, and 20% of iron and steel.
Regulations, standards or conformity assessment procedures
• E.g. EPR, deposit-refund systems, take-back or recycling requirements.
• Mostly focus on e-waste, electronic equipment, packaging, or batteries.
• Differences across jurisdictions, lack of common definitions, incompatibility.
Subsidies
• Fossil fuel subsidies.
• Subsidies to plastic production.
• Subsidies to the metal sector disproportionately allocated to the primary
sector, providing disincentives to use secondary raw materials.
Slide 7

8. The University of Adelaide
Trade measures notified to the WTO
• Notifications: 370 measures between 2009 – 17.
• STC: classification issues, concerns around standards and technical requirements.
Number of measures related to the circular economy notified to the WTO (2009 – 17)
Source: Steinfatt (2020)
Slide 8

9. RECOMMENDATIONS

10. Three possible
(cumulative)
approaches
under the
TESSD
The University of Adelaide
A Ministerial Statement at MC12
A post-MC12 exploratory work
programme
Post MC12 deliverables and
negotiated outcomes
Slide 10

11. The University of Adelaide
A Ministerial Statement at MC12
• Highlighting the trade and circular economy interface as a priority topic to be
addressed under the TESSD initiative.
• Recognizing the role of trade in fostering a circular economy transition.
• Fostering mutual supportiveness and policy coherence.
• Stressing the need for exploratory work and inclusion in negotiations.
• Give general guidance regarding the type of expected results.
Slide 11

12. The University of Adelaide
A post-MC12 exploratory work
programme under TESSD
• Fostering transparency, notifications and exchange of information.
• Promoting dialogue with environment ministries, private sector, stakeholders and
relevant institutions (e.g., WCO, Basel, etc.).
• Exploring interlinkages and policy coherence.
• Identifying good practices.
Possible Areas of Focus
Trade policy obstacles affecting a CE transition
Classification of end-of-life products under the HS
system
Tariff protection
Export restrictions
Trade facilitation
Subsidies
Domestic circular economy policies with trade implications
Quantitative restrictions / bans
Extended Producer Responsibility schemes (EPR)
Standards, labelling schemes and conformity assessment
procedures
Circular procurements
Landfill or virgin materials taxes
Slide 12

13. The University of Adelaide
As part of post-MC12
negotiations/deliberations
• May require consensus or at least critical mass including main players.
• Ideally should also involve developing countries.
• Think beyond traditional market access binding commitments.
Options for possible
deliverables
As part of revived plurilateral
EGS talks.
Identifying common principles
and sectoral best practices.
Reviving / extending previous
work on remanufactured goods.
Slide 13

14. As part of
revived EGS
talks
Identify services related to the circular economy to be included in environmental
services negotiations (beyond CPC Division 94):
• Metal waste and scrap recovery (recycling) services, on a fee or
contract basis (CPC 8941).
• Non-metal waste and scrap recovery (recycling) services, on a fee or
contract basis (CPC 89420).
The University of Adelaide
Include circular economy and resource efficiency in the environmental
categories considered under EGS talks.
• by proposing a focus on specific CE technologies like (e.g., recycling) or
specific environmental challenges (e.g., resource management).
Identify goods related to the circular economy to be included in a list of
environmental goods.
• From the literature (e.g., Steinfatt, 2020).
• From existing list of 300 + products identified under EGA.
• New subheadings from HS 2017 revision (e.g., EV HS Codes).
Slide 14

15. Reviving /
extending
previous work
on
remanufactured
goods
• See 2010 draft ministerial decision by Japan, US and Switzerland
(TN/MA/W/18/Add.16/Rev.4)
• Review non-tariff measures including import licensing, import
prohibitions, pre-shipment inspection requirements, technical
regulations, and conformity assessment procedures.
• Creation of a Working Group on Trade in Remanufactured
Goods for Members to:
 “raise and discuss specific trade concerns regarding
prospective or current measures and ways in which
Members could adjust their measures to reduce or
eliminate barriers to trade in remanufactured goods.”
• Could be extended to trade in refurbished and repaired goods,
secondary raw materials or second-hand goods.
The University of Adelaide
Slide 15

16. Towards a set
of common
principles and
sectoral best
practices
Possible models: telecom reference paper, TBT work on good regulatory
practices, WTO work on MSME.
The University of Adelaide
Defining a set of common principles/best practices to be followed in the
design of trade-related circular economy regulatory measures.
• e.g. EPR schemes, standards or the implementation of quantitative
restrictions and bans.
Soft law prescriptions of non-binding nature.
• Easier to achieve and more appropriate to address non-tariff
measures of a regulatory nature.
Designed in cooperation with private sector representatives and relevant
organizations.
• e.g. Basel convention.
Focus on particular sector or area.
• e.g., single use plastics, hazardous waste, e-waste, chemicals etc.
Slide 16