As part of the World Trade Organization’s (WTO) 2021 Public Forum, the International Chamber of Commerce (ICC) organized a session to explore options to overcome barriers to scaling up the global transition to a more resource-efficient, circular economy with a particular focus on the role of trade and trade policy in enabling such a transition.

Themed, ‘The Multilateral Trading System and the Circular Economy: Recommendations for Action in the WTO,’ the event discussed possible options at the WTO, including through initiatives such as the Structured Discussions on Trade and Environmental Sustainability (TESSD), in the run up to and after the Twelfth Ministerial Conference (MC12), set to convene from 30 November to 3 December in Geneva, Switzerland.

The session started with the presentation of the preliminary findings and recommendations of a report prepared under a joint project of the ICC and the Institute for International Trade (IIT) of the University of Adelaide.

Christophe Bellmann, IISD and IIT, highlighted the main features of the circular economy and trade interface, and listed a set of specific recommendations for action at the WTO. He emphasized the importance of trade in facilitating a circular economy transition, by exploiting existing comparative advantages and allowing economies of scale. He also provided an overview of existing trade flows at different stages of the value chain, including trade in waste and scrap, secondary raw materials, second-hand goods, goods for remanufacturing and refurbishment, and trade in services. Bellmann highlighted the main trade obstacles affecting a circular economy transition, including differences in product classification, quantitative restrictions, tariff and non-tariff measures, and export restrictions or subsidies such as to fossil fuel production and consumption. He emphasized in particular the challenges posed by regulatory divergences across jurisdictions in areas such as circular economy-related standards, labels or conformity assessment procedures.

In terms of specific recommendations for the WTO, Bellmann proposed a sequential approach starting with a reference to the circular economy in a TESSD ministerial statement to be released at MC12, putting the topic firmly on the agenda. This, he said, should be followed by a post-MC12 exploratory work programme fostering dialogue among relevant stakeholders, including environment ministries, the private sector, intergovernmental organizations, and civil society. Finally, the TESSD participants could envisage a set of specific deliverables such as: including circular economy-related goods and services in a revived environmental goods and services (EGS) agreement; reinitiating work on remanufactured goods launched in 2010 by the US, Japan, and Switzerland; or developing a set of non-binding principles and good practices to be followed by WTO members when designing their trade-related circular economy regulatory measures to ensure they do not create unnecessary barriers to trade while achieving their legitimate environmental objectives.

Shunta Yamaguchi, Organisation for Economic Co-operation and Development (OECD), supported the main conclusions of the report, including the critical role of trade and the need to address existing obstacles affecting the scaling up of a circular economy transition. He also highlighted the importance of a reference to the circular economy in a possible MC 12 statement, followed by an inclusive dialogue at the WTO bringing together relevant stakeholders. He outlined opportunities to advance circular economy considerations through future EGS negotiations, but also through trade facilitation. Finally, Yamaguchi emphasized the importance of developing guiding principles as a way to address barriers of a regulatory nature.

Lisa Schroeter, Dow, stressed the need for an inclusive dialogue involving the right stakeholders, particularly those at the forefront of innovation and technological development in the areas of recycling, energy efficiency, and remanufacturing. Beyond EGS negotiations, she supported developing guiding principles and good practices for regulatory cooperation, enabled by capacity building as a way to foster technology dissemination. Schroeter also highlighted the role of investment facilitation as a possible vehicle to promote circular solutions.

Malena Sell-Myllyoja, Finnish Innovation Fund (SITRA), described ongoing initiatives in Finland and in the EU to promote a circular economy transition. These efforts included the preparation of a national road map for a circular economy transition in Finland with a toolbox of measures to be contemplated by the private sector. She also provided an overview of circular economy businesses in Finland, ranging from companies focusing on downstream recycling and those promoting resource efficiency by extending the durability and life of products, to more upstream models developed by start-up companies licensing innovative technologies or focusing on services and digital trade.

Finally, Sell-Myllyoja described developments in the EU, including the definition of new material use commitments by 2035, the 2020 circular economy action plan, and upcoming regulations in support of new sustainable product policies starting at the design stage and covering the whole life cycle of products. Among examples she provided was the development of a new batteries regulation, including a set of new standards and possibly mandatory recycling requirements. [SDG Knowledge Hub Sources] [WTO Public Forum 2021]