92/ DDG Ellard stresses need to reduce trade barriers for environmental goods and services
14 SEPTEMBER 2021
On 14 September, Deputy Director-General Angela Ellard participated virtually in an “armchair dialogue” at the World Circular Economy Forum 2021, which explored how to transition to a circular economy in order to achieve the global climate and UN Sustainable Development Goals targets. DDG Ellard presented a vision of a circular economy that is global, safe and inclusive, and shared her views on how the WTO can help to achieve this vision. Her speaking points are below.
Moderator: What, in your view, does a fully functioning circular economy look like and how can it support social and environmental progress in our world?
Making progress towards a circular economy is essential for achieving sustainable development and is a vital element in our efforts to mitigate and adapt to climate change.
Population and economic growth are projected to lead to a doubling in global material consumption by 2060. The surge in natural resource demand will increase greenhouse gas emissions and other environmental pressures that arise from the extraction, consumption and end-of-life management of such resources. We have to place a priority on the efficient use of resources, the level of emission reductions, and the generation of high-quality green jobs must be considered as well.
Our vision must be a circular economy that is global, inclusive, and safe. And for all of these three characteristics, trade, and the WTO, play an important role.
In a global circular economy, open trade ensures that all countries have access to the goods, services, as well as technologies that allow them to produce and consume resources in a more sustainable manner.
In an inclusive circular economy, trade ensures that the circular economy benefits rich and poor countries alike. Trade helps to make the participation in the circular economy affordable and can create opportunities for jobs and economic diversification in developing countries. For example, circularity promotes economic diversification by establishing new circular sectors and activities, such as waste management, repair, maintenance, remanufacturing and recycling. It can also diversify a country’s export industries by promoting trade in secondary raw materials and high value-added industrial waste.
In a safe circular economy, trade goes hand-in-hand with actions to reduce the threats to human health or the environment associated with linear economic approaches. Governments must act collectively to avoid possible pitfalls of illegal or unregulated trade in waste that can undermine the circular economy. We need to work collectively to curb illicit trade.
WTO rules and structure are helping us to get to a good place on these issues, and more can be done in this area.
Moderator: What do we need to have in place in order to advance a systemic transition to a fully functioning circular economy globally?
WTO rules on trade are a good place to start because they further the ambition of governments to promote environmental sustainability and pursue circular economy strategies.
WTO rules focus on more than removing trade barriers. Sustainable development is an objective of the multilateral trading system, which is included in the agreement establishing the WTO.
WTO rules give Members ample policy space to pursue environmental and other legitimate policy goals, while keeping protectionism in check. WTO rules can help governments develop better environmental regulations and promote coherent and holistic approaches to circular economy and sustainability.
WTO promotes transparency on policies related to trade and the circular economy.
WTO includes several transparency mechanisms that inform on policy measures taken by governments. For instance, governments are required to notify new technical regulations for which no international standard exists and that may have a significant effect of trade. WTO also provides for comprehensive, periodic trade policy reviews of its Members.
The WTO’s Environmental Database gathers environment-related trade measures of its Members, such as government support, technical regulations and conformity assessment procedures, and trade bans and licensing requirements.
WTO promotes policy dialogues that foster a better collective understanding as well as collaboration on these issues.
The WTO Committee on Trade and Environment provides governments a dedicated forum for discussing the interlinkages between trade and environmental sustainability. We’ve looked at trade aspects of domestic initiatives on waste and chemicals management, extended producer responsibility and recycling, and support to developing countries to facilitate their participation in e‑waste recycling value chains.
Complementary policy dialogues on circular economy issues are also taking place under two new initiatives that were launched by several Members in November last year.
- The Trade and Environmental Sustainability Structured Discussions (53 Members) promote sharing of trade-related best practises and collaboration among WTO Members to advance work on a more resource-efficient circular economy, sustainable supply chains, and sustainability standards and regulatory measures, while taking into account opportunities and challenges for developing countries.
- In the Informal Dialogue on Plastics Pollution (17 Members), discussions on the circular economy cover the constructive role of trade in addressing barriers in plastics waste and scrap, technology transfer facilitation for developing countries, and identifying knowledge-gaps in data about plastics trade and plastics pollution.
We need more ambition:
Harmonization in regulations and the adoption of international standards facilitates trade and promotes the circular economy.
As more countries take domestic measures to promote the circular economy, we run the risk that divergences in domestic standards create unnecessary obstacles to trade. Although the WTO itself does not develop these standards, its rules and day-to-day work helps regulators adopt international standards, follow best practices, cooperate across borders, and improve coherence between trade and other legitimate regulatory policy goals.
More ambition is also needed in reducing barriers to trade in environmental goods and services.
More open trade would spur the deployment of advanced technologies to allow all countries to improve resource and energy efficiency, replace traditional inputs with renewable or recovered goods, and manage solid and hazardous waste. An integrated global market makes technological solutions that support the circular economy more affordable and is a driver of innovation. Trade allows businesses to utilize economies of scale to enhance the cost‑effectiveness of recycling and remanufacturing and developing viable circular business models. So, we have come a long way, but there is more to do.
Moderator: What are the key drivers and enablers we need to focus on?
Examples of a few areas where things could be improved from the trade perspective:
Trade policies should better incorporate resource efficiency and other aspects of the circular economy.
For example, improving traceability of products and materials throughout the product life cycle, developing better global definitions and standards, and fostering trade facilitation and better cooperation between domestic regulators, are needed to move to a circular economy that delivers health, environmental, and economic benefits.
Many trade-related measures do not distinguish between waste and reusable materials.
The result is that reusable materials end up being redirected from productive purposes such as remanufacturing or recycling to the waste stream, exactly what we are trying to avoid. Work is needed on new or improved provisions under the Harmonized System on tariff nomenclature and in collaboration with the Basel Convention among others.
We need to address services restrictions that have an impact on the circular economy.
Many parts of the circular economy value chain, i.e., repair, warranty recovery, redistribution, value recovery, end-of-life recycling or any combination of these activities, are powered by services. This includes R&D for product design, services for waste management and recovery of secondary materials, installation, assembly, testing, and other services required for remanufacturing or refurbishing. Digital solutions and technological innovations have allowed sharing platforms or product-service systems to emerge. Trade in services is needed for the circular economy to thrive.
We need to focus on strengthening the capacities of developing countries, and in particular least developed countries (LDCs), to allow them to participate and benefit from the circular economy. In this regard, Aid for Trade support can play a key role in helping countries build their productive capacities as well as standards and trade facilitation infrastructures to ensure that circular trade meets safety and quality requirements, minimize the risk of illegal waste imports, and facilitate the flow of legitimate products.
The circular economy is a focus area of the ongoing WTO work on Aid for Trade and the next Global Review of Aid for Trade to be held in Summer 2022. The ongoing analytical work and dialogue among donors, beneficiaries, and other stakeholders will provide valuable insights on the role of aid for trade in helping developing countries take advantage of the circular economy for their sustainable development and export diversification.
Let me conclude by highlighting again that open trade, integrating trade and environmental objectives and policies, and strengthening of trade capacities in developing countries are essential elements to promote a global, safe, and inclusive circular economy. The WTO will continue its important work to assure these aims.
Background Information: World Circular Economy Forum (WCEF)
Launched in 2017, the WCEF is a global initiative of Finland and the Finnish Innovative Fund Sitra. With the participation of over 4000 business leaders, policymakers and experts, the WCEF aims to present the world’s leading circular economy solutions to help businesses seize new opportunities and gain a competitive advantage, as well as contribute to achieving the United Nations Sustainable Development Goals.
The last meeting of the WCEF, held in 2019, emphasised scaling up the circular economy transition by increasing investments into circular economy businesses, spreading and adopting new technologies and making regulatory changes, such as through “right to repair” policies, to facilitate and scale up the transition towards a circular economy. The event also highlighted that the transition to a circular economy must be socially fair and inclusive.
Regarding trade, the attendees of the WCEF2019 emphasised that a truly circular economy requires the involvement of international trade and especially the free movement of goods, capital and labour. Further, circularity must be prevalent and integrated throughout the entire value chain to overcame global climate challenges.
Source: wto.org
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