International Trade in the Realm of the Circular Economy

International Trade in the Realm of the Circular Economy

Isha Jaswal
DOI: 10.4018/978-1-7998-4990-2.ch008
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Abstract

A circular economy advocates the use of resources for the longest time possible and to further regenerate materials when such resources are at the end of their service life. The movement towards a circular economy brings structural changes in an economy, and this, in turn, can potentially impact the international trade regime. Consequently, the aim should be to achieve material circularity among various countries of the world. While transiting towards a circular economy, nations introduce superfluous trade restrictions and at times enter into trade disputes with trade partners. It is imperative that circular economy policies and trade policies are reciprocally supportive. International cooperation on circular economy value chains should thus be explored for coordination of quality standards of materials, promoting demand for second-hand goods and secondary raw materials, removing unnecessary regulatory barriers, and to avoid environmentally harmful activities.
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The Issues in Exporting Plastic Waste: Case of European Union (EU)

The EU is majorly deficient in reusing, recycling and recovering its plastic waste and challenges involved in managing the latter relative to paper, metal and glass is a matter of recent awareness. This is the reason why EU prefers to rather export this waste plastic. Not only due to lack of capacity, but plastic waster is exported on account of its import demand. This import demand exists due to the economic value or profits attached to it.

It is noteworthy that the EU law restricts the export of plastic waste for its disposal from the EU to non EU nations. However, Asian economies import it in large quantities because of profit making avenues. Additionally, the regulations pertaining to treatment of waste in these countries is different from the EU and are rather less stringent. Thus, the importing Asian economies witness an influx of plastic waste form the EU.

The determining factors of exporting plastic waste from the EU to other countries (in terms of volume and direction) include:

  • tariff and non-tariff barriers and differences in gate fees at treatment facilities

  • transport costs

  • environmental taxes and policy stringency

  • treatment capacity

  • legislation and classification

The plastic waste that is exported not only has environmental and climatic impacts but has burgeoning social consequences as well. For instance, if this waste is dumped in open or is left uncollected or may be disposed in uncontrolled landfills; will only lead to environmental and related hazards. The downside of the matter is that the EU lacks the knowledge of such impacts or spillover effects with regards to the plastic waste that it exports.

Further, it is also noteworthy that most of the nations to whom the EU exports its plastic waste are still in their infant stages of developing effective and sound waste management. Also, the share of imported waste is not processed as per the European standards and to additional dismay, it might even be discarded in unregulated methods.

As a result, a number of stakeholders in south-east Asia reap huge economic gains from deficiency of legal operators and the failure of authorities to combat the problem of increased imports. This is in stark contrast to the fact that the EU waste legislation lays down ‘broadly equivalent conditions’ which apply to recovery operations on exported waste to economies within the EU.

Thus, lack of knowledge about the treatment of plastic waste exported from the EU and its resultant impact on the environment necessitates the handling of the waste safely within the EU. Given these concerns, the EU has initiated mechanisms in order to manage and cope up with the problems of plastics and plastic waste more efficiently. The European strategy places huge importance on the circular economy. This in turn means steps to be taken to not only prevent plastic waste but to manage the waste in consonance with the paramount environmental standards, in particular through reuse and recycling.

In this regards many novel and aspiring targets for plastic recycling had been incorporated in the waste directives of 2018. For instance, the Single Use Plastic Directive which bans single use plastic form 2021 is a transitional step towards handling plastic and resultant plastic waste in a circular manner.

Specific to trade in plastic waste, the EU nations are regulated by the Waste Shipment Regulation which forbids the export of plastic waste for disposal to non-EU countries (except those in the European Free Trade Area, which are party to the UN Basel Convention) and of hazardous plastic waste for recovery to countries that are not part of the Organisation for Economic Co-operation and Development (OECD).

Moreover the UN Basel Convention makes provision for including tainted, mixed or hard-to-recycle plastic waste. This shall more likely lessen the trade of plastic waste with economies not part of the EU and can act instrumental in plastic waste management. Nevertheless, in the short run, this may increase the landfilling. Nonetheless, this will simultaneously put pressure in EU countries to transit towards a more circular plastic economy.

In fact, the following figure (figure 3) evidences the enormous potential on part of the EU nations to boost the process of plastic recycling. It is clear from the figure the from 2007 to 2016, the recycling and recovery of plastic packaging waste — which accounts for the largest fraction of plastic waste— grew significantly. With recycling rates less than 50% in the EU till 2016 depicts the probability of gravely increasing the process.

Figure 3.

Plastic packaging recycling and recovery in the EU-28 (2007-2016)

978-1-7998-4990-2.ch008.f03
Source: European Environment Agency. (2019). Plastic waste trade in circular economy. Available at: https://www.eea.europa.eu/themes/waste/resource-efficiency/the-plastic-waste-trade-in

This means that plastic waste can provide huge opportunities to manufacturing units for processing secondary resources. Additionally, waste management and recycling initiatives will generate employment opportunities as well.

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