Circular economy in international trade: challenges and opportunities for global value chains

Unofficial AI-generated summary based on the public title and abstract. Not an official translation.

🔬研究者:Provides a stakeholder-sensitive framework for analyzing circular trade barriers, useful for further empirical research.

🏢実務担当者:Highlights regulatory and classification risks in cross-border circular supply chains, aiding compliance and sourcing strategies.

🏛政策担当者:Offers actionable recommendations for trade policy reform to enable circular transitions, relevant for WTO and regional agreements.

Introduction The circular economy (CE) seeks to decouple growth from environmental degradation by closing material loops and promoting reuse, repair, and recycling. While CE has gained increasing traction at the national and regional levels, particularly in policy frameworks like the European Green Deal, its global integration through international trade and global value chains (GVCs) remains limited and fragmented. As economies seek to minimize waste and extend the lifecycle of materials, international trade becomes a crucial enabler, or barrier, to the realization of circularity on a global scale (Tuerk and Sporysheva, 2022). In recent years, the global policy discourse has acknowledged the potential of circular trade to reduce raw material dependency, promote eco-innovation, and support just transitions toward more inclusive economic models (Srivastava, 2024). However, the interface between CE and international trade remains underexplored in mainstream sustainability research. While studies have empirically assessed the trade effects of circular material use in specific sectors (de Lange, 2024) and modeled waste flow dynamics globally (Zisopoulos et al., 2025), less attention has been paid to how stakeholders – governments, trade organizations, firms, and civil society – shape and are shaped by regulatory misalignments, fragmented standards, and trade classifications that obstruct circular material flows. Recent reviews also emphasize that successful CE integration requires not just technical adaptation but also coordinated stakeholder engagement to overcome regulatory uncertainty and market barriers (Onukwulu et al., 2025; Singh and Kumar, 2024). This reveals a clear research gap: the lack of conceptual and policy-oriented analyses that examine how specific stakeholder interactions and trade mechanisms constrain or enable circular transitions across borders. Moreover, scholars are increasingly recognizing that without international trade reform, many CE strategies risk being confined to national borders, undermining the potential for large-scale circular transitions (Šálková and Singh, 2024). The global dimension is particularly crucial when considering how circularity can drive social inclusion, particularly through circular supply chains that generate jobs and redistribute value (Van Opstal et al., 2024). While existing research has addressed various dimensions of the circular economy and trade separately, few studies have explored how specific stakeholder interactions intersect with trade policy mechanisms to enable or constrain circular transitions across borders. Moreover, most existing literature focuses on either sector-neutral frameworks or technical barriers, with limited attention to how governance misalignments and classification systems affect CE in globally integrated sectors. This article fills this gap by offering a stakeholder-sensitive and sector-specific review, highlighting the roles of governments, firms, trade organizations, and civil society in shaping circular trade. Article contribute a novel perspective by combining policy analysis with cases from the textile and construction sectors, and by offering actionable trade-related policy recommendations to support a more inclusive and harmonized global circular transition. The findings suggest that international trade policy, if strategically reformed, can evolve from a barrier into a key enabler of circular value chains. This has direct implications for policymakers seeking to align trade, sustainability, and industrial development goals. At the heart of CE model lie three core principles: designing out waste and pollution, keeping materials in use, and regenerating natural systems. However, the circular economy is more than just a technical redesign of industrial processes, it entails a structural transformation of economic systems, including the creation of new business models, shifts in producer-consumer dynamics, and the development of collaborative industrial ecosystems (Awan et al., 2022). As production and consumption are globally distributed, international trade is essential for enabling circular flows of second-hand goods, remanufactured products, and secondary raw materials. These exchanges reduce reliance on virgin resources and expand access to technologies and services needed for circular models. Van der Ven (2020) adds that circular trade also supports inclusion by creating jobs and promoting reuse of high-value goods. However, many circular products are misclassified as waste, causing delays, import bans, and compliance uncertainty due to the lack of harmonized definitions and standards (Jaswal, 2021). This disproportionately affects developing countries, where large volumes of used goods can strain local industries and waste systems, raising concerns about equity in global circular trade (Barrie et al., 2022). GVC organize production across multiple countries and have driven specialization and economic growth. However, they also contribute to environmental harm due to long-distance transport and weak regulatory coherence. Embedding circularity into GVCs offers major sustainability benefits. It reduces reliance on virgin raw materials, supports innovation in recycling and product design, and strengthens supply chain resilience by diversifying sourcing options and lowering material risks (Eisenreich et al., 2022). However, achieving this transformation requires several systemic enablers: harmonized environmental standards across borders, interoperable systems for tracking and exchanging value chain data (Gentilini et al., 2021), and policy coherence across trade, industrial, and environmental governance structures (Tuerk and Sporysheva, 2022). Without these supporting conditions, the integration of CE into international trade and GVCs will remain partial and inconsistent, undermining its potential as a driver of sustainable globalization. Sector-specific challenges further complicate the picture. In the automotive sector, remanufacturing has significant environmental and economic potential but struggles with limited consumer trust, inconsistent regulations, and a lack of demand certainty. Public procurement has been identified as a promising lever to create stable markets for remanufactured parts (Wasserbaur et al, 2022). In electronics, trade in refurbished goods is often blocked by strict product safety or data security laws. In textiles, second-hand clothing exports raise both environmental and socio-economic issues in importing countries, while in construction, the lack of performance standards for reclaimed materials hinders international flows despite high sustainability potential (Huovila and Westerholm, 2022). Technical and regulatory trade barriers remain a persistent obstacle. A more supportive global trade regime for circularity could be built by standardizing customs classifications for circular goods, harmonizing environmental quality standards, and embedding circularity into trade and investment agreements. The WTO could play a greater role (currently lack clarity regarding remanufactured products leading to trade disputes and reduced market trust) by facilitating rule updates, promoting transparency, and enhancing the integration of circular economy goals into its Committee on Trade and Environment. Simultaneously, regional trade agreements can serve as testbeds for mutual recognition of CE standards and capacity-building programs aimed at developing economies (Barrie at al., 2021). National and regional policies such as China's National Sword initiative or specific interpretations of the Basel Convention have restricted the flow of recyclable materials and waste, disrupting global secondary materials markets (Do et al., 2020). Sectoral Focus Among the many sectors impacted by the transition to a circular economy, the textile and construction industries stand out due to their scale, environmental footprint, and strategic roles within global value chains. Both are resource-intensive, trade-dependent, and generate substantial waste, yet they also offer distinct opportunities for circular innovation. These sectors are used here as diagnostic cases that illustrate how systemic barriers, such as regulatory misalignments, fragmented standards, and stakeholder coordination gaps, affect the global implementation of circular principles. Their analysis reinforces the article's core argument that trade policy can either enable or obstruct circular transitions across borders. The textile industry, as one of the most globalized and environmentally intensive sectors, it contributes heavily to resource depletion, emissions, water use, and waste (Das et al., 2025). Over 100 billion garments are produced annually, with only around 15% collected for reuse or recycling, and even less transformed into new products (Shirvanimoghaddam et al., 2020). The linear model of "produce, consume, discard" is reinforced by global trade: production is concentrated in low-cost countries, while consumption and disposal occur mainly in high-income regions. This disconnect undermines accountability across the value chain. However, strategies like extended producer responsibility, textile-to-textile recycling, and second-hand trade are gaining traction in both policy and industry. Research increasingly calls for system-level change over technical fixes. A cross-national study in the Netherlands, Spain, and India co-developed future scenarios showing that circularity must also address labor rights, gender equity, and informal work to ensure just transitions (Suárez-Visbal et al., 2024). In the Dutch context, second-hand flows are most developed, mechanical recycling suffers from weak demand for recycled fibers, and chemical recycling remains costly and experimental (Reike and Hekkert, 2022). These differences show that CE success hinges not only on technology but also on regulation, market incentives, and consumer perception. At the firm level,

• openalex https://doi.org/10.3389/frsus.2025.1681061first seen 2026-08-02 18:45:36