Report

The role of international trade in realizing an inclusive circular economy

This report from UK think tank Chatham House looks at the role international trade will play in the transition to a circular economy.

The transition to a circular economy is essential to address the triple threat of pollution, climate change and biodiversity loss. International trade will play a key role in delivering this transition, as no single country can achieve a circular economy alone. Currently, the distribution of value from circular trade is highly uneven, with the Global North accruing most of the economic gains while the Global South bears most of the environmental and human costs. Greater collaboration at the global level is therefore necessary to prevent the development of a circular trade divide. Despite the importance of the circular economy in achieving global environmental and human development goals, there remains limited awareness or understanding among trade actors. To address this knowledge gap, this research paper presents a working definition of circular trade and outlines the main types of circular trade flow in goods, services, materials and intellectual property. The paper then explores the main benefits and challenges of each flow, before proposing a pathway to collective action to ensure that global trade enables fair, inclusive and circular societies.