Circular Economy and International Trade: a Systematic Literature Review

Abstract

The role of international trade in accelerating the transition to a circular economy is receiving increasing attention in the global policy arena and academic literature. It is a complex area of study encompassing domestic policy, international trade governance, multilateral environmental agreements, material flow analysis, and Just Transition. Due to the expansiveness and interconnectivity of the topic, this article conducts the first systematic literature review on the intersection between a just circular economy transition and international trade. A total of 69 articles were reviewed spanning academic and grey literature. The article identifies and discusses the predicted adverse impacts and benefits of the global CE transition. One striking finding of the review is the prevalence of competing claims across the literature, which will potentially lead to the design of ineffective policy actions. This contradiction of claims is indicative of the significant knowledge gaps in terms of mapping and understanding the complex trade flow dynamics associated with the CE transition. It also presents the most common recommended actions covering immediate policy actions and further research. Policy actions include the development and harmonization of CE standards and definitions, upgrading the Harmonized System of codes structure and customs processes to better enable trade in CE goods and services and mainstreaming circular economy objectives in free trade agreements. Further research is required on how to ensure a Just Transition, the role of global trade in terms of remaining within the planetary boundaries and achieving the SDGs; and improving trade flow modelling. New research is also required on the impacts of geopolitics, technological innovation, and CE finance on circular trade.