Circular economy now sits inside the same strategic space as oil routes, rare earth supply and carbon budgets. It governs who owns the metals in yesterday’s cars, who sets the rules for tomorrow’s batteries, and who gets paid when a tonne of “waste” crosses a border. From an international relations perspective, it is no longer a side story of environmental policy. It is a field where trade, climate and security are starting to pull in different directions.
Start with scale. In 2019, countries traded about 550 million tonnes of used materials such as scrap metals, plastics, paper, e-waste, second-hand textiles, worth roughly 315 billion dollars. In value terms, recyclable waste alone was already about 0.6 percent of world trade by 2016. Exports of ferrous scrap now sit around 43 billion dollars a year and copper scrap around 35 billion. This is not a marginal stream. It is a globally traded resource base, tightly connected to steel, aluminium, plastics and electronics value chains.
At the same time, the climate constraint is hardening. The energy system accounts for over three quarters of global greenhouse gas emissions. Buildings and construction, once you include cement, steel and aluminium, are responsible for roughly 37 percent. The world cannot meet any plausible temperature target if it continues to expand primary extraction and material-intensive infrastructure on current terms. That is why attention is shifting towards the material stock already embedded in vehicles, buildings and products. Circular trade is the mechanism that connects that stock to the global economy.
Europe is a good vantage point because it sits at the intersection of high ambition, structural dependence and limited domestic extraction. The circular material use rate in the European Union – the share of materials coming from recycling and reuse – has inched up from 10.7 percent in 2010 to 11.8 percent in 2023. Italy is above 20 percent, some members are below 5 percent. Behind those averages, however, sits a dense policy architecture: eco-design rules, recycling targets, landfill restrictions, green public procurement, research programmes and now industrial plans tied to strategic autonomy.
What matters for international relations is how that architecture reframes three classical questions: who controls access to strategic resources, how interdependence is structured and what counts as a legitimate order.
Control of resources is no longer only about mines and wells. It is also about cities, landfills and industrial clusters where secondary materials are concentrated. In a decarbonising world, primary production of cement, steel, aluminium, plastics and fertilisers remains one of the most carbon-intensive activities. The production and use of building materials alone has an enormous footprint. Any plausible route to net zero requires running those sectors on cleaner energy and at the same time reducing the need for virgin feedstock. That is where circular capabilities enter: the ability to collect, sort, certify and upgrade scrap into high-quality inputs.
Countries with advanced circular infrastructure and regulation gain two forms of leverage. They are slightly less exposed to price and volume swings in global commodity markets because a larger share of their demand can be met from internal stocks. And they can position themselves as hubs in trade flows of secondary materials. When deterrence and resilience doctrines talk about “stockpiles” and “supply security”, they usually mean gas storage or critical minerals. Political leaders are only beginning to realise that a modern scrap yard network or a well-regulated used-materials trading system is also a security asset.
For exporters of primary materials, this is a strategic problem. Many low and middle income economies depend on fossil fuels, metal ores or bulk agricultural products for fiscal revenue and foreign exchange. They are told, often by the same capitals that built their wealth on centuries of extraction, that demand for virgin inputs must flatten or decline if the climate is to stabilise. Circular strategies in rich economies accelerate that trend. If European and East Asian manufacturers source more metals from internal scrap, exporters of iron ore, bauxite or copper concentrate may see long-term terms-of-trade erosion. If that happens while those same exporters are still servicing debts incurred to build pipelines, dams and transport corridors, resentment is inevitable.
The second question is how interdependence is changing. For three decades, the dominant pattern was simple: high income regions exported light high-value goods and services and imported resource-heavy products and raw materials. Waste flows, when visible at all, were treated as an awkward by product. The last fifteen years have disturbed that pattern.
China’s rise as the main importer of global scrap and waste plastics gave manufacturers cheap secondary inputs for rapid industrial expansion. When Beijing tightened and then largely closed its doors to many waste streams, flows were rerouted to Southeast Asia and other regions whose regulatory systems were less prepared. Between 1988 and 2022, global exports of waste plastics reached about 255 million tonnes, mainly from high income regions to Asia. Basel Convention parties responded with new rules that place most plastic waste under prior informed consent procedures from 2021 onward. Enforcement remains uneven. A recent investigation by an environmental watchdog estimated that more than ten thousand containers of e-waste left the United States for Southeast Asia and the Middle East in just over two years, often mislabelled under general recycling codes.
This mix of crackdowns, loopholes and re-routing is not just an environmental scandal. It is a sign of systemic adjustment. As trade in waste and scrap grows, regulators will decide, case by case, whether they treat these flows as hazardous materials, valuable commodities or both. That classification will determine what kind of restrictions can legally be used and under which trade rules. It gives governments, especially those with large markets, an instrument to favour domestic recyclers, to set minimum quality standards or to close their ports to specific categories of imports.
The third question concerns legitimacy and justice. The language of a “just transition” and a “human-centred circular economy” is now common in multilateral documents. The financial reality does not match the rhetoric. The estimated annual gap in financing for the Sustainable Development Goals has grown from about 2.5 trillion dollars a year to somewhere between 3.9 and 4 trillion. Adaptation to climate impacts alone may require 310 to 365 billion dollars a year by the mid-2030s, while current adaptation finance for developing countries is around 26 billion.
Against that background, the idea that circular trade can generate new flows of income and investment is attractive. Secondary materials are inherently labour-intensive. If managed well, they can create local jobs, from collection and repair to advanced reprocessing. Yet the image of rich regions exporting dangerous e-waste and mixed plastics to poorer countries while keeping the high value parts of the chain at home has created a narrative of “waste colonialism” that will not vanish just because the trade codes change.
For a power that wants to use circular policies as instruments of influence rather than sources of friction, three strategic moves stand out.
The first is to recognise that standards and data rules are geopolitical choices, not technical afterthoughts. Circular trade hinges on information. To reuse a component, upgrade scrap into feedstock or prove that a product meets recycled content requirements, firms need verifiable data on composition and provenance. Proposals for digital product passports are often framed in narrow consumer terms. In reality, whoever designs the architecture of those passports will shape who can participate in circular markets. If the system is closed, complex and tailored to the capacities of large firms in rich countries, it will lock most Southern producers into the low value tiers of the chain. If it is designed as a shared infrastructure with open protocols, local data ownership and simple interfaces, it can support industrial upgrading beyond the OECD.
The second is to decide what kind of clubs to build. There is almost zero chance that circular rules will evolve into a single global regime any time soon. Fragmentation is inevitable. The real question is whether the main blocs construct exclusive clubs or porous ones.
An exclusive club scenario would see a handful of large markets align their product rules, waste controls and information systems, then use a mix of trade agreements and border measures to enforce them. Membership would be attractive because access to these markets and their secondary material flows would come with regulatory certainty and technological spillovers. Non-members would face a maze of compliance costs and limited voice in rulemaking. In the climate sphere, something similar is already emerging around carbon pricing clubs. Translating it into circular trade would extend that logic to the material backbone of the economy.
A porous club scenario would still involve leading markets coordinating standards, but with deliberate space for others to shape the rules. That means involving exporters of metals, plastics and electronic goods in early discussions about content rules and data formats; linking preferential access for secondary materials to concrete commitments on environmental and labour protections rather than to blind trust; and accepting that some of the most efficient locations for recycling and remanufacturing will be in countries that are currently treated mainly as recipients of waste.
The third move is to connect circular trade to the wider finance debate with numbers, not slogans. If the SDG and climate funding gaps are between 2.5 and 4 trillion dollars a year, then revenue streams from circular activities have to be part of the solution. That will not happen if secondary materials are treated as a cheap feedstock silently subsidising global manufacturing. It needs explicit policy design: revenue-sharing formulas between exporting and importing states for certain high value streams, dedicated taxes on virgin materials used to capitalise circular infrastructure funds, and conditionality in development finance that rewards governments not just for passing recycling laws but for enforcing them and protecting informal workers who currently do much of the sorting and dismantling.
At this point the role of Europe, the United States and China diverges.
Europe has regulatory depth, a large internal market and a structural interest in reducing dependence on raw material imports. Its circular material use rate is still modest but rising. It already exports and imports substantial quantities of scrap within and beyond the Union. If it chooses, it can anchor a rules based regime for secondary materials that ties market access to meaningful environmental and social safeguards, provides predictable standards and opens its data architecture to partners. That path would support its ambition to be seen as a “normative power” in the green transition.
The United States has a different profile. It is both a major exporter of scrap and a major producer of primary resources. Scrap exports reach more than 160 countries and are marketed as a contribution to the trade balance. Large federal subsidies for clean technologies under recent legislation make the domestic pull for secondary materials stronger, yet regulatory approaches differ widely across states. Its trade diplomacy has been focused on critical minerals for batteries and clean energy rather than on the full spectrum of secondary materials. It can either treat circular trade as a narrow industrial instrument or fold it into a broader offer that includes enforcement against illegal e-waste exports and technology partnerships on safe recycling.
China remains central, both as a consumer of scrap and as a producer of low carbon technologies. Its earlier role as the main destination for global waste created environmental and social problems that drove the clampdown on imports. Now it is investing heavily in its own recycling and remanufacturing systems to reduce dependence on imported ores and to support its position in clean energy supply chains. It will not accept a circular order that restricts its access to secondary materials while preserving Western control over standards and intellectual property.
From a strategic perspective, the most likely trajectory over the next decade is hybrid. Circular trade rules will spread unevenly through overlapping trade agreements, regional standards and ad hoc restrictions on specific value chains like plastics or batteries. Baseline multilateral rules under the Basel Convention and the World Trade Organization will set floor conditions. Above that floor, clusters of states will differentiate themselves by the stringency of their product standards, their data regimes and their willingness to integrate climate and justice concerns into trade decisions.
For international relations, the key analytical move is to stop treating circular economy as a technocratic corner of environmental policy and to integrate it into core thinking about power and order. Control over fossil fuels is still a major vector of influence, but the structure of the global economy is tilting towards sectors where the limiting factor is not only energy, it is also material throughput and waste absorption capacity. States with the ability to keep high value materials in circulation, while exporting credible governance models for how those circulations are managed, will gain a form of quiet structural power.
That power will not be exercised through cinematic crises in shipping lanes. It will show up when a standard on recycled content quietly locks out producers who cannot certify their inputs, when a digital product passport becomes the gatekeeper to lucrative markets, or when a group of regulators decides that a particular category of mixed plastic can no longer be traded as “recyclable” and must be treated as hazardous. Each of those decisions will have distributional consequences, both within and between states.
The strategic task for any government that takes both climate constraints and global stability seriously is therefore double. Domestically, it must build circular capacity fast enough to relieve pressure on primary extraction and emissions, while cushioning the social impacts. Internationally, it must use that capacity in ways that do not simply create a green version of the old core periphery hierarchy. The numbers on trade in used materials, on emissions from material production and on the financing gap for development and adaptation are signals that the window for improvisation is closing.
Circular trade will not, by itself, decide the shape of the emerging order. It will, however, decide who can afford to move quickly in the green transition and who remains stuck financing old assets with shrinking returns. That is why foreign ministries, trade negotiators and security planners need to start treating waste codes, scrap tariffs and recycled content rules with the same strategic attention they once reserved for oil chokepoints and grain shipments.
