Trade by design

New international trade agreements could be designed to include circular economy concepts, helping spark efforts to move towards greater sustainability in the global economy.

In joint research with a U.K. colleague, Ryerson professors Deborah de Lange and Philip Walsh, both of whom teach at the Ted Rogers School of Management, recently explored the opportunity to incorporate a circular economy approach into a post-Brexit trade agreement between the U.K. and Canada. The paper, "Understanding the Future of Canada-U.K. Trade Relationships in a Circular Economy Context," was published in December 2018. Their research included a literature review and interviews with stakeholders, both of which identified knowledge gaps as well as opportunities for a circular economy approach to any future trade agreement.

The topic grew out of professor de Lange's interest in international trade and sustainability.

Their paper is one of the first to be written on integrating circular economy concepts into international trade agreements.

There are already trade agreements in existence with some notions of sustainability, like the Canada-Europe trade agreement (CETA), but none that outright incorporate circular economy. Professor de Lange says it would be potentially precedent setting if circular economy concepts were incorporated into a post-Brexit U.K. and Canada trade deal.

"An agreement would include provisions that incorporate circular economy principles, thereby encouraging trade in products and services that can be reused, recycled, repurposed or upcycled, and therefore returned back to the economic system," said professor Walsh.

Professor de Lange said that trade agreements incorporating circular economy principles would lead to a redesign of global supply chains, further integrating them, so they become more complex while offering more global business opportunities and eliminating worldwide waste. A trade agreement like the one proposed between the U.K. and Canada, two developed countries already trending towards sustainability, could lead the way. Trade agreements tend to influence international relations and reduce trade volatility, increasing trade volumes and economic integration between signatory countries. Increased trade also results in economic integration, which reduces the likelihood of conflict. Circular economy trade would lead to tighter integration, potentially increasing these positive effects.

Although the concept is not without its challenges, there are already Canadian companies engaging in circular economy business. Professor Walsh says companies will have to get on board with the idea of participating in a circular economy and building their products to contribute to it. Businesses that do adapt could find benefit in selling off what would otherwise have been discarded, and new businesses may emerge in order to get involved.

If circular economy concepts are included in international trade agreements, professors de Lange and Walsh see the possibility of environmental and sustainability standards increasing together with the related technological developments and economic opportunities.

"We can have a race to the top instead of a race to the bottom," said professor de Lange.

This research was supported by a grant from the Social Sciences and Humanities Research Council of Canada.