Recognizing the inherent limitations of the HS in regard to promoting a more circular economy—as described in point 3 below on product data for example—it is essential to explore additional measures that could streamline circular trade flows, reduce the burden on customs administrations, and bolster the capacity of customs authorities to monitor and regulate trade in both circular goods and those goods that governments are seeking to restrict or phase out. These measures could include:
1. Trusted circular
trader schemes: A “trusted trader” scheme is a certification programme offered by customs administrations or relevant government agencies to businesses engaged in international trade, providing certain benefits and privileges to approved traders who meet specific criteria and demonstrate a high level of compliance with customs regulations and security standards. Similar to trusted trader programs, a specialized trusted circular
trader initiative could offer greater incentives to businesses involved in circular trade flows.
2. Resource recovery lanes:
These would consist of designated pathways within supply chains for efficient collection, recycling, or reuse of waste materials and resources. Resource recovery lanes could aim to tackle a current pain point facing companies that need reliable, timely, and affordable access to secondary raw materials at scale from abroad to make their products more sustainable, yet which currently face severe delays and administrative hurdles.
3. Integration of product data relevant to circular economy goals: One of the key limitations of the HS in terms of facilitating circular trade is that the HS classes goods by their physical attributes. Yet in nearly all cases it is not possible to identify the circularity of a good through its physical attributes but rather by its non-physical attributes. These include a good’s condition (new, used, unusable), durability, repairability, recyclability, or non-toxicity, as well as its methods of production or its intended use in the importing country.
Reflecting on the data challenge, practical solutions and pilot programmes are needed to better capture and communicate circular-relevant information on goods at international borders in a globally interoperable and HS-compatible manner. Many experiments are already underway, such as DATAPIPE (led by TU Delft and TNO), and UNECE’s Sustainability Pledge.
Future experiments should be cognisant of the day-to-day challenges many resource-constrained customs agencies face in developing and least developed countries in terms of regulating trade flows—including most prominently in relation to illicit waste trade—and must therefore include them as primary partners in the design of future solutions.