Impacts of EU circular textiles policies on trade partners: A case study of Ghana

READ THE FULL PAPER HERE

Rapid global growth in textiles consumption has resulted in a rise in the trade of used textiles, valued at $5.7 billion in 2022.¹ Trade in used textiles offers several benefits. Redistributing garments to regions with high demand for reuse helps extend their lifetime. It also provides affordable clothing to people in emerging markets and creates numerous employment opportunities in sorting, cleaning, repairing, upcycling and recycling textiles. However, it also poses significant social and environmental challenges, such as contributing to uncontrolled and polluting waste, and it often relies on informal employment with poor working conditions. Addressing these challenges while maximizing the benefits is essential for making the global used textiles trade more sustainable.

In response to these challenges, the EU launched its ‘Strategy for Sustainable and Circular Textiles’ (the strategy) in 2022.² The strategy aims to make textiles placed on the EU market more sustainable, circular, and less harmful to the environment by addressing the entire lifecycle of textiles, from production to disposal. The strategy involves the introduction of many policies. However the three main policy measures within the strategy are:

• Ecodesign for Sustainable Products Regulation (ESPR). This focuses on setting design requirements for textile products to improve their durability, repairability, recyclability, and levels of recycled content and non-toxicity, as well as improved traceability via a digital product passport.
• Waste Shipment Regulation (WSR). This ensures stricter controls on the export of textile waste, seeking to prevent illegal shipments and ensuring that textiles are properly recycled or disposed of in a sustainable manner. Textile waste shipments to non-OECD countries will be banned (unless an exemption is requested and approved by any non-OECD country).
• Waste Framework Directive (WFD). This establishes regulations for member states to improve waste management practices, including mandatory separate textiles collection, harmonized textiles extended producer responsibility (EPR) schemes and enhanced textile recycling systems to reduce waste generation.
  

The combination of these policy measures will have wide-ranging consequences for major importing countries of used textiles from the EU. Yet little is understood as to the scale and nature of these consequences. This is important given that the EU imports up to 80 per cent of its textiles and is one of the biggest exporting regions of used textiles – and is therefore highly dependent upon the ability of non-EU value chain actors to adapt to the new circular textile policy requirements.

Ghana may be considered an important textile trading partner with the EU, receiving $29.3 million (or 29.6kt) worth of used textiles in 2022. Beyond the EU, Ghana remains a key global destination for post-consumer textile exports. Each year, more than 150,000 tonnes of second-hand clothes are imported into the country, with a large portion arriving at Accra’s Kantamanto Market.

Percevied as the ‘end of the line’ for the fashion industry, Ghana has received increased attention in recent years due to its role in managing global textile waste. However, the environmental impact of textile waste in Ghana is severe. Many imported textiles cannot be resold – due to poor quality and sheer volumes – and end up disposed of in ecologically and socially harmful ways, including open burning and dumping in unmanaged landfills. High and increasing rates of synthetic textiles – which are produced with crude oil and do not biodegrade – are also posing risks, polluting air, soil and water.

Drawing on Ghana as a case study, this article summarizes the findings of a larger research project evaluating the potential opportunities and challenges brought about by the EU Strategy for Sustainable and Circular Textiles on Ghana’s textile industry in the form of changes to trade patterns in imports of used and unsold textiles and new or renewed textile exports to the EU.

In recognizing the strategic benefits of such trade partners in supporting the EU’s vision of achieving a circular and sustainable global textiles sector, this article provides recommendations to the EU textiles policy community.

First, it evaluates how textile trade flows between the EU and its trading partners may change over the short, medium and long term due to the strategy and the consequences for non-EU value chain actors. It then considers what potential socio-economic impacts these scenarios could have on workers and businesses, namely small and medium-sized businesses. Finally, it offers recommendations on how future policy can be designed to mitigate the challenges and amplify the opportunities for trading partners within a circular textiles value chain, particularly highlighting the potential to develop more inclusive and synergistic trade relations between the EU and the Global South.

For a detailed overview of the trade flow scenarios and consequences for Ghana see the full report.

For a detailed overview of trade flows and employment in the second-hand textile trade in Ghana see the full report.

For a detailed overview of the socio-economic impacts on Ghana of the EU Sustainable and Circular Textiles Strategy see this report

If successful, the EU strategy will alter the structure of global textiles value chains. We ran a scenario analysis to evaluate how this may impact major importers of EU used textiles in the short, medium and long term.

In the short term, European exports of both high- and low-quality used textiles, as well as unsold goods, are projected to rise sharply. This is due to new mandatory separate post-consumer textile collection and extended producer responsibility requirements in the Waste Framework Directive that could generate millions of tonnes of stock, which, in the short to medium term, will far exceed current EU reuse, recycling and storage capacities.

Due to the WSR revision, a proportion of this excess will not be able to be shipped abroad to non-OECD countries if it is classified as waste post-sorting. Nonetheless, a significant volume will still be able to be shipped to non-OECD countries if it is classified as reusable (and not waste under the revised end-of-waste criteria). Moreover, exporters will not be required to provide evidence that the item resales in the secondary market rather than being discarded as waste due to lack of local demand. This remains an unsolved issue, which is not solely linked to legislation but also the nature of the trade, with some importers still preferring to import bales of clothes without the certainty it will meet a local demand.

Imports of used textiles from the EU to Ghana will likely increase as a result which could exacerbate challenges relating to the country’s already strained waste management infrastructure. Ghana will also face challenges due to the recent ban on trading used textiles within African Continental Free Trade Agreement (AfCFTA), making managing this influx more complex as Ghanaian exporters are unable to ship surplus to neighbouring AfCFTA members.

In the medium term, improvements in EU-based sorting, reuse and recycling capacity are expected to scale up and eventually lead to a decrease in the export of high-quality used textiles. Meanwhile, collection of pre-ESPR legacy textiles and unsold goods (which are banned from being destroyed) will continue to increase. Combined with the ability of exporters to continue shipping low-quality used textiles (not classified as waste), export of low-quality garments is expected to continue in high volumes.

The plateauing and overall reduction in quality of EU exports may not have a substantial effect on the volume of used textiles being imported to Ghana as the EU makes up only one-fifth of Ghanaian imports and importers are likely to be able to cover the deficit by sourcing from other regions. Ghanaian exporters of new or upcycled textiles will face increasing barriers in accessing the EU market, particularly for upcycled garments, due to stringent traceability and product design requirements.

Assuming the EU’s textile strategy achieves its long-term objectives, the model of fast fashion in the EU will have begun to be replaced by a more sustainable alternative. Used textile exports will continue to decrease and plateau as the ESPR kicks in and new textiles entering the EU market on average will be much higher quality, while collection, reuse and recycling systems will be maturing. Exports of used textiles will continue albeit at much lower volume and lower quality.

Ghana may face increased competition for EU exported used textiles. However, it is likely to be able to continue sourcing used textiles from other regions with rising textiles consumption. If Ghana’s textile sector grows as the government intends, planning to meet EU market requirements now will help avoid barriers in the future.

Continued low-quality second-hand textile exports will exacerbate existing pressures on vulnerable workers operating in an informal setting. Our research reveals significant inequalities within the trade, including unstable pay, limited representation for traders, upcyclers, head porters, and other workers engaged in the trade, along with somewhat more favourable conditions for importers.

Conversely, a sharp reduction in volumes could negatively impact workers as there are no organized transition pathways or employment alternatives for the variety of workers engaged in the trade.

The EU textile strategy and the growing focus on favouring circular, sustainable textile products could offer an opportunity for Ghana to expand its role in selling upcycled products to the EU market, but this is still contingent on trade agreements that recognize circular products as Ghanaian-made.

Below is a summary of recommendations to EU policymakers regarding steps that could be taken to ensure the EU strategy delivers on the domestic policy goals while supporting a just and equitable transition in import-dependent countries.

Major importers of used clothing from the EU (such as Ghana) should not be reductively viewed as just ‘dumping grounds’ for textile waste. Rather, they are strategic partners with potentially thriving markets for second-hand clothing and the knowledge and skill base with which to renew, repair, upcycle, recycle and resell such items (including exporting such upcycled items back to Europe creating a virtuous cycle of circular trade).

A focus area for immediate bilateral discussion would be the lack of clarity on production, quality and traceability standards required for imported upcycled garments to be ESPR-compliant. It is therefore necessary for the upcoming ESPR delegated act on textiles to bring clarity to this issue and, where possible, seek pragmatic solutions to enabling the trade in upcycled textiles, particularly from key used textiles trading partners. This should also be explicitly addressed within the EU Joint Research Centre’s impact assessment for the ESPR textiles delegated act.

Despite restricting trade in textile waste, used textiles will still be able to be shipped to Ghana and other used textile importing countries. Hence there is still a responsibility for the EU to invest in supporting Ghanaian workers to avoid the ongoing associated negative environmental and social impacts of used textile trade.

In addition, restricting EU used textile and textile waste exports to Ghana (at least those of the worst quality as regulated under WSR) may not directly lead to a reduction of imports to Ghana given the option for importers to pivot to other less well-regulated export markets. As such, the EU will continue to have a ‘legacy’ responsibility to work with Ghana to prevent such a regression and open new market opportunities for them into the EU instead.

There are many ways in which the EU could increase collaborative support for import-dependent countries with regards to transitioning to a more sustainable model of textiles production and consumption and benefit from the opportunities presented by the EU’s transition. Examples include:

1. Providing necessary support to improve working conditions and workers’ rights and supply chain transparency relevant to the used textile sector as well as domestic waste management and recycling systems and infrastructure;
2. Providing technical support and funding to trading partners to improve education frameworks, valorize skills in the informal sector, upskill education institutions and increase access to upskilling;
3. Embedding extended producer responsibility (EPR) transboundary transfer payments within EU guidelines to ensure sufficient funding is available to manage exported EU used textile items at their end-of-life;
4. Strengthening commitments to textile remanufacturing and recycling IP and technology transfer, access to relevant services and increased foreign direct investment; and
5. Co-piloting novel used textile trade facilitation mechanisms like trusted circular traders, electronic data systems and special economic zones.It is imperative that in pursuing such collaborative actions a wide range of stakeholders such as municipalities, markets and used clothing associations are included as active partners.

EU policy uncertainty and a lack of data on estimated future textiles trade and recycling flows affects long-term planning and investment in Ghana’s textile sector. Efforts to provide easily understandable and engaging guidance notes on key policy developments (and their likely impacts on trade partners) alongside robust trade flow predictions would be valuable in this respect.

Studies offering estimates by relevant EU textile stakeholders and institutions (such as the European Commission, Joint Research Council or EURATEX) would be valuable too, particularly when preparing future impact assessments for European policies. Our research highlights the critical importance of fostering inclusive participatory processes and expanding stakeholder engagement throughout both the development and implementation phases of circular textile policies.

It is also important to initiate early-stage discussions with key non-OECD used textile and textile waste trade partners to provide greater clarity on the pre-assessment criteria around obtaining an exemption to the Waste Shipment Regulations ban on the export of textile waste to non-OECD countries. Particular areas for discussion include minimum requirements for recycling and waste management facilities as well as how the EU could support such countries to meet the basic standards in a way that is inclusive of those working in informal textiles waste handling and recycling in these countries.

Currently, trade agreements with major textiles trade partners are not adequately utilized as tools for mutual collaboration on the circular economy agenda. There is an opportunity for the EU to seek to strengthen provisions within existing economic partnership agreements spanning IP and technology transfer, finance transfer, collaboration on trade facilitation, and policy and standards harmonization.

Currently, trade agreements with major textiles trade partners are not adequately utilized as tools for mutual collaboration on the circular economy agenda. There is an opportunity for the EU to seek to strengthen provisions within existing economic partnership agreements spanning IP and technology transfer, finance transfer, collaboration on trade facilitation, and policy and standards harmonization.

Currently there is no easy way to differentiate between shipments of unsold, used and upcycled textiles. All of these are typically classified under HS6309 (worn clothing and other worn articles) as there are no separate classifications available for unsold or upcycled textiles.

The volume of trade in low-quality unsold textile goods is set to grow rapidly with the roll-out of bans on the destruction of unsold textile goods, putting pressure on the local production and used clothing repair and upcycling industries in recipient markets. Equally, the trade in upcycled textiles, which offers significant potential for delivering on circular economy goals, is hampered by ambiguous and fragmented waste definitions.

The inability to differentiate between the three is currently creating a significant barrier to the formation of global circular textile value chains. The EU can play an important leadership role in bringing together a coalition of governments to identify pragmatic approaches to regulating these three distinct but currently amalgamated trade flows.

One approach may involve evaluating the viability of HS reclassification, or the addition of new classifications or guidance notes and formally proposing these in the next round of HS revisions. Inspiration can be drawn from the successful addition of the new e-waste heading (8549) to HS2022. Another may be to explore how to introduce straightforward production, quality and traceability standards and guidelines for the export and import of upcycled textiles to avoid having to classify them as waste or as worn clothing.

These activities could be done via a coalition between the EU and major new and used textile importer and exporter countries, and working closely with relevant trade institutions and forums (such as the World Customs Organization and the TESSD informal working group on circular economy and trade).

1. Clarify EU used textile trade flow predictions. Seek clarity from the European Commission on expected short-, medium- and long-term changes in used and waste textile trade. These changes depend on scaling up member states’ sorting, reuse and recycling capacities, for which robust estimates are needed to better inform EU textile import policies and strategies.

2. Seek active forms of inclusion and participation in the design of future European circular textile policies. Include perspectives from both businesses and workers and how they view the effects of upcoming policies, with particular emphasis on representation for marginalized groups, such as informal and female workers.

3. Anticipate a decline in used textile import quality and volumes. As the EU strengthens domestic textile processing, export volumes may drop, causing Ghanaian importers to turn to markets with less stringent quality-control regulations. Addressing this early and identifying suitable markets for Ghana would be beneficial.

4. Explore potential for synergistic trade relationships. Collaborate with the EU to develop circular textile value chains regarding the production of ESPR-compliant textiles from upcycled EU garments. For example, Ghanaian upcyclers face challenges in exporting upcycled garments, as customs often block these products under HS6309, despite their added value. An evaluation of trade barriers for exporters of upcycled textiles would help identify solutions to facilitate their export. Additionally, exploring a mandatory EPR scheme for textiles in Ghana that covers imports, while exempting renewed or upcycled items, could also improve domestic textile waste management.

5. Prepare for WSR compliance. If importing countries wish to maintain access to EU textile waste, they must notify the European Commission by February 2025. This includes assessing domestic facilities for WSR compliance and upgrading where needed. A key outstanding question is how best the informal sector can be supported to meet WSR exemption requirements. Enhanced bilateral dialogues are crucial for these preparations.

6. Adopt relevant transparency and traceability standards. Importing countries should consider introducing best practice transparency and traceability standards for used clothing management.

Circular textile trade scenarios between the EU and Ghana

Circular textile trade scenarios between the EU and Bangladesh (coming soon)

Circular textiles policy review: Considerations for EU trading partner countries

Socioeconomic Impacts of European Union Circular Textiles Policies on Trading Partners

Textile Trade Flow and Employment Baseline Analysis: Ghana

Textile Trade Flow and Employment Baseline Analysis: Bangladesh

This study is an output of the ‘Exploring the impact of EU textile policies on trading partner countries: Focus on Bangladesh and Ghana’ project, co-funded by Laudes Foundation and BMZ and co-led by Chatham House, Circle Economy Foundation and the European Environmental Bureau, in partnership with The Or Foundation (Ghana) and BUILD (Bangladesh).

We gratefully acknowledge funding for this project from Laudes Foundation and the German Federal Ministry for Economic Cooperation and Development (BMZ) and supported by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH. Views and opinions expressed are those of the author(s) only and do not necessarily reflect those of the funders.

​​​​​The findings and recommendations from our research are derived from a desk-based literature review combined with interviews and an in-person workshop series conducted in July 2024. This involved a range of key textiles stakeholders spanning second-hand resellers, second-hand upcyclers, second-hand market association leaders and second-hand clothing head porters responsible for moving garments. The workshop series was led by The Or Foundation in Ghana and took place alongside bilateral conversations with senior officials within the Ghanaian government. The Or Foundation is an NGO working at the intersection of fashion development, environmental justice and education; it runs an array of programmes within the Kantamanto second-hand clothing market in Accra, Ghana, through which significant experience and subject matter expertise has been gained that has aided in the preparation of this report.