INTERNATIONAL ECONOMICS REPORT CIRCULAR ECONOMY IN INTERNATIONAL TRADE WITH WASTE AND RECOMMENDATIONS FOR VIETNAM

TABLE OF CONTENTS ABSTRACT ................................................................................................................................... 4 INTRODUCTION ......................................................................................................................... 5 1. Literature review ................................................................................................................ 5 2. Objectives ............................................................................................................................ 6 3. Methodology ....................................................................................................................... 6 3.1. Topic Approach ............................................................................................................ 7 3.2. Data Analysis ................................................................................................................ 7 CONTENT ..................................................................................................................................... 9 1. Circular economy concept ................................................................................................. 9 1.1. Definition of circular economy ..................................................................................... 9 1.2. Impacts of circular economy ........................................................................................ 9 2. International trade in waste and scrap .......................................................................... 11 2.1. Types of wastes traded ................................................................................................ 11 2.2. Theory ......................................................................................................................... 14 2.3. Waste trade opportunities and challenges .................................................................. 19 3. Interlinkages between international trade in waste and circular economy ................ 20 3.1. Impacts of a circular economy transition on waste trade .......................................... 20 3.2. Waste trade and circular economy policies interactions ........................................... 23 4. Case of Vietnam wasteimport management ................................................................. 26 4.1. Background scenarios in Vietnam .............................................................................. 26 4.2. Wastetrade policies in Vietnam ................................................................................. 28 4.3. Challenges faced by Vietnam in controlling trade in waste ....................................... 30 5. Recommendations ............................................................................................................ 32 5.1. Policy implementation of other countries ................................................................... 32 5.2. Recommendations for Vietnam ................................................................................... 33 CONCLUSIONS ......................................................................................................................... 35 REFERENCES ............................................................................................................................ 36 3 ABSTRACT Each year, humanity consumes enough resources and ecosystem services to keep up with and sustain our societies, which would require 1.5 Planet Earths to keep up with and support our societies. Human activities have destabilized Earth systems and natural cycles since industrialization, forcing the environment into an unbalanced condition. Earlier environmental changes occurred more slowly and primarily locally, whereas present changes occur at a rapid geological rate and are global in scope. When abrupt environmental changes approach tipping points, the impact could be irreversible, with disastrous consequences for human progress. The existing production and consumption pattern, sometimes known as the linear economy, is a key contributor to the global environments continuous deterioration. The concept of Circular economy began with the desire to alter the linear economic system in order to reduce resource consumption and waste of natural capital. It is based on the idea of solarpowered cycles in nature, where nothing is wasted and everything loops back on itself. This thesis attempts to contribute to the topic of Circular Economy by providing fresh academic information on Circular economy. It does so by investigating the notion of Circular economy in connection to sustainable development and attempting to comprehend Circular economys potential role in the establishment of a more sustainable system within planetary bounds. It accomplishes this through a literature review and structured research. The results reveal that while the Circular economy appears to meet environmental sustainability standards in theory, it falls short of providing solutions to apply for Vietnam. The results of the research focused on three important issues, according to the thesis, are based on existing concepts, but with fresh implementation and applications. 4 INTRODUCTION 1. Literature review Modern consumption has created unsustainable levels of resource extraction and waste genera.on, putting high pressure on the environment and climate. The “takemakeusedispose” pattern that characterizes the linear economy has resulted in an inefficient use of scarce resources, harmful emissions, and the genera.on of large amounts of waste. In response to these challenges, and aiming to make supply chains more resilient, a number of advanced economies have signaled an interest in transitioning to a more resourceefficient and circular economy. There is increased awareness that it will have an associated impact on international supply chains that will extend beyond national borders. For instance, a widespread transition towards a circular economy is expected to lead to a reduced trade in primary raw materials; increased trade in secondary raw materials; increased trade in recyclable waste; increased trade in secondhand products; and increased trade in services. The CE model prescribes that waste be not only minimized but also cycled back into production processes. Accordingly, studies of CE policies focus primarily on waste treatment, including production processbased approaches to eliminating waste (Saavedra et al., 2018; Hauschild et al., 2017; Reh, 2013; Zuo and Yang, 2006). Principal findings of the literature are that opportunities for waste reduction exist throughout the production process and product lifecycle, requiring producers to allot resources for analysis, industrial reconfiguration, and worker retraining. The contribution of government purchasing decisions to CE advancement, referenced primarily in the context of sustainable public procurement (SPP), is another principal topic in the literature and represents a direct conduit through which the policypractice connection has been articulated. SPP and CE in combination have been explored from multiple analytical perspectives, including surveys and comparisons of practices (Wang et al., 2018) and reviews of 5 SPPrelated methodological and research trends (AdjeiBamfo et al., 2019). Fewer are examples of metalevel reviews or comparisons of CE policies; most studies are case or industryspecific and focus on quality standards (Zhu et al., 2019), public procurement (Witjes and Lozano, 2016), market mechanisms (CruzPastrana and FrancoGarcía, 2019), education, promotion, and upskilling (Schroeder et al., 2019), infrastructure (Wilts and O’Brien, 2019), financial incentives (Geng et al., 2009), and labelling related to the quality of reused and remanufactured products (Gåvertsson et al., 2018). 2. Objectives Among the reasons for this study is that the systematic review will provide a background to properly position new research activities. In view of this, the master thesis aims to establish a clear relationship among the different approaches to circular economics, through an overview of the most uptodate and relevant scientific publications on the topic, with the application of circular economy in International trade. With a more ambitious objective, th thesis also aim to make some recommendations for Vietnam to apply and develop the current economic status. 3. Methodology In order to provide the reader with a possibility to evaluate the reliability and validity of this study, this chapter will explain the steps taken in order to conduct this research and detail the methodological tools used. The account for this researchs methodological approach will begin with a discussion of the nature of the problem, which is the first phase in the research process and includes identifying what is to be studied in order to thereafter define how to study it in a suitable way. Thus the next step describes the method for data collection, which will include a presentation of the secondary sources and primary sources. Subsequently, a way of analyzing the data will be presented. 6 3.1. Topic Approach To achieve the goals proposed by this master thesis, a qualitative study was conducted, employing a systematic literature review, so as to obtain solid knowledge about the theme, using the most recent and relevant articles. After some research around Vietnam’s Circular Economy, we define the Topic and start to take a deeper analysis of it. In the first stage, we define all keywords and issues that would be used to locate the literature. We use the formation through the sources available on the internet and our previous lectures at school. The key words and issues in evidence were then used for a more objective selection of the literature that will be considered in this study. In the second step, after finding out important parts of the topic, we prioritize and structure ideas in a logical outline: From abstract to details, from theories to applications. Each chapter of the master thesis is linked to an evidence we use to analyze in detail. In this stage, the formulation of the abstracts was designed in such a way that the relevant concepts on the topic be evident and amenable to comparison For the third stage, an analysis of each part was processed with data and detailed information . In this stage, evidence was collected with data sources. By selecting the most important components, informing about the data collection method and presenting the main results obtained from each study evaluated in this paper, we could build an overview of the academys perspective on the circular economy. 3.2. Data Analysis The studys data was gained through a literature review that included database research, scientific publications, books, and an academic course, as well as data gathered from empirical research of several case studies. In this thesis, archives data collection meant gathering information from companies sustainability reports, webpages, and other sources that provided information about circular economy, as well as gathering research from experts backgrounds relating to circular economy. 7 When analyzing the data from the empirical findings, constant comparisons were used to analyze and compare data in regards to their similarities and differences. The process of constant comparison meant that the raw data from the empirical research was first broken down into segments that belong to each part of the thesis. Thereafter, through brainstorming, the possible meaning of the data, as well as similarities and differences in this data were analyzed. Similar data was grouped together, forming relevant concepts that were based on their recurrence throughout different researches of different sources. Core categories were formed which describe the major structure of the study. 8 CONTENT 1. Circular economy concept 1.1. Definition of circular economy “A circular economy is an industrial system that is restorative or regenerative by intention and design. It replaces the endoflife concept with restoration, shifts towards the use of renewable energy, eliminates the use of toxic chemicals, which impair reuse and return to the biosphere, and aims for the elimination of waste through the superior design of materials, products, systems, and business models. ” (World Economic Forum, 2020) By and large, today’s manufacturing takes raw materials from the environment and turns them into new products, which are then disposed into the environment after use. It is a linear process with a beginning and an end. In this system, limited raw materials eventually run out. Waste accumulates, either incurring expenses related to disposal or else polluting—indeed, a 2012 World Bank report estimates that municipal waste generation will double over the next 20 years in lowincome countries. On top of that, manufacturing processes are often themselves inefficient, leading to further waste of natural resources (UNIDO, 2021) In a circular economy, however, products are designed for durability, reuse and recyclability, and materials for new products come from old products. As much as possible, everything is reused, remanufactured, recycled back into a raw material, used as a source of energy, or as a last resort, disposed of. 1.2. Impacts of circular economy The ISWA, the International Solid Waste Association, mentioned about the dangers of a world where the open sky dumps hosting 40% of the waste produced by man, which is a global health emergency. This fact is precisely represented by the circular economy (ISWA, 2017). According to the CESME White Book, the impacts of the circular economy are clear and from different areas: environmental, economic and social. 9 1.2.1. Environmental benefits Many experts think that the basic commodities such as oil, copper, cobalt, lithium, silver, lead and tin are likely to run out in 50100 year time. However, between the increasingly scarce resources, there is also the water: in 2050, more than 40 percent of the world population (almost 4 billion people) will suffer from a severe water shortage. Human intervention, such as the increase in greenhouse gases and the use of fertilizers in cultivation, are threatening planetary absorption reservoirs like forests, atmosphere, oceans, etc. Impacts of circular on water use have been even less researched across all streams; water use is neither accounted for in modelling nor measured in case studies (a notable exception is Chertow and Miyata, 2011). (Sehnem, et al., 2019) On top of that is the issue of waste. So far, mankind has reached 11 billion tonnes of waste generated each year. Researches have shown that if humans continue with the current waste model of growth by 2025, municipal waste will increase by over 75% and industrial waste by 35%. Impacts of circular economy on the minimization of waste as well as reduction of raw materials have been stated in reports by a number of scientists namely Linder, Chielse and Choudhary throughout the recent years. (Sehnem, et al., 2019) 1.2.2. Economic benefits The circular economy is claimed to have a positive impact on economic growth. By 2030, a potential growth of 4.5 trillion dollars globally was stated by the book “Circular Economy From waste to value” written by Peter Lacy, Jakob Rutqvist and Beatrice Lamonica, the Sustainability services division executives of the consulting firm Accenture (Lacy, et al., 2015). According to the European Commission, more efficient use of raw materials and resources throughout the supply chain could reduce the need for new raw materials by 17% 24% by 2030, with savings for European industry estimated at 630 billion Euro per year. The circular economy could save 8% of annual turnover to the industries while also reducing its total annual emissions of greenhouse gases by 2.4% (European Commission, 2014).

FOREIGN TRADE UNIVERSITY FACULTY OF INTERNATIONAL ECONOMICS -*** - INTERNATIONAL ECONOMICS REPORT CIRCULAR ECONOMY IN INTERNATIONAL TRADE WITH WASTE AND RECOMMENDATIONS FOR VIETNAM TABLE OF CONTENTS ABSTRACT INTRODUCTION Literature review Objectives Methodology 3.1 Topic Approach 3.2 Data Analysis CONTENT Circular economy concept 1.1 Definition of circular economy 1.2 Impacts of circular economy International trade in waste and scrap 11 2.1 Types of wastes traded 11 2.2 Theory 14 2.3 Waste trade opportunities and challenges 19 Interlinkages between international trade in waste and circular economy 20 3.1 Impacts of a circular economy transition on waste trade 20 3.2 Waste trade and circular economy policies interactions 23 Case of Vietnam waste-import management 26 4.1 Background scenarios in Vietnam 26 4.2 Waste-trade policies in Vietnam 28 4.3 Challenges faced by Vietnam in controlling trade in waste 30 Recommendations 32 5.1 Policy implementation of other countries 32 5.2 Recommendations for Vietnam 33 CONCLUSIONS 35 REFERENCES 36 ABSTRACT Each year, humanity consumes enough resources and ecosystem services to keep up with and sustain our societies, which would require 1.5 Planet Earths to keep up with and support our societies Human activities have destabilized Earth systems and natural cycles since industrialization, forcing the environment into an unbalanced condition Earlier environmental changes occurred more slowly and primarily locally, whereas present changes occur at a rapid geological rate and are global in scope When abrupt environmental changes approach tipping points, the impact could be irreversible, with disastrous consequences for human progress The existing production and consumption pattern, sometimes known as the linear economy, is a key contributor to the global environment's continuous deterioration The concept of Circular economy began with the desire to alter the linear economic system in order to reduce resource consumption and waste of natural capital It is based on the idea of solar-powered cycles in nature, where nothing is wasted and everything loops back on itself This thesis attempts to contribute to the topic of Circular Economy by providing fresh academic information on Circular economy It does so by investigating the notion of Circular economy in connection to sustainable development and attempting to comprehend Circular economy's potential role in the establishment of a more sustainable system within planetary bounds It accomplishes this through a literature review and structured research The results reveal that while the Circular economy appears to meet environmental sustainability standards in theory, it falls short of providing solutions to apply for Vietnam The results of the research focused on three important issues, according to the thesis, are based on existing concepts, but with fresh implementation and applications INTRODUCTION Literature review Modern consumption has created unsustainable levels of resource extraction and waste genera.on, putting high pressure on the environment and climate The “take-make-use-dispose” pattern that characterizes the linear economy has resulted in an inefficient use of scarce resources, harmful emissions, and the genera.on of large amounts of waste In response to these challenges, and aiming to make supply chains more resilient, a number of advanced economies have signaled an interest in transitioning to a more resource-efficient and circular economy There is increased awareness that it will have an associated impact on international supply chains that will extend beyond national borders For instance, a widespread transition towards a circular economy is expected to lead to a reduced trade in primary raw materials; increased trade in secondary raw materials; increased trade in recyclable waste; increased trade in second-hand products; and increased trade in services The CE model prescribes that waste be not only minimized but also cycled back into production processes Accordingly, studies of CE policies focus primarily on waste treatment, including production process-based approaches to eliminating waste (Saavedra et al., 2018; Hauschild et al., 2017; Reh, 2013; Zuo and Yang, 2006) Principal findings of the literature are that opportunities for waste reduction exist throughout the production process and product lifecycle, requiring producers to allot resources for analysis, industrial reconfiguration, and worker retraining The contribution of government purchasing decisions to CE advancement, referenced primarily in the context of sustainable public procurement (SPP), is another principal topic in the literature and represents a direct conduit through which the policy-practice connection has been articulated SPP and CE in combination have been explored from multiple analytical perspectives, including surveys and comparisons of practices (Wang et al., 2018) and reviews of SPP-related methodological and research trends (Adjei-Bamfo et al., 2019) Fewer are examples of meta-level reviews or comparisons of CE policies; most studies are case- or industry-specific and focus on quality standards (Zhu et al., 2019), public procurement (Witjes and Lozano, 2016), market mechanisms (Cruz-Pastrana and Franco-García, 2019), education, promotion, and upskilling (Schroeder et al., 2019), infrastructure (Wilts and O’Brien, 2019), financial incentives (Geng et al., 2009), and labelling related to the quality of re-used and remanufactured products (Gåvertsson et al., 2018) Objectives Among the reasons for this study is that the systematic review will provide a background to properly position new research activities In view of this, the master thesis aims to establish a clear relationship among the different approaches to circular economics, through an overview of the most up-to-date and relevant scientific publications on the topic, with the application of circular economy in International trade With a more ambitious objective, th thesis also aim to make some recommendations for Vietnam to apply and develop the current economic status Methodology In order to provide the reader with a possibility to evaluate the reliability and validity of this study, this chapter will explain the steps taken in order to conduct this research and detail the methodological tools used The account for this research's methodological approach will begin with a discussion of the nature of the problem, which is the first phase in the research process and includes identifying what is to be studied in order to thereafter define how to study it in a suitable way Thus the next step describes the method for data collection, which will include a presentation of the secondary sources and primary sources Subsequently, a way of analyzing the data will be presented 3.1 Topic Approach To achieve the goals proposed by this master thesis, a qualitative study was conducted, employing a systematic literature review, so as to obtain solid knowledge about the theme, using the most recent and relevant articles After some research around Vietnam’s Circular Economy, we define the Topic and start to take a deeper analysis of it In the first stage, we define all keywords and issues that would be used to locate the literature We use the formation through the sources available on the internet and our previous lectures at school The key words and issues in evidence were then used for a more objective selection of the literature that will be considered in this study In the second step, after finding out important parts of the topic, we prioritize and structure ideas in a logical outline: From abstract to details, from theories to applications Each chapter of the master thesis is linked to an evidence we use to analyze in detail In this stage, the formulation of the abstracts was designed in such a way that the relevant concepts on the topic be evident and amenable to comparison For the third stage, an analysis of each part was processed with data and detailed information In this stage, evidence was collected with data sources By selecting the most important components, informing about the data collection method and presenting the main results obtained from each study evaluated in this paper, we could build an overview of the academy's perspective on the circular economy 3.2 Data Analysis The study's data was gained through a literature review that included database research, scientific publications, books, and an academic course, as well as data gathered from empirical research of several case studies In this thesis, archives data collection meant gathering information from companies' sustainability reports, webpages, and other sources that provided information about circular economy, as well as gathering research from experts' backgrounds relating to circular economy When analyzing the data from the empirical findings, constant comparisons were used to analyze and compare data in regards to their similarities and differences The process of constant comparison meant that the raw data from the empirical research was first broken down into segments that belong to each part of the thesis Thereafter, through brainstorming, the possible meaning of the data, as well as similarities and differences in this data were analyzed Similar data was grouped together, forming relevant concepts that were based on their recurrence throughout different researches of different sources Core categories were formed which describe the major structure of the study CONTENT Circular economy concept 1.1 Definition of circular economy “A circular economy is an industrial system that is restorative or regenerative by intention and design It replaces the end-of-life concept with restoration, shifts towards the use of renewable energy, eliminates the use of toxic chemicals, which impair reuse and return to the biosphere, and aims for the elimination of waste through the superior design of materials, products, systems, and business models ” (World Economic Forum, 2020) By and large, today’s manufacturing takes raw materials from the environment and turns them into new products, which are then disposed into the environment after use It is a linear process with a beginning and an end In this system, limited raw materials eventually run out Waste accumulates, either incurring expenses related to disposal or else polluting—indeed, a 2012 World Bank report estimates that municipal waste generation will double over the next 20 years in low-income countries On top of that, manufacturing processes are often themselves inefficient, leading to further waste of natural resources (UNIDO, 2021) In a circular economy, however, products are designed for durability, reuse and recyclability, and materials for new products come from old products As much as possible, everything is reused, remanufactured, recycled back into a raw material, used as a source of energy, or as a last resort, disposed of 1.2 Impacts of circular economy The ISWA, the International Solid Waste Association, mentioned about the dangers of a world where the open sky dumps hosting 40% of the waste produced by man, which is a global health emergency This fact is precisely represented by the circular economy (ISWA, 2017) According to the CESME White Book, the impacts of the circular economy are clear and from different areas: environmental, economic and social 1.2.1 Environmental benefits Many experts think that the basic commodities such as oil, copper, cobalt, lithium, silver, lead and tin are likely to run out in 50-100 year time However, between the increasingly scarce resources, there is also the water: in 2050, more than 40 percent of the world population (almost billion people) will suffer from a severe water shortage Human intervention, such as the increase in greenhouse gases and the use of fertilizers in cultivation, are threatening planetary absorption reservoirs like forests, atmosphere, oceans, etc Impacts of circular on water use have been even less researched across all streams; water use is neither accounted for in modelling nor measured in case studies (a notable exception is Chertow and Miyata, 2011) (Sehnem, et al., 2019) On top of that is the issue of waste So far, mankind has reached 11 billion tonnes of waste generated each year Researches have shown that if humans continue with the current waste model of growth by 2025, municipal waste will increase by over 75% and industrial waste by 35% Impacts of circular economy on the minimization of waste as well as reduction of raw materials have been stated in reports by a number of scientists namely Linder, Chielse and Choudhary throughout the recent years (Sehnem, et al., 2019) 1.2.2 Economic benefits The circular economy is claimed to have a positive impact on economic growth By 2030, a potential growth of 4.5 trillion dollars globally was stated by the book “Circular Economy - From waste to value” written by Peter Lacy, Jakob Rutqvist and Beatrice Lamonica, the Sustainability services division executives of the consulting firm Accenture (Lacy, et al., 2015) According to the European Commission, more efficient use of raw materials and resources throughout the supply chain could reduce the need for new raw materials by 17% 24% by 2030, with savings for European industry estimated at 630 billion Euro per year The circular economy could save 8% of annual turnover to the industries while also reducing its total annual emissions of greenhouse gases by 2.4% (European Commission, 2014) 10