Socioeconomic Impacts of European Union Circular Textiles Policies on Trading Partners

This report investigates the socioeconomic impacts of the European Union’s (EU) circular textile policies on two key trading partners: Bangladesh and Ghana. These policies, including the Waste Framework Directive (WFD), Waste Shipment Regulation (WSR), Ecodesign for Sustainable Products Regulation (ESPR), and Corporate Sustainability Due Diligence Directive (CSDDD), aim to advance sustainability within the EU textile sector. However, their implications extend beyond Europe, significantly affecting upstream production in Bangladesh and downstream textile markets in Ghana.

Key Findings of the Report

1. Competitiveness & Transition Costs:
   • Bangladesh faces potential trade barriers due to stringent EU sustainability requirements, particularly from ESPR and CSDDD. Compliance costs may disproportionately burden small and medium-sized enterprises (SMEs), risking layoffs and stagnant wages.
   • Ghana could capitalize on upcycling opportunities but remains vulnerable to increased administrative costs and fluctuating import volumes.
2. Labour Market & Sectoral Transformation:
   • The transition to a circular economy will reshape job markets. Bangladesh may see job displacement in ready-made garment (RMG) manufacturing, while Ghana could experience job creation in recycling and upcycling.
   • Informal workers, especially women, face heightened vulnerability as formal compliance measures overlook their contributions.
3. Work Reallocation & Skills Development:
   • Skills gaps pose a major challenge. Bangladesh lacks structured pathways for reskilling workers in circular production processes. Women encounter systemic barriers to accessing training, exacerbating existing inequalities.
4. Informality & Circular Economy:
   • Informal textile waste handlers in Bangladesh and secondhand traders in Ghana play crucial roles but are often excluded from formal policymaking and support structures. Recognizing and integrating these workers is vital for equitable transitions.
5. Decent Work & Social Equity:
   • Labour rights improvements under the CSDDD are promising but contingent on strong local enforcement and worker representation. Without proper safeguards, vulnerable groups risk further exploitation.

Recommendations for Policymakers

• Conduct inclusive impact assessments involving local stakeholders.
• Develop capacity-building programs and provide transition funding.
• Ensure circular economy policies account for informal workers and marginalized groups.
• Align trade agreements with social equity and fair labour standards.

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