Circular economy as next trade strategy
Bangladesh’s export strategy has long been built on producing more, selling more, and competing primarily on labor costs.
That model has delivered success in ready-made garments (RMG), but the future will demand more. Buyers increasingly care not only about price, quality, and delivery, but also about carbon emissions, resource efficiency, traceability, recycled content, and product life cycles.
The circular economy should therefore be viewed not simply as an environmental agenda but as a next-generation trade strategy.
Recycling, recycled fibers, repair, remanufacturing, and circular production could create new export opportunities and strengthen the competitiveness of existing industries.
The circular economy challenges the conventional “take-make-dispose” model by keeping materials and products in use as long as possible. It emphasizes reducing resource consumption, extending product life, recovering materials, and designing production systems for reuse and recycling.
The European Union’s Circular Economy Action Plan, for example, links circularity to product design, sustainable production, waste reduction, and resource efficiency. These policies matter to Bangladesh because its major export markets increasingly incorporate environmental requirements into trade and procurement decisions.
The country already has one of the world’s largest apparel manufacturing bases, generating substantial quantities of pre-consumer textile waste from cutting and production processes, as well as post-consumer waste.
Rather than treating textile waste primarily as a disposal problem, Bangladesh could develop a competitive recycled-fiber industry.
Cotton and polyester waste can be collected, sorted, and processed into recycled fibers and yarns. These materials could then be used in domestic textile production or exported as intermediate products. The commercial opportunity is therefore not merely to export garments but also to export the materials from which circular garments are made.
However, shifting to recycled fibers requires technological upgrades. Mechanical recycling can be effective for relatively clean, homogeneous textile waste, whereas chemical recycling can recover higher-quality fibers from complex blends.
A more realistic strategy would be to initially focus on commercially viable technologies, develop industrial clusters, and attract investment in sorting, fiber recovery, yarn production, and textile-to-textile recycling. The objective should be to move gradually from waste collection toward higher-value circular manufacturing.
The second opportunity lies in repair and extending product life. Export competitiveness has traditionally been tied to manufacturing new products rather than maintaining existing ones. Circular trade creates a different commercial logic: a product can generate economic value through repair, refurbishment, resale, and upgrades. Firms could develop specialized repair and refurbishment services for international brands, particularly in markets where labor-intensive processes remain commercially viable. Digital platforms could also connect brands and consumers with certified repair providers.
Remanufacturing offers an even more sophisticated opportunity. It involves restoring used products or components to a condition comparable to new products, typically through disassembly, replacement, testing, and quality assurance. Bangladesh could explore remanufacturing in sectors such as machinery, electrical equipment, automotive components, and industrial tools.
These activities would require stronger technical standards, engineering skills, and product-testing capacity, but they could create higher-value employment than conventional assembly operations.
The greatest strategic opportunity, however, may be circular production. Rather than treating circularity as an additional environmental requirement imposed on exporters, manufacturers could redesign production systems for resource efficiency.
Factories could reduce material losses, reuse water, recover heat, recycle production waste, and incorporate renewable energy. In the garment sector, for example, improved pattern optimization can reduce cutting waste, while closed-loop systems can recover materials that would otherwise become waste. Circular production can therefore reduce environmental pressure and lower input costs.
Yet Bangladesh faces substantial barriers. Recycling infrastructure remains fragmented, and collection and sorting systems are underdeveloped. Many forms of textile waste lack reliable traceability.
The informal waste sector plays an important role in material recovery but remains insufficiently integrated into formal industrial value chains. Moreover, recycled materials must meet increasingly stringent standards for quality, safety, chemical content, and traceability. Without reliable certification, recycled products may struggle to command premium prices in sophisticated markets.
Trade policy must therefore be integrated into the circular-economy strategy. Bangladesh should negotiate and monitor emerging international standards to ensure that environmental requirements do not become unexpected non-tariff barriers.
Exporters need support to comply with recycled-content requirements, product passports, extended producer responsibility systems, and environmental disclosure rules in major markets. The government could also establish incentives for textile-to-textile recycling, facilitate investment in recycling technologies, support circular-design research, and strengthen testing and certification institutions.
The private sector will ultimately determine whether circularity achieves commercial success. Large exporters can partner with global brands to build closed-loop supply chains, while SMEs can specialize in waste collection, sorting, repair, refurbishment, and processing recycled materials.
Universities and technical institutions should advance materials science, recycling technology, and circular product design. Financial institutions could develop green and transition-finance instruments for firms investing in circular production.
Bangladesh should therefore stop viewing circularity as merely a compliance cost. It can be a strategy for trade diversification. The country’s competitive advantage in labor-intensive manufacturing can be paired with expanding capabilities in recycling, materials recovery, repair, remanufacturing, and circular design.
This would create opportunities to export not only finished products but also recycled fibers, recovered materials, refurbished components, and circular production services.
(Author: Former Additional Secretary to the Government. Currently Associate Professor of Public Policy, Bangladesh Institute of Governance and Management– Affiliated to the University of Dhaka)
