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The Circular Economy Demands Reformed Trade Codes, Cambridge Reports
Alexandra Harrell
6 min read
“What proposals for Harmonized System (HS) code reform should industry bodies advocate for by 2027 so that the codes meet the needs of a circular and sustainable textile economy?”
These globally-recognized codes used for customs documentation have been criticized for lacking clarity and relevance in a world working to transition away from the incumbent take-make-waste model. Without an eco-minded designation embedded into the classification system, the secondhand clothing and textile recycling sectors face gratuitous legal and financial barriers—risking the “5.7 billion euros needed by 2030 to deliver a circular textile economy in Europe alone,” per a 2022 McKinsey report—ultimately knee-capping the textile industry’s transition to a circular economy.
As the World Customs Organization (WCO) is set to begin its updates to the international textile trade codes in 2027, these sustainability stalwarts shared some suggestions for the intergovernmental organization to consider.
The Centre for Resilience and Sustainable Development (CRSD) at the University of Cambridge partnered with the European Recycling Industries Confederation (EuRIC) and the UK’s Textile Recycling Association (TRA) has published its research on reforming these customs trade codes to remove the unnecessary barriers the textile recycling sector faces. The resulting report, “Proposal for Trade Code Reform,” presents several adjustments to modernize the codes to support the textile industry’s circular transition better.
“Current customs trade codes create unnecessary barriers for the textile recycling sector that hinder its transition to a circular economy at a time when sustainable textile management is more crucial than ever,” Julia Ettinger, general of EuRIC, said in a statement. “This research project offers practical proposals for HS code reform that we can present to governments to grow this vital sector.”
Throughout 2024, the three organizations collaborated with industry and policy stakeholders to address the challenges posed by the aforementioned question. In response, the trifecta utilized the CRSD’s action-research methodology—the Cambridge Policy Boot Camp (CPBC)—to develop new specifications that include secondhand clothing, recycling materials and textile waste.
“Rather than providing definitive solutions, the report aims to stimulate analysis and dialogue between industry and government stakeholders, serving as a foundation for further, in-depth work,” the report reads, clarifying the report’s scope is just one piece of the puzzle.
“This isn’t just about changing codes—it’s about building the foundation for a more circular textile industry,” Alan Wheeler, the TRA’s chief executive officer, said. “The recommendations provide a clear pathway for reform that could support the sector’s ability to scale up circular economy initiatives.”
Their report outlines a systems-based draft framework for reforming HS customs codes used in textiles trading for recycling, waste disposal or reuse as secondhand clothing. More specifically, the report proposes seven comprehensive reforms in relation to the “big bucket” code, HS 6309. Also known as HTS 6309 in the U.S. Harmonized Tariff Schedule (HTSUS), it’s a broad designation for worn textiles that the report believes undermines the textile’s legwork establishing secondhand streams based on that product’s value hierarchy.
“Most traders use a single customs code (HS 6309) for SHC and textile recycling shipments regardless of their position in the value chain, the quality of the trade item or their intended final use,” per the report.
With ambiguous and open-to-interpretation language, customs officials have no concrete playbook to determine compliance with import/export national regulations. Without specific trade codes for textile waste, textiles for recycling, textiles for reuse or to differentiate between quality or end-use, the officer on duty is operating on interpretation—something difficult to consistently enforce. The lack of clarity in customs codes increases risk and cost for the sector, hindering investment in and scalability of the circular economy.
As it stands, HS codes don’t align with the realities of textile sorting, recycling and reuse. The lack of precise waste classification prevents accurate trade monitoring, which runs the risk of textile waste laundering and illegal dumping.
“The Organized Crime and Corruption Reporting Project (OCCRP) reports that the large amount of collected ‘fast fashion’ has fueled an illegal trade in textile waste that is shipped as secondhand clothing into Romania through manipulation of paperwork and lack of clear regulations,” the report references as anecdotal evidence. Adding to that evidence is the diverging interpretations of what is interpreted as non-waste (HS 6309) and what is interpreted as waste (HS 6310); Poland’s understanding challenges Germany’s version which contrasts with Finland’s definition.
The most fundamental proposed solution would abolish HS 6309, replacing the generic classification with distinct codes differentiating between textiles for fiber recycling, reuse clothing, reuse shoes, reuse accessories, reuse household textiles, textile waste, and unsorted textiles.
“To maintain system coherence, reforms to HS codes 6309 and 6310 should align with ongoing developments in minimum textile sorting standards and emerging end-of-waste criteria frameworks [as] coordination is essential to ensure harmonized policy approaches across the textile value chain,” the report reads. “These categories should replace HS 6309 entirely, rather than serve as subcodes. If the WCO implements these as subcodes, traders could default to the existing, generic HS 6309 classification, undermining the reform’s benefits.”
“EU policy processes around end-of-waste criteria development will likely face delays. Consequently, industry may wish to create their own definitions,” the report reads. “Various terms and definitions are currently used across the sector to describe similar processes and products. Therefore, standardization is likely to require compromise.”
On the topic of compromise, the third strategy establishes contamination benchmarks to “minimize the rejection rate of cargo” due to the unintended inclusion of “non-target” items; as in, the accidental inclusion of a clothing hanger in the clothing shipment would not, up to a threshold, be subject to rejection, per the CRSD. This, however, requires “further work” to determine what that threshold should (or shouldn’t) specify.
Strategy four suggests creating dedicated subcodes for garments made with recycled content, which governments could then use to levy lower tariff rates and create economic incentives—a current challenge for recycled content. Subcodes make up the fifth strategy as well, acknowledging the need for distinct codes for high-value secondhand clothing sold in premium markets, which often use similar packaging and marketing as new items. Strategy six would develop a textile stream to the Authorized Economic Operator (AEO) program, while the last strategy suggests “revitalizing” the education and training efforts for customs officials, as the CRSD’s research suggests these officers do not utilize the current resources at their disposal.
Outside of the obvious are other net gains; specific codes for products using recycled materials, for example, can drive demand for said material; confidence, too, could encourage investors to support circularity. Holistically, streamlining the process should reduce risk (see: cost) for the recycling and reuse value chain players.
“This trade codes project is yet another example of the power of co-creation and genuine collaboration between academia and industry,” said project lead Dr. Nazia Habib, founder and director of CRSD. “We would encourage TRA and EuRIC and other similar associations to work closely with our Centre to apply co-creation methods for collective action.”
