02 February 2026

The EU Circular Economy Act: A Competitiveness Instrument with Global Reach

  • Articles
  • Legal
  • Governance / ESG

The EU plans the Circular Economy Act (from Q3 2026): an industrial law to boost competitiveness, double circular material use to 24% by 2030 and cut import reliance.

  • Dr. Martin Eckert

    Legal Partner

  • Adrian Peyer

    Legal Partner

The EU Circular Economy Act: A Competitiveness Instrument with Global Reach

Why Non-EU Companies Should Start Preparing Now

The European Union is preparing a major new legislative pillar for its sustainability and industrial policy: the Circular Economy Act (CEA), expected in the third quarter of 2026. Unlike previous circular economy strategies, which were primarily environmental in nature, the CEA is explicitly positioned as a competitive and industrial resilience instrument. Its core ambition is to double the EU’s circular material use rate to 24% by 2030, establish a genuine single market for secondary raw materials, and reduce strategic dependence on virgin materials and imports from third countries.

While the legislative initiative is EU-centric in form, its practical impact will extend well beyond the Union’s borders. Experience with instruments such as the Ecodesign Regulation, CBAM, and the Battery Regulation shows that EU products and market rules quickly become de facto global standards. The Circular Economy Act is likely to follow the same trajectory.

For non-EU companies, including Swiss, UK, US, and Asian manufacturers and suppliers, the CEA should therefore be understood as a market-access regime, not merely an EU environmental policy.

 

1.  From Environmental Policy to Industrial Strategy 

The CEA responds to a structural vulnerability: Europe’s heavy dependence on imported raw materials, including nearly 100% reliance on imports for heavy rare earth elements, and extremely low recycling rates for critical materials such as lithium and rare earths (below 1%).

To address this, the Commission plans to anchor the CEA in three main pillars:

  • Amendments to the Waste Framework Directive and Landfill Directive
  • Amendments to the WEEE Directive (electrical and electronic waste)
  • Additional horizontal measures, including harmonization of end-of-waste rules, EPR governance, and possibly environmental taxation  

This architecture signals a shift away from a fragmented waste-law approach toward a resource-market logic: waste is to be transformed into a high-quality, tradable secondary raw material.

 

2.  Core Policy Levers Likely Under the CEA 

Across Commission communications, Member State discussions, and stakeholder input, several regulatory levers consistently appear:

  • Harmonised EU-wide “end-of-waste” criteria
  • Stronger and more standardised extended producer responsibility (EPR) schemes
  • Mandatory or quasi-mandatory recycled-content targets
  • Green public procurement rules favouring secondary materials
  • Digitalisation (e.g., product passports, digital waste tracking)
  • Measures to close the price gap between virgin and recycled materials  

Together, these tools aim to reshape supply chains, product design, and procurement decisions across entire value chains.

 

3.  Why the CEA Matters for Non-EU Companies 

3.1  Market Access Conditions Will Tighten 

Non-EU companies placing products on the EU market are likely to face new conditions regarding:

  • Minimum recycled content in products
  • Demonstration of recyclability, repairability, and material efficiency
  • Participation in EU-compatible EPR schemes
  • Data provision on material composition and waste handling

In practical terms, EU customers may no longer be able to source from suppliers that cannot document circularity attributes in line with EU rules.

This mirrors the logic already seen under the EU Battery Regulation and Ecodesign framework: compliance is tied to market access, regardless of where production takes place.

3.2  Recycled Content as a Commercial Requirement 

If recycled-content targets are introduced, non-EU manufacturers will need secure access to high-quality recyclates or secondary raw materials that meet EU specifications.

This creates two strategic consequences:

  1. Supply-chain restructuring: Non-EU companies may need long-term offtake agreements with certified recyclers.
  2. Cost pressure: Recycled materials are often more expensive than virgin inputs today; EU policy intends to reverse this imbalance through regulatory and fiscal tools.

Non-EU suppliers unable to integrate secondary materials risk becoming uncompetitive in EU tenders and customer sourcing decisions.

3.3  Extraterritorial Reach via Customers 

Even if the CEA formally applies only to EU operators, its effects will cascade through contractual requirements:

  • EU manufacturers will pass circularity obligations down to suppliers.
  • Audits, declarations, and data-sharing will become standard contractual clauses.
  • Non-EU companies may be required to join EU EPR schemes or equivalent systems.

This “indirect extraterritoriality” is already familiar from CSRD or CSDDD-driven supply-chain due diligence.

3.4 Increased Scrutiny of Imports and Online Sales

Several Member States and stakeholders have emphasized the need for a level playing field, including for online sales and imports. This suggests:

  • Stronger customs controls for compliance with recycled-content or design rules
  • Potential digital product passport checks at the border
  • Enforcement actions against non-compliant imported goods

Non-EU exporters should expect compliance documentation to become part of standard import processes.

3.5 Strategic Shift Toward “Circular Friendly-Shoring”

By prioritizing domestic EU recycling capacity and secondary-material markets, the CEA aims to reduce dependence on imported raw materials.

For non-EU companies, this implies:

  • Less EU demand for certain virgin raw materials
  • More EU demand for circular feedstocks, recycling technology, and know-how
  • Potential preference for partners located within jurisdictions with aligned circular-economy standards

Countries with regulatory alignment (e.g., Switzerland through bilateral approximation) may enjoy a relative advantage.

 

4.  Opportunities for Non-EU Companies 

The CEA is not only a compliance risk; it also opens strategic opportunities:

  • Technology providers: Recycling, sorting, material recovery, and digital tracking technologies are likely to see strong EU demand.
  • Premium positioning: Products with demonstrably high recycled content and durability can command preferential access.
  • Strategic partnerships: Joint ventures with EU recyclers or circular-material producers.
  • First-mover advantage: Early alignment can differentiate suppliers in competitive EU markets.

5. Likely Interaction with Other EU Frameworks

The CEA will not operate in isolation. Non-EU companies should anticipate cumulative effects with:

  • Ecodesign for Sustainable Products Regulation
  • Digital Product Passports
  • CSRD and CSDDD supply-chain due diligence regimes
  • Critical Raw Materials Act
  • Potential use of CBAM-style logic to favor low-carbon and recycled materials  

Together, these instruments point toward a future where material origin, circularity, and environmental footprint are core trade parameters.

 

6.  What Non-EU Companies Should Do Now 

1. Map material flows

Identify where virgin materials are used and where secondary materials could technically substitute.

2.  Assess recyclability and design 

 Evaluate product design against durability, repairability, and recyclability principles. 

3.  Engage suppliers early 

Begin discussions on recycled-content availability and traceability.

4. Monitor EU legislative developments

Track the Commission proposal in 2026 and subsequent delegated acts.

5.  Integrate circularity into strategy 

Treat circularity as a competitiveness topic, not merely an ESG add-on.

 

Conclusion

The EU Circular Economy Act marks a decisive shift: circularity becomes a core pillar of industrial and trade policy. For non-EU companies, the central message is clear: access to the EU market will increasingly depend on demonstrable circular performance.

Those who prepare early will not only reduce compliance risk but can position themselves as preferred partners in a market that is redefining how value is created from materials.

 
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