When it comes to environmental policy, the mantra to “reduce, reuse, recycle” is by now etched into the popular consciousness. But in practice, recycling has become the main way people feel they’ve contributed to reducing pollution and waste. The first two, which focus on minimising consumption in the first place, tend to get swept into the garbage bin.

Nowhere is this more dire than in the case of plastics. Plastic production was just 2 million metric tons (MMTs) in 1950 and has since exploded to 436 MMTs in 2022. By 2050, this figure is expected to double to 884 MMTs. Overconsumption is off the scale. Of this, only 10% is recycled, while 75% becomes waste, with emerging economies hit hardest by the fallout.

Published in August 2025, the UN Centre for Trade and Development’s (UNCTAD) Global Trade Update highlights how global merchandise supply chains validate this trade. In the absence of binding international agreements, there is no comprehensive way to target such a complex, interconnected problem. 

Trade Finance Global (TFG) spoke to Luz María de la Mora, UNCTAD’s Director of the Division on International Trade and Commodities, to find out more: especially as the UN works to develop an International Legally Binding Instrument (ILBI) on plastic pollution.

Who pays the hidden costs of plastic pollution?

Thinking about the environmental damage of plastic waste often conjures images of turtles tangled in six-pack rings. But in plastics, a number tells a thousand words:

• 98% of plastics are produced using fossil fuels, and their eventual incineration generates significant toxic and greenhouse gases. Globally, burning plastic packaging adds 16 MMTs of greenhouse gases: the equivalent of over 2.7 million homes’ electricity for one year. 
• The fiscal costs of plastic pollution are estimated to exceed $1.5 trillion annually.
• Every day, the equivalent of 2,000 garbage trucks full of plastic are disposed in aquatic ecosystems, reaching an annual 19-23 MMTs.

As with most environmental crises, coastal developing countries and small island developing states (SIDS) are disproportionately impacted by the externalities of others’ pollution. While some developing economies have taken initiative – like Colombia, Jamaica, and Panamá, which embarked on a $42 million project in 2023 – international efforts are needed.

What does UNCTAD prescribe?

The main point which the UNCTAD report elucidates is that current trade policies inadvertently favour plastics over alternatives. “Trade plays a central role in the plastics economy,” said de la Mora. “Over 78% of plastics cross borders, yet plastic substitutes still face higher tariffs and stricter regulations than conventional plastics.” 

Source: UNCTAD

Tariffs on plastics and rubber have fallen from 34% to 7.2% over 30 years, whilst plant-based alternatives face higher tariffs averaging 14.4%. This disparity undermines the competitiveness of sustainable substitutes. For example, plastic straws face 7.7% tariffs compared to 13.3% for paper alternatives. “This penalises innovation and delays the shift to more sustainable materials,” explained de la Mora. 

Source: UNCTAD

UNCTAD has identified 274 traded non-plastic substitutes from mineral, plant, or animal origins that could replace plastics, particularly in packaging, agriculture, and fisheries. Global exports of these alternatives reached $485 billion in 2023, with developing countries contributing 42% of exports and showing 5.6% growth rates.

However, raw materials dominate this trade (65%), with value-added products comprising only 35%. Most non-tariff measures focus on controlling these substitutes for safety rather than enabling their adoption.

The report holds several recommendations for forthcoming global plastics treaties, including:

1. Reducing tariffs and simplifying compliance for sustainable alternatives. “Trade policy should support the development and use of better substitutes – especially in developing countries – by aligning tariffs, standards, and incentives with sustainability goals,” said de la Mora. 
2. Advancing mutual recognition of standards, and aligning trade policies with environmental frameworks.
3. Increasing funding for waste management infrastructure, with international investment in R&D for the benefit of emerging economies. In this vein, trade-in-services play a crucial role throughout the plastic value chain, from design and manufacturing to waste management. Foreign direct investment (FDI) could catalyse transformative change, though current reduced FDI flows mean waste management services will likely depend on official development assistance and concessional finance.
4. Leveraging digital tools to expand traceability systems for products and waste, thereby strengthening plastic lifecycles.

Finally, the UNCTAD report evaluates the multilateral response to plastic pollution, which has progressed significantly since 1988’s MARPOL Convention.The 2019 Basel Convention amendments brought plastic waste under global notification systems, and the ongoing Intergovernmental Negotiating Committee (INC) process to develop a comprehensive treaty addressing plastic pollution’s full lifecycle from production to disposal. As the ILBI reaches its final stages, multilateral coordination is essential to ensure that measures to combat plastic pollution are inclusive and don’t “become disguised trade barriers or unfairly disadvantage certain countries,” as de la Mora highlighted.

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When the first synthetic plastics were invented in 1907, they soon sparked a consumer boom. Lightweight, durable, affordable, plastics have now become ubiquitous with almost everything we consume. 

Now, as we turn an eye to development and sustainability of countries and ecosystems, plastics must be viewed with more hyperopia than hysteria. It is essential that trade, financial, investment, and development policies all imbricate, with the ILBI sitting in the middle.

“As the world moves to tackle plastic pollution, trade must be part of the solution – integrated into long-term efforts to reduce waste and reshape global supply chains,” summarised de la Mora.