Garbage Politics and Sin Tariffs: How the Global South can Protect the Environment Without Banning Trade

One Person’s Trash…

In the global waste trade, exporters collect post-consumer materials and post-industrial byproducts and offer them for sale on international markets. Importers buy containers of waste products because they can process the waste and scrap to recover valuable raw materials. While raw materials are sourced from waste worldwide, resource-scarce developing countries in the Global South have proven especially eager for imported waste products. This has been a boon to developed countries in the Global North, which have leaned into the “not in my backyard” (NIMBY) benefits to be had from designing waste management around export.

For states in the Global South, the upshot is that the legal waste trade relocates foreign-generated garbage into their already overburdened domestic waste management systems. According to the World Bank, over two-thirds of Global South garbage is disposed of in open dumps. In low-income states, over 90% is in open dumps. For comparison, only 2% of waste in high-income states is in open dumps.

China’s Market Dominance—and the Consequences of its Exit

China’s rise and near-insatiable demand for raw materials have been central in the development of the global waste trade. So the world was turned upside down when, on 18 July 2017, China notified the World Trade Organization (WTO) that it banned imports of 26 specific waste products as part of its “Operation National Sword,” also known as “No More Foreign Garbage.” Banned products included several metal ash, residue, and slag products; several yarn and textile waste products made of cotton, wool and animal hair, or artificial fibers; sorted and unsorted rags; unsorted paper; and all post-consumer plastic products. Careful studies document how markets for all of these waste products were upended.

China’s ban on plastic waste imports has been especially salient. In a matter of months, China’s plastic waste imports dropped by 99.1%. Many imports were diverted to neighboring countries, and their post-processing valueless leftovers choked their already overburdened domestic waste management systems. The bans also meant that, suddenly, piles of plastic waste that used to be sold and shipped abroad were left in Global North municipalities, overburdening limited recycling capacity and, in many cases, being diverted to landfills. We can draw a direct through-line from China’s plastic waste bans to the 2019 plastic waste amendments to the most important international treaty in this space, the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal (of which effectively every country except the United States is a member). In 2022, the UN took up the cause of plastic, launching negotiations to develop a binding international treaty to address the full life cycle of plastic. The UN did not meet its deadline of the end of 2024 to finalize the text. At the time of writing, actors continue to clash, especially over the primary goal of the treaty—to decrease plastic production or increase plastic recycling.

In our contemporary world, the supply of waste and potential waste products that could be derived from waste is endless and unrelenting.

The struggle around dealing with the aftermath of the China bans, of plastic and other waste products goes back to the reality that waste and scrap products legally travel around the globe due to international trade. In the “circular economy” approach, capitalist markets match supply with demand. Ultimately, recycling is endogenous to the market—what is recyclable is not really about the physical substance in question. It is about whether there is a downstream buyer of the physical substance in question, which then motivates the capitalist infrastructure to collect, process, and sell the physical substance under the moniker of a waste product. In our contemporary world, the supply of waste and potential waste products that could be derived from waste is endless and unrelenting.

Still, a truism in political economy holds that with “winners” come “losers.” After China bans, Global South countries housed undeniable winners. But so too emerged undeniable losers: the environment, and the extended consequences of environmental harm for human health and safety. On the question of whether people living in other Global South countries that became newly competitive noticed this harm, myriad sources make clear that growing piles of foreign-origin garbage have been no secret. International non-governmental organizations (NGOs), civil society, and those holding political power debate how to respond.

After China bans, Global South countries housed undeniable winners. But so too emerged undeniable losers: the environment, and the extended consequences of environmental harm for human health and safety.

In the immediate wake of the shock, Global South states in China’s neighborhood experimented with intricate domestic environmental regulations. For example, national regulators at times declared that 100% of containers would be inspected or that further imports would be delayed until inspection backlogs cleared. Such regulations take incredible state capacity that would strain even Global North developed states; the percentage of containers inspected in the Global North is in the low single digits.

In fact, there is a less headline-worthy but, I argue, useful domestic environmental policy to which states can and do turn to manage the tradeoff between economics and the environment. The product-level import tariff is an adjustable, incremental, targeted, unilateral, easy-to-implement, potentially revenue-generating option that might be old-fashioned but should not be overlooked. In new research, I use the setting of the waste trade to make the argument that tariffs can operate in furtherance of environmental protection, too.

Sin Tariffs as Environmental Policy

Think of a “sin tariff” as a sin tax that just happens to be extracted at the border. In new research, I establish that, in the wake of China’s 2017 “Operation National Sword,” Global South states flooded with diverted waste product imports raised sin tariffs in ways consistent with environmental protection.

To do so, I use what is called a difference-in-differences quantitative research design. I consider trends in tariffs for imports of the 179 waste products in up to 170 Global South state countries, from 1995-2020. First, I track the trends in tariffs across all these waste product-countries for the years prior to China’s bans (1995-2016). In general, average tariffs have been declining in recent decades. For the sample under study here, average tariffs across all traded products declined in this period from around 10% to 5%. Tariffs on waste products specifically also declined on average, although trends differed between plastic, metal, and waste products made of other substances.

Then, I consider whether in the years after 2017, the trends in tariffs on waste product-country combinations “treated” with the China bans diverged from trends on other waste product-country combinations. If so, we can conclude that the China bans themselves caused different trends in tariffs. The presumption is that, but for the China bans, trends on all waste product-country combinations would have continued as before.

Can we find evidence that governments adopted this logic—using tariffs as environmental policy – when they set rates?  The notion of using taxes as environmental policy was certainly in the air: plastic waste diversion in particular triggered public discussion throughout the Asia-Pacific region, such as Indonesia, Thailand, Vietnam, and Taiwan. In 2019, the Philippines famously sent back to Canada 69 containers, with then-president Duterte announcing, “Your garbage is on the way. Prepare a grand reception. Eat it if you want to.” Still, years after this grand gesture, the Philippines also publicly turned to taxation; as of 2022, the Philippines passed a tax of 100 pesos (USD 1.75) per kilogram of plastic waste, while at the same time the Philippines has not ratified the full set of prohibitions on hazardous plastic and other waste imports available via the Basel Convention, consistent with the Pigouvian logic favoring incentive manipulation rather than outright rejection of trade.

In Malaysia, the use of sin tariffs on plastic waste products was both explicit and well-documented. Awash in diverted imports just two months after the shock, Malaysia announced a tax of 15 ringgits (USD 3.62) per metric ton of imported waste plastic. The Malaysian Plastic Manufacturers Association complained about the tariff, while a prominent Malaysian NGO complained that “the cost and burden to public health and the environment far outweigh the revenue gained by the Malaysian government from the levy imposed on plastic waste imports.” In parliament, an opposition MP asked if Malaysia would ban plastic waste imports as China had. The responsible minister demurred and said there were no such plans—“the processing of such waste could result in RM 30 billion [USD 7.2 billion] worth of business and the government could not treat the potential lightly.” What a sin tariff can do is trade off costs to industry against benefits to the environment, of course, without fully satisfying either side. Still, Malaysia’s reported direct government expenditure on environmental protection increased by a factor of 1.3 from three years before to after China’s ban (2014 v. 2020).

The Limits of Local Solutions

Quantitative and qualitative evidence demonstrates that governments can leverage sin tariffs to influence the distribution of the physically big, environmentally overwhelming, costly leftovers of the global waste trade.

There are many other imports we might consider “sinful” to which this logic could apply: flora and fauna that could become invasive species; weapons with the potential to generate harms for natural and social environments; single-use goods destined for landfills for which there is no secondary demand for recovered raw materials; or goods carrying negative externalities for the climate. Others have already brainstormed about the net benefits of tariffs for the environment, including that higher global tariffs on carbon-intensive industries would mitigate global emissions at a low global cost. Still, if tariffs can help governments and their populations achieve better socio-environmental outcomes, then such an easy-to-implement, even old-fashioned trade policy should take a central place in the environmental policy repertoire.

Still, the thing about the waste trade that is different from so many other environmental topics is that its negative externalities are not inherently transboundary. Post-processing end-of-life waste is highly localized, often manifesting via literal piles. Does one country’s sin tariff, that reduces end-of-life waste in that country’s territory, make the global environment better off? Or does it just mean that waste products and their end-of-life leftovers are diverted to another buyer in another country…and so on?

I am sitting here at my desk in the United States, eating a yogurt, and in so doing producing the waste product of a used plastic yogurt cup. The “circular economy” approach banks on me putting the dirty plastic in my recycle bin, which then leads a series of actors in competitive, capitalist, international markets to buy and sell it until its useful raw materials are input into further production processes. The cup’s dirt and grime, with no further reuse value, will still end up in a dump, or a waterway, or burned into fumes somewhere else, where an importer is located. If not China, or another country where tariffs are too high, then still it will go somewhere else—that the United States has an interest in making as far away from my desk as possible. From this point of view, one could think of sin tariffs as a tool for Global South countries to extract rents from the Global North in exchange for the “yes in my backyard” (YIMBY) services they provide to exporters interested in “not in my backyard” (NIMBY) outsourcing. It could be that, eventually, Global South countries will raise sin tariffs so high, or otherwise increase the costs of trade so much, that trade-based circular economy approaches peter out. If that happens, and too many would-be exports are left at home, then the Global North would have to devise different solutions. One would be for the Global North to ban waste exports or single-use products with no downstream market.

The problem of adjustment in the Global North has gotten attention, but deserves more dedicated theorizing. Here, I note only that these dynamics reinforce the political usefulness of sin tariffs for governments and societies in the Global South—the costs of which might be shared with or even borne by people far away.

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Rachel Wellhausen is Professor of Government at the University of Texas at Austin (visit her homepage here). Naisha Singh and others at the UT Austin Innovations for Peace and Development lab provided excellent research assistance.

Image: “Cambodian shipping container filled with garbage,” by Jacob Malcom. Image is in the public domain.