Guatemala’s Reuse Markets Challenge Global Myths About Fashion Waste

At the core of Guatemala’s secondhand clothing economy is ropa cruda, unsorted bales that arrive without grading or selection. Unlike pre-sorted consignments, ropa cruda gives traders flexibility to create their own categories of quality, demand and price. A single bale can be split into several tiers: higher-end garments diverted to better-off urban districts, mid-range items sold in local markets, and low-cost garments redistributed into rural stalls. This adaptability allows traders to capture small margins across multiple resale cycles, sustaining families where formal employment is scarce.

Lisa Jepsen, Chief Executive Officer of Garson & Shaw, explains the dynamic: “The research brings to the fore the importance of ropa cruda to local economic activity in Guatemala. Unsorted imports enable local sorting businesses and retailers to extract maximum value based on specific consumer demand. Local sorting is valuable and not only aligns with our business goals but also strengthens local livelihoods and economies.” For Jepsen, ropa cruda is both a business model and a development mechanism, creating jobs where few alternatives exist.

Survey evidence reinforces this. According to the Guatemala Report, a combined 71.9% of traders purchased either unsorted ropa cruda (42.7 %) or low-sort saldos (29.2 %), compared with 28.1% choosing pre-sorted clasificados.. The preference is deliberate: traders want control over grading, since it allows them to respond directly to customer demand. The report also tracked volumes, showing 1.59–2.36 million kg of clothing moving annually through four major markets: La Guarda, El Terminal, San Martín and La Maya. Each market has its own redistribution pattern, with unsold stock flowing outwards as saldos to smaller towns and rural vendors.

The social dimension is equally significant. In Guatemala’s economy, 71.1% of the labour force works informally, and the SHC sector reflects this reality. As mentioned, women play a key role: 60.7% of participants in the trade are female, while 57.4% of business owners are women. This exceeds national averages for women’s participation in commerce. Jennifer Wang, Chief Executive Officer of Full Cycle Resource, highlights the significance: “The secondhand clothing (SHC) sector’s 60.7% female participation rate, which is significantly above national norms, demonstrates its function as a key pathway for informal economic engagement. Low barriers to entry, modest capital requirements, and flexible market structures enable women—particularly those excluded from formal employment, to secure income and social capital through extensive trading networks.”

These networks matter because margins in SHC are modest. A trader may buy a bale of ropa cruda, sort it into categories, and sell premium garments for two or three times the price of bulk pieces, but each stage requires labour and skill. The resale process is labour-intensive: garments are washed, ironed, repaired and displayed. Downstream, unsold items are marked down through timed discount cycles before entering rural markets. Even when clothing fails to sell as apparel, it may be cut into cleaning rags or used as household textiles, further extending its life.

The Guatemala Report also draws attention to gendered income effects. While women in the SHC sector face a wage gap of 17% compared with male peers, this is significantly narrower than the 26% gap recorded nationally. For households in Guatemala’s extensive informal economy, such differences are critical. Ropa cruda is therefore not just the backbone of the SHC trade but also a stabiliser of livelihoods, redistributing value through multiple tiers of Guatemala’s economy.

Policy debates in Europe and North America are increasingly shaping the rules for SHC trade. Extended Producer Responsibility (EPR) frameworks, now moving through legislatures in the Global North, frequently include provisions for mandatory pre-sorting of exports. The stated aim is quality assurance and traceability. Yet in Guatemala, where much of the value is created after imports arrive, such rules are seen as disruptive. Mandatory pre-sorting would not only remove livelihoods tied to grading but would also alter the basic economics of ropa cruda markets.

Jepsen points to this danger. “We believe EPR frameworks can be highly effective if designed thoughtfully, but they must acknowledge the realities of global reuse markets. Mandatory pre-sorting could negatively affect local employment and economic benefits generated by local sorting activities. We believe that EPR schemes should clearly prioritise reuse over recycling, in line with the waste hierarchy, and be flexible enough to ensure that exporting countries support, rather than undermine, effective circular systems in receiving countries.” Her comments highlight a clash between policy intent abroad and lived realities in Guatemala.

The Guatemala Report details why pre-sorting would be problematic. A large proportion of retailers, particularly in the four surveyed markets, purchase unsorted ropa cruda because they can sort items to meet their customers’ preferences. By doing so, they capture downstream margins. Removing this step by imposing pre-export sorting would shift both employment and profits back to exporters in the Global North. The report explicitly states that credential clothing should be regulated as reusable product, not waste, and warns that mandatory pre-sorting would damage local value chains.

Wang frames the debate as one of policy alignment. “The recommendation to resist mandatory pre-export sorting is not inconsistent with the policy objectives of quality assurance and transparency advanced by regulators in the EU and other Global North jurisdictions. While quality and traceability are legitimate regulatory aims, the evidence indicates that presorting requirements imposed at the export stage do not necessarily deliver the intended outcomes and can, in fact, diminish local value-addition opportunities in receiving markets and transfer hubs (sorting hubs).”

She offers an alternative path: “The push for higher quality and greater transparency in the secondhand clothing (SHC) trade should happen primarily through robust data collection and structured information-sharing, both voluntary and mandatory. A data-driven transparency framework can satisfy regulatory objectives in the EU and Global North while allowing importing markets to retain critical economic functions. In this sense, the central policy question is not whether goods are pre-sorted abroad, but whether there are mechanisms to generate and share credible, comparable information across the supply chain.”

These contrasting approaches expose a deeper disagreement about what counts as circularity. Exporters often focus on compliance metrics, documentation and tonnage flows, while importing countries emphasise livelihoods, flexible trade and downstream reuse. In Guatemala, where 71.1% of the workforce already operates in informal conditions, losing control over sorting would remove fragile but vital income streams. For women, who make up most traders and business owners, this would not only cut into profits but destabilise household survival. Unless carefully calibrated, pre-sorting rules risk privileging administrative neatness over functional circular systems that are already delivering measurable benefits.

The debate over SHC is not only about definitions of waste but also about what counts as credible circularity. Global narratives frequently place fibre-to-fibre recycling at the centre of future solutions. In practice, the technology remains limited in scale, while reuse already diverts huge volumes from landfill. Surveys in Guatemala show 88­–92% of imports are reused, and waste fractions stay within single digits for pre-sorted clothing. For traders, the idea that these systems should be displaced in favour of untested recycling models feels detached from their lived realities.

Jepsen stresses that point: “Reuse remains one of the most effective and immediate ways to reduce the amount of clothes going to landfill. While fibre-to-fibre recycling represents significant potential, it remains far from being commercially scalable today. Clothing reuse, on the other hand, is already successfully diverting textiles from landfills, reducing environmental impacts, and supporting local economies in Guatemala and elsewhere. In our view, reuse directly reduces waste, conserves resources, and must be prioritised and actively supported in policy and investment decisions as a proven circular solution.”

Shared accountability is also central. Guatemala’s traders and importers can maintain reuse systems, but the Global North still shapes upstream supply and regulatory frameworks. Jepsen argues this imbalance should be corrected: “We believe that collaboration and relationships between the Global North and South are key to driving circularity and ensuring the sustainability of trade. The Global North has a responsibility to be part of the end-of-life solutions in importing countries through supporting fair, practical, and inclusive approaches to textile circularity that bring positive economic and environmental outcomes and benefit every link of the value chain.”

At the municipal level, the gaps are visible. Local authorities face limited enforcement capacity in solid-waste management, and textile separation is often absent. In this vacuum, private actors step in. Mario Peña, General Manager of Megapaca, notes: “Guatemala has certain challenges in waste management and regulation. Megapaca works with municipalities to help them understand the importance of separating waste and prioritising reuse and recycling in waste management policy. We help them reconsider the waste stream so that textiles are separated within it, so that items can be diverted for reuse and recycling.” His remarks underline how corporate engagement can substitute for weak public governance, creating hybrid models of circularity.

The Guatemala Report concludes that reuse rates above 87% already meet key circular-economy objectives, while waste fractions compare favourably to disposal outcomes in high-income countries. What the sector needs is recognition and targeted support rather than policies that strip out value. If circular fashion is to be more than rhetoric, accountability must extend across borders, combining credible evidence of reuse with policies that strengthen rather than destabilise local livelihoods.