Legislation Is Rewriting Rules for a System It Does Not Understand

The dependency is structural. The majority of collected clothing cannot be absorbed domestically. Export markets absorb what the domestic system cannot, and without them, the material would accumulate, and eventually, it would be disposed of. The circularity that EPR frameworks promise would, under those conditions, begin at a collection point and end at a landfill.

Export markets sustain sorting infrastructure, fund charitable missions, and make it economically viable to collect lower-grade material that domestic reuse channels cannot absorb. The United States is the world's leading exporter of pre-owned clothing, with Guatemala, Honduras, Mexico, and India among the primary destinations. The revenue flows are not incidental. They are what make the economics of collection viable at scale.

For organisations operating within this system, the stakes of mischaracterising export flows are immediate and operational. Jessica Franken, Head of Government & External Affairs at the Secondary Materials and Recycled Textiles Association (SMART), is direct: "The biggest disconnect is the failure to recognise that reuse exports are not just a waste-management outlet, they are a lifeline. In receiving countries, millions of people depend on affordable secondhand clothing for daily life, and entire local economies rely on the jobs created through sorting, resale, repair, and informal trade.

"These markets are a critical source of employment and entrepreneurship. If textile EPR frameworks or international agreements restrict or destabilise reuse exports, the consequences ripple outward: sorting systems collapse, reuse declines, circularity breaks down and most dire, the people who depend on these markets are left without affordable clothing or livelihoods. Cutting off exports doesn't fix the system; it unravels it, with real human consequences."

The environmental case is equally direct. "Secondhand export markets extend the life of clothing, reduce demand for new production, and support millions of jobs while providing affordable apparel in receiving economies," Franken adds. "Because global resale markets absorb a significant share of collected textiles, restricting them would destabilise sorting and reuse systems, leading to more disposal, not less."

Mattias Wallander, CEO and Co-Founder of USAgain, brings the operational reality into sharper focus. "Domestic circular ambitions and global flows are not a contradiction but parts of the same system. The priority should always be to keep textiles in use for as long as possible and to respect the waste hierarchy, because reuse delivers greater environmental benefits than producing new clothes or recycling. But the operational reality is that U.S. domestic demand cannot absorb the growing volume of donated textiles. 

"Only 30% of clothing donated to thrift shops in the U.S. sells locally. The remaining amount is exported to regions with stronger demand for second-hand items: regions like Central America and Africa. Global end markets remain essential to keep textiles circulating at scale and to prevent them from being landfilled or incinerated."

The experience of mature EPR systems reinforces the point. Even after decades of policy intervention, export markets continue to play a central role in European recovery systems. The lesson from those systems is not that exports represent a failure of circularity—it is that circularity, at the scale the United States requires, cannot be achieved without them.

The problem with the current policy conversation is not that it lacks ambition. It is that it keeps arriving at the wrong diagnosis. Export flows are increasingly framed within EPR debates as evidence of system failure—material escaping domestic control, environmental burdens being offshored, regulatory gaps being exploited. It is an intuitive reading. It is also, in important respects, wrong.

Part of the problem is that the policy models being adopted are themselves still maturing. Andriana Kontovrakis, Director of EPR Design & Implementation at Reverse Logistics Group, is measured on this point: "Early textile EPR models are inconsistent when compared to each other and still under development. France has the only mature textile EPR prtogramme (since 2007). It has built strong circular infrastructure and introduced eco-modulation to reward durability and recyclability of covered products. However, some critics argue that producer fee incentives and penalties are not strong enough to meaningfully influence product design. 

"Most other countries—and California under SB 707—are still early in implementation. Many rely on flat, weight-based fees that ignore product attributes, limiting design incentives. It is too early to assess structural flaws in California's model, but its intent goes beyond cost-shifting to emphasise reuse, repair, responsible end markets, consumer access to collection, and safer chemistry."

When export markets dry up or are deliberately constrained, collected textiles do not simply re-route into domestic reuse or recycling channels. Those channels do not have the capacity to absorb them. What happens instead is accumulation, followed by disposal. The circularity gap widens precisely because the intervention intended to close it has removed the mechanism that was keeping material in circulation.

Kontovrakis identifies the broader alignment problem at the centre of these frameworks. "Market development is required to ensure textile recovery systems are able to scale accordingly to meet the demands of textile EPR programmes launching in the EU and California in the coming years. At the moment incentives to producers, collectors, sorters, and recyclers are not fully aligned. Design incentives must be strong enough to drive product change, while collection, sorting, and recycling partners need predictable, financially viable compensation. 

"Programmes must also account for commodity market volatility and resale market fluctuations. For example, in late 2025, collectors and sorters in France faced financial strain due to global resale market oversupply. The French PRO has since increased payments to prevent insolvencies and protect national sorting capacity. EPR programmes need transparent, adaptable incentive structures to ensure stable critical recovery infrastructure systems are available."

The compliance architecture compounds the problem. Kontovrakis notes that companies routinely underestimate the operational complexity involved: "Key challenges include collecting and validating data across internal teams and suppliers, tracking evolving PRO requirements and deadlines across jurisdictions, determining which SKUs qualify as 'covered products,' consolidating sales data by state/country, channel, and brand, gaps in supplier data on fiber content, recyclability, and chemicals, budgeting for eco-modulated fees and long-term pricing impacts, clarifying producer responsibility across distributors, licensees, and private labels. For global brands, complexity will multiply as textile EPR expands across the EU and California."

The regulatory fragmentation across US jurisdictions adds a further layer of dysfunction. "California is the only U.S. state with a textile EPR law but other states have introduced legislation and each is developing its own EPR framework with varying definitions of 'producer,' 'covered product,' 'recycling,' and 'responsible end market,'" Kontovrakis observes. "This creates compliance complexity, inconsistent reporting requirements, and uncertainty for investment. A harmonised national approach—with standardised definitions and aligned eco-modulation criteria—would reduce administrative burden, create clearer market signals, and better support scaling of a domestic textile recycling infrastructure."

The tension, ultimately, is not between environmental ambition and commercial interest. It is between regulatory abstraction and operational interdependence. Frameworks designed without a working understanding of how the system moves material will keep disrupting the very pathways they are trying to strengthen.

Resilience, in any recovery system, comes from distribution. Concentrate processing in too few facilities, pin the whole thing on a single policy jurisdiction, or try to contain globally distributed flows within national boundaries—and you do not get a more circular system. You get a more fragile one. The domestic textile recovery system in the United States is, by any operational measure, not yet equipped to function as a self-contained loop.

The infrastructure gaps are well documented. Unlike paper, glass, or aluminium, textiles lack a unified curbside collection network across most US jurisdictions. Municipal recycling facilities are engineered for rigid containers, not flexible garments—textiles that enter the general recycling stream are frequently treated as residue and sent to landfill. Chemical recycling facilities capable of processing post-consumer blends are moving from pilot to industrial scale, but remain geographically concentrated in a handful of states. The cost of moving low-density, low-value waste from dispersed collection points to centralised refineries can quietly erase whatever environmental benefit the processing was supposed to deliver.

Against that backdrop, the idea that EPR legislation alone can conjure a functioning closed-loop system within a fixed statutory timeline deserves scepticism. Wallander is measured but clear on what resilience actually requires. "Resilience starts with recognising what already works: the US has a diverse, robust ecosystem of collectors, including many small and mid-sized operators, supporting thousands of local jobs. Any reform should preserve innovation, diversity, and equal opportunity for operators. The system becomes fragile when it is concentrated, monopolised, or overly dependent on a limited number of operators. 

"Second, policy has to align across levels of government. State policy can set direction, but local regulation often determines whether collection infrastructure can exist at all. If local rules restrict siting, impose inconsistent permitting burdens, or treat collection as a nuisance to be pushed out of view, the network can't scale reliably. By 2030, the goal should be a network where local ordinances support state circularity objectives, funding matches the real cost of recovery, and reuse is prioritised."

Alongside governance alignment, the system lacks transparency—and Wallander is direct on what that means in practice. "First, the debate needs to start from the right diagnosis: we have a global textile waste problem driven by overproduction and overconsumption, and this is not confined to the Global South, nor caused by reuse. In the US, 85% of textiles are still discarded. There is also a significant problem with unsold and returned new goods being landfilled—5 billion pounds of customer returns are landfilled annually in the U.S., yet the scrutiny often focuses more on the reuse trade than on the upstream drivers of waste.

“Transparency across the sector can help clear up misinformation. This means clear grading definitions; chain-of-custody documentation; destination reporting at a meaningful level of detail; third-party audits of downstream partners; and verification that materials reach responsible end markets rather than being mismanaged. It also means being honest about system limits: there are still no commercially viable, scalable end-of-life solutions for most textiles (including fibre-to-fibre recycling at scale), so evidence-based policy must prioritise reuse and durability while using EPR funding to accelerate technology, product, and market development for the non-reusable fraction."

Inconsistent definitions across jurisdictions continue to create compliance complexity and investment uncertainty. Chemical recycling facilities require capital commitments of between $15 million and $25 million for equivalent throughput, with most business models projecting a 25-month path to break even. Investors will not commit that capital into a regulatory environment defined by jurisdictional inconsistency and unclear market signals. The sorting infrastructure that would feed those facilities faces the same calculus. Without predictable demand from recyclers, automated NIR-sorting investments cannot be justified. Without reliable feedstock from sorters, recyclers cannot de-risk their facilities. The investment stalemate is a direct consequence of the governance gap.

A domestically self-sufficient circular textile economy is not an unreasonable long-term ambition. It is, however, an ambition that the current system—in its collection density, processing capacity, end-market development, and regulatory coherence—cannot yet support. Policy that proceeds as though the infrastructure already exists—or that restricts the global flows currently compensating for its absence—does not accelerate the transition. It undermines the system that is, for now, holding things together.

The Cost of Getting It Wrong

Policy frameworks that attempt to internalise a globally distributed recovery system risk creating bottlenecks, increasing disposal, and weakening the economic foundations that currently sustain textile reuse at scale. The circularity gap in the United States is real, and EPR legislation is a legitimate tool for closing it. But legislation that misreads the system it is regulating will not close that gap—it will deepen it, methodically, and with the best of intentions.