Textile recycling operations inside Pakistan's Export Processing Zones (EPZs) are facing an existential threat from pending new legislation, the Secondary Materials and Recycled Textiles Association (SMART) has warned. If enacted, the law could unravel the global supply chain for used textiles and clothing (UTC), which heavily relies on Pakistan's sorting and re-export capabilities.
Background
Pakistan has long been a linchpin in the global used textiles trade. Operators within its EPZs handle the import, sorting, grading, recycling, and re-export of old clothing and textiles, benefiting from customs facilitation and tax breaks. These zones attract large volumes of used garments from Europe, the US, Japan, and South Korea.
The proposed legislation, while not fully disclosed, is expected to tighten import permits, raise environmental compliance standards, or even ban commercial sorting of certain used textile categories within the EPZs. For Pakistan, this is not just a trade policy shift—it could trigger massive job losses among the tens of thousands of workers employed in the sector.
Industry Impact
Pakistan's used textile industry is a critical node in the circular textile economy. Hundreds of thousands of tons of post-consumer garments arrive annually. After manual sorting, 30%-40% of high-quality items are resold to markets in the Middle East and Africa; the remainder is processed into industrial wipes, recycled cotton fibers, or filling materials for automotive, construction, and furniture industries in the West.
If the new law takes effect, the immediate impact will be a sharp reduction in sorting capacity within Pakistani EPZs. Exporters will scramble for alternatives—Bangladesh, India, or local African facilities. But none can match Pakistan's infrastructure and skilled labor in the short term. Sorting costs could rise by 15%-20%, and lead times will lengthen. For buyers of recycled fibers, raw material shortages and price volatility will become the norm through 2025.
On pricing, higher collection costs will directly push up the ex-factory price of recycled cotton yarn. China, the world's largest importer of recycled cotton yarn, will feel the pressure at the spinning mill level, squeezing margins for low-end recycled fabric products.