EU competition ministers met in Brussels to approve a plan proposed last year by the European Commission, the bloc's executive arm, to ban the destruction of textiles, shoes and other unsold consumer products.
The bloc wants to reduce the environmental impact of clothes or accessories that are made but never used, especially since the proliferation of online shopping.
According to the EU, textiles have the fourth highest impact on the environment and climate change across its 27 nations after food, housing and transport.
There will be a four-year exemption from the ban for medium-sized companies, while small firms will have a general exemption.
The rules will include tighter requirements for products to be "more durable, reliable, reusable, upgradable, reparable, recyclable and easier to maintain," the member states said in a statement.
Many other consumer goods will be affected, but there will be exemptions for food, feed, medicine and veterinary products. Cars were also exempted since other laws address their impact on the environment.
Goods must be sold with a "digital product passport," which could be a QR code, it added.
The rules will only come into force after negotiations between the member states and the European Parliament, which is due to formally back the proposals in the coming weeks.
The European Environment Agency (EEA) says the number of used textiles exported from the EU tripled over the last two decades from more than 550,000 tons in 2000 to almost 1.7 million tons in 2019.
But the EEA said the fate of used textiles exported from the EU is "highly uncertain."
Meanwhile, some African nations have banned the importation of used textiles in an effort to protect and encourage their own native textile industries.