There comes a point when a small business owner looks at the paperwork, calculates the cost and decides that selling abroad is simply no longer worth it.
New EU packaging rules could bring many more entrepreneurs to precisely that conclusion. The businesses affected range from jewelers and knife makers to potters, toy makers, clothing designers and countless other small-scale producers whose customers may be scattered across Europe.
On 12 August, the EU's new Packaging and Packaging Waste Regulation (PPWR) became generally applicable across the bloc. Its objective is straightforward and, on its face, entirely reasonable: to reduce packaging waste and make packaging across Europe more sustainable.
The scale of the problem is substantial. Europeans generate enormous quantities of packaging waste, while reuse and recycling remain insufficient. The PPWR is intended to address this through common rules covering the manufacture, composition, recyclability and disposal of packaging throughout the single market.
But one part of the new regime risks making cross-border trade disproportionately burdensome for the smallest businesses.
How the System Works
Packaging regulation is nothing new. Businesses selling goods across the EU have long had to navigate national extended producer responsibility schemes, with registration, reporting and payment requirements varying from country to country.
Some member states have offered exemptions or simplified arrangements for businesses placing only small quantities of packaging on their markets. The result was already complicated: a small producer selling into several EU countries needed to understand several different national regimes.
The PPWR was supposed to create a more harmonized European framework. Yet for some small cross-border sellers, one of its requirements threatens to make matters worse.
Under the regulation's extended producer responsibility rules, businesses selling packaged products directly to customers in another member state can be treated as producers in that country. The regulation provides for the appointment of an authorized representative for extended producer responsibility in the member state where those products are placed on the market.
For a multinational corporation, that is an administrative detail. For an artisan who sells a handful of necklaces, handmade knives or ceramic bowls to customers in several European countries, it can become a significant fixed cost.
Commercial providers advertising these services quote prices ranging from roughly €150 ($174) a year for basic assistance to substantially more for comprehensive compliance packages. Individual small-business owners have reported costs of several hundred euros per country.
That is where the economics become difficult.
A Fixed Cost Before the First Sale
The precise price of an authorized representative is ultimately less important than the structure of the cost.
A small business may have to arrange compliance before knowing whether it will sell enough products in a particular country to justify the expense. A company testing five new European markets could therefore face costs in all five before knowing whether customers there actually want its products.
For large companies, such expenses disappear into compliance budgets. For a sole proprietor, they can determine whether exporting makes economic sense at all.
That creates precisely the kind of barrier the European single market was designed to eliminate.
Small businesses are particularly dependent on access to a large market. A craftsperson producing a highly specialized product may have only a handful of potential customers in any one country. The economic logic of the business depends on being able to reach customers across Europe.
Fixed national compliance costs reverse that logic. Instead of one European market of roughly 450 million consumers, the entrepreneur once again confronts a collection of national markets, each carrying its own administrative price of admission.
Small Sellers Are Already Pulling Back
The effects are already visible among small online sellers. Artists and craftspeople have posted on social media that they are restricting or ending deliveries to other EU countries because they consider the new compliance requirements too expensive or complicated.
The owner of the online shop pau mau, which has nearly 72,000 Instagram followers, said the new packaging regime made it impossible for her to continue shipping throughout the EU.
Other jewelers, artists and small manufacturers have voiced similar concerns under the #PPWR hashtag.
Social media posts are hardly a comprehensive economic study. But they illustrate the incentive the regulation creates. For a company shipping thousands of parcels into a country, a few hundred euros in annual compliance costs may be trivial. For someone sending five parcels there, it can destroy the commercial logic of selling there altogether.
And therein lies the problem: the fixed administrative burden does not necessarily rise in proportion to the amount of packaging a business places on a particular national market.
Europe has therefore stopped short of what small exporters would actually need: a genuinely unified system allowing a business to register once, report once and comply across the entire single market.
Instead, the entrepreneur still encounters national systems and national administrative requirements. The single market may exist in law. For a growing number of Europe's smallest sellers, it risks becoming considerably less single in practice.
Even Brussels Recognizes the Problem
The strongest criticism of the arrangement comes, indirectly, from the European Commission itself.
In December 2025, only months before the PPWR became generally applicable, the Commission proposed suspending the rules requiring the appointment of authorized representatives for extended producer responsibility. The proposal would postpone the relevant requirement until 1 January 2035.
The Commission has gone further. As part of its broader effort to reduce environmental bureaucracy, it is considering reforming extended producer responsibility schemes and has floated the idea of a digital one-stop shop for registration, reporting and information.
That is remarkably close to an admission that the present system is unnecessarily cumbersome.
Brussels has created a requirement, recognized that it imposes an excessive administrative burden and proposed suspending it. Yet until the legislative process catches up, businesses must navigate the uncertainty created in between.
For small entrepreneurs deciding today whether to continue selling across borders, promises of future simplification are of limited comfort.
Europe Cannot Regulate Its Way to Competitiveness
The packaging dispute illustrates a much broader European problem.
Each regulation can be defended individually. Less packaging waste is desirable. Recycling is desirable. Producers should bear some responsibility for the waste their products generate.
But businesses do not experience regulation individually. They experience the cumulative burden of every registration, form, representative, fee, reporting requirement and compliance deadline imposed upon them.
Large corporations can employ departments to manage that burden. Small businesses cannot.
That distinction matters because the European economy needs precisely the companies most vulnerable to fixed compliance costs: small manufacturers, independent designers, craftspeople and entrepreneurs attempting to expand beyond their domestic markets.
The single market was supposed to give them access to an entire continent. It should not require them to assemble a miniature compliance department before they can sell a handmade product across a national border.
Europe frequently worries about declining competitiveness, weak productivity and its shortage of fast-growing companies. Yet it continues to construct regulatory barriers that disproportionately punish businesses before they have had the chance to grow.
Environmental protection does not require abandoning the single market. But if Brussels wants both, it needs rules proportionate to the businesses expected to comply with them.
A European market in which only large companies can comfortably afford to sell across borders is still a market. It is simply no longer much of a single one.