BERLIN, Germany — When the European Union’s new packaging regulation became applicable on Aug. 12, some small German merchants responded in the simplest way available to them: They stopped accepting orders from customers elsewhere in Europe.

Bookshops, breweries, craft manufacturers and food producers have been among the businesses warning that occasional foreign sales no longer justify the administrative expense. A Lower Saxony honey producer told BILD that suspending European deliveries could cost it a four-figure sum in annual revenue.

The reaction is real. But it does not amount to a broad German export shutdown, as some headlines imply. It is better understood as a selective withdrawal by smaller sellers from low-volume markets — and as evidence that a regulation intended to harmonize European commerce may initially make it more fragmented.

A Green Law Meets a Fragmented Market

The Packaging and Packaging Waste Regulation, or PPWR, entered into force in February 2025 and has applied generally since Aug. 12, 2026. Its long-term objectives include reducing waste, making packaging economically recyclable and shifting disposal costs toward the companies that place packaging on the market. The regulation’s official text applies directly across the bloc.

The environmental case is substantial. The European Union generated 79.7 million metric tons of packaging waste in 2023, or 177.8 kilograms per person. Germany produced 215.2 kilograms per person — among the highest levels in the bloc — although it also recorded comparatively high recycling volumes.

The immediate commercial dispute, however, concerns extended producer responsibility rather than cardboard design or recycling technology.

A company selling packaged goods directly to an end user in another member state is generally treated as a producer in the destination country. It must register there, comply with the national recovery system and, under Article 45, appoint a locally established representative for its packaging obligations.

There is no general exemption for a merchant sending only a handful of parcels. Businesses placing less than 10 metric tons of packaging on a national market receive simplified reporting treatment, but they are not excused from the underlying registration and representative requirements.

This distinction matters because the principal cost is often fixed rather than proportional. Registration, professional representation and annual administration may be manageable for a large retailer shipping thousands of orders, yet commercially irrational for a workshop making ten sales a year in Austria or Italy.

Not Everything Began in August

The controversy also requires historical perspective. European businesses already faced national packaging-registration and recycling-finance rules before the PPWR. Germany’s Central Agency Packaging Register says that the basic duties of registration, system participation and data reporting remain in place, although the new regulation changes which company bears responsibility in particular transactions.

The PPWR therefore did not suddenly invent packaging compliance in Europe. What it did was create an explicit bloc-wide requirement for an authorized representative when an EU-based producer sells directly to end users in another member state.

That requirement is particularly important in e-commerce. Sales through a local importer or reseller may place producer responsibility on the business established in the destination country; a direct online sale can leave the foreign merchant responsible.

Germany’s Händlerbund argues that the absence of a de minimis threshold makes the system disproportionate for small businesses and risks excluding them from the single market. The association says some merchants are already limiting their delivery areas because compliance costs exceed the revenue available in smaller destinations.

Brussels Recognized the Problem — Too Late

The most striking part of the dispute is that the European Commission identified the problem before the rules became applicable.

In December 2025, it proposed suspending the mandatory representative requirement until 2035 for producers established inside the European Union. The Commission described fragmented national EPR systems as a significant barrier to the internal market and acknowledged that appointing representatives in as many as 26 other countries could impose excessive costs, particularly on smaller companies. Businesses outside the European Union would not receive the same relief.

But the proposal has not become law. Negotiations in the Council were discontinued amid reservations from a large majority of member states. In the European Parliament, a narrower approach has been discussed that would concentrate relief on micro and small enterprises while preserving stricter enforcement for larger and non-European sellers.

Until legislation changes, Article 45 remains applicable.

A Warning Is Not a Waiver

The Commission has urged national authorities to avoid disrupting trade immediately after the application date. Its August guidance says that businesses should ordinarily receive a warning and a reasonable opportunity to correct noncompliance before authorities consider sales prohibitions, withdrawals or recalls.

That is an enforcement strategy, not a legal exemption. Describing it as an EU official encouraging governments to break the law overstates the case. The Commission cannot erase a binding regulation through informal advice, and merchants cannot safely treat an initial emphasis on warnings as permanent immunity from registration or penalties.

The Larger Economic Risk

There is not yet evidence that the measure will materially deepen Germany’s economic slowdown. Anecdotes about individual merchants cannot establish a nationwide export effect, and cross-border sales by major retailers are unlikely to stop.

The more credible risk is structural. Fixed compliance costs favor large platforms and established exporters, while smaller producers narrow their delivery areas or abandon foreign customers altogether. Consumers face less choice, and the single market becomes easiest to use for companies large enough to finance 27-country compliance.

The PPWR addresses a genuine environmental problem. But its early implementation illustrates a familiar European policy failure: common goals layered onto national administrative systems without first creating a genuinely common route to compliance.

The likely result is not the end of German exports. It is quieter and potentially more lasting — fewer small businesses participating in Europe’s internal market, even as Brussels insists that the market remains open.

Sources: EU Commission, European Parliament