Uno Loop and Heidy Tamme warned as far back as 1965 that you should not knit the sun into your mittens because then the snowball in your hand may melt. With the new European packaging rules that took effect on August 12, 2026, it is worth asking whether we have woven something into the bureaucracy that is causing the single market itself to melt away.

European single market as the engine of prosperity

The European Union grew out of the practical idea that if European countries removed barriers to trade among themselves and allowed goods to move freely, people would become more prosperous. The single market is not a byproduct of the European project, but one of its foundational ideas.

The European Union today is, of course, something different from the economic community established in 1957. The EU treaties place the internal market, economic growth and environmental protection alongside one another. The environment must therefore be protected in a way that does not simultaneously damage Europe's engine of prosperity: the single market.

This is especially important for Estonia. A French or Polish company can grow quite large without ever leaving its home market. In Estonia, with a market of just over 1 million consumers, the key to growth for our companies lies in Stockholm, Warsaw and Berlin. Small businesses account for more than 99 percent of EU companies. For a small country, cross-border sales are not a luxury but a way to achieve the scale that companies in larger countries can attain in their domestic markets.

When the medicine becomes the disease

This brings us to the paradox of the new Packaging and Packaging Waste Regulation, or PPWR. The PPWR was adopted under the internal market provision of the Treaty on the Functioning of the European Union and its first recital emphasizes preventing barriers to the internal market arising from packaging-related requirements. The goal is sensible: less packaging waste, more recyclable packaging, fewer hazardous substances and more uniform requirements across Europe.

Under the PPWR, a producer must register in every member state where it places packaging or a packaged product on the market. It is also subject to certain extended producer responsibility requirements there. In addition, the PPWR requires a company selling directly to end users in another member state to appoint a local authorized representative.

Imagine a small Estonian online store that finds five customers in Austria, 10 in Spain and a few in Bulgaria. In the digital single market, this should be a success story: an Estonian business has found new customers and European consumers have gained more choice.

In regulatory reality, however, every new member state can mean a new registry, extended producer responsibility system, reporting requirements and local representative. The lower the sales volume, the more absurd the fixed cost per product sold becomes. For a large corporation, this is a job for the compliance department. For an Estonian company with three employees, it may be reason enough to say: We'd better not sell elsewhere in Europe.

Where are clarity and political pressure from Estonia?

Most tellingly, the European Commission itself has already acknowledged the problem. For example, the Commission wants to postpone some of the more onerous bureaucratic obligations for years. It has also acknowledged that the regulation's practical implementation has raised numerous questions because of its novelty and complexity.

A strange vacuum has emerged. The PPWR has applied since August 12, even though the Commission itself has drafted legislation to suspend one of the regulation's more burdensome requirements. The EU legislature, however, has yet to adopt the amendment.

At the same time, neither the Commission nor Estonia has so far publicly taken any visible steps to suspend enforcement of the requirement until the amendment is resolved. Some member states have already begun implementing the regulation. For businesses, the result is confusion: a requirement applies today that may no longer be necessary tomorrow.

Similar situations have been handled more clearly in the financial sector. When a requirement was due to take effect in European securities markets at the beginning of 2022 even as a postponement was being prepared, the European Securities and Markets Authority (ESMA), which brings together Europe's financial market regulators, said directly at the end of 2021 that it could not make existing EU law disappear, but that national regulators would not prioritize enforcing the requirement in the meantime. This gave the market an official signal and some breathing room until lawmakers finished their work. We hope an equally clear interim solution will emerge for the packaging rules.

The criticism from our businesses is directed not so much at reducing packaging waste as at the way this is being done through the PPWR and the accompanying measures. In addition, the Estonian Employers' Confederation has warned, figuratively speaking, that if Estonia builds its own, stricter system alongside the directly applicable EU regulation, there will be at least twice as much bureaucracy.

These warning signs were already visible to politicians and officials while the regulation was being adopted. Three years ago, for example, the Riigikogu European Union Affairs Committee discussed exemptions for small businesses, assessments of the actual environmental impact and the need to avoid unnecessary bureaucracy in connection with the PPWR. Nearly a year ago, Germany's environment minister explicitly called for businesses to be given more time to implement the PPWR. Yet in Estonia, where a functioning cross-border market is even more important because of the country's small domestic market, strong political pressure on the issue has not been evident in public debate recently.

A small member state cannot be Brussels' taskmaster

A small country's role cannot simply be to diligently administer whatever text arrives from Brussels. Estonia must go to extraordinary lengths to ensure that the European single market works for small countries and small businesses.

In the first years of EU membership, Estonia's main task may have been to learn and implement the new rules. Twenty years later, the ambition must be to define Estonia's interests, build coalitions and shape European rules before, rather than after, they are adopted. We must also seek allies among other member states, demand genuinely proportionate treatment for micro and small businesses and refrain from adding extra requirements in Estonia. I would be glad to read about and applaud success stories like these.

Something has gone wrong with the European machinery when an Estonian entrepreneur lands their first customer in Spain, only to discover that before shipping the goods, they must consult Spain's packaging registry and find a local authorized representative. The European single market was created so that borders would cease to have economic significance. The Packaging and Packaging Waste Regulation should not rebuild those borders in the form of bureaucracy.

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