The European Union's greatest economic achievement is neither the funding packages nor the endless programmes with imaginative acronyms. It is the single market. The idea that a Greek, a French or an Estonian can sell his products to hundreds of millions of Europeans without tripping each time into a different national border.
Only Brussels has acquired a strange talent. They tear down the natural borders and instead build bureaucratic ones.
Since 12 August the new European Regulation on Packages and Packaging Wastes has been applied. His objectives sound perfectly reasonable. Less waste, more recycling, better reuse of materials. The European Commission itself argues that common rules will strengthen the single market and reduce compliance costs.
In practice, however, part of the new regime threatens to do exactly the opposite.
Undertakings that have packed products in different Member States are invited to register in their respective national producer registers. An obligation to designate an authorised representative for the extended producer responsibility in the consumer country is also laid down for distance cross-border sales. In other words, a very small business which until yesterday saw Europe as a market is in danger of facing 27 different administrative realities again.
This is not theoretical concern. Small businesses, independent creators and online shops warn that compliance costs can make their sales to other European countries unprofitable. A related protest has gathered tens of thousands of signatures from small and medium-sized entrepreneurs. Even European Parliament President Roberta Metsola described some of the burdens created for small and medium-sized enterprises as counterproductive. Corrections are already being discussed.
And here lies the real problem.
Bureaucracy is not free. Every register, every certification, every representative, every form and every hour a businessman needs to understand what the legislator requires is a transaction cost. Ronald Couse taught us how decisive these costs are for economic activity. The more you make the trade, the less trade you'll have.
And the problem is always bigger for the young. A multinational has legal departments, consultants and regulatory compliance officials. The man who makes handmade products in Kalamata and sells them online has none of them. Any new regulation which imposes the same fixed bureaucratic costs on the small and the large acts as a subsidy to the large.
This does not mean that there should be no environmental rules. It means that rules must also be judged by their consequences, not only by their intentions. Proportionality is not a concession to entrepreneurs. It is a basic principle of good governance.
Europe today is rightly concerned about the competitive gap with the US and Asia. But it will not close with other strategies, other funds and other subsidies, if at the same time it makes the life of the small businessman more difficult.
The single market was a great European achievement because it removed obstacles. But it remains an incomplete undertaking as long as Europe continues to replace the natural borders with new bureaucratic barriers.
